Luzhou Laojiao Co., Ltd.
2022 Interim Report
August 2022
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 andYan Li, responsible person for the Company’s financial affairs (Accounting Supervisor) have warrantedthat the financial statements in this report are true, accurate and complete.
All the directors attended the board meeting to deliberate this report by themselves.
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 this report, the potential risks in the operation of the Company have been disclosed. Investors arekindly reminded to pay attention to possible investment risks.
The Company has no interim dividend plan, either in the form of cash or stock.
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 ...... 9
Section IV Corporate Governance ...... 28
Section V Environmental and Social Responsibility ...... 30
Section VI Significant Events ...... 34
Section VII Changes in Shares and Information about Shareholders ...... 41
Section VIII Preferred Shares ...... 49
Section IX Information about Bond ...... 50
Section X Financial Report ...... 53
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 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 (if any) | 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 | ||
2. Contact us
| Secretary of the board | Representative for securities affairs | |
| Name | Wang Hongbo | Wang Chuan |
| Address | Luzhou Laojiao Marketing Network Command Center, Nanguang Road, Luzhou City, Sichuan Province, China | |
| Tel. | （0830）2398826 | （0830）2398826 |
| Fax | （0830）2398864 | （0830）2398864 |
| dsb@lzlj.com | dsb@lzlj.com | |
3. Other Information
3.1. Contact Information of the Company
Whether any change occurred to the registered address, office address and their zip codes, websiteaddress and email address of the Company in the reporting period.? Applicable ? N/ANo change occurred to the said information in the reporting period, which can be found in the 2021Annual Report.
3.2. Information disclosure and place where the interim report is keptWhether any change occurred to the information disclosure and place where the interim report is kept.
? Applicable ? N/ANo change occurred to the newspapers designated by the Company for information disclosure, thewebsite designated by the CSRC for disclosing the interim report and the place where the interim iskept in the reporting period. The said information can be found in the 2021 Annual Report.
3.3. Other information
Whether any change occurred to other information in the reporting period.? Applicable ? N/A
4. Key accounting data and financial indicators
Whether the Company performed a retroactive adjustment to or restatement of accounting data.? Yes ? No
| H1 2022 | H1 2021 | Change | |
| Operating revenues (CNY) | 11,664,377,552.94 | 9,317,097,027.05 | 25.19% |
| Net profits attributable to shareholders of the Company (CNY) | 5,531,926,340.44 | 4,226,316,722.25 | 30.89% |
| Net profits attributable to shareholders of the Company before non-recurring gains and losses (CNY) | 5,496,265,842.50 | 4,208,650,132.88 | 30.59% |
| Net cash flows from operating activities (CNY) | 4,077,014,965.34 | 2,738,237,039.90 | 48.89% |
| Basic earnings per share (CNY/share) | 3.76 | 2.89 | 30.10% |
| Diluted earnings per share (CNY/share) | 3.76 | 2.89 | 30.10% |
| Weighted average ROE | 17.96% | 16.78% | 1.18% |
| 30 June 2022 | 31 December 2021 | Change | |
| Total assets (CNY) | 45,206,239,893.13 | 43,211,782,005.68 | 4.62% |
| Net assets attributable to shareholders of the Company (CNY) | 28,982,624,244.86 | 28,040,247,005.94 | 3.36% |
5. Differences in accounting data under domestic and overseasaccounting standards
5.1. 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.
5.2. 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.
6. Non-recurring gains and losses
? Applicable ? N/A
Unit: CNY
| Item | Amount | Note |
| Gain or loss from disposal of non-current assets (including the write-off portion of the impairment provision) | 19,789,402.07 | See "Section X Note 5.44" for details. |
| 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 consistently given at a fixed amount or quantity in accordance with the national policies or standards) | 9,141,196.38 | See "Section X Note 5.40 and 5.45" for details. |
| Gain or loss on fair-value changes on held-for-trading financial assets and liabilities & income from disposal of held-for-trading financial assets and liabilities and available-for-sale financial assets (exclusive of the effective portion of hedges that arise in the Company’s ordinary course of business) | 10,690,773.61 | See "Section X Note 5.41 and 5.42" for details. |
| Other non-operating income and expenditure except above-mentioned items | 9,186,723.82 | See "Section X Note 5.45 and 5.46" for details. |
| Less: Corporate income tax | 11,930,835.44 | |
| Minority interests (after tax) | 1,216,762.50 | |
| Total | 35,660,497.94 |
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. Business scope in the reporting period
The Company operates within the baijiu subdivision industry which belongs to the liquor & wine,beverage and refined tea production industry with specialized baijiu product design, production andsales as its main business model. Its primary products include baijiu series such as "National Cellar1573" and "Luzhou Laojiao", and its main comprehensive performance indicators rank high in thebaijiu industry.
In recent years, although the baijiu industry has seen a shrink in total consumption, a decrease in thenumber of consumers, fluctuations of the pandemic, and other impacts, opportunities such as policysupport, brand concentration, and market purification have also emerged. The industry's leadingenterprises have ushered in a period of great development potential.
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 Company holds five food business licenses, and its production model is self-production. TheCompany’s main business is the research and development, production and sales of baijiu seriessuch as "National Cellar 1573" and "Luzhou Laojiao".
In the Reporting Period, the Company upheld the development theme of "improving developmentquality, strengthening cultural empowerment, and accelerating breakthroughs", striving for success onkey tasks through solid work. The Company continuously promoted the "seven concentrations",continuously upgraded the height of the brand, firmly consolidated the foundation of quality, andcomprehensively strengthened risk prevention, thus maintaining the momentum of benign and rapiddevelopment. For H1 2022, operating revenue amounted to CNY 11.664 billion, up 25.19% year onyear; and the net profit attributable to the shareholders of the listed company reached CNY 5.532billion, up 30.89% year on year. Excellent results have been achieved in a market condition full ofcompetition and uncertainty.
A. Main operations and results in the Reporting Period
a. Adhering to promoting "seven concentrations" to steadily increase the market volume
The Company comprehensively launched the "Hundred Cities Program" to promote the nationalizedmarket layout in-depth, and continuously improve the capacity for marketing synergy. The Companyoptimized and upgraded the "Wave Program" to reach core offline consumers with precision, steadilyenhancing consumption innovation capabilities. The Company deepened the implementation of the"Double 124" Project, continuously strengthening the consumer cultivation capabilities. Meanwhile, it
accelerated the promotion of the "Three-network Integration, Five-flow Interconnection, and Multi-code Interrelation" project, continuously deepening the digital and intelligent transformation inmarketing.
b. Continuously upgrading the height of the brand to return to the value and image of a famous baijiubrand
The Company adhered to shaping the brand's characteristic IP and enhanced the brand's culturalmemory from the dimensions of culture, sports, and festivals, further strengthening the brand'spresence. The Company innovated the brand concept and continuously constructed the consumptionscenarios, further enriching the high-end, fashionable, and youthful brand connotation of LuzhouLaojiao. The Company made full use of the unique core assets as a "Living Dual National Treasures"brand to create a brand cultural IP of the intangible cultural heritage, further enhancing the brandvalue and consumer experience.
c. Making every effort to promote major projects and accelerating the layout of intelligent production
The Company accelerated the planning and construction of a series of major projects such as thebrewing digital and intelligent transformation project, the technical upgrade project of intelligentbrewing, and the technical upgrade project of the Intelligent Packaging Center to promote thestandardization of the brewing system, the automation of production, the digitalization of the process,and the refinement of management, taking the construction of intelligent factories to a new level.
d. Firmly consolidating the foundation of quality and accelerating the application of scientific researchachievements
Strengthening scientific research management and paying close attention to project implementation,the Company carried out nine key research projects of applied and prospective nature with a focus onfields such as functional microorganisms for brewing, production process innovation, and cleanproduction, participated in the formulation or revision of four national standards and 11 groupstandards, applied for 47 patents, and was granted 36 patents, with breakthroughs in keyachievements.
e. Comprehensively strengthening risk prevention to safeguard the development of the Company
First, the Company strengthened political supervision and fully fulfilled the responsibility for thecomprehensively rigorous Party self-governance. Second, the Company prevented integrity risk withthe continued implementation of the full coverage of discipline and law education. Third, the Companyprevented management risk through the accurate governance of key areas and key links. Fourth, theCompany carried out special supervision of hidden danger governance for safety and environmentalprotection and effectively strengthened the Company's closed-loop management of hidden dangergovernance for safety and environmental protection.
B. Priorities in the second half of the year
In the second half of 2022, the Company will focus on the following work:
a. Strengthening marketing progress and comprehensively optimizing the layout
In accordance with the marketing policy of "strategic concentration, operation upgrade, and fullpersonnel activation", the Company will continue to promote the "seven concentrations" and makeevery effort to promote sales expansion. Focusing on the strategy implementation, the Company willstrengthen the closed-loop operation and promote the organizational effectiveness of the salessystem. The Company will focus on the front-line business, strengthen the promotion ofempowerment in the front line, accelerate the digital construction, and continuously improve themarketing service and guarantee capacity.
b. Strengthening culture cultivation and boosting brand empowerment
The Company will accelerate the construction of cultural projects such as "Luzhou Laojiao Museumand renovation and upgrading of the National Cellar Square" and continue to improve the image andservice level of scenic spots such as the Cellars of National Treasure, Chunyang Cave, and QiankunBaijiu Castle, continuously enhancing the experience and participation of consumers and visitors ofLuzhou Laojiao. The Company will continue to promote consumer-centric characteristic brandactivities, expanding the influence and coverage of brand marketing activities such as the "Seven StarFeast".
c. Strengthening intelligent production and constantly consolidating the foundation
The Company will promote the digital management of the whole production procedure, continue toresearch the brewing mechanism, green brewing, and other cutting-edge key technologies, andcontinuously improve the resource utilization rate and production efficiency of brewing. The Companywill continue to deepen the Company-university-research institute integration to boost the technologyupgrade of the intelligent brewing industry. The Company will continue to intensify and accelerate thejoint research of various horizontal technology projects so as to accelerate breakthroughs andachievement applications in the fields such as brewing raw grain research and brewing processresearch.
d. Strengthening management synergy and accelerating empowerment upgrade
The Company will further optimize, deepen, and refine the "14th Five-Year Plan", focusing on theformation of special plans and implementation plans involving the departments of human resources,finance, material, production, supply, and marketing. The Company will accelerate the process ofonline organization, personnel, and business in various fields through procedure and policy
optimization, build a knowledge sharing system, and continuously improve the synergy efficiency.
e. Strengthening talent efficiency gains and continuing to tap the momentum
The Company will continuously optimize the scientific and effective career position system, continueto improve the creation, implementation, evaluation, and incentive mechanisms for scientific projects,and implement talent cultivation through projects. Specifically, by encouraging the elite talent andreserve talent to lead and found projects, the Company will enrich the talent's professionalknowledge, broaden the horizon of openness and innovation, and enhance the managementleadership with the promotion of projects.
f. Strengthening Party building and driving the growth of the Company
The Company will continuously follow, study, publicize, and implement the spirit of the 20th NationalCongress of the Communist Party of China, the spirit of the 12th Provincial Congress of theCommunist Party of China, and the spirit of the 9th Municipal Congress of the Communist Party ofChina to consolidate ideological consensus and achieve synergy. It will continue to deepen Partybuilding for development, promote the foundation of grass-roots "five-type Party organizations", andboost the deep integration and mutual promotion of Party building work and the work of the Company,so as to test the work and combat effectiveness of the Party organization with results of reform anddevelopment.
Brand operationThe Company firmly followed the development path of "Return to the Value of a Famous ChineseBaijiu Brand" and focused on the strategy of “dual brands, three product series, and major singleproducts”. Specifically, National Cellar 1573 has been widely recognized as a high-end Chinesebaijiu; Luzhou Laojiao 1952 has taken up the mission of leading the revival of the Luzhou Laojiaoseries brand with its price and image; Tequ and Cellar Age Baijiu focused on synergistic developmentand secured the key price zone; Touqu realized operational upgrade of the price, quota, and brand,and the Hey Guys launched the core city layout and tasting promotion, which laid a solid foundationfor the development of Luzhou Laojiao; innovative products continuously explored new models,achieved new breakthroughs, and accelerated the opening of the core market to quickly open up thesituation. With years of efforts, the Company has successfully transformed into a new leading baijiuproducer that is "comprehensively consumer-centric".
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 operation model | 10,837,418,201.38 | 1,470,222,316.16 | 86.43% | 25.09% | 25.76% | -0.08% |
| Emerging channel operation model | 711,909,071.06 | 125,369,248.70 | 82.39% | 33.88% | 6.84% | 4.46% |
2. Distributors
Unit: Number
| 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 | 1,526 | 134 | 391 | -19.64 | |
| Overseas | 112 | 6 | 42 | 3.70 |
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
| Total sales to top five customers（CNY） | 7,761,468,899.89 |
| Total sales to top five customers as % of the total sales | 66.54% |
| Total sales to related parties among top five customers as % of the total sales | 0.00% |
The Company had no accounts receivable from the top five distributors at the end of the period.
5. Information on top five distributors
| No. | Customer | Sales amount (CNY) | As % of the total sales for the reporting period |
| 1 | Customer A | 5,457,865,851.83 | 46.79% |
| 2 | Customer B | 993,270,897.91 | 8.52% |
| 3 | Customer C | 535,236,995.88 | 4.59% |
| 4 | Customer D | 440,125,552.78 | 3.77% |
| 5 | Customer E | 334,970,601.49 | 2.87% |
| Total | -- | 7,761,469,889.89 | 66.54% |
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 the contents under the heading"Business segment, products or geographical segments contributing over 10% of the operatingrevenues or profits" in “3. Analysis of main business” of Section III. The Company's main products aresold online. Its main cooperation platforms include 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 | 2,613,369,460.39 |
| Purchase based on the unified pricing of the Development and Reform Commission of Luzhou and the Price Bureau of Luzhou, and purchase through bid invitation | Fuels and energies | 87,266,233.44 |
| Purchase through bid invitation | Low-value consumables | 29,289,051.04 |
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 | Item | H1 2022 | H1 2021 | YoY Change |
| segment | Amount | As % of cost of sales | Amount | As % of cost of sales | ||
| Baijiu | Raw materials | 1,362,639,995.08 | 85.40% | 1,118,577,468.66 | 86.95% | 21.82% |
Baijiu
| Baijiu | Labor costs | 97,048,667.74 | 6.08% | 69,632,827.38 | 5.41% | 39.37% |
| Baijiu | Manufacturing overhead | 135,902,902.04 | 8.52% | 98,238,245.45 | 7.64% | 38.34% |
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- and high-end baijiu | 21,572.12 | 17,454.26 | 43,294.91 | 9.10 | 22.47 | 55.73 | Inventory increased year-on-year mainly due to the Company's adjustment of production plans. |
| Other baijiu | 22,758.29 | 21,852.34 | 14,581.45 | -7.87 | -11.28 | 6.84 |
2. Inventory at the end of the reporting period
Unit: Ton
| Finished baijiu | Semi-finished baijiu (including base baijiu) |
| 57,876.36 | 421,454.38 |
3. Capacity
Unit: Ton
| Main products | Design capacity | Actual capacity | Capacity in progress |
| Baijiu | 170,000 | 170,000 | 80,000 |
2. Analysis of core competitiveness
A. Geographical advantageLuzhou City, where the Company is located, sits in the transitional area between the southern rim of theSichuan Basin and the Yunnan-Guizhou Plateau, featuring a warmer and more humid sub-tropicalclimate compared to other areas at the same latitude, with a temperature above 0℃ throughout theyear. The unique climate and soil are agreeable to grow grains for baijiu brewing. The glutinous redsorghum and soft wheat grown in this area are the primary raw materials for the baijiu of the Company.The cellars in which the Company brews its baijiu are made of the local loessal clay characterized bystrong viscosity, rich minerals and excellent moisture retention. In addition, the abundant and qualitywater in the region creates 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, together
with 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 Liquor” for five consecutivetimes, as well as the pioneer with regard to the “Tequ” variety of baijiu. In recent years, the Companyhas successfully 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 &automation. Relying on the technological innovation platforms such as the National Industrial DesignCenter, and continuously deepening the cooperation with universities and scientific research institutesincluding the Chinese Academy of Sciences and the Jiangnan University, the Company has undertaken
dozens of national- or provincial-level projects and has been granted hundreds of invention or utilitymodel patents. And remarkable results have been achieved with respect to improvement of the qualityof base Baijiu, as well as production efficiency improvement.
E. Talent advantageThe Company has 1 inheritor of national intangible cultural heritage, 5 masters of Chinese brewing, 3masters of Chinese baijiu, 1 master of Chinese baijiu technique, 2 Chinese liquor connoisseurs, 8senior professor engineers, 7 experts who receive special allowances from the State Council, 4 nationaltechnicians, 3 academic and technologic leaders of Sichuan province, 2 craftsmen of Sichuan province,1 technological elite of Sichuan province, as well as hundreds of highly skilled personnel includingnational baijiu judges, senior brewing technicians and brewing technicians. The comprehensive andprofessional personnel system assures the sound development of the Company.
3. Analysis of main business
OverviewSee contents under the heading “1. Business scope in the reporting period” above.
Year-on-year changes in key financial data
Unit：CNY
| H1 2022 | H1 2021 | YoY Change | Reason for any significant change | |
| Operating revenues | 11,664,377,552.94 | 9,317,097,027.05 | 25.19% | |
| Cost of sales | 1,642,310,550.61 | 1,335,154,943.46 | 23.01% | |
| Selling and distribution expenses | 1,213,861,984.66 | 1,183,247,931.92 | 2.59% | |
| General and administrative expenses | 542,666,754.49 | 439,561,779.70 | 23.46% | |
| Finance expenses | -126,988,421.10 | -128,007,967.42 | ||
| Corporate income tax | 1,800,020,542.39 | 1,346,062,434.86 | 33.72% | Mainly due to the increased sales revenue from baijiu, resulting in the increased deferred corporate income tax |
| R&D investments | 93,892,252.85 | 51,984,969.33 | 80.61% | Mainly due to the increased comprehensive research and development investments |
| Net cash flows from operating activities | 4,077,014,965.34 | 2,738,237,039.90 | 48.89% | Mainly due to the increased cash received from sale of goods and rendering of services in the current period |
| Net cash flows from investing activities | -1,158,401,612.09 | -732,184,328.54 | Mainly due to the purchase of wealth management product (collective asset management plan) from securities firm in the current period | |
| Net cash flows from financing activities | 579,368,826.99 | -48,460,474.66 | Mainly due to the receipt of payments from the awardees under the restricted share incentive plan for subscription for |
| such shares | ||||
| Net increase in cash and cash equivalents | 3,512,307,170.67 | 1,956,159,445.84 | 79.55% | Mainly due to the increased net cash flows from operating and financing activities in the current period |
Significant changes to the profit structure or sources of the Company in the reporting periodNo such changes in the Reporting Period.
Breakdown of operating revenues
Unit：CNY
| H1 2022 | H1 2021 | YoY Change | |||
| Amount | As % of operating revenues | Amount | As % of operating revenues | ||
| Total | 11,664,377,552.94 | 100% | 9,317,097,027.05 | 100% | 25.19% |
| By business segment | |||||
| Baijiu | 11,549,327,272.44 | 99.01% | 9,195,242,633.92 | 98.69% | 25.60% |
| Other revenues | 115,050,280.50 | 0.99% | 121,854,393.13 | 1.31% | -5.58% |
| By product | |||||
| Mid- and high-end baijiu | 10,372,408,380.45 | 88.92% | 8,218,296,465.61 | 88.21% | 26.21% |
| Other baijiu | 1,176,918,891.99 | 10.09% | 976,946,168.31 | 10.48% | 20.47% |
| Other revenues | 115,050,280.50 | 0.99% | 121,854,393.13 | 1.31% | -5.58% |
| By geographical segment | |||||
| Domestic | 11,570,386,785.08 | 99.19% | 9,264,547,206.51 | 99.44% | 24.89% |
| Overseas | 93,990,767.86 | 0.81% | 52,549,820.54 | 0.56% | 78.86% |
Business segment, products or geographical segments contributing over 10% of the operatingrevenues 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 | 11,549,327,272.44 | 1,595,591,564.86 | 86.18% | 25.60% | 24.03% | 0.17% |
| By product | ||||||
| Mid- and high-end baijiu | 10,372,408,380.45 | 999,050,394.79 | 90.37% | 26.21% | 29.31% | -0.23% |
| Other baijiu | 1,176,918,891.99 | 596,541,170.07 | 49.31% | 20.47% | 16.10% | 1.90% |
| By geographical segment | ||||||
| Domestic | 11,570,386,785.08 | 1,596,761,668.91 | 86.20% | 24.89% | 20.34% | 0.52% |
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 period is calculatedbased on adjusted statistical standards at the end of the reporting period
? Applicable ? N/A
Reason for any over 30% YoY movements in the data above? Applicable ? N/A
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.
A. Breakdown of selling and distribution expenses
Unit：CNY
| Selling and distribution expenses | H1 2022 | H1 2021 | YoY Change | Reason for any significant change |
| Advertising expenses | 691,914,456.49 | 407,510,592.52 | 69.79% | Increased advertising activities |
Sales promotionexpenses
| Sales promotion expenses | 142,494,942.50 | 482,468,677.16 | -70.47% | Decreased sales promotion expenses in the current period |
| Warehousing and logistics expenses | 63,874,054.36 | 48,338,332.97 | 32.14% | Increased sales revenue from baijiu, leading to a corresponding increase in logistics expenses |
| Labor costs | 204,443,388.51 | 183,923,965.82 | 11.16% | |
| Other | 111,135,142.80 | 61,006,363.45 | 82.17% | Increased travel expenses, etc. |
B. Breakdown of advertising expenses
Unit：CNY
| Advertising | Expenses |
| Online advertising (exclusive of TV advertising) | 122,126,397.73 |
| Offline advertising | 178,363,754.97 |
| TV advertising | 240,116,375.42 |
| Other (inclusive of branding ideas, exhibitions & showcases, advertising materials, activity planning, etc.) | 151,307,928.37 |
4. Analysis of non-core business
? Applicable ? N/A
5. Assets and liabilities
5.1. Significant change of asset items
Unit：CNY
| 30 June 2022 | 31 December 2021 | Change in | Explanation |
| Amount | As % of total assets | Amount | As % of total assets | percentage | about any material change | |
| Cash and cash equivalents | 17,046,109,916.36 | 37.71% | 13,513,494,580.56 | 31.27% | 6.44% | |
| Accounts receivable | 1,403,341.54 | 0.00% | 1,628,248.55 | 0.00% | 0.00% | |
| Inventories | 8,713,280,634.28 | 19.27% | 7,277,573,166.80 | 16.84% | 2.43% | |
| Long-term equity investments | 2,657,050,723.78 | 5.88% | 2,626,744,236.25 | 6.08% | -0.20% | |
| Fixed assets | 8,557,024,850.52 | 18.93% | 8,089,487,274.39 | 18.72% | 0.21% | |
| Construction in progress | 724,127,630.54 | 1.60% | 1,259,845,487.50 | 2.92% | -1.32% | |
| Right-of-use assets | 48,376,749.33 | 0.11% | 52,714,810.04 | 0.12% | -0.01% | |
| Contract liabilities | 2,329,543,604.94 | 5.15% | 3,510,110,701.25 | 8.12% | -2.97% | |
| Lease liabilities | 39,336,140.81 | 0.09% | 40,667,668.08 | 0.09% | 0.00% |
5.2. Main assets overseas
? Applicable ? N/A
5.3. 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) | 706,352,241.79 | 5,862,846.29 | 1,400,000,000.00 | 809,303,216.80 | 1,302,911,871.28 | |||
| 4.Investments in other equity instruments | 363,312,120.43 | -25,218,844.78 | 232,988,066.65 | 25,000.00 | 338,068,275.65 | |||
| Accounts receivables financing | 4,757,631,778.64 | -3,086,025,812.88 | 1,671,605,965.76 | |||||
| Subtotal of financial assets | 5,827,296,140.86 | -19,355,998.49 | 232,988,066.65 | 1,400,000,000.00 | 809,328,216.80 | -3,086,025,812.88 | 3,312,586,112.69 | |
| Total | 5,827,296,140.86 | -19,355,998.49 | 232,988,066.65 | 1,400,000,000.00 | 809,328,216.80 | -3,086,025,812.88 | 3,312,586,112.69 | |
| Financial liability | 0.00 | 0.00 | ||||||
Information about other changesN/A
Whether measurement attribution of main assets changes significantly in the reporting period
?Yes ? No
5.4. Restricted asset rights as of the end of this reporting period
| Item | Closing Balance | Reason |
| Bank deposits (CNY) | 119,786,289.43 | Accrued interest on term deposits |
| Other cash and cash equivalents (CNY) | 11,487,514.43 | Restricted security deposits for travel service and bank guarantees |
| Total | 131,273,803.86 |
6. Investment
6.1. Total investment
? Applicable ? N/A
| Investment made in the reporting period (CNY) | Investment made in the same period of last year (CNY) | YoY change |
| 1,669,795,904.73 | 536,408,910.19 | 211.29%1 |
Note 1: Mainly due to the purchase of collective asset management plan product from securities firmin the current period.
6.2. Significant equity investment made in the reporting period? Applicable ? N/A
6.3. Significant ongoing non-equity investment in the reporting period? Applicable ? N/A
6.4. Financial assets investment
6.4.1. 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 record | Amount of purchase | Amount of sale | Profit and loss during the reporting period | Closing book balance | Accounting item | Capital source |
| ed into equity | |||||||||||||
| Domestic and foreign stock | 601211.SH | GTJA | 12,719,156.76 | Fair value measurement | 210,690,476.31 | -31,680,121.93 | 166,291,197.62 | 8,008,357.96 | 179,010,354.38 | Investments in other equity instruments | Own fund | ||
| Domestic and foreign stock | 002246.SZ | SNC | 1,030,000.00 | Fair value measurement | 15,963,896.54 | -2,689,314.60 | 12,244,581.94 | 70,359.98 | 13,274,581.94 | Investments in other equity instruments | Own fund | ||
| Domestic and foreign stock | 01983.HK | LZBANK | 51,120,000.00 | Fair value measurement | 102,174,621.71 | 9,150,591.75 | 60,205,213.46 | 111,325,213.46 | Investments in other equity instruments | Own fund | |||
| Total | 64,869,156.76 | -- | 328,828,994.56 | -25,218,844.78 | 238,740,993.02 | 0.00 | 0.00 | 8,078,717.94 | 303,610,149.78 | -- | -- | ||
6.4.2. Derivative investment
□Applicable ? N/A
No such cases in the reporting period
6.5. Use of funds raised
? Applicable ? N/A
6.5.1. General use of funds raised
? Applicable □ N/A
Unit：CNY 10,000
| Year | Method | Total amount of funds raised | 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 |
| 2019 | Public offering of corporate bond | 249,000 | 0 | 253,081.84 | 0 | 0 | 0.00% | 0 | N/A | 0 |
| 2020 | Public offering of | 149,400 | 24,694.14 | 60,354.6 | 0 | 0 | 0.00% | 97,185.49 | Deposited in special | 0 |
| corporate bond | account for raised funds | |||||||||
| Total | -- | 398,400 | 24,694.14 | 313,436.44 | 0 | 0 | 0.00% | 97,185.49 | -- | 0 |
| Notes for general use of funds raised | ||||||||||
| The total amounts of used and unused funds raised include interest on the funds. | ||||||||||
6.5.2. 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 | Adjusted Investment total amount (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 | 24,420.52 | 292,640.73 | 78.67% | N/A | Yes | No | |
| Project of Intelligent Upgrading and Building of the Information Management System | No | 273.62 | 3,772.17 | N/A | No | No | ||||
| Project of Acquiring Sealing Equipment for the Cellar of Huangyi Brewing Base | No | 0 | 12,043.3 | N/A | Yes | No | ||||
| Project of Acquiring Accessory Equipment for Leaven Making for Huangyi Brewing Base | No | 0 | 4,980.25 | N/A | Yes | No | ||||
| Subtotal of committed investment projects | -- | 398,4001 | 398,400 | 24,694.14 | 313,436.45 | -- | -- | N/A | -- | -- |
| Use of over-raised funds | ||||||||||
| None | ||||||||||
| Total | -- | 398,400 | 398,400 | 24,694.14 | 313,436.45 | -- | -- | N/A | -- | -- |
| Situation and reason for not reaching plan progress or expected benefits (by specific items) | N/A | |||||||||
| Significant changes of project feasibility | N/A | |||||||||
| Amount, purpose and progress of over-raised funds | N/A | |||||||||
| Change of implementation site of investment projects | N/A | |||||||||
| 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 30 June 2022, the Company had replaced advance investments of self-pooled funds of CNY 573,178,496.64 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., the special account No. 631395395 for raised funds in the Chengdu Branch of China Minsheng Banking Corp., Ltd., and the special account No. 028900140410888 for raised funds in the Chengdu Branch of China Merchants Bank Co., 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 were uncertainties in the approval and issue time for public offerings ofcorporate bond in the review of issue plans, in order to ensure smooth progress of the projects andprotect the interests of the Company’s shareholders, the investment sequence and specific amountsof the corresponding raised funds should be determined by the Chairman of the Board as authorizedby the general meeting of shareholders or other persons as authorized by the Board of Directorswithin the scope of the four raised funds investment projects according to the actual needs, providedthat the capital funds for each project is no less than 20% of the total investment.
Note 3: As of December 2020, construction was completed for the Technical Renovation Project ofBrewing (Phase II), with the project image progress reaching 100%. Quality inspection andacceptance of the relevant sub-projects was finished. Other inspection and acceptance, as well assettlement were finished in June 2021.
Note 4: As of 30 June 2022, the Project of Intelligent Upgrading and Building of the InformationManagement System was in the process.
Note 5: Construction was completed for the Project of Acquiring Sealing Equipment for the Cellar ofHuangyi Brewing Base in December 2020. Quality inspection and acceptance of the project wasfinished. Other inspection and acceptance, as well as settlement were finished in June 2021.
Note 6: Construction was completed for the Project of Acquiring Accessory Equipment for LeavenMaking for Huangyi Brewing Base in December 2020. Quality inspection and acceptance of theproject was finished. Other inspection and acceptance, as well as settlement were finished in June2021.
Note 7: 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.
6.5.3. Re-purposed funds raised
? Applicable ? N/ANo such cases in the reporting period
7. Sale of major assets and equity interests
7.1. Sale of major assets
? Applicable ? N/ANo such cases in the reporting period.
7.2. Sale of major equity interests
? Applicable ? N/A
8. Analysis of major subsidiaries
? Applicable ? N/AMain 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 | Luzhou Laojiao series unified package Baijiu sales | 100,000,000.00 | 10,623,090,857.06 | 5,903,661,256.04 | 11,007,308,240.21 | 5,129,170,763.61 | 3,854,305,540.46 |
Acquisition and disposal of subsidiaries during the reporting period
□ Applicable ? N/A
9. Structured entities controlled by the Company
? Applicable ? N/A
10. Risks facing the Company and countermeasures
A. Pandemic-related risk: Although overall the domestic pandemic has gradually eased, there are stilllocal multi-point occurrences and frequent occurrences of mutated strains, and the pandemic is stillsevere in many international regions, which continues to affect the total demand for baijiu andconsumption scenarios. The Company will pay close attention to the domestic and overseas pandemic,strictly follow the requirements for pandemic prevention and control, actively carry out normalized
prevention and control, and ensure the normal and orderly production and operation of the Company.
B. Macroeconomic risk: Despite the growth recovery in the first half of the year, as China's economy iscontinuously impacted by the epidemic, inflation, the Russia-Ukraine war, and other unfavorable factors,the basis for growth is still not solid, and the macroeconomic operational risk cannot be ignored. TheCompany will strengthen the research and judgment of macroeconomic and industry situations, upholdthe development theme of "improving development quality, strengthening cultural empowerment, andaccelerating breakthroughs", and continuously promote the benign and healthy development of theCompany.
C. Environmental risk: As the national awareness of environmental protection continues to grow, therequirements of production pollutant emissions for the baijiu industry are also increasingly high. TheCompany will continue to adhere to environmental protection and management, solidly practice theenvironmental management concept of "happy life from green production", strictly regulate theprevention and control of the "three wastes" pollution, and continuously explore the key technology ofgreen brewing, so as to continuously promote energy saving, consumption reduction, and green cyclein baijiu brewing.
D. Risk of food safety: Food safety is a major concern of the society. Baijiu production involvesprocesses such as processing of raw materials, and fine control of these processes is required forproduct quality. Therefore, the Company will further practice the idea of "making the quality visible",enhance and extend the quality regulation system, and build an intelligent, standardized and visiblequality tracing system with higher level.
E. Public opinion risk: Since the baijiu industry is often affected by public opinion on industrial policies,social responsibility, and industry competition, and leading enterprises receive high market attentionand are subject to public opinion risk. The Company will actively shoulder social responsibility whilepursuing development and uphold the industry rules of "shared culture, shared standards, sharedmarket, shared rules, and shared crises" to develop hand in hand with more outstanding Chineseenterprises and brands and establish a good market image.
Section IV Corporate Governance
1. Annual and extraordinary general meeting convened during thereporting period
1.1 General meeting convened during the reporting period
| Meeting | Type | Investor participation ratio | Date of the meeting | Date of disclosure | Resolution of the meeting |
| The 2021 Annual General Meeting | Annual General Meeting | 63.73% | 29 June 2022 | 30 June 2022 | Announcement No.: 2022-22 of Luzhou Laojiao Co., Ltd. on Resolutions of the 2021 Annual General Meeting (http://www.cninfo.com.cn/) |
1.2 Extraordinary general meetings convened at the request of preferenceshareholders with resumed voting rights? Applicable ? N/A
2. Changes in directors, supervisors, and senior management
? Applicable □ N/A
| Name | Title | Type | Date | Reason |
| Li Guowang | Independent director | Elected | 29 June 2022 | |
| Gong Zhengying | Director | Elected | 29 June 2022 | |
| Tang Shijun | Supervisor | Elected | 29 June 2022 | |
| Ou Fei | Supervisor | Elected | 29 June 2022 | |
| Sun Dongsheng | Independent director | Resignation | 29 June 2022 | Voluntary resignation |
| Shen Caihong | Director | Resignation | 31 May 2022 | Voluntary resignation |
| Lian Jin | Supervisor | Resignation | 28 May 2022 | Voluntary resignation |
| Guo Shihua | Supervisor | Resignation | 28 May 2022 | Voluntary resignation |
3. Profit distribution and converting capital reserves into share capitalfor the reporting period? Applicable ? N/A
The Company has no interim dividend plan, either in the form of cash or stock.
4. Implementation of any equity incentive plan, employee stockownership plan or other incentive measures for employees? Applicable ? N/A
4.1. Equity incentives
On 26 September 2021, the Proposal on the 2021 Restricted Share Incentive Plan (Draft) andSummary of Luzhou Laojiao Co., Ltd., the Proposal on the Performance Appraisal Methods for the2021 Restricted Share Incentive Plan of Luzhou Laojiao Co., Ltd., and the Proposal on theManagement Methods for the 2021 Restricted Share Incentive Plan of Luzhou Laojiao Co., Ltd. wereapproved at the Seventh Meeting of the 10
thBoard of Directors. On 29 December 2021, the aforesaidproposals were approved at the First Extraordinary General Meeting of Shareholders of 2021. On thesame day, the Proposal on the Grant of Restricted Shares to Awardees was approved at the 12
th
Meeting of the 10
thBoard of Directors. As such, it was decided to grant a total of 6.9286 millionrestricted shares to 444 eligible awardees at CNY 92.71/share in the first grant on 29 December 2021.During the payment process after the grant date was determined, four awardees chose to waive a totalof 66 thousand restricted shares that the Company had intended to grant to them due to personalreasons. Therefore, in fact, 6.8626 million restricted shares were granted to 437 awardees asregistered. On 22 February 2022, as the shares granted under the restricted share incentive plan werelisted, the total shares of the Company increased from 1,464,752,476 shares to 1,471,615,076 shares.
4.2. Implementation of employee stock ownership plans
? Applicable ? N/A
4.3. Other incentive measures for employees
? Applicable ? N/A
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
| Company name | Name of main pollutant and particular pollutant | Discharge type | Number of discharge outlet | Distribution of discharge outlet | Emission concentration | Pollution discharge standard | Total emission | Approved total emission | Excessive discharge |
| Luzhou Laojiao Co., Ltd. | COD | Direct discharge | 1 | Luohan Brewery Eco-Park | 21.173 mg/L | 50 mg/L | 5.4842 t/a | 25 t/a | No |
| Luzhou Laojiao Co., Ltd. | Ammonia nitrogen | Direct discharge | 1 | Luohan Brewery Eco-Park | 0.162 mg/L | 5 mg/L | 0.0417 t/a | 2.5 t/a | No |
| Luzhou Laojiao Co., Ltd. | Total nitrogen | Direct discharge | 1 | Luohan Brewery Eco-Park | 5.156 mg/L | 15 mg/L | 1.332 t/a | 7.5 t/a | No |
| Luzhou Laojiao Co., Ltd. | Total phosphorus | Direct discharge | 1 | Luohan Brewery Eco-Park | 0.110 mg/L | 0.5 mg/L | 0.0284 t/a | 0.25 t/a | No |
| Luzhou Laojiao Co., Ltd. | PM | Organized discharge | 2 | Luohan Brewery Eco-Park | 4.336 mg/m3 | 20 mg/m3 | 0.3071 t/a | 3.9 t/a | No |
| Luzhou Laojiao Co., Ltd. | Sulfur dioxide | Organized discharge | 2 | Luohan Brewery Eco-Park | 0.117 mg/m3 | 50 mg/m3 | 0.0092 t/a | 11.5 t/a | No |
| Luzhou Laojiao Co., Ltd. | Oxynitride | Organized discharge | 2 | Luohan Brewery Eco-Park | 25.185 mg/m3 | 150 mg/m3 | 2.0337 t/a | 45.4 t/a | No |
| Luzhou Laojiao Co., Ltd. | COD | Indirect discharge | 1 | Huangyi Brewery Eco-Park | 25.905 mg/L | 400 mg/L | 7.7711 t/a | 400 t/a | No |
| Luzhou Laojiao Co., Ltd. | Ammonia nitrogen | Indirect discharge | 1 | Huangyi Brewery Eco-Park | 0.156 mg/L | 30 mg/L | 0.0421 t/a | 30 t/a | No |
| Luzhou Laojiao Co., Ltd. | Total nitrogen | Indirect discharge | 1 | Huangyi Brewery Eco-Park | 11.028 mg/L | 50 mg/L | 3.3289 t/a | 50 t/a | No |
| Luzhou Laojiao Co., Ltd. | Total phosphorus | Indirect discharge | 1 | Huangyi Brewery Eco-Park | 0.576 mg/L | 3 mg/L | 0.1719 t/a | 3 t/a | No |
| Luzhou Laojiao Brewing Co., Ltd. | PM | Organized discharge | 2 | Energy Center of Sichuan Luzhou Baijiu Industrial Park | 0.854 mg/m3 | 5 mg/m3 | 0.3052 t/a | 5.64t/a | No |
| Luzhou Laojiao Brewing Co., Ltd. | PM | Organized discharge | 1 | Energy Center of Sichuan Luzhou Baijiu Industrial Park | 0.952 mg/m3 | 20 mg/m3 | 0.0127 t/a | 3t/a | No |
| Luzhou Laojiao Brewing Co., Ltd. | Sulfur dioxide | Organized discharge | 2 | Energy Center of Sichuan Luzhou Baijiu Industrial Park | 0.644 mg/m3 | 35 mg/m3 | 0.2125 t/a | 16.68 t/a | No |
| Luzhou Laojiao Brewing | Sulfur dioxide | Organized discharge | 1 | Energy Center of Sichuan | 0.384 mg/m3 | 50 mg/m3 | 0.0054 t/a | 2.2 t/a | No |
| Co., Ltd. | Luzhou Baijiu Industrial Park | ||||||||
| Luzhou Laojiao Brewing Co., Ltd. | Oxynitride | Organized discharge | 2 | Energy Center of Sichuan Luzhou Baijiu Industrial Park | 37.592 mg/m3 | 100 mg/m3 | 13.3981 t/a | 113.4 t/a | No |
| Luzhou Laojiao Brewing Co., Ltd. | Oxynitride | Organized discharge | 1 | Energy Center of Sichuan Luzhou Baijiu Industrial Park | 45.478 mg/m3 | 150 mg/m3 | 0.6055 t/a | 22.68 t/a | No |
Information about construction and operation of anti-pollution installationsA. Waste water: Areas of the Company that produce wastewater are National Cellar Base, XiaoshiBase, Zaojiaoxiang Base, Anning Park, Luohan Brewery Eco-Park, and Huangyi Brewery Eco-Park. InNational Cellar Base, Xiaoshi Base, Zaojiaoxiang Base, and Anning Park, the high-concentrationbrewing wastewater is temporarily collected in pools (or tanks), and is later transferred to thewastewater treatment station of Huangyi Brewery Eco-Park by truck for treatment. The wastewatertreatment stations of Luohan Brewery Eco-Park and Huangyi Brewery Eco-Park are equipped withonline monitors to automatically monitor COD, ammonia nitrogen, total phosphorus, total nitrogen, pHvalue and flows, and transmit the monitoring data to the supervision platform of the higher authority.The Company's facilities for prevention and control of wastewater pollution are under normal operations,ensuring up-to-standard discharge through general discharging outlets.
B. Waste gas: Areas of the Company that produce exhaust gas are National Cellar Base, Xiaoshi Base,Zaojiaoxiang Base, Luohan Brewery Eco-Park, and Huangyi Brewery Eco-Park. In National Cellar Base,natural gas boilers are used, while in Xiaoshi Base and Zaojiaoxiang Base, direct-fired bottom boilersare used. The boilers of Luohan Brewery Eco-Park (20t/h, 30t/h) and the boilers of Huangyi BreweryEco-Park (20t/h, 75t/h, 75t/h) are equipped with online monitors to automatically monitor exhaust gas,and transmit the monitoring data to the supervision platform of the higher authority. Low NOxcombustion technology is adopted for the natural gas boilers. The Company's facilities for preventionand control of exhaust gas pollution are under normal operations, ensuring up-to-standard emission ofexhaust gas through outlets.
Environmental impact assessment for construction project and other environmental protectionadministrative permissionThe Company’s new reconstruction and expansion projects are carried out in accordance with theapplicable laws and regulations. The environmental assessment and approval procedures shall becompleted before commencement of the projects. After the projects are completed, the environmentalprotection inspection and acceptance shall be carried out in accordance with the requirements of theenvironmental assessment. Construction projects to be started in 2022 will go through the approvalprocedures in accordance with the relevant requirements.
Emergency plan for environmental emergencies
The Company developed the Contingency Plan for Environmental Emergencies (Revision 2020), theEnvironmental Risk Assessment Report and the Emergency Resources Survey Report, and reported tothe Environmental Emergency Service Center of Luzhou for filing. Institutions of the Companyorganized training programs on the contingency plan for employees, and carried out drills ofcontingency plans, which improved employees' capability to respond to environmental emergencies.
Environmental self-monitoring programThe Company developed the environmental self-monitoring plan and entrusted third-party agencies toconduct environmental self-monitoring. Self-monitoring information is released on "Environmental CreditChina" and the "Platform of Sichuan Province for Management and Sharing of Information aboutPollution Source Monitoring" to facilitate social supervision.
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
Measures taken to reduce carbon emissions during the reporting period and the results? Applicable ? N/ADuring the reporting period, the Company reduced its carbon dioxide emissions by more than 1,400tons through innovative electricity consumption models, electricity alternative trading programs, andutilization of renewable energy such as hydropower.
Other information about environment protectionN/A
2. Social responsibility
The Company effectively enhanced its political and social responsibilities and thoroughlyimplemented the arrangements and deployments by the Party committees at all levels for ruralrevitalization. In the first half of 2022, the Company carried out the 2022 Chinese New Yearconsolation activities in Xiangtian Village, Longshan Town, Gulin County and Guntang Village, MaiwaTown, Hongyuan County to distribute consolation money and gifts to 652 households, includinghouseholds that have been lifted out of poverty, difficult households, and ordinary farmers. Also, theCompany helped Guntang Village carry out the 2022 village cultural festival activities, Party building,and household electrical wiring renovation. The Company continued to implement "purchase insteadof donation" and bought designated supported agricultural products from Hongyuan County and GulinCounty. The case study of rural revitalization, "Shouldering the Mission of Youth and Contributing to
Rural Revitalization", was published and publicized in the Sichuan Party Building magazine and"Xuexi Qiangguo". While consolidating and expanding the achievements of poverty eradication andeffectively incorporating rural revitalization, the Company was awarded the 2021 "Advanced Group ofDesignated Support" in Sichuan Province by the Rural Work Leading Group of the Sichuan ProvincialCommittee of the Communist Party of China.
Section VI Significant Events
1. Undertakings of the Company's actual controller, shareholders,related parties and acquirer, as well as the Company and othercommitment makers fulfilled in the reporting period or ongoing by theend of this reporting period? Applicable ? N/ANo such cases in the reporting period.
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. Engagement and disengagement of CPAs firm
Are the interim financial statements audited?
□ Yes ? No
The interim financial statements are not audited.
5. Explanation of the board of directors and the supervisory committeeregarding the "Non-standard audit opinion" for the reporting period? Applicable ? N/A
6. Explanations of the board of directors regarding the "Non-standardaudit opinion" of Last Year? Applicable ? N/A
7. Bankruptcy and reorganization
? Applicable ? N/ANo such cases in the reporting period.
8. Litigation
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 | 15,000 | No | The second trial has been concluded, and the case | ICBC Nanyang Zhongzhou Branch, ICBC Nanyang Branch, and Sanya Rural Commercial | The banks have paid part of the compensations. As there was a dispute over the | 10 January 2015 | See Section VI “Other significant events” |
| 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. | is now at the stage of enforcement. | 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. | 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. |
Other litigation? 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 |
| Other litigations that do not meet the standard of a material litigation which is required to be disclosed | 1,076.88 | No | Pending | No significant impact | Pending |
9. Punishments and rectifications
? Applicable ? N/A
10. Credit conditions of the Company as well as its controllingshareholder and actual controller? Applicable ? N/A
11. Significant related party transactions
11.1. Related party transactions arising from routine operation
? Applicable ? N/ANo such cases in the reporting period.
11.2. Related party transactions regarding purchase or sales of assets or equityinterests? Applicable ? N/ANo such cases in the reporting period.
11.3. Related party transitions arising from joint investments in external parties? Applicable ? N/ANo such cases in the reporting period.
11.4. Credits and liabilities with related parties
? Applicable ? N/ANo such cases in the reporting period.
11.5. 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.
11.6. 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.
11.7. Other significant related party transactions
? Applicable ? N/ANo such cases in the reporting period.
12. Significant contracts and their execution
12.1. Trusteeship, contracting and leasing
12.1.1. Trusteeship
? Applicable ? N/ANo such cases in the reporting period.
12.1.2. Contracting
? Applicable ? N/ANo such cases in the reporting period.
12.1.3. Leasing
? Applicable ? N/ANo such cases in the reporting period.
12.2. Major guarantees
? Applicable ? N/ANo such cases in the reporting period.
12.3. Entrust assets management
? Applicable ? N/A
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 bank | Own funds | 80,000 | 80,000 | 0 | 0 |
| Wealth management product of trust company | Own funds | 30,000 | 30,000 | 0 | 0 |
| Others | Own funds | 20,000 | 20,000 | 0 | 0 |
| Total | 130,000 | 130,000 | 0 | 0 | |
Particulars of high risk wealth management products with a significant single amount, low security,poor liquidity or no principal protection? Applicable ? N/A
Expected inability to recover the principal of entrusted assets management or other circumstancesthat may result in impairment? Applicable ? N/A
12.4. Other significant contracts
? Applicable ? N/ANo such cases in the reporting period.
13. 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 the date of this Report, the Company had recovered a total amount of CNY
370.9505 million for the three disputes.
See details in the Company’s announcements:
| Date of announcement | No. | Catalogue | Official website |
15 October 2014
| 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 |
VII6 June 2018
| 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
| 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
| 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
| 15 December 2021 | 2021-57 | Announcement of significant litigation progress part XV |
| 30 December 2021 | 2021-64 | Announcement of significant litigation progress part XVI |
14. 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. The program has been approved at the First ExtraordinaryGeneral Meeting of 2022 on 16 August 2022. For further information, see Announcement No. 2022-24 on the Implementation of Luzhou Laojiao’s Technical Upgrade Program of Intelligent Brewing(Phase I) by Subsidiary.
Section VII Changes in Shares and Information about
Shareholders
1. Changes in shares
1.1 Changes in shares
Unit：Share
| Before | Changes in this period (＋，－) | After | |||||||
| Number | Proportion | Issuance of new shares | Bonus shares | Capitalization of capital reserves | Other | Subtotal | Number | Proportion | |
| I. Restricted shares | 247,921 | 0.02% | 6,862,600 | 6,862,600 | 7,110,521 | 0.48% | |||
| 1. Shares held by the state | |||||||||
| 2. Shares held by state-owned corporations | |||||||||
| 3. Shares held by other domestic investors | 247,921 | 0.02% | 6,862,600 | 6,862,600 | 7,110,521 | 0.48% | |||
| Of which: shares held by domestic corporations | |||||||||
| Shares held by domestic individuals | 247,921 | 0.02% | 6,862,600 | 6,862,600 | 7,110,521 | 0.48% | |||
| 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 | 99.98% | 1,464,504,555 | 99.52% | |||||
| 1.CNY common shares | 1,464,504,555 | 99.98% | 1,464,504,555 | 99.52% | |||||
| 2. Domestically listed foreign shares | |||||||||
| 3. Overseas listed foreign shares | |||||||||
| 4. Other | |||||||||
| III. Total shares | 1,464,752,476 | 100.00% | 6,862,600 | 6,862,600 | 1,471,615,076 | 100.00% | |||
Reasons for the change in shares? Applicable ? N/AOn 22 February 2022, as the shares granted under the restricted share incentive plan were listed, thetotal shares of the Company increased from 1,464,752,476 shares to 1,471,615,076 shares.
Approval of share changes? Applicable ? N/AOn 26 September 2021, the Proposal on the 2021 Restricted Share Incentive Plan (Draft) andSummary of Luzhou Laojiao Co., Ltd., the Proposal on the Performance Appraisal Methods for the2021 Restricted Share Incentive Plan of Luzhou Laojiao Co., Ltd., and the Proposal on theManagement Methods for the 2021 Restricted Share Incentive Plan of Luzhou Laojiao Co., Ltd. wereapproved at the Seventh Meeting of the 10
th
Board of Directors. On 2 December 2021, the Companyreceived the Reply of State-owned Assets Supervision and Administration Commission of Luzhou onthe Second Equity Incentive Plan of Luzhou Laojiao Co., Ltd. (LGZKP [2021] No. 62). As such, theCompany was agreed, in principle, to implement the restricted share incentive plan. On 29 December2021, the aforesaid proposals were approved at the First Extraordinary General Meeting ofShareholders of 2021. On the same day, the Proposal on the Grant of Restricted Shares to Awardeeswas approved at the 12
th Meeting of the 10
th
Board of Directors.
Transfer of share ownership? Applicable ? N/A
Implementation progress of shares repurchases
□ Applicable ? N/A
Implementation progress of share buyback reduction through centralized bidding
□ 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 the beginning of the reporting period | Decrease in restricted shares during the reporting period | Increase in restricted shares during the reporting period | Number of restricted shares held at the end of the reporting period | Reason for restriction | Date of unlocking |
| Liu Miao | 144,140 | 0 | 95,900 | 240,040 | Locked-up shares of senior | For locked-up shares of senior management, 25% of |
| management, and shares granted under restricted share incentive plan | such shares are unlocked and become transferable on a yearly basis as legally allowed. For restricted shares, see Announcement No. 2022-1 on the Completion of the Grant of Restricted Shares for the unlocking dates. | |||||
| Lin Feng | 0 | 0 | 95,900 | 95,900 | Shares granted under restricted share incentive plan | For restricted shares, see Announcement No. 2022-1 on the Completion of the Grant of Restricted Shares for the unlocking dates. |
| Wang Hongbo | 0 | 0 | 76,700 | 76,700 | Shares granted under restricted share incentive plan | For restricted shares, see Announcement No. 2022-1 on the Completion of the Grant of Restricted Shares for the unlocking dates. |
| Shen Caihong | 103,781 | 0 | 76,700 | 180,481 | Locked-up shares of senior management, and shares granted under restricted share incentive plan | For locked-up shares of senior management, 25% of such shares are unlocked and become transferable on a yearly basis as legally allowed. For restricted shares, see Announcement No. 2022-1 on the Completion of the Grant of Restricted Shares for the unlocking dates. |
| Xie Hong | 0 | 0 | 76,700 | 76,700 | Shares granted under restricted share incentive plan | For restricted shares, see Announcement No. 2022-1 on the Completion of the Grant of Restricted Shares for the unlocking dates. |
| He Cheng | 0 | 0 | 76,700 | 76,700 | Shares granted under restricted share incentive plan | For restricted shares, see Announcement No. 2022-1 on the Completion of the Grant of Restricted Shares for the unlocking dates. |
| Zhang Suyi | 0 | 0 | 76,700 | 76,700 | Shares granted under restricted | For restricted shares, see Announcement No. 2022-1 on the |
| share incentive plan | Completion of the Grant of Restricted Shares for the unlocking dates. | |||||
| Xiong Pingting | 0 | 0 | 62,800 | 62,800 | Shares granted under restricted share incentive plan | For restricted shares, see Announcement No. 2022-1 on the Completion of the Grant of Restricted Shares for the unlocking dates. |
| Li Yong | 0 | 0 | 62,800 | 62,800 | Shares granted under restricted share incentive plan | For restricted shares, see Announcement No. 2022-1 on the Completion of the Grant of Restricted Shares for the unlocking dates. |
| Total of the other restricted share awardees | 0 | 0 | 6,161,700 | 6,161,700 | Shares granted under restricted share incentive plan | For restricted shares, see Announcement No. 2022-1 on the Completion of the Grant of Restricted Shares for the unlocking dates. |
| Total | 247,921 | 0 | 6,862,600 | 7,110,521 | -- | -- |
2. Issuance and listing of securities
? 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 | ||||||||
| Restricted shares | CNY 92.71 | 6,862,600 | 22 February 2022 | 6,862,600 | Announcement No. 2022-1 on the Completion of the Grant of Restricted Shares | 21 February 2022 | ||
| Convertible corporate bonds, convertible corporate bonds with warrants, or corporate debt | ||||||||
| Other derivative securities | ||||||||
Notes to the offering of securities during the reporting periodSee “4. Implementation of any equity incentive plan, employee stock ownership plan or otherincentive measures for employees” in “Section IV Corporate Governance”.
3. Total number of shareholders and their shareholdings
Unit：Share
| Total number of common shareholders at the end of the reporting period | 112,980 | Total number of preferred shareholders with resumed voting rights by the end of the reporting period (if any)(see Note 8) | 0 | |||||
| Shareholdings of common shareholders with a shareholding percentage over 5% or the top 10 common shareholders | ||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Total common shares held by the end of the reporting period | Increase/decrease during the reporting period | Number of holding restricted common shares | Number of holding non-restricted common shares | Pledged, marked or frozen shares | |
| Status of shares | Number of shares | |||||||
| Luzhou Laojiao Group Co., Ltd. | State-owned corporation | 25.90% | 381,088,389 | 0 | 0 | 381,088,389 | ||
| Luzhou XingLu Investment Group Co., Ltd. | State-owned corporation | 24.87% | 365,971,142 | 0 | 0 | 365,971,142 | ||
| Bank of China Co., Ltd. – Baijiu index classification securities investment fund by China Merchants Fund | Other | 2.99% | 43,958,452 | -3,136,882 | 0 | 43,958,452 | ||
| Hong Kong Securities Clearing Company Limited | Outbound corporation | 2.90% | 42,667,574 | 7,227,486 | 0 | 42,667,574 | ||
| China Securities Finance Corporation Limited | Other | 2.30% | 33,842,059 | 0 | 0 | 33,842,059 | ||
| Bank of China Co., Ltd.－Blue chip selected hybrid securities investment fund by E Fund | Other | 1.71% | 25,180,000 | -820,000 | 0 | 25,180,000 | ||
| Industrial and Commercial Bank of China Co., Ltd.-Newly growth hybrid securities investment fund by Invesco Great Wall | Other | 1.25% | 18,352,276 | -847,724 | 0 | 18,352,276 | ||
| Central Huijin Asset Management Co., Ltd. | State-owned corporation | 0.92% | 13,539,862 | 0 | 0 | 13,539,862 | ||
| Agricultural Bank of China Co., Ltd. - Consumption industry | Other | 0.72% | 10,573,293 | 0 | 0 | 10,573,293 | ||
| stock - based securities investment fund by E Fund | |||||||||
| Bank of China Co., Ltd.－High quality selected hybrid securities investment fund by E Fund | Other | 0.54% | 7,970,000 | — | 0 | 7,970,000 | |||
| Strategic investors or general corporations become the top-ten common shareholders due to placing of new shares (if any) (see note 3) | N/A | ||||||||
| Related parties or acting-in-concert | 1. Luzhou Laojiao Group Co., Ltd. and Luzhou XingLu Investment Group Co., Ltd. are both holding state-owned companies under the jurisdiction of SASAC of Luzhou. The two companies signed the agreement of persons acting in concert on 31 December 2015. For details, please refer to the announcement of the Company on 5 January 2016 - Announcement on the agreement of persons acting in concert signed by shareholders. The announcement number is 2016-1 (http://www.cninfo.com.cn/). The two companies signed the renewed agreement of persons acting in concert on 27 May 2021. For details, please refer to the announcement of the Company on 29 May 2021 - Announcement on the renewed agreement of persons acting in concert signed by shareholders. The announcement number is 2021-18 (http://www.cninfo.com.cn/). 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 11) | N/A | ||||||||
| Shareholdings of the top 10 non-restricted common shareholders | |||||||||
| Name of shareholder | Number of non-restricted common shares held 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 | ||||||
| Bank of China Co., Ltd. – Baijiu index classification securities investment fund by China Merchants Fund | 43,958,452 | CNY common shares | 43,958,452 | ||||||
| Hong Kong Securities Clearing Company Limited | 42,667,574 | CNY common shares | 42,667,574 | ||||||
| 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 | 25,180,000 | CNY common shares | 25,180,000 | ||||||
| Industrial and Commercial Bank of China Co., Ltd.-Newly growth hybrid securities investment fund by Invesco Great Wall | 18,352,276 | CNY common shares | 18,352,276 | ||||||
| Central Huijin Asset Management Co., Ltd. | 13,539,862 | CNY common shares | 13,539,862 | ||||||
| Agricultural Bank of China Co., Ltd. - Consumption industry stock - based securities investment fund by E Fund | 10,573,293 | CNY common shares | 10,573,293 | ||||||
| Bank of China Co., Ltd.－High quality selected hybrid securities investment fund by E Fund | 7,970,000 | CNY common shares | 7,970,000 | ||||||
| The statement of association or acting-in-concert between | See above in this table | ||||||||
| the top 10 shareholders of unrestricted common shares and between the top 10 shareholders of common unrestricted shares and top 10 common shareholders | |
| Top 10 common shareholders participating in securities margin trading (if any) (see note 4) | 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 ? NoThe top 10 non-restricted common shareholders, the top10 common shareholders did not conductany promissory repurchase during the reporting period.
4. Changes in shares held by directors, supervisors, and seniormanagement? Applicable □ N/A
| Name | Office title | Incumbent/former | Opening shareholding (share) | Increase in shareholding in the current period (share) | Decrease in shareholding in the current period (share) | Closing shareholding (share) | Opening restricted shares held (share) | Restricted shares granted in the current period (share) | Closing restricted shares held (share) |
| Liu Miao | Chairman of the board | Incumbent | 192,187 | 95,900 | 0 | 288,087 | 95,900 | 0 | 95,900 |
| Lin Feng | Director, General manager | Incumbent | 0 | 95,900 | 0 | 95,900 | 95,900 | 0 | 95,900 |
| Wang Hongbo | Director, Deputy general manager, Secretary of the board | Incumbent | 0 | 76,700 | 0 | 76,700 | 76,700 | 0 | 76,700 |
| Shen Caihong | Deputy general manager | Incumbent | 138,375 | 76,700 | 0 | 215,075 | 76,700 | 0 | 76,700 |
| Xie Hong | CFO | Incumbent | 0 | 76,700 | 0 | 76,700 | 76,700 | 0 | 76,700 |
| He Cheng | Deputy general manager | Incumbent | 0 | 76,700 | 0 | 76,700 | 76,700 | 0 | 76,700 |
| Zhang Suyi | Deputy general manager | Incumbent | 0 | 76,700 | 0 | 76,700 | 76,700 | 0 | 76,700 |
| Xiong Pingting | Director, Deputy general manager | Incumbent | 0 | 62,800 | 0 | 62,800 | 62,800 | 0 | 62,800 |
| Li Yong | Deputy general manager | Incumbent | 0 | 62,800 | 0 | 62,800 | 62,800 | 0 | 62,800 |
| Total | -- | -- | 330,562 | 700,900 | 0 | 1,031,462 | 700,900 | 0 | 700,900 |
5. Change of controlling shareholder or actual controllerChange of the controlling shareholder during the reporting period? Applicable ? N/ANo such cases in the reporting period.
Change of the actual controller during the reporting period? Applicable ? N/AThe actual controller of the Company has not changed during the reporting period.
Section VIII Preferred Shares? Applicable ? N/ANo 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
| Name | Abbr. | Code | Issue date | Value date | Due date | Bond balance | Interest rate | Way of redemption | Place of trading |
| 2019 Public Offering of Corporate Bond of Luzhou Laojiao Co., Ltd. for Qualified Investors (Phase I) | 19 Lao Jiao 01 | 112959.SZ | 27 August 2019 | 28 August 2019 | 28 August 2024 | 2,500,000,000.00 | 3.58% | 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. | Shenzhen Stock Exchange |
| 2020 Public Offering of Corporate Bond of Luzhou Laojiao Co., Ltd. for Qualified Investors (Phase I) | 20 Lao Jiao 01 | 149062.SZ | 17 March 2020 | 17 March 2020 | 17 March 2025 | 1,500,000,000.00 | 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 principal. | 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/AThe term of “19 Lao Jiao 01” is five years with the issuer’s option for adjustment to the stated interestrate and the investor’s option for sell back at the end of the 3
rdyear. The said clause was not triggeredin the reporting period.
2.3. Changes in credit ratings in the reporting period
? Applicable ? N/A
2.4. Execution and changes with respect to guarantees, repayment plans andother repayment-ensuring measures in the reporting period, as well as the impacton the interests of bond holders? Applicable ? N/AIn order to fully and effectively safeguard the interests of bondholders, the issuer has formulated aseries of work plans for the timely and full redemption of "19 Lao Jiao 01" and "20 Lao Jiao 01",including assigning special departments and personnel to participate in the management, arrangingdebt repayment funds, formulating management measures, hiring supervising banks and signingtripartite supervision agreements with supervising banks and bond trustees, strengthening informationdisclosure, and developed a set of safeguard measures to ensure the safe redemption of the bonds.During the reporting period, the above status remained unchanged.
3. Debt instruments as a non-financial enterprise? Applicable ? N/ANo such cases in the reporting period.
4. Convertible corporate bonds
? Applicable ? N/ANo such cases in the reporting period.
5. Consolidated loss of the reporting period over 10% of net assets asat the end of last year? Applicable ? N/A
6. 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 | 30 June 2022 | 31 December 2021 | Change |
| Current ratio | 2.42 | 2.43 | -0.41% |
| Debt/asset ratio | 35.57% | 34.89% | 0.68% |
| Quick ratio | 1.68 | 1.74 | -3.45% |
| H1 2022 | H1 2021 | Change | |
| Net profits before non-recurring gains and losses | 549,626.58 | 420,865.01 | 30.59% |
| EBITDA/debt ratio | 190.37% | 145.46% | 44.91% |
| Interest cover (times) | 62.60 | 57.98 | 7.97% |
| EBITDA-to-interest cover (times) | 65.13 | 60.65 | 7.39% |
Section X Financial Report
1. Auditor’s report
Are these interim financial statements audited by an independent auditor?
□Yes ? No
The interim financial statements are not audited by an independent auditor.
2. Financial statements
Monetary unit for the financial statements and the notes thereto: CNY
Prepared by: Luzhou Laojiao Co., Ltd.
Consolidated balance sheet
As at 30 June 2022
Monetary Unit: CNY
| Item | Balance as at 30 June 2022 | Balance as at 1 January 2022 |
| Current assets: | ||
| Cash and cash equivalents | 17,046,109,916.36 | 13,513,494,580.56 |
| Settlement reserves | ||
| Lending funds | ||
| Held-for-trading financial assets | 1,302,911,871.28 | 706,352,241.79 |
| Derivative financial assets | ||
| Notes receivables | ||
| Accounts receivables | 1,403,341.54 | 1,628,248.55 |
| Accounts receivables financing | 1,671,605,965.76 | 4,757,631,778.64 |
| Prepayment | 146,929,974.32 | 178,087,688.81 |
| Premiums receivable | ||
| Reinsurance accounts receivable | ||
| Reinsurance contract reserve | ||
| Other receivables | 71,286,211.55 | 28,615,361.96 |
| Including：Interests receivable | ||
| Dividends receivable | 35,361,832.34 | |
| Buying back the sale of financial assets | ||
| Inventories | 8,713,280,634.28 | 7,277,573,166.80 |
| Contract assets | ||
| Assets held for sale | ||
| Non-current assets due within one year | ||
| Other current assets | 42,689,792.53 | 111,974,532.91 |
| Total current assets | 28,996,217,707.62 | 26,575,357,600.02 |
| Non-current assets: | ||
| Disbursement of loans and advances | ||
| Investments in debt obligations | ||
| Investments in other debt obligations | ||
| Long-term receivables |
| Long-term equity investments | 2,657,050,723.78 | 2,626,744,236.25 |
| Investments in other equity instruments | 338,068,275.65 | 363,312,120.43 |
| Other non-current financial assets | ||
| Investment property | ||
| Fixed assets | 8,557,024,850.52 | 8,089,487,274.39 |
| Construction in progress | 724,127,630.54 | 1,259,845,487.50 |
| Productive biological assets | ||
| Oil and gas assets | ||
| Use right assets | 48,376,749.33 | 52,714,810.04 |
| Intangible assets | 2,545,348,298.90 | 2,606,359,188.72 |
| Development expenses | ||
| Goodwill | ||
| Long-term deferred expenses | 1,042,852.71 | 1,463,869.21 |
| Deferred tax assets | 552,382,268.40 | 986,112,983.42 |
| Other non-current assets | 786,600,535.68 | 650,384,435.70 |
| Total non-current assets | 16,210,022,185.51 | 16,636,424,405.66 |
| Total assets | 45,206,239,893.13 | 43,211,782,005.68 |
| Current liabilities: | ||
| Short-term loans | ||
| Borrowings from the central bank | ||
| Loans from other banks | ||
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | ||
| Accounts payable | 1,728,943,332.96 | 2,420,354,469.53 |
| Advance from customer | ||
| Contract liabilities | 2,329,543,604.94 | 3,510,110,701.25 |
| Financial assets sold for repurchase | ||
| Deposits from customers and inter-bank | ||
| Customer brokerage deposits | ||
| Securities underwriting brokerage deposits | ||
| Employee benefits payable | 474,542,544.93 | 648,103,740.96 |
| Taxes payable | 1,053,665,059.39 | 3,173,479,627.79 |
| Other payable | 5,970,193,535.41 | 652,393,292.60 |
| Including：Interests payable | ||
| Dividends payable | 4,773,919,306.54 | |
| Handling charges and commissions payable | ||
| Reinsurance accounts payable | ||
| Liabilities held for sale | ||
| Non-current liabilities due within one year | 103,015,445.84 | 86,202,215.03 |
| Other current liabilities | 302,840,668.64 | 456,314,391.17 |
| Total current liabilities | 11,962,744,192.11 | 10,946,958,438.33 |
| Non-current liabilities: | ||
| Insurance contract reserves | ||
| Long-term loans | ||
| Bonds payable | 3,992,391,967.40 | 3,990,785,742.23 |
| Including：Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | 39,336,140.81 | 40,667,668.08 |
| Long-term payables | ||
| Long-term payroll payables | ||
| Accrued liabilities | ||
| Deferred income | 25,455,871.42 | 28,531,014.28 |
| Deferred tax liabilities | 60,413,216.08 | 67,578,019.93 |
| Other non-current liabilities | ||
| Total non-current liabilities | 4,117,597,195.71 | 4,127,562,444.52 |
| Total liabilities | 16,080,341,387.82 | 15,074,520,882.85 |
| Owners' equity | ||
| Share capital | 1,471,615,076.00 | 1,464,752,476.00 |
| Other equity instruments | ||
| Including: preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 4,573,224,059.40 | 3,755,354,665.73 |
| Less: treasury stock | 613,969,371.60 | |
| Other comprehensive income | 141,119,108.43 | 167,527,152.32 |
| Special reserves | ||
| Surplus reserves | 1,464,752,476.00 | 1,464,752,476.00 |
| General risk reserve | ||
| Undistributed profits | 21,945,882,896.63 | 21,187,860,235.89 |
| Total equity attributable to owners of the parent company | 28,982,624,244.86 | 28,040,247,005.94 |
| Non-controlling interests | 143,274,260.45 | 97,014,116.89 |
| Total owners' equity | 29,125,898,505.31 | 28,137,261,122.83 |
| Total liabilities and owners' equity | 45,206,239,893.13 | 43,211,782,005.68 |
Legal representative：Liu MiaoPerson in charge of accounting affairs：Xie HongPerson in charge of accounting department：Yan Li
Balance sheet of parent company
As at 30 June 2022
Monetary Unit: CNY
| Item | Balance as at 30 June 2022 | Balance as at 1 January 2022 |
| Current assets: | ||
| Cash and cash equivalents | 16,303,260,723.80 | 13,038,549,397.55 |
| Held-for-trading financial assets | 1,302,911,871.28 | 706,352,241.79 |
| Derivative financial assets | ||
| Notes receivables | ||
| Accounts receivables | 2,470,496.71 | 1,207,477.63 |
| Accounts receivables financing | ||
| Prepayment | 1,867,047.31 | 1,464,893.09 |
| Other receivables | 12,991,445,147.03 | 10,033,554,898.57 |
| Including：Interests receivable | ||
| Dividends receivable | 35,361,832.34 | |
| Inventories | 682,920,870.61 | 3,918,211.13 |
| Contract assets | ||
| Assets held for sale | ||
| Non-current assets due within one year | ||
| Other current assets | ||
| Total current assets | 31,284,876,156.74 | 23,785,047,119.76 |
| Non-current assets: | ||
| Investments in debt obligations | ||
| Investments in other debt obligations | ||
| Long-term receivables | ||
| Long-term equity investments | 6,163,259,504.13 | 6,051,400,833.91 |
| Investments in other equity instruments | 337,764,354.02 | 362,983,198.80 |
| Other non-current financial assets | ||
| Investment property | ||
| Fixed assets | 1,066,168,645.05 | 1,087,640,695.62 |
| Construction in progress | 69,364,075.45 | 53,881,812.48 |
| Productive biological assets | ||
| Oil and gas assets | ||
| Use right assets | 304,605.68 | 573,800.02 |
| Intangible assets | 630,886,123.45 | 671,147,243.40 |
| Development expenses | ||
| Goodwill | ||
| Long-term deferred expenses | 956,583.53 | 1,364,659.65 |
| Deferred tax assets | 110,210,683.40 | 91,734,925.57 |
| Other non-current assets | 500,600.00 | |
| Total non-current assets | 8,378,914,574.71 | 8,321,227,769.45 |
| Total assets | 39,663,790,731.45 | 32,106,274,889.21 |
| Current liabilities: | ||
| Short-term loans | ||
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | ||
| Accounts payable | 732,367,925.11 | 83,724,151.54 |
| Advance from customer | ||
| Contract liabilities | 2,878,108.46 | 2,523,947.74 |
| Employee benefits payable | 200,547,774.31 | 234,008,858.96 |
| Taxes payable | 73,236,181.07 | 285,894,625.64 |
| Other payables | 13,011,301,344.75 | 1,659,106,919.10 |
| Including：Interests payable | ||
| Dividends payable | 4,773,919,306.54 | |
| Liabilities held for sale | ||
| Non-current liabilities due within one year | 90,470,476.43 | 72,625,138.08 |
| Other current liabilities | 374,154.10 | 328,113.21 |
| Total current liabilities | 14,111,175,964.23 | 2,338,211,754.27 |
| Non-current liabilities: | ||
| Long-term loans | ||
| Bonds payable | 3,992,391,967.40 | 3,990,785,742.23 |
| Including：Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | 5,593.91 | 163,523.64 |
| Long-term payables | ||
| Long-term payroll payables | ||
| Accrued liabilities | ||
| Deferred income | ||
| Deferred tax liabilities | 60,413,216.08 | 67,578,019.93 |
| Other non-current liabilities | ||
| Total non-current liabilities | 4,052,810,777.39 | 4,058,527,285.80 |
| Total liabilities | 18,163,986,741.62 | 6,396,739,040.07 |
| Owners' equity | ||
| Share capital | 1,471,615,076.00 | 1,464,752,476.00 |
| Other equity instruments | ||
| Including: preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 4,559,618,625.79 | 3,739,666,108.27 |
| Less: treasury stock | 613,969,371.60 | |
| Other comprehensive income | 139,591,347.02 | 167,572,013.86 |
| Special reserves | ||
| Surplus reserves | 1,464,752,476.00 | 1,464,752,476.00 |
| Undistributed profits | 14,478,195,836.62 | 18,872,792,775.01 |
| Total owners' equity | 21,499,803,989.83 | 25,709,535,849.14 |
| Total liabilities and owners' equity | 39,663,790,731.45 | 32,106,274,889.21 |
Consolidated income statement
Monetary Unit: CNY
| Item | H1 2022 | H1 2021 |
| 1. Total operating revenue | 11,664,377,552.94 | 9,317,097,027.05 |
| Including: Operating revenue | 11,664,377,552.94 | 9,317,097,027.05 |
| Interest income | ||
| Earned premium | ||
| Fee and commission income | ||
| 2. Total operating costs | 4,392,197,692.56 | 3,859,318,360.86 |
| Including: Cost of sales | 1,642,310,550.61 | 1,335,154,943.46 |
| 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 | 1,045,859,768.74 | 992,673,552.12 |
| Selling and distribution expenses | 1,213,861,984.66 | 1,183,247,931.92 |
| General and administrative expenses | 542,666,754.49 | 439,561,779.70 |
| Research and Development expenses | 74,487,055.16 | 36,688,121.08 |
| Financial expenses | -126,988,421.10 | -128,007,967.42 |
| Including：Interest expenses | 119,589,682.10 | 75,787,443.01 |
| Interest income | 237,072,806.72 | 206,402,358.25 |
| Plus: Other income | 10,744,728.17 | 9,041,045.01 |
| Investment income ("-" for losses) | 57,499,481.86 | 128,006,644.21 |
| Including: income from investment in associates and joint ventures | 37,796,914.64 | 121,343,983.69 |
| 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) | 5,862,846.29 | |
| Credit impairment losses (“-” for losses) | -584,263.98 | -218,830.33 |
| Impairment losses(“-“ for losses) | ||
| Gains from disposal of assets("-" for losses) | 19,789,402.07 | 180,849.31 |
| 3. Operating profits ("-" for losses) | 7,365,492,054.79 | 5,594,788,374.39 |
| Plus: non-operating income | 11,135,733.33 | 25,711,304.83 |
| Less: non-operating expenses | 1,949,009.51 | 8,283,409.08 |
| 4. Total profits before tax ("-" for total losses) | 7,374,678,778.61 | 5,612,216,270.14 |
| Less: income tax expenses | 1,800,020,542.39 | 1,346,062,434.86 |
| 5. Net profit ("-" for net loss) | 5,574,658,236.22 | 4,266,153,835.28 |
| 5.1 By operating continuity | ||
| 5.1.1 Net profit from continuing operation ("-" for losses) | 5,574,658,236.22 | 4,266,153,835.28 |
| 5.1.2 Net profit from discontinued operation ("-" for losses) | ||
| 5.2 By ownership | ||
| 1) Attributable to owners of the parent company | 5,531,926,340.44 | 4,226,316,722.25 |
| 2) Attributable to non-controlling interests | 42,731,895.78 | 39,837,113.03 |
| 6. Net of tax from other comprehensive income | -25,120,502.64 | 9,246,453.08 |
| Net of tax from other comprehensive income to the owner of the parent company | -26,408,043.89 | 10,138,274.15 |
| 6.1 Other comprehensive income cannot reclassified into the profit and loss: | -18,914,133.57 | 7,593,799.86 |
| 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 | ||
| 3) Changes in fair value of investments in other equity instruments | -18,914,133.57 | 7,593,799.86 |
| 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 | -7,493,910.32 | 2,544,474.29 |
| 1) Share in other comprehensive income that will be classified into profit and loss under equity method | -9,066,533.27 | 3,634,687.85 |
| 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 | 1,572,622.95 | -1,090,213.56 |
| 7) Others | ||
| Net of tax from other comprehensive income to non-controlling interests | 1,287,541.25 | -891,821.07 |
| 7. Total comprehensive income | 5,549,537,733.58 | 4,275,400,288.36 |
| Total comprehensive income attributable to owners of the parent company | 5,505,518,296.55 | 4,236,454,996.40 |
| Total comprehensive income attributable to non-controlling interests | 44,019,437.03 | 38,945,291.96 |
| 8. Earnings per share |
| (1) Basic earnings per share | 3.76 | 2.89 |
| (2) Diluted earnings per share | 3.76 | 2.89 |
Legal representative：Liu MiaoPerson in charge of accounting affairs：Xie HongPerson in charge of accounting department：Yan Li
Income statement of parent company
Monetary Unit: CNY
| Item | H1 2022 | H1 2021 |
| 1. Operating revenue | 2,067,048,989.06 | 2,677,491,673.30 |
| Less: Cost of sales | 1,385,687,450.52 | 1,928,926,973.89 |
| Taxes and surcharges | 21,846,321.17 | 21,482,412.01 |
| Selling and distribution expenses | ||
| General and administrative expenses | 471,587,969.18 | 337,596,961.15 |
| Research and Development expenses | 21,774,399.61 | 11,217,192.99 |
| Financial expenses | -213,866,445.14 | -174,298,477.59 |
| Including：Interest expenses | 22,117,787.32 | 30,742,980.11 |
| Interest income | 236,000,565.63 | 205,130,761.41 |
| Plus: Other income | 2,964,466.60 | 4,047,195.83 |
| Investment income ("-" for losses) | 52,812,442.16 | 111,792,244.20 |
| Including: income from investment in associates and joint ventures | 25,579,283.02 | 105,134,583.68 |
| 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) | 5,862,846.29 | |
| Credit impairment losses (“-” for losses) | -103,576.90 | -228,556.69 |
| Asset impairment losses (“-” for losses) | ||
| Gains from disposal of assets("-" for losses) | 19,786,813.38 | 180,849.31 |
| 2. Operating profits ("-" for losses) | 461,342,285.25 | 668,358,343.50 |
| Plus: non-operating income | 5,439,905.79 | 16,653,311.55 |
| Less: non-operating expenses | 1,671,093.97 | 4,338,960.68 |
| 3. Total profits before tax ("-" for total losses) | 465,111,097.07 | 680,672,694.37 |
| Less: income tax expenses | 85,788,728.92 | 140,409,892.00 |
| 4. Net profit ("-" for net loss) | 379,322,368.15 | 540,262,802.37 |
| 4.1 Net profit from continuing operation ("-" for losses) | 379,322,368.15 | 540,262,802.37 |
| 4.2 Net profit from discontinued operation ("-" for losses) | ||
| 5. Net of tax from other comprehensive income | -27,980,666.84 | 11,228,487.71 |
| 5.1 Other comprehensive income cannot reclassified into the profit and loss: | -18,914,133.57 | 7,593,799.86 |
| 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 | ||
| 3) Changes in fair value of investments in other equity instruments | -18,914,133.57 | 7,593,799.86 |
| 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 | -9,066,533.27 | 3,634,687.85 |
| 1) Share in other comprehensive income that will be classified into profit and loss under equity method | -9,066,533.27 | 3,634,687.85 |
| 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 | 351,341,701.31 | 551,491,290.08 |
| 7. Earnings per share | ||
| (1) Basic earnings per share | 0.24 | 0.37 |
| (2) Diluted earnings per share | 0.24 | 0.37 |
Consolidated statement of cash flows
Monetary Unit: CNY
| Item | H1 2022 | H1 2021 |
| 1. Cash flows from operating activities | ||
| Cash received from sale of goods and rendering of services | 15,086,273,014.66 | 10,852,935,107.83 |
| 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 | 89,261,122.49 | 743,477.96 |
| Cash received from other operating activities | 287,930,011.44 | 496,103,267.09 |
| Subtotal of cash inflows from operating activities | 15,463,464,148.59 | 11,349,781,852.88 |
| Cash paid for goods purchased and services received | 3,622,026,296.99 | 2,612,739,333.51 |
| 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 | 699,560,416.16 | 609,928,620.07 |
| Cash paid for taxes and surcharges | 5,713,535,332.59 | 4,320,563,608.28 |
| Cash paid for other operating activities | 1,351,327,137.51 | 1,068,313,251.12 |
| Subtotal of cash outflows from operating activities | 11,386,449,183.25 | 8,611,544,812.98 |
| Net cash flows from operating activities | 4,077,014,965.34 | 2,738,237,039.90 |
| 2. Cash flows from investing activities | ||
| Cash received from disposal of investments | 814,171,770.96 | |
| Cash received from returns on investments | 6,795,921.96 | 1,412,900.00 |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 47,943,500.00 | 275,836.47 |
| Net cash received from disposal of subsidiaries and other business units | ||
| Cash received from other investing activities | ||
| Subtotal of cash inflows from investing activities | 868,911,192.92 | 1,688,736.47 |
| Cash paid to acquire and construct fixed assets, intangible assets and other long-term assets | 587,312,805.01 | 733,873,065.01 |
| Cash paid for investments | 1,440,000,000.00 | |
| Net increase in pledge loans | ||
| Net cash paid to acquire subsidiaries and other business units | ||
| Cash paid for other investing activities | ||
| Subtotal of cash outflows from investing activities | 2,027,312,805.01 | 733,873,065.01 |
| Net cash flows from investing activities | -1,158,401,612.09 | -732,184,328.54 |
| 3. Cash flows from financing activities | ||
| Cash received from investors | 636,231,646.00 | 5,886,464.02 |
| Including: cash received by subsidiaries from investments by minority shareholders | 5,886,464.02 | |
| Cash received from borrowings | ||
| Cash received from other financing |
| activities | ||
| Subtotal of cash inflows from financing activities | 636,231,646.00 | 5,886,464.02 |
| Cash paid for debt repayments | ||
| Cash paid for distribution of dividends and profits or payment of interest | 52,502,625.00 | 52,502,625.00 |
| Including: dividends and profits paid to minority shareholders by subsidiaries | ||
| Cash paid for other financing activities | 4,360,194.01 | 1,844,313.68 |
| Subtotal of cash outflows from financing activities | 56,862,819.01 | 54,346,938.68 |
| Net cash flows from financing activities | 579,368,826.99 | -48,460,474.66 |
| 4. Effect of fluctuation in exchange rate on cash and cash equivalents | 14,324,990.43 | -1,432,790.86 |
| 5. Net increase in cash and cash equivalents | 3,512,307,170.67 | 1,956,159,445.84 |
| Plus: balance of cash and cash equivalents at the beginning of the period | 13,402,528,941.83 | 11,568,195,062.81 |
| 6. Balance of cash and cash equivalents at the end of the period | 16,914,836,112.50 | 13,524,354,508.65 |
Cash flow statements of parent company
Monetary Unit: CNY
| Item | H1 2022 | H1 2021 |
| 1. Cash flows from operating activities | ||
| Cash received from sale of goods and rendering of services | 2,334,856,499.28 | 3,026,181,734.93 |
| Refunds of taxes and surcharges | ||
| Cash received from other operating activities | 3,758,977,124.59 | 2,396,719,536.21 |
| Subtotal of cash inflows from operating activities | 6,093,833,623.87 | 5,422,901,271.14 |
| Cash paid for goods purchased and services received | 1,596,587,859.22 | 2,191,470,150.06 |
| Cash paid to and on behalf of employees | 639,918,889.87 | 562,431,917.32 |
| Cash paid for taxes and surcharges | 451,760,425.43 | 350,499,714.09 |
| Cash paid for other operating activities | 120,449,483.46 | 95,820,090.04 |
| Subtotal of cash outflows from operating activities | 2,808,716,657.98 | 3,200,221,871.51 |
| Net cash flows from operating activities | 3,285,116,965.89 | 2,222,679,399.63 |
| 2. Cash flows from investing activities | ||
| Cash received from disposal of investments | 814,131,144.12 | |
| Cash received from returns on investments | 6,795,921.96 | 1,407,900.00 |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 47,943,500.00 | 275,836.47 |
| Net cash received from disposal of |
| subsidiaries and other business units | ||
| Cash received from other investing activities | ||
| Subtotal of cash inflows from investing activities | 868,870,566.08 | 1,683,736.47 |
| Cash paid to acquire and construct fixed assets, intangible assets and other long-term assets | 53,052,249.25 | 41,220,364.85 |
| Cash paid for investments | 1,440,000,000.00 | |
| Net cash paid to acquire subsidiaries and other business units | ||
| Cash paid for other investing activities | ||
| Subtotal of cash outflows from investing activities | 1,493,052,249.25 | 41,220,364.85 |
| Net cash flows from investing activities | -624,181,683.17 | -39,536,628.38 |
| 3. Cash flows from financing activities | ||
| Cash received from investors | 636,231,646.00 | |
| Cash received from loans | ||
| Cash received from other financing activities | ||
| Subtotal of cash inflows from financing activities | 636,231,646.00 | |
| Cash paid for debt repayments | ||
| Cash paid for distribution of dividends and profits or payment of interest | 52,502,625.00 | 52,502,625.00 |
| Cash paid for other financing activities | 261,142.60 | 149,580.00 |
| Subtotal of cash outflows from financing activities | 52,763,767.60 | 52,652,205.00 |
| Net cash flows from financing activities | 583,467,878.40 | -52,652,205.00 |
| 4. Effect of fluctuation in exchange rate on cash and cash equivalents | ||
| 5. Net increase in cash and cash equivalents | 3,244,403,161.12 | 2,130,490,566.25 |
| Plus: balance of cash and cash equivalents at the beginning of the period | 12,938,983,758.82 | 11,045,051,933.54 |
| 6. Balance of cash and cash equivalents at the end of the period | 16,183,386,919.94 | 13,175,542,499.79 |
Consolidated statement of changes in owners' equity
For the six months ended 30 June 2022
Monetary Unit: CNY
| Item | H1 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 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 | 1,464,752,47 | 3,755,354,66 | 167,527,152. | 1,464,752,47 | 21,187,860,2 | 28,040,247,0 | 97,014,116.8 | 28,137,261,1 | |||||||
| 6.00 | 5.73 | 32 | 6.00 | 35.89 | 05.94 | 9 | 22.83 | ||||||||
| Plus: adjustments for changes in accounting policies | |||||||||||||||
| Adjustments for correction of accounting errors in prior year | |||||||||||||||
| Business combinations under common control | |||||||||||||||
| 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) | 6,862,600.00 | 817,869,393.67 | 613,969,371.60 | -26,408,043.89 | 758,022,660.74 | 942,377,238.92 | 46,260,143.56 | 988,637,382.48 | |||||||
| (1) Total comprehensive income | -26,408,043.89 | 5,531,926,340.44 | 5,505,518,296.55 | 44,019,437.03 | 5,549,537,733.58 | ||||||||||
| (2) Capital contributed or reduced by owners | 6,862,600.00 | 817,869,393.67 | 613,969,371.60 | 210,762,622.07 | 2,240,706.53 | 213,003,328.60 | |||||||||
| Capital contributions by owners | 629,369,046.00 | 636,231,646.00 | -6,862,600.00 | -6,862,600.00 | |||||||||||
| Capital contributions by other equity instruments holders | 0.00 | ||||||||||||||
| Amounts of share-based payments recognized in owners' equity | 6,862,600.00 | 188,500,347.67 | -22,262,274.40 | 217,625,222.07 | 2,240,706.53 | 219,865,928.60 | |||||||||
| Others | 0.00 | ||||||||||||||
| (3) Profit distribution | -4,773,919,306.54 | -4,773,919,306.54 | -4,773,919,306.54 | ||||||||||||
| Withdrawal of surplus reserves | 0.00 | ||||||||||||||
| Withdrawal of general risk reserve | 0.00 | ||||||||||||||
| Profit | - | - | - |
| distributed to owners (or shareholders) | 4,773,919,306.54 | 4,773,919,306.54 | 4,773,919,306.54 | ||||||||||||
| 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 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 30 June of the current year | 1,471,615,076.00 | 4,573,224,059.40 | 613,969,371.60 | 141,119,108.43 | 1,464,752,476.00 | 21,945,882,896.63 | 28,982,624,244.86 | 143,274,260.45 | 29,125,898,505.31 |
For the six months ended 30 June 2021
Monetary Unit: CNY
| Item | H1 2021 | ||||||||||||||
| 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 | 1,464,752,476.00 | 3,722,777,063.13 | 186,063,325.03 | 1,464,752,476.00 | 16,236,513,212.43 | 23,074,858,552.59 | 107,011,321.12 | 23,181,869,873.71 | |||||||
| Plus: | |||||||||||||||
| adjustments for changes in accounting policies | |||||||||||||||
| Adjustments for correction of accounting errors in prior year | |||||||||||||||
| Business combinations under common control | |||||||||||||||
| Others | |||||||||||||||
| 2. Balance as at 1 January of the current year | 1,464,752,476.00 | 3,722,777,063.13 | 186,063,325.03 | 1,464,752,476.00 | 16,236,513,212.43 | 23,074,858,552.59 | 107,011,321.12 | 23,181,869,873.71 | |||||||
| 3.Increases/decreases in the current period (“-” for decreases) | 10,138,274.15 | 1,222,109,393.97 | 1,232,247,668.12 | 44,831,755.98 | 1,277,079,424.10 | ||||||||||
| (1) Total comprehensive income | 10,138,274.15 | 4,226,316,722.25 | 4,236,454,996.40 | 38,945,291.96 | 4,275,400,288.36 | ||||||||||
| (2) Capital contributed or reduced by owners | 0.00 | 5,886,464.02 | 5,886,464.02 | ||||||||||||
| Capital contributions by owners | 0.00 | 5,886,464.02 | 5,886,464.02 | ||||||||||||
| Capital contributions by other equity instruments holders | 0.00 | ||||||||||||||
| Amounts of share-based payments recognized in owners' equity | 0.00 | ||||||||||||||
| Others | 0.00 | ||||||||||||||
| (3) Profit distribution | -3,004,207,328.28 | -3,004,207,328.28 | -3,004,207,328.28 | ||||||||||||
| Withdrawal of surplus reserves | 0.00 | ||||||||||||||
| Withdrawal of general risk reserve | 0.00 | ||||||||||||||
| Profit distributed to owners (or shareholders) | -3,004,207,328.28 | -3,004,207,328.28 | -3,004,207,328.28 | ||||||||||||
| 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 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 | |||||||||||||||
| 4. Balance as at 30 June of the current year | 1,464,752,476.00 | 3,722,777,063.13 | 196,201,599.18 | 1,464,752,476.00 | 17,458,622,606.40 | 24,307,106,220.71 | 151,843,077.10 | 24,458,949,297.81 |
Statement of changes in owners' equity of parent company
For the six months ended 30 June 2022
Monetary Unit: CNY
| Item | H1 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) | 6,862,600.00 | 819,952,517.52 | 613,969,371.60 | -27,980,666.84 | -4,394,596,938.39 | -4,209,731,859.31 | ||||||
| (1) Other comprehensive income | -27,980,666.84 | 379,322,368.15 | 351,341,701.31 | |||||||||
| (2) Capital contributed or reduced by owners | 6,862,600.00 | 819,952,517.52 | 613,969,371.60 | 212,845,745.92 | ||||||||
| Capital contributions by owners | 629,369,046.00 | 636,231,646.00 | -6,862,600.00 | |||||||||
| Capital contributions by other equity instruments holders | ||||||||||||
| Amounts of share-based payments recognized in owners' equity | 6,862,600.00 | 190,583,471.52 | -22,262,274.40 | 219,708,345.92 | ||||||||
| Others | ||||||||||||
| (3) Profit distribution | -4,773,919,306.54 | -4,773,919,306.54 | ||||||||||
| Withdrawal of surplus reserves | ||||||||||||
| Profit distributed to owners (or shareholders) | -4,773,919,306.54 | -4,773,919,306.54 | ||||||||||
| 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 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 | ||||||||||||
| 4. Balance as at 30 June of the current year | 1,471,615,076.00 | 4,559,618,625.79 | 613,969,371.60 | 139,591,347.02 | 1,464,752,476.00 | 14,478,195,836.62 | 21,499,803,989.83 |
For the six months ended 30 June 2021
Monetary Unit: CNY
| Item | H1 2021 | |||||||||||
| 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 | 3,706,816,950.12 | 185,441,302.55 | 1,464,752,476.00 | 14,305,883,685.01 | 21,127,646,889.68 | ||||||
| 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 | 3,706,816,950.12 | 185,441,302.55 | 1,464,752,476.00 | 14,305,883,685.01 | 21,127,646,889.68 | ||||||
| 3.Increases/decreases in the current period (“-” for decreases) | 11,228,487.71 | -2,463,944,525.91 | -2,452,716,038.20 | |||||||||
| (1) Other comprehensive income | 11,228,487.71 | 540,262,802.37 | 551,491,290.08 | |||||||||
| (2) Capital contributed or reduced by owners | ||||||||||||
| Capital contributions by owners | ||||||||||||
| Capital contributions by other equity instruments holders | ||||||||||||
| Amounts of share-based payments recognized in owners' equity | ||||||||||||
| Others | ||||||||||||
| (3) Profit distribution | -3,004,207,328.28 | -3,004,207,328.28 | ||||||||||
| Withdrawal of surplus reserves | ||||||||||||
| Profit distributed to owners (or shareholders) | -3,004,207,328.28 | -3,004,207,328.28 | ||||||||||
| 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 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 | ||||||||||||
| 4. Balance as at 30 June of the current year | 1,464,752,476.00 | 3,706,816,950.12 | 196,669,790.26 | 1,464,752,476.00 | 11,841,939,159.10 | 18,674,930,851.48 |
3. Company Profile
3.1 Company Overview
Luzhou Laojiao Co., Ltd. (hereinafter referred to as "Company" or "the Company"), formerly known asLuzhou Laojiao Brewery, was established in March 1950. On 20 September 1993, Luzhou Laojiaobrewery established a joint-stock limited company with fund-raising exclusively from its operationalassets. On 25 October 1993, the public offering of shares was approved by Sichuan Provincial People'sGovernment 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 tradedin 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 theimplementation, 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 81,088,300 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,raising a 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 majorityshareholder and SASAC of Luzhou still was the actual controller.
On 22 February 2022, the first grant of 6,862,600 shares under the 2021 Restricted Share IncentivePlan was completed and registered. As such, the total shares of the Company were changed to1,471,615,076 shares. The said grant of restricted shares did not result in the change of theCompany’s controlling shareholder or actual controller.
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 Cellar AgeSeries” ,”Luzhou Laojiao Tequ”, ”Touqu”, ”Hey Guys” and other baijiu series.
3.4 The name of the controlling shareholder and the ultimate substantive controllerThe 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 date
The financial report is approved and submitted by the board of directors of the Company anddisclosed on 25 August 2022.
3.6 Consolidated financial statement scope and their changes
(1) The 24 subsidiaries included in the consolidated financial statements for the current periodare listed as follows:
| Name of subsidiary | Abbreviation | Shareholding proportion(%) | Voting rights (%) | |
| Direct | Indirect | |||
| Luzhou Laojiao Brewing Co., Ltd. | Brewing company | 100.00 | 100.00 | |
| Luzhou Red Sorghum Modern Agricultural Development Co., Ltd. | Red sorghum company | 60.00 | 60.00 | |
| Luzhou Laojiao Sales Co., Ltd. | Sales company | 100.00 | 100.00 | |
| Luzhou Laojiao Nostalgic Liquor Marketing Co., Ltd. | Nostalgic company | 100.00 | 100.00 | |
| Luzhou Laojiao Custom Liquor Co., Ltd. Note 1 | Custom liquor company | 15.00 | 60.00 | |
| Luzhou Laojiao Selected Supply Chain Management Co., Ltd. | Selected company | 100.00 | 100.00 | |
| Guangxi Luzhou Laojiao Imported Liquor Industry Co., Ltd. | Guangxi Imported Liquor Industry | 100.00 | 100.00 | |
| Luzhou Dingli Liquor Industry Co., Ltd. | Dingli company | 100.00 | 100.00 | |
| Luzhou Dingyi Liquor Industry Sales Co., Ltd. | Dingyi company | 100.00 | 100.00 | |
| Luzhou Laojiao New Liquor Industry Co., Ltd. | New Liquor Industry company | 100.00 | 100.00 | |
| Luzhou Laojiao Import and Export trade Co., Ltd. | Import and export company | 100.00 | 100.00 | |
| Luzhou Laojiao Boda Liquor Industry Marketing Co., Ltd. | Boda marketing | 75.00 | 75.00 | |
| Luzhou Laojiao Fruit Wine Industry Co., Ltd. Note 2 | Fruit wine industry | 41.00 | 60.00 | |
| Mingjiang Co., Ltd. | Mingjiang company | 54.00 | 54.00 | |
| Luzhou Laojiao New Retail Co., Ltd. | New retail company | 40.00 | 100.00 | 100.00 |
| Luzhou Laojiao Tourism Culture Co., Ltd. Note 4 | Tourism company | 100.00 | 100.00 | |
| Luzhou Pinchuang Technology Co., Ltd. | Pinchuang company | 100.00 | 100.00 | |
| Luzhou Laojiao International Development（Hong Kong）Co., Ltd. | Hong Kong company | 55.00 | 55.00 | |
| Luzhou Laojiao Commercial Development (North America) Co., Ltd. | North America company | 100.00 | 100.00 | |
| Luzhou Laojiao Electronic Commerce Co., Ltd. | Electronic Commerce company | 90.00 | 90.00 | |
| Luzhou Laojiao Whitail Liquor Industry Co., Ltd. Note 3 | Whitail liquor industry | 35.00 | 60.00 | |
| Luzhou Baonuo Biotechnology Co., Ltd. | Baonuo biotechnology | 100.00 | 100.00 | |
| Luzhou Laojiao Health Liquor Industry Co., Ltd. | Health Liquor Industry | 100.00 | 100.00 | |
| Luzhou Laojiao Health Sales Co., Ltd. | Health sales | 100.00 | 100.00 |
Note 1: Although the Company holds less than 51% of the equity of Custom Liquor Company, among the five membersof the board of directors, the Company has sent three people. The Company has actual control over Custom LiquorCompany, so it is included in the scope of consolidation.Note 2: Although the Company holds less than 51% of the equity of Fruit wine industry, among the five members of theboard of directors, the Company has sent three people, and the chairman of the board (legal representative) is thedirector sent by the Company. The Company has actual control over Fruit wine industry, so it is included in the scope ofconsolidation.Note 3: Although the Company holds less than 51% of the equity of Whitail liquor industry, among the five members ofthe board of directors, the Company has sent three people. The Company has actual control over Whitail liquorindustry and its subsidiaries, so it is included in the scope of consolidation.Note 4: The subsidiary Luzhou Laojiao Tourism Culture Co., Ltd. completed business and tax cancellation in June2022. Its travel deposit of CNY 1,400,000 must be approved by the Ministry of Culture and Tourism of the People'sRepublic of China before the restriction can be lifted. As of June, the bank account was not canceled as the relevantprocedures were not completed, so it is still included in the combination scope in this reporting period.
Details of the subsidiaries incorporated into the consolidated financial statements show on “7.1.Interests in subsidiaries”
(2) Liquidation and cancellation for subsidiaries in this period
| Name of subsidiary | Reason |
| Luzhou Laojiao Bosheng Hengxiang Liquor Sales Co., Ltd. | Liquidation cancellation |
Details of changes in the scope of consolidation show on “6.5. Changes in consolidated scope for otherreasons”.
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 (2014 Revision) issued by CSRC.
4.2. Going concern
The Company’s business activities have adequate financial support. Based on the current informationobtained 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 estimates
The disclosure requirements for related food and wine manufacturing business in the Self-regulatoryGuidelines No. 3 for Companies Listed on Shenzhen Stock Exchange - Industry InformationDisclosure shall be observed by the Company.
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 2014.
5.2 Accounting period
The Company adopts the calendar year as its accounting year, i.e. from 1st January to 31stDecember.
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 The accounting treatment of business combinations involving enterprisesunder common control and business combinations not involving enterprisesunder common control
(1) Business combination under common control
Assets and liabilities obtained by the Company from the combine through business combinationunder common control shall be measured at the book value as stated in the consolidated financialstatements of ultimate controlling party at the combination date. The share of the book value of themerged party’s owner’s equity in the consolidated financial statements is taken as the initialinvestment cost of long-term equity investments in individual financial statements. The capital reserve
(stock premium or capital premium) is adjusted according to the difference between the book value ofnet asset acquired through combination and the book value of consideration paid for the combination(or total par value of shares issued). If the capital reserve (stock premium or capital premium) isinsufficient to offset, the retained earnings 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 betweenfair value and its book value shall be included in current profit and loss. The Company shall recognizethe difference of the combination costs in excess of the fair value of the net identifiable asset acquiredfrom the acquiree through combination as goodwill. After the review, if the combination costs are stillin short of the fair value of the net identifiable asset acquired from the acquiree through combination,include the 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.
5.6 Preparation of consolidated financial statements
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. Whenpreparing consolidated financial statement, the Company considers the Group as an accountingentity, adopts unified accounting policies, and applies the requirements of ASBE related torecognition, measurement and presentation to reflect the Group’s financial position, operating resultsand 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 policiesor accounting periods of a subsidiary are different from those of the Company, the financialstatements of the subsidiary, upon preparation of consolidated financial statements, shall be madenecessary adjustment based on its own accounting policies and accounting periods of the Company.For subsidiaries 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, itsassets and 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 ofthe ultimate 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 statementrespectively. When the amount of current loss attributable to non-controlling shareholders of asubsidiary exceeds the balance of the non-controlling shareholders’ portion in the opening balance of
owner's equity of the subsidiary, 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 combinationunder common control, the opening balance in the consolidated balance sheet shall be adjusted. Theincome, expenses and profits of the newly acquired subsidiaries from the beginning to the end of thereporting period shall be included in the consolidated income statement. The cash flows of the newlyacquired subsidiaries from the beginning to the end of the reporting period shall be included in theconsolidated statement of cash flows. At the same time, the relevant items of the comparativeinformation shall be adjusted as the combined entity existed since the control point of the ultimatecontrolling 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 adjustin the current state when the ultimate controlling party starts to control them. For the equityinvestment before obtaining control of the investee, the recognized relevant profit or loss and othercomprehensive income and other changes in net assets between the later of acquisition date ofprevious equity and the date on which both the investor and the investee are under common controland the combination date shall respectively write-down the beginning retained earnings or currentprofits and losses during the period 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 commoncontrol due to additional investment or other reasons, the Company shall re-measure the previouslyheld equity interests to its fair value on the acquisition date, and the difference shall be recognized asinvestment income. When the previously held equity investment is accounted for under equity method,any other comprehensive 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 forother comprehensive income resulting from changes in net liabilities or net assets due to re-measurement of defined benefit plan by investee.
Disposal of subsidiaries and businessGeneral treatmentsDuring the reporting period, if the Company disposes subsidiaries, the income, expenses and profitsof the 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 be
included 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 dateof loss of control. The amount of the consideration obtained from the disposal of the equity and thefair value of the remaining equity, minus the net asset shares calculated continuously from theacquisition date based on the previous shareholding proportion and the goodwill, the difference shallbe included in the investment income of the period when the control is lost. Other comprehensiveincome related to the former subsidiary’s equity investment of or other changes in owners' equityexcluding net profit and loss, other comprehensive income and profit distribution shall be transferredto investment income for the current period when control is lost. Other comprehensive incomeresulting from changes in net liabilities or net assets due to re-measurement of defined benefit planby 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 whenconsidered together 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 incomein the consolidated financial statements and transferred into the profit and loss of the current periodwhen the control is lost.
If the transactions from the disposal of the equity investment of the subsidiary to the loss of controlare not considered as a package transactions, the accounting treatment shall be conducted accordingto the relevant policies on the partial disposal of the equity investment of the subsidiary where controlis retained 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 acquisitionof non-controlling shareholders and the share of net assets of the subsidiary calculated continuouslyfrom the acquisition date or combination date based on newly shareholding proportion shall be
adjusted to equity (share) premium of capital reserves in the consolidated balance sheet. If the capitalreserve is insufficient, 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 withoutloss of control, the difference between disposal consideration and net assets of the subsidiarycalculated continuously since the acquisition date or the combination date related to the disposal oflong-term equity investment shall be adjusted to equity (share) premium of capital reserves in theconsolidated balance sheet. If the capital reserve is insufficient, any excess shall be adjusted againstretained earnings.
5.7 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 arrangementthat is structured through a separate vehicle is usually classified as a joint venture. However, when ajoint arrangement provides clear evidence that it meets any of the following requirements andcomplies with applicable laws and regulations as a joint operation:
a. The legal form of the joint arrangement indicates that the parties that have joint control have rightsto the 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.The Company shall fully recognize impairment loss when there are any impairment loss of invested or
sold assets 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, ifthe Company enjoys the assets related to the joint venture and assumes the liabilities related to thejoint venture, the accounting treatment shall be conducted according to the above principles.Otherwise, the accounting treatment shall be conducted in accordance with the relevant accountingstandards.
5.8 Cash and cash equivalents
When preparing the cash flow statement, the Company recognizes cash on hand and deposits thatcan be readily withdrawn on demand as cash. Cash equivalents are the Company’s short-term (duewithin 3 months from purchase date), highly liquid investments that are readily convertible to knownamounts of cash and which are subject to an insignificant risk of changes in value. Restricted bankdeposits are not recognized as cash and cash equivalents in the cash flow statement.
5.9 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 tospot rate of the balance sheet date. The exchange difference generated from the difference of spotrate of the current balance sheet date and the time of initial recognition of a foreign currency or theprevious balance sheet date is charged to the profit or loss of the current period except that theexchange difference generated from foreign currency borrowings relating to assets of which theacquisition or production satisfies the capitalization conditions is capitalized.Non-monetary items measured at fair value that is reflected in foreign currency at the end of theperiod, the Company shall firstly translate the foreign currency into the amount in functional currencyat the spot exchange rate on the date when the fair value is determined, and then compare it with theoriginal functional currency amount. Difference between the translated functional currency amountand the original functional currency amount is treated as profit or loss from changes in fair value(including changes in exchange rate) and is recognized in current profit and loss. If there is a non-monetary item of available-for-sale financial assets, the differences are recorded into othercomprehensive 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 inthe income statement are translated at the spot exchange rates on the dates when the transactionsoccur or at the exchange rate determined in a systematical and reasonable method and similar to thespot exchange rate on the day when the transactions occur. Differences arising from the above
translations of foreign currency financial statements are separately listed under other comprehensiveincome in the consolidated balance sheet. If the overseas business is partly disposed of, the foreigncurrency financial statements exchange difference shall be calculated in proportion to the percentageof disposal and 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.
5.10 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 flowcharacteristics of financial assets, the Company classifies financial assets into: financial assetsmeasured at amortized cost; financial assets measured at fair value with their changes included intoother comprehensive income; and financial assets measured at fair value with their changes includedinto current profits/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 costaims to receive contract cash flow. Furthermore, the characteristics of the contract cash flow of suchfinancial assets are consistent with basic borrowing and lending arrangements, which means thatcash flow generated on a specific date serves only as payment for principal and interests based onthe amount of unpaid principal. The Company adopts the effective interest method for such financialinterests, performs subsequent measurement of them at amortized cost, and includes the gains orlosses from derecognition, changes or impairment of them into current profits/losses.
2) Financial assets measured at fair value with their changes included into other comprehensiveincomeThe 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 includedinto other 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 currentprofits/losses, in order to eliminate or substantially reduce accounting mismatch. For such financialassets, the Company performs subsequent measurement using fair value and records changes in thefair value into 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/lossesinclude trading financial liabilities (including derivatives classified as financial liabilities) and thefinancial liabilities specified to be measured at fair value with their changes included into currentprofits/losses at the 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 intocurrent profits/losses, changes in the fair value of such liabilities caused by changes in theCompany’s own credit risk should be included into other comprehensive income. In derecognition ofsuch liabilities, cumulative changes in their value caused by the Company’s own credit risk that havebeen recorded into other comprehensive income should be transferred into retained earnings. Otherchanges in their fair value should be recorded into current profits/losses. If treatment of the impact ofthe Company’s own credit risk changes of such financial liabilities in the above manner causes orexpands accounting mismatch in profits/losses, the Company will include all gains or losses of suchfinancial liabilities (including the amount of the impact of the Company’s own credit risk changes) intocurrent profits/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 thefinancial asset has been transferred to the transferee; 3)The financial asset has been transferred, andalthough the enterprise neither transfers nor retains almost all the risks and remunerations in respectof the ownership 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 involvedfinancial asset shall be recognized according to the level of continuous involvement of the transferredfinancial asset and the relevant liabilities shall be recognized accordingly. The level of continuousinvolvement of the transferred financial asset refers to the level of risk faced by the enterprise due tochanges in the value of the financial asset.
If the overall transfer of the financial asset meets the recognition conditions, the difference betweenthe carrying value of the transferred financial asset as well as the consideration received from thetransfer and the cumulative amount of fair value changes originally-recorded into othercomprehensive incomes shall 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 derecognitionand underecognition part. The difference between the summation of the consideration received fromthe transfer and the cumulative amount of fair value changes originally-recorded into othercomprehensive incomes that should be apportioned to the derecognition part and the apportionedaforementioned carrying 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 statedin previous 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 anagreement with a lender to replace an original financial liability in the form of bearing a new financialliability and the contract terms for the new financial liability differ from those for the original insubstance, the original financial liability should be derecognized and the new one should berecognized. When the Company makes substantial changes to the contract terms of an originalfinancial liability (or a part of it), the original financial liability should be derecognized and a newfinancial liability should be recognized according 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 bornethat are 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 liabilitiesand may 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 mutualoffset in the balance sheet. Other than that, they shall be presented separately in the balance sheetwithout the 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 therecent market transactions, as well as references to the present fair value of other financialinstruments of the same nature, discounted cash flow method and options pricing model. In thevaluation, the Company uses a valuation technique that is applicable in the current situation withsufficient data available and other information support, chooses input values that are consistent withthe asset or liability characteristics considered by market players in related asset or liabilitytransactions, and make maximum effort to use related observable input values on a preferential basis.When it is unable or unfeasible 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 expenses
related 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 theexpected credit loss for the entire duration.
For a financial asset other than those using the above simplified measurement, the Companyassesses on each balance sheet date whether its credit risk has substantially increased since theinitial recognition. If it has not and is in the first stage, the Company will measure the loss provision atthe amount equivalent to the expected credit loss for the next 12 months and calculate the interestincome according to the book balance and the effective interest rate; if it has substantially increasedsince the initial recognition without credit impairment and is in the second stage, the Company willmeasure the loss provision at the amount equivalent to the expected credit loss for the entire durationand calculate the interest income according to the book balance and the effective interest rate; ifcredit impairment has occurred since the initial recognition and is in the third stage, the Company willmeasure the loss provision by the amount equivalent to the expected credit loss for the entireduration and calculate the interest income according to the amortization cost and the effective interestrate. For financial instruments with low credit risks on balance sheet dates, the Company assumesthat their credit risks have not substantially increased since the initial recognition.
The Company assesses expected credit losses of financial instruments based on individual andgroup assessment. 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 financialassets, the Company will directly write down the book balance of such financial assets.
5.11 Notes receivable
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 |
5.12 Accounts receivables
The method of determining the expected credit loss of accounts receivables and accountingtreatment method:
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 asfollows:
(1) When there is objective evidence showing that an account receivable has incurred creditimpairment, the Company shall make bad debt provision for the account receivable and recognize theexpected credit loss.
(2) When the information about the expected credit loss of a single financial asset cannot beevaluated at a reasonable cost, the Company shall divide the accounts receivables portfolioaccording to credit risk 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 Company combines the accounts receivables classified as risk portfolio in accordance withsimilar credit risk characteristics (aging), and calculates the expected credit loss through the exposureat default and expected credit loss rate over the entire life based on the current situation andprediction of future economic situation consulting historical credit loss experience. The comparativetable 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 |
5.13 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 5.10Financial instruments.
5.14 Other receivables
The method of determining the expected credit loss of other receivables and accounting treatmentmethod:
As for other receivables, regardless of whether there is a significant financing component, theCompany always calculates the expected credit loss through the exposure at default and expectedcredit loss rate in the next 12 months or over the entire life based on the current situation andprediction of future economic situation consulting historical credit loss experience, and the resultingincrease or reversal of provision for loss shall be included in the current profit or loss as gains orlosses on impairment. The accrual 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 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 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 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
| Within 1 year | 5 |
| 1-2 years | 10 |
| 2-3 years | 20 |
| 3-4 years | 40 |
| 4-5 years | 80 |
| Over 5 years | 100 |
5.15 Inventory
(1) Classification of inventory
Inventories are classified as: raw materials, goods in progress (including semi-finished goods), stockcommodities, dispatched inventories, revolving materials (including packing materials and low-costconsumables).
(2) Measurement method of dispatched 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; Thegoods in progress and semi-finished goods shall be accounted according to the actual cost, and theweighted 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 atthe end of the month shall be adjusted into the actual cost through the cost-sharing difference.
(3) Basis to determine net realizable values of inventories and method of provision for stockobsolescenceAt 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 toproduct ranges produced and sold in the same district or used for the same or similar ultimatepurpose and are difficult to be measured separately from other inventories, the Company provides forstock obsolescence as a whole. For inventories that have large quantities but low value, theCompany provides 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 realizablevalue of the finished products is lower than the cost, the materials shall be measured at the netrealizable value.
(4) Inventory system
The Company adopts perpetual inventory system.
(5) Amortization method of packing materials and low-cost consumablesIt is amortized in full at once.
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 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.
5.18 Assets held for sale
(1) Classification of non-current assets held for sale or disposal groups
The 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 completedwithin one year.
The non-current assets or disposal group acquired by the Company for resale shall be divided intothe held-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 categorywithin a 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-current assets or disposal groups, it can continue to account for non-current assets or disposalgroups as held-for-sale: the buyer or any other party accidentally set sale extension condition. TheCompany has to take action in time according to these conditions and the extension problem isexpected to be solved within one year; In rare cases, the Company has taken the necessary stepsand re-satisfy the hold for sale category condition within the first year for the new circumstanceswhich caused it unable to complete the sale of the non-current assets or disposal group within oneyear.
(2) Measurement of non-current assets or disposal groups held for sale
a. Initial measurement and subsequent measurementWhen the Company measure a non-current asset or disposal group held for sale initially or re-measure at balance sheet date subsequently, the impairment loss should be recognized if the bookvalue is higher than fair value less costs to sell at the amount of the difference of these two in profitand 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 acquisitiondate, they shall be measured as the lower of the initial measurement amount and the net amountafter deducting the selling expenses from the fair value under the assumption that it is not divided intoheld-for-sale categories at the initial measurement. Except for the non-current assets or the disposalgroups obtained in the enterprise merger, the difference caused by the non-current assets or thedisposal groups taking the net amount after the fair value minus the selling expenses as the initialmeasurement amount 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-saleshall 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
increases after the fair value deducting the selling expenses, the amount previously written downshall be reversed, and the amount of the impairment loss recognized as non-current assets afterbeing classified as the held-for-sale shall be reversed, and the reversed amount shall be included inthe current profit and loss. The book value of the goodwill that has been written down and theimpairment losses 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. The accounting treatment that does not continue to be classified as held-for-sale and thetermination of recognitionNon-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 Long-term receivables
For more details, see Note 5.10 Financial instruments.
5.20 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 aseparate entity and the Company is judged to have rights to the net assets of such a separate entityaccording to the relevant conventions. Such a separate entity shall be regarded as a joint venture andaccounted by the equity method. If the Company is judged to be not entitled to the net assets of theseparate entity according to relevant conventions, the separate entity shall be regarded as a jointventure and the Company shall recognize the items related to the shares of the joint venture andperform accounting treatment in accordance with relevant accounting standards.The term ‘significant influence’ refers to the power to participate in decision-making on the financialand operating 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 ormore of 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 investmentcost of long-term equity investment shall be taken as the share of the owner's equity of the investee inthe book value of the final control party's consolidated financial statements. If the investee underbusiness combination under common control can be controlled due to additional investment or otherreasons, the initial investment cost of long-term equity investment shall be determined on the mergerdate according to the share of the net assets of the investee in the book value of the final controlparty's consolidated financial statements. The difference between the initial investment cost of thelong-term equity investment on the merger date and sum of the book value of the long-term equityinvestment before the merger and the new consideration of acquiring shares on the merger date shallbe recorded to adjust the equity premium. If the equity premium is insufficient to be written down, theretained earnings shall be written down.
Business combination not under common control：The Company takes the initial investment cost oflong-term equity investment as the merger cost determined on the purchase date. If the investee canbe controlled under business combination not under common control due to additional investment orother reasons, 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 valueas the 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 conditionthat an exchange of non-monetary assets is of commerce nature and the fair value of assetsexchanged can be reliably measured, non-monetary assets traded in is initially stated at the fair valueof the assets traded out, unless there is conclusive evidence indicating that the fair value of theassets traded in is more reliable; if the above conditions are not satisfied, initial investment costs oflong-term equity investments traded in shall be recognized at the book value of the assets traded outand the relevant taxes and surcharges payable.
For long-term equity investments obtained by debt restructuring, the Company recognizes the fairvalue of 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,the equity 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 valueof the 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 shareof the fair value of the investee’s identifiable net assets, the difference shall be recognized in currentprofit and loss.
The Company shall, according to the shares of net profits and other comprehensive income realizedby the 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 lossesof the 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 orother reasons, the profits or losses on the investments shall be directly calculated and recognizedbased on the net book profits and losses of the investee. The Company shall calculate the partdistributed from cash dividends or profits declared by the investee and correspondingly reduce thebook value of the long-term equity investments. When recognizing the income from investments inassociates and joint ventures, the Company shall write off the part of incomes from internalunrealized transactions between the Company and associates and joint ventures which areattributable to the Company and recognize the profit and loss on investments on such basis. Wherethe losses on internal transactions between the Company and the investee are impairment of relatedassets, full amounts of such losses shall be recognized. Profit and loss from internal unrealizedtransactions between the Company’s subsidiaries included into the combination scope andassociates and joint ventures shall be written off according to the above principles and the profit andloss 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 inthe following sequence: Firstly, write off the book value of the long-term equity investments; wherethe book value of the long-term equity investments is insufficient to cover the loss, investment lossesare recognized to the extent that book value of long-term equity which form net investment in theinvestee in other substances and the book value of long-term receivables shall be written off; after allthe above treatments, if the Company still assumes additional obligation according to investmentcontracts or agreements, the obligation expected to be assumed should be recognized as provisionand included into the investment loss in the current period. If the investee is profitable in subsequentaccounting periods, the Company shall treat the loss in reverse order against that described aboveafter deducting unrecognized share of loss: i.e. write down the book value of the recognized provision,then restore the book value of long-term interests which substantially form net investments in theinvestee, then restore the book value of long-term investments, and recognize investment income atthe same time.
5.21 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 alreadyrent, land use right held for appreciation and then sold, and buildings already rent.
Initial RecognitionWhen 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 theasset reaches the intended use condition;The cost of the investment property obtained by other means shall be recognized in accordance withrelevant accounting standards.
Subsequent measurementIn 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 fairvalue continuously and reliably, the Company can use fair value model for subsequent measurement.For the investment property measured at fair value model, the Company does not providedepreciation or amortization and adjusts its book value based on the fair value of investment property
at the balance sheet date. The difference between the fair value and book value is recorded intocurrent profit or loss.
(3) When the Company changes the use of investment property, the relevant investment property willbe transferred to other assets.
5.22. 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 and estimatednet salvage value and reviews their service life, estimated net salvage value and depreciation methodat the end of the year. Changes in the service life, estimated net salvage value and depreciationmethod of the same type of assets are treated as changes in accounting estimation.
(3) Recognition standard, valuation method and depreciation method for fixed assets acquiredunder financing leaseA finance lease refers to a lease where almost all the risks and rewards, related to the ownership ofthe leased asset, are substantially transferred, regardless of whether the ownership is eventuallytransferred or not. The policy for the accrual of the depreciation of the leasehold property for the fixedassets acquired under the finance lease was consistent with that adopted for the Company's fixedassets. If there is reasonable assurance that the Company will obtain the ownership of the leasedassets when the lease term expires, the leased assets should be depreciated over its useful life; ifthere is no reasonable assurance that the Company will obtain the ownership of the leased assetswhen the lease term expires, the leased assets should be depreciated over the shorter of the leaseterm or the useful life of the leased assets.
(4) 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-termidleness, a provision for impairment of the fixed assets shall be made for the difference between therecoverable amount and the book value of individual fixed assets. If the recoverable amount of theindividual asset is difficult to estimate, the Company will determine the recoverable amount of theasset group based on the asset group to which the asset belongs. The impairment losses on fixedassets must not be reversed in subsequent accounting periods once recognized.For fixed assets for which depreciation provision has been made, the depreciation rate anddepreciation amount shall be remeasured according to the book value of the fixed assets (the originalprice of fixed assets minus accumulated depreciation and provision for impairment), and theremaining service life.On the balance sheet date, the fixed assets shall be measured at the lower of the book value and therecoverable amount.
5. 23. 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 be
recognized; 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. 24. 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 andconstruction 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. Borrowingcosts 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. 25. Right-of-use assets
Refer to Note 5.42 Lease for the detail.
5. 26. Intangible assets
(1) Measurement method, useful life, impairment test
Intangible 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 amortization methodFor 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) Internal research and development expenditure accounting policyThe expenditures incurred in the development stage of the internal research and development projectsshall be recognized 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 assets
from the date when the project reaches its intended purpose.
5. 27. 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 therecoverable 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. 28. 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 tothe current profit and loss.
5. 29. Contract liabilities
The recognition method of contract liabilities: The Company presents contract assets or contract
liabilities 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. 30. Employee benefits
Employee benefits refer to the various forms of remuneration or compensation provided by theCompany in order to obtain services offered by employees or terminate an employment relationship.Employee remuneration mainly includes short-term remuneration, post-employment benefits,dismissal benefits, and other long-term employee welfare.
(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, theCompany 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 benefitsOther 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 theconditions of the defined contribution plan shall be treated in accordance with the same principles ofthe defined contribution plan; If the conditions for defined benefits are met, net liabilities or net assetsof other long-term employee benefits shall be recognized and measured in accordance with therelevant principles of the defined benefits plan.
5. 31. Lease liabilities
Refer to the Note 5.42 Lease for details.
5. 32. 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. 33. 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 other
subsequent 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,unless it cannot be vested because it cannot meet the vesting conditions of equity instruments(except market conditions).
5. 34. Revenue
Accounting policies for recognition and measurement of revenue
(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 are 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 mainly sells alcoholic products, which is a performance obligation performed at a certainpoint in time. The revenue identification of domestic products must meet the following requirements: a.The Company has delivered the products to the purchasers according to the contract and thepurchasers have signed and confirmed the receipts. b. The amount of sales revenue has beenidentified. c. The payment has been received; the receipt of the document of title has been obtainedand the relevant economic benefits are likely to flow in. d. The product-related costs can be reliablycalculated. The following requirements must be met to confirm the revenue of export products: a. TheCompany has declared the products in accordance with the contract, obtained the bills of lading,received the payment or obtained the receipt of payment and related economic benefits that are likelyto flow in. b. The main risks and rewards of the product ownership have been transferred. c. The legalownership of the goods has been transferred.
5. 35. 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 the
government 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. 36. 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 andloss as income tax expense or income, except for the income tax generated from the enterprisemerger, transactions or events directly recognized in the owner's equity.
5. 37. Lease
(1) Accounting treatment of operating lease
From the effectiveness date of a contract, the Company assessed whether the contract was a lease orincludes any lease. If a party to the contract transferred the right allowing the control over the use ofone or more assets that had been identified within a certain period, in exchange for a consideration,such contract was a lease or includes a lease.
① Accounting treatment with the Company as lessee
On the commencement date of the lease term, the Company recognizes the right-of-use assets andlease liabilities for the lease, unless it is a simplified short-term lease or a low-value asset lease.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.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 lease
payments, 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.The Company does not recognize the right-of-use assets and lease liabilities for short-term leases andleases of low-value assets, which are included in the profit or loss for the current period or the cost ofrelevant assets on a straight-line basis during each period of the lease term.
② Accounting treatment with the Company as lessor
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.
(2) Accounting treatment of finance lease
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.
On the commencement date of the lease term, the Company recognizes the finance leasereceivables for the finance lease and derecognizes the leased asset of the finance lease. In the initialmeasurement of finance lease receivables, the sum of the unsecured residual value and the presentvalue of the lease payments receivable not yet received on the commencement date of the leaseterm discounted at the interest rate implicit in lease is the entry value of the finance lease receivables.The Company calculates and recognizes the interest income in each period within the lease term at afixed interest rate implicit in the lease. The received variable lease payments that are not included inthe measurement of the net investment in the lease are included in profit or loss for the current periodwhen they are actually incurred.
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 quantity) | Quantity of baijiu | CNY 1.00/kg |
| Consumption tax (based on price) | Baijiu tax price or ex-factory price | 20% |
| 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% |
6.2. Tax preferences
(1) According to Announcement of the Ministry of Finance, State Taxation Administration and NationalDevelopment and Reform Commission on Continuing the Corporate Income Tax Policies Concerningthe Western Development Strategy (No. 23 in 2020, Ministry of Finance), from 1 January 2021 to 31December 2030, companies are located in the western region whose primary business is listed in theCatalogue of Encouraged Industries in the Western Region, and the primary business incomeaccounting for over 60% of the total enterprise income. These companies shall be subject to thecorporate income tax at a reduced rate of 15%. The Company's holding subsidiary, Luzhou Pinchuang
Technology Co., Ltd., whose primary business income meet the requirements of scope and standard ofthe Catalogue of Encouraged Industries in the Western Region, is paid at the rate of 15% for corporateincome 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 Western Developmentwith the half reduction in the tax period of preferential policies shall enjoy the local share of corporateincome tax exemption (namely 40% of corporate income tax was exempted, and the proportionadjusted by the state shall be executed according to new proportion); Guangxi Luzhou Laojiao ImportedLiquor Industry Co., Ltd., the wholly-owned subsidiary of the Company, pays corporate income tax atthe rate of 9% according to the tax preference policies.
7. Notes to the main items of the consolidated financial statements (Allcurrency unit is CNY, except other statements)
7.1. Cash and cash equivalents
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Cash | 26,149.25 | 26,281.86 |
| Bank deposit | 17,016,946,921.19 | 13,490,769,725.71 |
| Other cash and cash equivalents | 29,136,845.92 | 22,698,572.99 |
| Total | 17,046,109,916.36 | 13,513,494,580.56 |
| Including: Total deposit outbound | 93,630,931.60 | 63,993,390.31 |
| Total amount with restriction to use due to mortgage, pledge or freeze | 131,273,803.86 | 110,965,638.73 |
Other statements:
Note 1: The deposit outbound is the balance of cash and cash equivalents of the foreign holdingsubsidiary of the Company.Note 2: The closing balance of other cash and cash equivalents is the travel service deposit of CNY1,400,000.00 deposited by the subsidiary, Luzhou Laojiao Tourism Culture Co., Ltd., in the
designated bank according to the regulations of the tourism bureau, the balance of CNY17,649,331.49 deposited by the subsidiary, Luzhou Laojiao Electronic Commerce Co., Ltd. and thesubsidiary, Luzhou Laojiao Custom Liquor Co., Ltd. on the third-party e-commerce platform, andguaranty letter deposit of CNY 10,087,514.43 by the Company and the subsidiary, Luzhou LaojiaoSales Co., Ltd., in the bank.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
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Financial assets measured at fair value with their changes included into current profits/losses | 1,302,911,871.28 | 706,352,241.79 |
| Including: | ||
| Including: | ||
| Total | 1,302,911,871.28 | 706,352,241.79 |
Other statements:
The closing balance of held-for-trading financial assets increased by CNY 596,559,629.49, up 84.46%compared with the beginning of the period, which was mainly due to the purchase of wealthmanagement products of the collective asset management plan from securities-type companies in thereporting period.
7.3. Accounts receivable
7.3.1. Classification of accounts receivable
Monetary 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: | ||||||||||
| Accounts receivable tested for impairment by the portfolio | 1,491,871.88 | 100.00% | 88,530.34 | 5.93% | 1,403,341.54 | 1,713,947.55 | 100.00% | 85,699.00 | 5.00% | 1,628,248.55 |
| Including: | ||||||||||
| Accounts receivable tested | 1,491,871.88 | 100.00% | 88,530.34 | 5.93% | 1,403,341.54 | 1,713,947.55 | 100.00% | 85,699.00 | 5.00% | 1,628,248.55 |
| for impairment on the portfolio with characteristics of credit risk | ||||||||||
| Total | 1,491,871.88 | 100.00% | 88,530.34 | 5.93% | 1,403,341.54 | 1,713,947.55 | 100.00% | 85,699.00 | 5.00% | 1,628,248.55 |
Accounts receivable tested for impairment on the portfolio:
Monetary Unit: CNY
| Name | Closing Balance | ||
| Book balance | Provision for bad debt | Proportion | |
| Risk portfolio | 1,491,871.88 | 88,530.34 | 5.93% |
| Other portfolio | |||
| Total | 1,491,871.88 | 88,530.34 | |
Please refer to the relevant information of disclosure of provision for bad debt of other accountsreceivable if adopting the general mode of expected credit loss to withdraw provision for bad debt ofaccounts receivable
□Applicable ? N/A
Disclosure by aging
Monetary Unit: CNY
| Aging | Closing balance |
| Within 1 year (including 1 year) | 1,213,136.87 |
| 1-2 years | 278,735.01 |
| Total | 1,491,871.88 |
The Company shall observe the disclosure requirements for related food and wine manufacturingbusiness in the Self-regulatory Guidelines No. 3 for Companies Listed on Shenzhen Stock Exchange- Industry Information Disclosure
7.3.2. Provision and recovery for bad and doubtful debt in the current periodAllowance of provision for bad debt:
Monetary Unit: CNY
| Type | Opening Balance | Current Period | Closing Balance | |||
| Allowance | Reversal or recovery | Write-off | Other | |||
| Provision allowance by risk portfolio | 85,699.00 | 2,831.34 | 88,530.34 | |||
| Total | 85,699.00 | 2,831.34 | 88,530.34 | |||
Note: There is no significant provision in accounts receivable reversed or recovered in the reportingperiod.
7.3.3. Accounts receivable actually verified in the current period
Verification of accounts receivable:
There is no verified accounts receivable in the reporting period.
7.3.4. Top five entities with the largest balances of accounts receivable
Monetary Unit: CNY
| Company name | Closing Balance | Proportion to total closing balance of accounts receivable | Closing balance of provision for bad debt |
| Tai Fung Castelmor. Ltd | 483,135.87 | 32.39% | 24,156.79 |
| Liquor Control Board of Ontario (LCBO) | 278,007.18 | 18.64% | 13,900.36 |
| Beijing Secoo Trading Limited | 263,509.80 | 17.66% | 26,350.98 |
| Park Street Imports, LLC | 105,840.19 | 7.09% | 5,292.01 |
| Beijing Jingdong Century Information Technology Co., Ltd. | 25,386.86 | 1.70% | 1,269.34 |
| Total | 1,155,879.90 | 77.48% |
7.3.5. Accounts receivable derecognized due to the transfer of financial assetsThere was no accounts receivable derecognized due to the transfer of financial assets in the currentperiod.
7.3.6. The amount of the assets and liabilities formed by the transfer and continuedinvolvement of accounts receivableThe amount of the assets and liabilities formed by the transfer and continued involvement of accountsreceivable in the current period is zero.
7.4. Accounts receivable financing
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Bank acceptance bill | 1,671,605,965.76 | 4,757,631,778.64 |
| Total | 1,671,605,965.76 | 4,757,631,778.64 |
Changes in accounts receivable financing in the reporting period and fair value:
□Applicable ? N/A
Please refer to the relevant information of disclosure of impairment provision of other accountsreceivable if adopting the general mode of expected credit loss to withdraw impairment provision ofaccounts receivable financing.
□Applicable ? N/A
Other statements:
Note 1: At the end of the period, the closing balance decreased by CNY 3,086,025,812.88, down
64.86% compared with the opening balance, which was mainly due to the impact of bill discount andremittance of bills for collection at maturity.Note 2: The business mode to manage notes receivable aims to collect contract cash flow as well asto sell the financial assets, and thus the notes receivable is presented as accounts receivablefinancing; since the timing and price of bills discounted may not be reliably estimated due to the shortmaturity of the bills all being less than one year and the endorsement of the negotiable bills beingvalued at book value, the face value is regarded as the fair value of accounts receivable financing bythe Company.Note 3: There was no allowance of provision for bad debt at the end of the reporting period.
(1) There was no accounts receivable financing pledge at the end of the period.
(2) There is CNY 5,894,055,980.36 as follows of accounts receivable financing that have beenendorsed to other parties by the Company but have not expired at the end of the period:
| Item | Derecognition at period-end | Not derecognition at period-end |
| Bank acceptance bill | 5,894,055,980.36 | |
| Subtotal | 5,894,055,980.36 |
Note: The acceptor of the bank acceptance bill is a commercial bank. The probability of not being paiddue is very low, and the possibility of being recourse is very low, so the confirmation has beenterminated.
(3) There are no accounts receivable financing transferred to accounts receivable due to the non-performance of the agreements by the issuers.
(4) There are no accounts receivable financing actually written off during the reporting period.
7.5. Prepayment
7.5.1. Aging analysis
Monetary Unit: CNY
| Aging | Closing Balance | Opening Balance | ||
| Amount | Proportion | Amount | Proportion | |
| Within 1 year | 121,182,947.28 | 82.48% | 174,252,091.59 | 97.85% |
| 1-2 years | 24,252,782.18 | 16.51% | 3,411,121.11 | 1.92% |
| 2-3 years | 1,284,534.19 | 0.87% | 424,476.11 | 0.24% |
| Over 3 years | 209,710.67 | 0.14% | ||
| Total | 146,929,974.32 | 178,087,688.81 | ||
Reasons for significant prepayments whose aging is longer than 1 year without timely settlement:
Note 1: There is no significant prepayment whose aging is longer than 1 year.
7.5.2. 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. | 63,523,133.52 | 43.23% |
| Luzhou Western Gas Co., Ltd. | 8,050,769.30 | 5.48% |
| Shenzhen Airport Asiaray Media Co., Ltd. | 7,408,470.99 | 5.04% |
| Luzhou Power Supply Company of State Grid Sichuan Electric Power Company | 6,105,000.00 | 4.16% |
| China Railway Chengdu Bureau Group Co., Ltd. | 5,300,794.54 | 3.61% |
| Subtotal | 90,388,168.35 | 61.52% |
7.6. Other receivables
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Dividend receivable | 35,361,832.34 | |
| Other receivables | 35,924,379.21 | 28,615,361.96 |
| Total | 71,286,211.55 | 28,615,361.96 |
7.6.1. Interest receivable
7.6.1.1. Allowance of provision for bad debt
□Applicable ? N/A
7.6.2. Dividend receivable
7.6.2.1. Classification of dividend receivable
Monetary Unit: CNY
| Item (investee) | Closing Balance | Opening Balance |
| Guotai Junan Securities Co., Ltd. | 8,008,357.96 | |
| Huaxi Securities Co., Ltd. | 27,283,114.40 | |
| North Chemical Industries Co., Ltd. | 70,359.98 | |
| Total | 35,361,832.34 |
7.6.2.2. Allowance of provision for bad debt
□Applicable ? N/A
Other statements:
(1) There is no significant dividend receivable whose aging is longer than 1 year at the end of thereporting period.
(2) There was no allowance of provision for bad debt at the end of the reporting period.
7.6.3. Other receivables
7.6.3.1. Other receivables disclosed by nature
Monetary Unit: CNY
| Nature | Closing book balance | Opening book balance |
| Intercourse funds and others | 29,446,467.39 | 19,729,613.70 |
| Petty cash | 472,546.91 | 292,228.26 |
| Saving deposits involving contract disputes1 | 130,158,189.98 | 132,376,912.43 |
| Total | 160,077,204.28 | 152,398,754.39 |
Note 1: In the 2014 Annual Report, the Company disclosed the information about three depositsamounting to CNY 500,000,000.00 with Changsha Yingxin Sub-branch of Agricultural Bank of Chinaand Nanyang Zhongzhou Sub-branch of Industrial and Commercial Bank of China. The deposits havelost the nature of monetary fund due to their involvement in contract disputes and have thus beentransferred into “other receivables”.
7.6.3.2. Allowance of provision for bad debt
Monetary 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 2022 | 3,783,392.43 | 120,000,000.00 | 123,783,392.43 | |
| Balance of 1 January 2022 in the current period | ||||
| Allowance | 581,432.64 | 581,432.64 | ||
| Write-off | 212,000.00 | 212,000.00 | ||
| Balance of 30 June 2022 | 4,152,825.07 | 120,000,000.00 | 124,152,825.07 |
Changes of book balance with significant amount changed of loss provision in the current period?Applicable □ N/A
| Company Name | Closing book balance | Provision for bad debt | Aging | Proportion |
| Agricultural Bank of China Changsha Yingxin Sub-branch, Industrial and Commercial Bank of China Nanyang Zhongzhou Sub-branch and another bank | 130,158,189.98 | 120,000,000.00 | Over 5 years | 92.20% |
| Subtotal | 130,158,189.98 | 120,000,000.00 | 92.20% |
Note: see Note 12.2 and 14.7.1 for information about the deposits with involvement in contractdisputes.
Disclosure by aging
Monetary Unit: CNY
| Aging | Closing balance |
| Within 1 year (including 1 year) | 22,458,265.66 |
| 1-2 years | 3,963,179.55 |
| 2-3 years | 544,969.09 |
| Over 3 years | 133,110,789.98 |
| 3-4 years | 680,000.00 |
| 4-5 years | 100,000.00 |
| Over 5 years | 132,330,789.98 |
| Total | 160,077,204.28 |
7.6.3.3. Provision and recovery for bad and doubtful other receivables in the current periodAllowance of provision for bad debt:
Monetary Unit: CNY
| Type | Opening Balance | Current Period | Closing Balance | |||
| Allowance | Reversal or recovery | Write-off | Other | |||
| Other receivables tested for impairment individually | 120,000,000.00 | 120,000,000.00 | ||||
| Other receivables tested for impairment by the portfolio | 3,783,392.43 | 581,432.64 | 212,000.00 | 4,152,825.07 | ||
| Total | 123,783,392.43 | 581,432.64 | 212,000.00 | 124,152,825.07 | ||
7.6.3.4. Other receivables actually verified in the current period
Monetary Unit: CNY
| Item | Amount |
| Petty cash | 212,000.001 |
Note: 1. There was no significant other receivables verified in the current period.
7.6.3.5. Top five entities with the largest balances of the other receivables
Monetary 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 | 130,158,189.98 | Over 5 years | 81.31% | 120,000,000.00 | |
| Beijing Jingdong Century | Security deposit | 2,602,968.52 | Within 1 year | 1.63% | 130,148.43 |
| Information Technology Co., Ltd. | |||||
| CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | Security deposit | 2,506,590.68 | Within 1 year, 1-2 years | 1.57% | 247,689.88 |
| Zhejiang Tmall Technology Co.,Ltd. | Security deposit, etc. | 1,836,683.58 | Within 1 year | 1.15% | 91,834.18 |
| Longmatan Power Supply Bureau of Luzhou Power Bureau | Security deposit | 1,520,000.00 | Over 5 years | 0.95% | 1,520,000.00 |
| Total | 138,624,432.76 | 86.60% | 121,989,672.49 |
7.6.3.6. Other receivables derecognized due to the transfer of financial assetsThere were no other receivables derecognized due to the transfer of financial assets in the reporting period.
7.6.3.7. Amount of assets and liabilities due to the transfer of other receivables and continuedinvolvementThe amount of assets and liabilities due to the transfer of other receivables and continued involvement in the reportingperiod was zero.
7.7. Inventories
Whether the Company needs to comply with the disclosure requirements of real estate industryNo
7.7.1. Categories of Inventories
Monetary 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 | 41,943,212.09 | 41,943,212.09 | 123,986,924.38 | 123,986,924.38 | ||
| Goods in progress | 6,659,413,775.51 | 6,659,413,775.51 | 5,255,917,501.41 | 5,255,917,501.41 | ||
| Finished goods | 1,976,584,873.55 | 1,976,584,873.55 | 1,855,731,688.91 | 1,855,731,688.91 | ||
| Goods in transit | 35,338,773.13 | 35,338,773.13 | 41,937,052.10 | 41,937,052.10 | ||
| Total | 8,713,280,634.281 | 8,713,280,634.28 | 7,277,573,166.80 | 7,277,573,166.80 |
Note: 1. The closing balance increased CNY 1,435,707,467.48 compared with opening balance,mainly due to the increase in the output of products because some constructions of the technicalrenovation project of brewing were put into production and management requirements for shelf life ofproducts.
The Company shall observe the disclosure requirements for related food and wine manufacturingbusiness in the Self-regulatory Guidelines No. 3 for Companies Listed on Shenzhen Stock Exchange- Industry Information Disclosure
7.7.2. Notes to the ending balance of inventories including capitalized borrowing expenseThere was no capitalized borrowing expense among the ending balance of inventories.
7.8. Other current assets
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Value-added tax | 14,096,836.32 | 82,734,324.31 |
| Corporate income tax | 25,611,023.79 | 24,638,887.44 |
| Other taxes | 2,981,932.42 | 4,601,321.16 |
| Total | 42,689,792.53 | 111,974,532.91 |
Other statements:
1. The value-added tax expected to be deducted in the next tax period and corporate income tax andother taxes are disclosed in other current assets.
2. The closing balance decreased CNY 69,284,740.38 compared with opening balance, with adecrease by 61.88%, mainly due to tax rebate of excess VAT paid in the reporting period.
7.9. Long-term equity investments
Monetary Unit: CNY
| Investee | Opening Balance (book value) | 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. | 2,493,328,165.33 | 30,289,606.80 | -9,066,533.27 | 27,283,114.40 | 2,487,268,124.46 | 2,567,098.80 | |||||
| Sichuan Development | 5,726,848.36 | 110,262.94 | 5,837,111.30 | ||||||||
| Wine Investment Co., Ltd. | |||||||||||
| Sichuan Tongniang Liquor Industry Technology Research Institute Co., Ltd. Note | 7,887,461.52 | 16,954.03 | 7,904,415.55 | ||||||||
| CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | 119,801,761.04 | -3,811,895.58 | 115,989,865.46 | ||||||||
| Luzhou Laojiao Postdoctoral Workstation Science and Innovation Co., Ltd. | 40,000,000.00 | 51,207.01 | 40,051,207.01 | ||||||||
| Subtotal | 2,626,744,236.25 | 40,000,000.00 | 26,656,135.20 | -9,066,533.27 | 27,283,114.40 | 2,657,050,723.78 | 2,567,098.80 | ||||
| Total | 2,626,744,236.25 | 40,000,000.00 | 26,656,135.20 | -9,066,533.27 | 27,283,114.40 | 2,657,050,723.78 | 2,567,098.80 |
7.10. Other equity instrument investment
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Financial assets designated to be measured at fair value through other comprehensive income | ||
| Including: | ||
| North Chemical Industries Co.,Ltd. | 13,274,581.94 | 15,963,896.54 |
| Luzhou Bank Co., Ltd. | 111,325,213.46 | 102,174,621.71 |
| Guotai Junan Securities Co., Ltd. | 179,010,354.38 | 210,690,476.31 |
| Guotai Junan Investment Management Co., Ltd. | 22,611,834.24 | 22,611,834.24 |
| Guojiu Big Data Co., Ltd. | 10,000,000.00 | 10,000,000.00 |
| Sichuan China Liquor Golden Triangle Brand Operation Development Co., Ltd. and other equity instrument investments | 1,846,291.63 | 1,871,291.63 |
| Total | 338,068,275.65 | 363,312,120.43 |
Categories of non-trading equity instrument investment in the current period:
Monetary 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 |
| North Chemical Industries Co.,Ltd. | 70,359.98 | 12,244,581.94 | According to the mode of managing assets by management layer | |||
| Luzhou Bank Co., Ltd. | 60,205,213.46 | According to the mode of managing assets by management layer | ||||
| Guotai Junan Securities Co., Ltd. | 8,008,357.96 | 166,291,197.62 | 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 | |||||
| Guojiu Big Data Co., Ltd. | According to the mode of managing assets by management layer | |||||
| Shenzhen Xingangfeng Development Co., Ltd. | 2,354,000.00 | According to the mode of managing assets by management layer | ||||
| Sichuan Deyang Jintai Hotel | 2,000,000.00 | According to the mode of managing assets by management layer | ||||
| Hainan | 1,000,000.00 | According to |
| Huitong International Trust Company | the mode of managing assets by management layer | |||||
| Sichuan China Liquor Golden Triangle Brand Operation Development Co., Ltd. and other equity instrument investments | 398,926.37 | According to the mode of managing assets by management layer | ||||
| Subtotal | 8,078,717.94 | 238,740,993.02 | 5,752,926.37 |
7.11. Fixed assets
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Fixed assets | 8,539,274,171.78 | 8,088,216,508.58 |
| Disposal of fixed assets | 17,750,678.74 | 1,270,765.81 |
| Total | 8,557,024,850.52 | 8,089,487,274.39 |
7.11.1. Details of fixed assets
Monetary Unit: CNY
| Item | Buildings and constructions | Specialized equipment | General equipment | Transportation equipment | Other equipment | Total |
| I. Original cost: | ||||||
| 1.Opening balance | 6,810,063,839.38 | 1,116,825,737.03 | 894,181,275.81 | 45,071,455.46 | 1,491,462,062.44 | 10,357,604,370.12 |
| 2.Increase in current period | 416,655,620.26 | 64,917,177.19 | 135,537,134.37 | 1,295,585.85 | 110,872,547.19 | 729,278,064.86 |
| (1) External purchase | 2,016,371.68 | 7,809,262.25 | 637,288.50 | 757,345.14 | 11,220,267.57 | |
| (2) Transfer from construction in progress | 419,313,281.24 | 63,275,740.15 | 127,396,081.41 | 658,297.35 | 109,843,862.61 | 720,487,262.76 |
| (3) Increase from business combination | ||||||
| (4) Changes of exchange rates | 264.43 | 83,497.48 | 83,761.91 | |||
| (5) Adjustment for completion settlement | -2,657,660.98 | -375,199.07 | 248,293.23 | 271,339.44 | -2,513,227.38 | |
| 3.Decrease in current period | 41,017,518.40 | 50,706,488.21 | 5,513,502.78 | 1,730,873.16 | 14,320,587.53 | 113,288,970.08 |
| (1) Disposal or retirement | 40,796,791.90 | 50,706,488.21 | 5,513,502.78 | 1,730,873.16 | 14,320,587.53 | 113,068,243.58 |
| (2) Other | 220,726.50 | 220,726.50 | ||||
| 4.Closing Balance | 7,185,701,941.24 | 1,131,036,426.01 | 1,024,204,907.40 | 44,636,168.15 | 1,588,014,022.10 | 10,973,593,464.90 |
| II. Accumulated depreciation | ||||||
| 1.Opening Balance | 819,228,209.63 | 383,120,514.56 | 327,421,150.75 | 30,623,904.90 | 708,371,141.63 | 2,268,764,921.47 |
| 2.Increase in current period | 111,919,375.03 | 67,894,253.30 | 48,423,855.00 | 1,605,951.05 | 31,553,116.73 | 261,396,551.11 |
| (1) Provision | 111,936,308.38 | 67,920,977.28 | 48,330,586.57 | 1,605,951.05 | 31,532,013.16 | 261,325,836.44 |
| (2) Changes of exchange rates | 70,714.67 | 70,714.67 | ||||
| (3) Adjustment for completion settlement | -16,933.35 | -26,723.98 | 22,553.76 | 21,103.57 | 0.00 | |
| 3.Decrease in current period | 29,459,909.20 | 48,372,976.27 | 5,132,478.01 | 1,644,329.52 | 11,855,426.53 | 96,465,119.53 |
| (1) Disposal or retirement | 29,451,948.52 | 48,372,976.27 | 5,132,478.01 | 1,644,329.52 | 11,855,426.53 | 96,457,158.90 |
| (2) Other | 7,960.68 | 7,960.68 | ||||
| 4.Closing Balance | 901,687,675.46 | 402,641,791.59 | 370,712,527.74 | 30,585,526.43 | 728,068,831.83 | 2,433,696,353.05 |
| 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 | 6,283,391,325.71 | 728,394,634.42 | 653,492,379.66 | 14,050,641.72 | 859,945,190.27 | 8,539,274,171.78 |
| 2.Opening Book Value | 5,990,212,689.68 | 733,705,222.47 | 566,760,125.06 | 14,447,550.56 | 783,090,920.81 | 8,088,216,508.58 |
7.11.2. Fixed assets without certification of right
Monetary Unit: CNY
| Item | Book value | Reason for not having the certification of right |
| Buildings of parent company | 24,704,619.35 | 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 brewing company | 306,468,869.38 | In procedure |
| Buildings of the subsidiary-brewing company | 4,118,145,330.28 | In procedure |
| Subtotal | 4,449,318,819.01 |
7.11.3. Disposal of fixed assets
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Disposal and retirement of assets | 17,750,678.74 | 1,270,765.81 |
| Total | 17,750,678.74 | 1,270,765.81 |
Other statements:
The closing balance increased CNY 16,479,912.93 compared with opening balance, mainly due toincrease in disposal and retirement of assets.
7.12. Construction in progress
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Construction in progress | 724,127,630.54 | 1,259,845,487.50 |
| Total | 724,127,630.54 | 1,259,845,487.50 |
7.12.1. Details of the construction in progress
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Improvement and technical renovation project of Luzhou Laojiao production supporting | 563,063,821.82 | 563,063,821.82 | ||||
| Technical renovation of Luzhou Laojiao Intelligent packaging center | 424,816,003.44 | 424,816,003.44 | 301,985,162.65 | 301,985,162.65 | ||
| Landscape improvement project of Luzhou Laojiao Huangyi Brewing Ecological Park | 171,451,841.13 | 171,451,841.13 | 149,089,445.94 | 149,089,445.94 | ||
| Other projects | 127,859,785.97 | 127,859,785.97 | 245,707,057.09 | 245,707,057.09 | ||
| Total | 724,127,630.54 | 724,127,630.54 | 1,259,845,487.50 | 1,259,845,487.50 | ||
7.12.2. Significant changes in construction in progress
Monetary 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 |
| Improvement and technical renovation project of Luzhou Laojiao production supporting | 888,544,100.00 | 563,063,821.82 | 313,844.04 | 559,989,425.29 | 3,388,240.57 | 0.00 | 64.24% | 100.00% | Other | |||
| Technical renovation of Luzhou Laojiao Intelligent packaging center | 1,886,176,000.00 | 301,985,162.65 | 123,783,637.25 | 685,771.68 | 267,024.78 | 424,816,003.44 | 24.32% | 30.00% | Other | |||
| Landscape improvement project of Luzhou Laojiao Huangyi | 200,065,400.00 | 149,089,445.94 | 22,362,395.19 | 171,451,841.13 | 91.50% | 100.00% | Other |
| Brewing Ecological Park | ||||||||||||
| Total | 2,974,785,500.00 | 1,014,138,430.41 | 146,459,876.48 | 560,675,196.97 | 3,655,265.35 | 596,267,844.57 |
7.13. Right-of-use assets
Monetary Unit: CNY
| Item | Land use right | Buildings and constructions | Total |
| I. Original cost | |||
| 1. Opening Balance | 32,680,786.33 | 32,890,490.67 | 65,571,277.00 |
| 2. Increase in current period | 3,396,293.62 | 3,396,293.62 | |
| (1) Lease in | 2,698,438.06 | 2,698,438.06 | |
| (2) Changes of exchange rates | 697,855.56 | 697,855.56 | |
| 3. Decrease in current period | |||
| (1) Other | |||
| 4. Closing Balance | 32,680,786.33 | 36,286,784.29 | 68,967,570.62 |
| II. Accumulated amortization | |||
| 1. Opening Balance | 3,634,912.70 | 9,221,554.26 | 12,856,466.96 |
| 2. Increase in current period | 1,817,456.35 | 5,916,897.98 | 7,734,354.33 |
| (1) Provision | 1,817,456.35 | 5,623,005.00 | 7,440,461.35 |
| (2) Changes of exchange rates | 293,892.98 | 293,892.98 | |
| 3. Decrease in current period | |||
| (1) Disposal | |||
| 4. Closing Balance | 5,452,369.05 | 15,138,452.24 | 20,590,821.29 |
| 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 | 27,228,417.28 | 21,148,332.05 | 48,376,749.33 |
| 2. Opening Book Value | 29,045,873.63 | 23,668,936.41 | 52,714,810.04 |
7.14. Intangible assets
7.14.1. Details of intangible assets
Monetary Unit: CNY
| Item | Land use right | Patent right | No-patent right technology | Computer software | Trademark right | Total |
| I. Original cost | ||||||
| 1. Opening Balance | 2,744,202,317.34 | 1,700,050.44 | 60,715,751.05 | 1,890,746.08 | 2,808,508,864.91 | |
| 2. Increase in current period | 220,726.50 | 60,978.66 | 281,705.16 | |||
| (1) Acquired | ||||||
| (2) Internal developed | ||||||
| (3) Business combination | ||||||
| (4) Transferred from construction in progress | 60,978.66 | 60,978.66 | ||||
| (5) Other | 220,726.50 | 220,726.50 | ||||
| 3. Decrease in current period | 36,454,066.94 | 36,454,066.94 | ||||
| (1) Disposal | 36,454,066.94 | 36,454,066.94 | ||||
| 4. Closing Balance | 2,707,968,976.90 | 1,700,050.44 | 60,776,729.71 | 1,890,746.08 | 2,772,336,503.13 | |
| II. Accumulated amortization | ||||||
| 1. Opening Balance | 171,347,186.40 | 700,604.04 | 28,303,256.02 | 1,798,629.73 | 202,149,676.19 | |
| 2. Increase in current period | 31,022,321.61 | 65,002.52 | 2,030,745.38 | 38,238.85 | 33,156,308.36 | |
| (1) Provision | 31,014,360.93 | 65,002.52 | 2,030,745.38 | 38,238.85 | 33,148,347.68 | |
| (2) Other | 7,960.68 | 7,960.68 | ||||
| 3. Decrease in current period | 8,317,780.32 | 8,317,780.32 | ||||
| (1) Disposal | 8,317,780.32 | 8,317,780.32 | ||||
| 4. Closing Balance | 194,051,727.69 | 765,606.56 | 30,334,001.40 | 1,836,868.58 | 226,988,204.23 | |
| 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 | 2,513,917,249.21 | 934,443.88 | 30,442,728.31 | 53,877.50 | 2,545,348,298.90 | |
| 2. Opening Book Value | 2,572,855,130.94 | 999,446.40 | 32,412,495.03 | 92,116.35 | 2,606,359,188.72 |
There is no proportion of intangible assets formed by internal development to the balance ofintangible assets at the period-end.
7.15. Long-term deferred expense
Monetary Unit: CNY
| Item | Opening Balance | Increase | Amortization | Other decrease | Closing Balance |
| Improvement expense of rented fixed assets | 1,463,869.21 | 421,016.50 | 1,042,852.71 | ||
| Total | 1,463,869.21 | 421,016.50 | 1,042,852.71 |
7.16. Deferred tax assets/ deferred tax liabilities
7.16.1. Deferred tax assets before offset
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance | ||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
| Provision for asset impairment | 127,431,394.30 | 31,846,288.78 | 127,059,130.30 | 31,755,535.22 |
| Unrealized profits from internal transactions | 1,412,851,344.96 | 353,212,836.24 | 3,161,541,177.98 | 790,385,294.49 |
| Deductible losses | 5,716,197.58 | 1,429,049.39 | 5,716,197.58 | 1,429,049.40 |
| Impact from salary | 417,838,496.90 | 103,095,253.30 | 591,456,408.66 | 145,429,434.14 |
| Impact from deferred earnings | 25,455,871.42 | 6,363,967.86 | 28,531,014.28 | 7,132,753.57 |
| Impact from fixed assets depreciation | 613,056.00 | 101,154.24 | 529,787.16 | 96,441.51 |
| Recognition costs of restricted shares for equity incentive in the vesting period | 224,323,787.121 | 54,895,487.00 | 34,895,071.18 | 8,446,243.50 |
| Impact from fair value changes of other equity instrument investment | 5,752,926.37 | 1,438,231.59 | 5,752,926.37 | 1,438,231.59 |
| Total | 2,219,983,074.65 | 552,382,268.402 | 3,955,481,713.51 | 986,112,983.42 |
Note: 1. Deductible temporary differences of CNY 224,323,787.12 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.
2. The closing balance decreased CNY 433,730,715.02 compared with opening balance with adecrease by 43.98%, mainly due to decline in unrealized profits of internal transactions in the currentperiod.
7.16.2. Deferred tax liabilities before offset
Monetary 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 | 238,740,993.02 | 59,685,248.27 | 263,959,837.80 | 65,989,959.48 |
| Fair value changes of held-for-trading financial assets | 2,911,871.28 | 727,967.81 | 6,352,241.79 | 1,588,060.45 |
| Total | 241,652,864.30 | 60,413,216.08 | 270,312,079.59 | 67,578,019.93 |
7.16.3. Details of unrecognized deferred tax assets
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Deductible losses | 133,868,585.45 | 201,219,210.53 |
| Impact from employee benefits payable | 244,647.31 | 139,023.54 |
| Total | 134,113,232.76 | 201,358,234.07 |
7.16.4. Deductible losses from unrecognized deferred tax assets will due on the followingyears
Monetary Unit: CNY
| Year | Closing Amount | Opening Amount | Notes |
| The 1st year | |||
| The 2nd year | 6,713,657.39 | 6,713,657.39 | |
| The 3rd year | 13,256,244.56 | 14,491,365.44 | |
| The 4th year | 37,989,105.20 | 108,989,982.02 | |
| The 5th year | 75,909,578.30 | 71,024,205.68 | |
| Total | 133,868,585.45 | 201,219,210.53 |
7.17. Other non-current assets
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Prepaid equipment and land expense | 786,600,535.68 | 786,600,535.68 | 650,384,435.70 | 650,384,435.70 | ||
| Total | 786,600,535.68 | 786,600,535.68 | 650,384,435.70 | 650,384,435.70 | ||
7.18. Accounts payable
7.18.1. Presentation of accounts payable
Monetary Unit: CNY
| Category | Closing Balance | Opening Balance |
| Materials and service expense | 612,933,284.36 | 1,171,595,976.46 |
| Engineering equipment expense | 1,116,010,048.60 | 1,248,758,493.07 |
| Total | 1,728,943,332.96 | 2,420,354,469.53 |
7.18.2. Significant accounts payable whose aging is longer than 1 year
Monetary Unit: CNY
| Category | Closing Balance | Reason for not payment or carrying forward |
| China Construction First Group Corporation Limited | 350,304,244.39 | Within the contract settlement period |
| Total | 350,304,244.39 |
7.19. Contract liabilities
Monetary Unit: CNY
| Category | Closing Balance | Opening Balance |
| Within 1 year | 2,306,607,990.58 | 3,484,385,115.64 |
| 1-2 years | 2,617,692.67 | 4,042,470.18 |
| 2-3 years | 722,156.09 | 1,569,941.86 |
| Over 3 years | 19,595,765.60 | 20,113,173.57 |
| Total | 2,329,543,604.94 | 3,510,110,701.25 |
The amount of significant changes of carrying value and reason during the reporting period:
Monetary Unit: CNY
| Item | Amount changed | Reason |
| Contract liabilities | 1,180,567,096.31 | The closing balance decreased by CNY 1,180,567,096.31, down 33.63% compared with the opening balance, mainly due to the decline in advances from customers. |
| Total | 1,180,567,096.31 | —— |
7.20. Employee benefits payable
7.20.1. Employee benefits payable shown as follows
Monetary Unit: CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
| 1. Short-term benefits | 611,190,565.92 | 531,953,749.90 | 695,865,600.86 | 447,278,714.96 |
| 2. Post-employment benefits- defined contribution plans | 36,904,203.51 | 56,985,047.92 | 66,634,392.99 | 27,254,858.44 |
| 3. Termination benefits | 8,971.53 | 252,600.69 | 252,600.69 | 8,971.53 |
| Total | 648,103,740.96 | 589,191,398.51 | 762,752,594.54 | 474,542,544.93 |
7.20.2. Short-term employee benefits payable shown as follows
Monetary Unit: CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
| 1. Wages, bonuses, allowances and grants | 549,316,255.45 | 446,519,809.20 | 608,241,904.27 | 387,594,160.38 |
| 2. Employees’ welfare | 21,571,675.02 | 21,571,675.02 | ||
| 3. Social insurance premiums | 5,366,001.71 | 19,756,337.64 | 21,902,029.12 | 3,220,310.23 |
| Including: Medical insurance premium | 2,238,878.69 | 18,495,733.24 | 20,578,220.52 | 156,391.41 |
| Work-related injury insurance | 1,409,665.57 | 1,238,229.92 | 1,295,362.75 | 1,352,532.74 |
| Maternity insurance premium | 1,716,777.45 | 22,374.48 | 28,445.85 | 1,710,706.08 |
| Other insurance premium | 680.00 | 680.00 |
| 4. Housing funds | 9,230,529.23 | 35,499,228.22 | 31,636,817.19 | 13,092,940.26 |
| 5. Labor union expenditures and employee education funds | 47,277,779.53 | 8,606,699.82 | 12,513,175.26 | 43,371,304.09 |
| Total | 611,190,565.92 | 531,953,749.90 | 695,865,600.86 | 447,278,714.96 |
7.20.3. Defined contribution plan shown as follows
Monetary Unit: CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
| 1. Basic endowment insurance premium | 17,650,834.85 | 33,393,959.32 | 41,337,043.54 | 9,707,750.63 |
| 2. Unemployment insurance premium | 5,993,266.59 | 1,254,912.80 | 1,550,344.15 | 5,697,835.24 |
| 3. Enterprise annuity | 13,260,102.07 | 22,336,175.80 | 23,747,005.30 | 11,849,272.57 |
| Total | 36,904,203.51 | 56,985,047.92 | 66,634,392.99 | 27,254,858.44 |
7.21. Taxes payable
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Value-added tax | 261,453,888.73 | 421,216,223.94 |
| Consumption tax | 138,743,071.20 | 1,263,440,836.05 |
| Enterprise income tax | 595,522,900.78 | 1,327,750,786.20 |
| Individual income tax | 8,761,863.19 | 10,467,970.24 |
| Urban maintenance and construction tax | 26,213,119.08 | 82,437,545.17 |
| Education surcharge | 11,169,162.67 | 35,234,596.27 |
| Local education surcharge | 7,554,333.71 | 23,651,376.27 |
| Stamp duty | 3,482,426.29 | 8,490,523.62 |
| Land use tax | 437,619.06 | 437,619.35 |
| Property tax | 302,010.14 | 337,645.12 |
| Others | 24,664.54 | 14,505.56 |
| Total | 1,053,665,059.39 | 3,173,479,627.79 |
Other statements:
The closing balance decreased by CNY 2,119,814,568.40, down 66.80% compared with the openingbalance, mainly due to the taxes of the end of last year put into the treasury in the current period.
7.22. Other payables
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Dividend payable | 4,773,919,306.54 | |
| Other payables | 1,196,274,228.871 | 652,393,292.60 |
| Total | 5,970,193,535.41 | 652,393,292.60 |
Note: 1. Other payables listed in the above table are other payables minus interest payable anddividend payable. 2. At the end of the period, the closing balance of other payables increased byCNY 543,880,936.27, up 83.37% compared with the opening balance, which was mainly due to theimpact of liabilities recognized for repurchase obligations under the restricted share incentive plan.
7.22.1. Dividend payable
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Ordinary share dividends | 4,751,657,032.14 | |
| Dividend of restricted shares | 22,262,274.40 | |
| Total | 4,773,919,306.54 |
7.22.2. Other payables
7.22.2.1. Categories by nature
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Security deposit | 547,657,735.63 | 628,174,772.12 |
| Intercourse funds | 24,175,030.26 | 17,757,284.78 |
| Others | 10,472,091.38 | 6,461,235.70 |
| Repurchase obligations of restricted shares | 613,969,371.60 | |
| Total | 1,196,274,228.87 | 652,393,292.60 |
7.22.2.2. Significant other payables whose aging are longer than 1 yearOther statements:
Other payables whose aging are longer than 1 year are mainly security deposits collected fromdealers.
7.23. Non-current liabilities due within one year
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Bonds payable due within one year | 90,135,616.43 | 72,219,178.08 |
| Lease liabilities due within one year | 12,879,829.41 | 13,983,036.95 |
| Total | 103,015,445.84 | 86,202,215.03 |
7.24. Other current liabilities
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Output VAT to be transferred | 302,840,668.64 | 456,314,391.17 |
| Total | 302,840,668.64 | 456,314,391.17 |
7.25. Bonds payable
7.25.1. Bonds payable
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Corporate bonds in 2019 (Phase I) | 2,495,547,799.60 | 2,494,539,629.08 |
| Corporate bonds in 2020 (Phase I) | 1,496,844,167.80 | 1,496,246,113.15 |
| Total | 3,992,391,967.40 | 3,990,785,742.23 |
7.25.2. Increase/decrease of bonds payable (excluding other financial instrument classified asfinancial liabilities such as preferred shares and perpetual bonds)
Monetary Unit: CNY
| Bond name | Par value | Issuing date | Duration | Issuing amount | Opening Balance | Issued in the current period | Withdrawal of interest by par value | Amortization of premium and depreciation | Repayment in the reporting period | Closing Balance | |
| Corporate bonds in 2019 (Phase I) | 2,500,000,000.00 | 27 August 2019 | 3+2 | 2,490,000,000.00 | 2,494,539,629.08 | 44,382,191.78 | 1,008,170.52 | 2,495,547,799.60 | |||
| Corporate bonds in 2020 (Phase I) | 1,500,000,000.00 | 16 March 2020 | 5 | 1,494,000,000.00 | 1,496,246,113.15 | 26,034,246.57 | 598,054.65 | 1,496,844,167.80 | |||
| Total | —— | 3,984,000,000.00 | 3,990,785,742.23 | 70,416,438.35 | 1,606,225.17 | 3,992,391,967.40 | |||||
7.26. Lease liabilities
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Lease payment | 58,332,807.54 | 61,305,700.55 |
| Less: unrecognized financing cost | -6,116,837.32 | -6,654,995.52 |
| Lease liabilities due within one year | -12,879,829.41 | -13,983,036.95 |
| Total | 39,336,140.81 | 40,667,668.08 |
7.27. Deferred income
Monetary Unit: CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance | Reason |
| Government grants | 28,531,014.28 | 930,000.00 | 4,005,142.86 | 25,455,871.42 | Reception of financial allocation |
| Total | 28,531,014.28 | 930,000.00 | 4,005,142.86 | 25,455,871.42 |
Details:
Monetary Unit: CNY
| Liability Item | Opening Balance | Increase in current period | Non-operating income in current period | Other income in current period | Cost reduction in current period | Other changes | Closing Balance | Related to assets/ income |
| New mode | 6,070,300. | 693,000.0 | 5,377,300. | Related to assets |
| application project of digital workshop for solid state liquor production | 00 | 0 | 00 | |||||
| Construction project of spirit room of Luzhou Laojiao brewing technical renovation | 5,950,000.00 | 700,000.00 | 5,250,000.00 | Related to assets | ||||
| Luzhou Laojiao automatic wine production line technical renovation project | 425,000.00 | 50,000.00 | 375,000.00 | Related to assets | ||||
| Boiler reconstruction project of Luohan Brewing Base of Luzhou Laojiao | 7,585,714.28 | 632,142.86 | 6,953,571.42 | Related to assets | ||||
| Brewing wastewater treatment project | 8,500,000.00 | 1,000,000.00 | 7,500,000.00 | Related to assets | ||||
| Others | 930,000.00 | 930,000.00 | Related to assets |
7.28. Share capital
Monetary 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 | 1,464,752,476.00 | 6,862,600.00 | 6,862,600.00 | 1,471,615,076.00 | |||
7.29. Capital reserves
Monetary Unit: CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
| Capital premium (stock premium) | 3,542,967,507.48 | 629,369,046.00 | 4,172,336,553.481 | |
| Other capital reserves | 212,387,158.25 | 188,500,347.67 | 400,887,505.92 | |
| Total | 3,755,354,665.73 | 817,869,393.67 | 4,573,224,059.40 |
Note: 1. The increase in stock premium was mainly due to the impact of issuance of premiumrestricted stocks. The increase in other capital reserves was mainly due to the impact of the incometax of the costs and expenses to be recognized in the period for the issuance of restricted shares andthe expected pre-tax deductible amount in future periods in excess of the recognized costs andexpenses.
7.30. Treasury shares
Monetary Unit: CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
| Perform the repurchase obligations under the equity incentive | 636,231,646.00 | 22,262,274.40 | 613,969,371.60 | |
| Total | 636,231,646.00 | 22,262,274.40 | 613,969,371.60 |
Other statements, including notes to increase and decrease during the reporting period and thereasons for changes:
The repurchase obligation of restricted shares recognized by the Company was CNY 636,231,646.00;the decrease in treasury shares for distribution of cash dividends in the current period was CNY22,262,274.40.
7.31. Other comprehensive income
Monetary 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 | 193,605,183.54 | -18,914,133.57 | -18,914,133.57 | 174,691,049.97 | ||||
| Fair value changes of other equity instrument investmen | 193,605,183.54 | -18,914,133.57 | -18,914,133.57 | 174,691,049.97 | ||||
| t | ||||||||
| II. Other comprehensive income that will be reclassified into profit and loss | -26,078,031.22 | -6,206,369.07 | -7,493,910.32 | 1,287,541.25 | -33,571,941.54 | |||
| Including: Other comprehensive income that will be reclassified into profit and loss under equity method | -26,382,364.46 | -9,066,533.27 | -9,066,533.27 | -35,448,897.73 | ||||
| Difference from conversion of financial statements in foreign currency | 304,333.24 | 2,860,164.20 | 1,572,622.95 | 1,287,541.25 | 1,876,956.19 | |||
| Total | 167,527,152.32 | -25,120,502.64 | -26,408,043.89 | 1,287,541.25 | 141,119,108.43 |
7.32. Surplus reserves
Monetary Unit: CNY
| Item | Opening Balance | Increase in current period | Decrease in current period | Closing Balance |
| Statutory surplus reserves | 1,464,752,476.00 | 1,464,752,476.00 | ||
| Total | 1,464,752,476.00 | 1,464,752,476.00 |
7.33. Undistributed profits
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Undistributed profit before adjustment at the end of the last year | 21,187,860,235.89 | 16,236,513,212.43 |
| Undistributed profit after adjustment at the beginning of year | 21,187,860,235.89 | 16,236,513,212.43 |
| Plus: Net profit attributable to owners of the parent company for the current period | 5,531,926,340.44 | 4,226,316,722.25 |
| Less: Ordinary share dividends payable | 4,773,919,306.54 | 3,004,207,328.28 |
| Plus: Other | 15,626.84 | |
| Undistributed profits at the end of the period | 21,945,882,896.63 | 17,458,622,606.40 |
7.34. Operating revenue and cost of sales
Monetary Unit: CNY
| Item | Current Period | Previous Period | ||
| Revenue | Cost of sales | Revenue | Cost of sales | |
| Primary business | 11,549,327,272.44 | 1,595,591,564.86 | 9,195,242,633.92 | 1,286,448,541.49 |
| Other business | 115,050,280.50 | 46,718,985.75 | 121,854,393.13 | 48,706,401.97 |
| Total | 11,664,377,552.94 | 1,642,310,550.61 | 9,317,097,027.05 | 1,335,154,943.46 |
Details:
Monetary Unit: CNY
| Contract category | Liquor sales | Total |
| Commodity type | 11,549,327,272.44 | 11,549,327,272.44 |
| Including: | ||
| Medium and high grade liquor | 10,372,408,380.45 | 10,372,408,380.45 |
| Other liquor | 1,176,918,891.99 | 1,176,918,891.99 |
| By operating segment | 11,549,327,272.44 | 11,549,327,272.44 |
| Including: | ||
| Domestic | 11,458,610,295.98 | 11,458,610,295.98 |
| Outbound | 90,716,976.46 | 90,716,976.46 |
| Contract type | 11,549,327,272.44 | 11,549,327,272.44 |
| Including: | ||
| Commodity sales contract | 11,549,327,272.44 | 11,549,327,272.44 |
| Total | 11,549,327,272.44 | 11,549,327,272.44 |
7.35. Business taxes and surcharges
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Consumption tax | 759,217,972.85 | 768,511,169.55 |
| Urban maintenance and construction tax | 131,976,380.41 | 113,588,226.81 |
| Educational surcharge | 56,558,689.68 | 48,680,668.64 |
| Property tax | 34,169,290.28 | 8,536,994.15 |
| Land use tax | 17,874,337.59 | 15,056,103.68 |
| Stamp duty | 8,264,059.53 | 5,789,652.51 |
| Others | 92,783.65 | 56,957.69 |
| Local education surcharge | 37,706,254.75 | 32,453,779.09 |
| Total | 1,045,859,768.74 | 992,673,552.12 |
7.36. Selling and distribution expenses
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Advertising promotion expense | 691,914,456.49 | 407,510,592.52 |
| Promotion expense | 142,494,942.50 | 482,468,677.16 |
| Employee compensation | 204,443,388.51 | 183,923,965.82 |
| Storage and logistics costs | 63,874,054.36 | 48,338,332.97 |
| Others | 111,135,142.80 | 61,006,363.45 |
| Total | 1,213,861,984.66 | 1,183,247,931.92 |
7.37. General and administrative expenses
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Employee compensation | 260,100,920.11 | 258,646,895.05 |
| Depreciation and amortization | 55,428,718.37 | 46,232,227.29 |
| Management fee and service expense | 15,223,826.86 | 24,286,900.46 |
| Others | 211,913,289.15 | 110,395,756.90 |
| Total | 542,666,754.49 | 439,561,779.70 |
7.38. Research and development expenses
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Comprehensive research and development expenses | 74,487,055.16 | 36,688,121.08 |
| Total | 74,487,055.16 | 36,688,121.08 |
Other statements:
The current period increased CNY 37,798,934.08 compared with previous period with an increase by
103.03%, mainly due to increase in comprehensive research and development expenses.
7.39. Financial expenses
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Interest expenses | 119,589,682.10 | 75,787,443.01 |
| Less: Interest income | 237,072,806.72 | 206,402,358.25 |
| Losses from currency exchange | -10,795,717.36 | 1,433,551.74 |
| Handling charges | 913,004.25 | 365,454.45 |
| Amortization of unrecognized financing costs | 377,416.63 | 807,941.63 |
| Total | -126,988,421.10 | -128,007,967.42 |
7.40. Other income
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Government grants | 9,141,196.38 | 7,226,821.19 |
| Individual income tax commission refund | 1,603,531.79 | 1,814,223.82 |
| Total | 10,744,728.17 | 9,041,045.01 |
7.41. Investment income
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Investment income from long-term equity investments under the equity method | 37,796,914.64 | 121,343,983.69 |
| Investment income gained during the period of holding held-for-trading financial assets | 6,795,921.96 |
| Investment income from disposal of held-for-trading financial assets | 4,827,927.32 | |
| Dividend income gained during the period of holding other equity instrument investment | 8,078,717.94 | 6,662,660.52 |
| Total | 57,499,481.86 | 128,006,644.21 |
Other statements:
1. There is no major restriction on the repatriation of the Company's investment income.
2. The current period decreased CNY 70,507,162.35 compared with previous period with a decreaseby 55.08%, mainly due to the decline in profitability of the investee Huaxi Securities Co., Ltd.
7.42. Gain on changes in fair value
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Held-for-trading financial assets | 5,862,846.29 | |
| Total | 5,862,846.29 |
7.43. Credit impairment loss
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Bad debt loss of other receivables | -581,432.64 | 55,124.50 |
| Bad debt loss of accounts receivable | -2,831.34 | -273,954.83 |
| Total | -584,263.98 | -218,830.33 |
7.44. Gains from disposal of assets
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Gains from disposal of non-current assets | 19,789,402.07 | 180,849.31 |
| Including: Gains from disposal of fixed assets | 2,588.69 | 180,849.31 |
| Gains from disposal of intangible assets | 19,786,813.38 | |
| Total | 19,789,402.071 | 180,849.31 |
Note: 1. The current period increased CNY 19,608,552.76 compared with previous period, mainly dueto the disposal of land use rights in the current period.
7.45. Non-operating income
Monetary Unit: CNY
| Item | Current Period | Previous Period | The amount included in the extraordinary gains and losses of the current period |
| Compensation for default | 3,384,765.95 | 1,190,640.00 | 3,384,765.95 |
| Others | 7,750,967.38 | 24,520,664.83 | 7,750,967.38 |
| Total | 11,135,733.33 | 25,711,304.83 | 11,135,733.331 |
Note: 1. The current period decreased CNY 14,575,571.50 compared with previous period with adecrease by 56.69%, mainly due to YoY decrease in income from anti-counterfeiting claims.
7.46. Non-operating costs
Monetary Unit: CNY
| Item | Current Period | Previous Period | The amount included in the extraordinary gains and losses of the current period |
| Donation | 1,500,000.00 | 4,045,600.00 | 1,500,000.00 |
| Losses from damage retirement of non-current assets | 70,762.97 | 70,762.97 | |
| Others | 378,246.54 | 4,237,809.08 | 378,246.54 |
| Total | 1,949,009.51 | 8,283,409.08 | 1,949,009.51 |
Other statements:
The current period decreased CNY 6,334,399.57 compared with previous period with a decrease by
76.47%, mainly due to the decrease in donation and others.
7.47. Income tax expense
7.47.1. Statement of income tax expense
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Current period income tax | 1,366,370,466.01 | 1,269,426,840.24 |
| Deferred income tax | 433,650,076.381 | 76,635,594.62 |
| Total | 1,800,020,542.39 | 1,346,062,434.86 |
Note: 1 The current period increased CNY 453,958,107.53 compared with previous period with anincrease by 33.72%, mainly due to increase in deferred income tax expense.
7.47.2. Adjustment for accounting profit and income tax expense
Monetary Unit: CNY
| Item | Current Period |
| Total profit | 7,374,678,778.61 |
| Income tax expenses determined by statutory/applicable tax rate | 1,843,669,694.65 |
| Impact from subsidiaries’ different tax rates | -820,833.86 |
| Impact from adjust for impact from income tax expense in previous period | -15,268,581.86 |
| Impact from non-taxable income | -11,468,908.15 |
| Impact from deductible loss of unrecognized deferred income tax assets in prior period | -18,393,721.17 |
| Impact from deductible temporary difference or losses due to unrecognized deferred tax asset in current period | 1,556,064.90 |
| Impact from reversal of deductible loss of recognized deferred income tax assets in prior period | 746,827.88 |
| Income tax expense | 1,800,020,542.39 |
7.48. Other comprehensive income
Details in Note 5.31. Other comprehensive income.
7.49. Notes to the statement of cash flow
7.49.1. Cash received from other operation activities
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Recovery of saving deposits involving contract disputes | 2,218,722.45 | |
| Government grants | 5,906,207.21 | 11,642,998.38 |
| Interest income from bank deposit | 210,646,002.01 | 174,050,502.18 |
| Others | 69,159,079.77 | 310,409,766.53 |
| Total | 287,930,011.44 | 496,103,267.09 |
7.49.2. Cash paid for other operating activities
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Cash paid for expenses | 1,351,327,137.51 | 1,068,313,251.12 |
| Total | 1,351,327,137.51 | 1,068,313,251.12 |
7.49.3. Cash paid for other financing activities
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Cash paid for rent of houses and equipment | 4,353,331.41 | 1,844,313.68 |
| Registration fee for stocks for equity incentive | 6,862.60 | |
| Total | 4,360,194.01 | 1,844,313.68 |
7.50. Supplementary information to statement of cash flow
7.50.1. Supplementary information to statement of cash flow
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| 1. Reconciliation of net profit to cash flow from operating activities: | ||
| Net profit | 5,574,658,236.22 | 4,266,153,835.28 |
| Plus: Provision for asset impairment | 584,263.98 | 218,830.33 |
| Depreciation of fixed asset, oil and gas assets and productive biological assets | 261,325,836.44 | 229,030,142.28 |
| Depreciation of right-of-use assets | 7,440,461.35 | |
| Amortization of intangible assets | 33,148,347.68 | 32,077,465.74 |
| Amortization of long-term deferred expense | 421,016.50 | 421,016.50 |
| Losses from disposal of fixed assets, intangible assets and other long-term assets (Gains use “-”) | -19,789,402.07 | -180,849.31 |
| Losses from retirement of fixed assets (Gains use “-”) | ||
| Losses from change in fair value (Gains use “-”) | -5,862,846.29 | |
| Financial expenses (Gains use “-”) | -126,988,421.10 | -128,007,967.42 |
| Losses on investments (Gains use “-”) | -57,499,481.86 | -128,006,644.21 |
| Decrease in deferred income tax assets (Increase uses “-”) | 433,730,715.02 | 76,635,594.62 |
| Increase in deferred income tax liabilities (Decrease uses “-”) | ||
| Decrease in inventories (Increase use “-”) | -1,435,707,467.48 | -1,220,911,532.46 |
| Decrease in operating receivables (Increase use “-”) | 3,179,384,157.51 | 1,047,344,251.88 |
| Increase in operating payables (Decrease use “-”) | -3,767,830,450.56 | -1,436,537,103.33 |
| Others | ||
| Net cash flows from operating activities | 4,077,014,965.34 | 2,738,237,039.90 |
| 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 | 16,914,836,112.50 | 13,524,354,508.65 |
| Less: Opening balance of cash | 13,402,528,941.83 | 11,568,195,062.81 |
| Plus: Closing balance of cash equivalents | ||
| Less: Opening balance of cash equivalents | ||
| Net change in cash and cash equivalents | 3,512,307,170.67 | 1,956,159,445.84 |
7.50.2. Composition of cash and cash equivalent
Monetary Unit: CNY
| Item | Opening Balance | Closing Balance |
| 1. Cash | 16,914,836,112.50 | 13,402,528,941.83 |
| Including: Cash on hand | 26,149.25 | 26,281.86 |
| Unrestricted bank deposit | 16,897,160,631.76 | 13,391,713,104.08 |
| Other unrestricted cash and cash equivalents | 17,649,331.49 | 10,789,555.89 |
| 3. Closing balance of cash and cash equivalents | 16,914,836,112.50 | 13,402,528,941.83 |
| Including: Cash and cash equivalent with restriction to use of parent company and subsidiaries | 131,273,803.86 | 110,965,638.73 |
Other statements:
The cash and cash equivalent with restriction to use are CNY 131,273,803.86, of which, CNY1,400,000.00 is a travel service deposit with limited use rights in other cash and cash equivalents,CNY 10,087,514.43 is the bank cash deposits for L/G and CNY 119,786,289.43 is provision for fixeddeposit interest on an accrual basis.
7.51. Notes to items in statements of changes in owners' equityNotes to names under the item of “Other” in the adjusted ending balance for the same period of lastyear and the corresponding amount:
None
7.52. Assets with restricted ownership or use rights
Monetary Unit: CNY
| Item | Closing book balance | Reason for restriction |
| Bank deposits | 119,786,289.43 | Provision for fixed deposit interest on an accrual basis |
| Other cash and cash equivalents | 11,487,514.43 | Travel service deposit with limited use rights and bank cash deposits for L/G |
| Total | 131,273,803.86 |
7.53. Foreign currency transactions
7.53.1. Foreign currency transactions
Monetary Unit: CNY
| Item | Closing Balance in Foreign Currency | Exchange Rate | Closing Balance in CNY |
| Cash at Bank and on Hand | |||
| Including: USD | 46,898,478.91 | 6.7114 | 314,754,451.36 |
| EUR | 1,044.50 | 7.0084 | 7,320.27 |
| HKD | 14,524,200.67 | 0.8552 | 12,421,096.41 |
| GBP | 291,903.10 | 8.1365 | 2,375,069.57 |
| AUD | 3,186.64 | 4.6145 | 14,704.75 |
| Accounts Receivable | |||
| Including: USD | 40,190.88 | 6.7114 | 269,737.04 |
| EUR | |||
| HKD | 845,506.82 | 0.8552 | 723,077.43 |
| Other Receivables | |||
| Including: HKD | 1,471,719.86 | 0.8552 | 1,258,614.82 |
| Accounts Payable | |||
| Including: USD | 162,108.35 | 6.7114 | 1,087,973.99 |
| HKD | 2,909,920.94 | 0.8552 | 2,488,564.39 |
| Other Payables | |||
| Including: HKD | 21,171,105.24 | 0.8552 | 18,105,529.20 |
| Non-current liabilities due within one year | |||
| Including: HKD | 3,249,131.47 | 0.8552 | 2,778,657.23 |
| Lease liabilities | |||
| Including: HKD | 6,201,152.90 | 0.8552 | 5,303,225.96 |
7.53.2. 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 |
7.54. Government grants
7.54.1. Details of government grants
Monetary Unit: CNY
| Item | Amount | Presentation | Amount included in profit or loss of the current period |
| Related to assets | 25,455,871.42 | Deferred income | 4,005,142.86 |
| Related to income | 5,136,053.52 | Other income | 5,136,053.52 |
| Total | 30,591,924.94 | 9,141,196.38 |
7.54.2. Return of government grants
□Applicable ? N/A
Other statements:
8. Changes in consolidated scope
8.1. Business combination not under common control
8.1.1. Business combination not under common control during current periodOther statements:
There is no business combination not under common control during current period.
8.2. Business combination under common control
8.2.1. Business combination under common control during current periodOther statements:
There is no business combination under common control during current period.
8.3. Reverse purchase
There is no reverse purchase during current period.
8.4. 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
8.5. 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:
The subsidiary Luzhou Laojiao Bosheng Hengxiang Liquor Sales Co., Ltd. was liquidated andcancelled in June 2022.
9. Interests in other entities
9.1. Interests in subsidiaries
9.1.1. Group composition
| Name of Subsidiaries | Major business location | Place of registration | Nature of business | Shareholding Proportion | Acquisition method | |
| Direct | Indirect | |||||
| Luzhou Laojiao Brewing Co., Ltd. | Luzhou | Luzhou | Liquor manufacture and sales | 100.00% | Investment | |
| Luzhou Red Sorghum Modern Agricultural Development Co., Ltd. | Luzhou | Luzhou | Agricultural product planting and sales | 60.00% | Business combination under common control | |
| Luzhou Laojiao Sales Co., Ltd. | Luzhou | Luzhou | Liquor sales | 100.00% | Investment | |
| Luzhou Laojiao Nostalgic Liquor Marketing Co., Ltd. | Luzhou | Luzhou | Liquor sales | 100.00% | Investment | |
| Luzhou Laojiao Custom Liquor Co., Ltd. Note | Luzhou | Luzhou | Liquor sales | 15.00% | Investment | |
| Luzhou Laojiao Selected Supply Chain Management Co., Ltd. | Luzhou | Luzhou | Liquor sales | 100.00% | Investment | |
| Guangxi Luzhou Laojiao Imported Liquor Industry Co., Ltd. | Qinzhou | Qinzhou | Red wine production and sales | 100.00% | Investment | |
| Luzhou Dingli Liquor Industry Co., Ltd. | Luzhou | Luzhou | Liquor sales | 100.00% | Investment | |
| Luzhou Dingyi Liquor Industry Sales Co., Ltd. | Luzhou | Luzhou | Liquor sales | 100.00% | Investment | |
| Luzhou Laojiao New Liquor Industry Co., Ltd. | Luzhou | Luzhou | Liquor sales | 100.00% | Investment | |
| Luzhou Laojiao Import and Export Trade Co., Ltd. | Luzhou | Luzhou | Wine import and export trade | 100.00% | Investment | |
| Luzhou Laojiao Boda Liquor Industry Marketing Co., Ltd. | Luzhou | Luzhou | Liquor sales | 75.00% | Investment | |
| Luzhou Laojiao Fruit Wine Industry Co., Ltd. Note | Luzhou | Luzhou | Fruit wine sales | 41.00% | Investment | |
| Mingjiang Co., Ltd. | America | America | Liquor sales | 54.00% | Investment | |
| Luzhou Laojiao New Retail Co., Ltd. | Luzhou | Luzhou | Liquor sales | 40.00% | 100.00% | Investment |
| Luzhou Pinchuang Technology Co., Ltd. | Luzhou | Luzhou | Technology development and service | 100.00% | Investment | |
| Luzhou Laojiao Tourism Culture Co., Ltd. | Luzhou | Luzhou | Liquor sales, tourism | 100.00% | Investment | |
| Luzhou Laojiao International Development (Hong Kong) Co., Ltd. | Hong Kong | Hong Kong | Wine sales | 55.00% | Investment | |
| Luzhou Laojiao Commercial Development (North America) Co., Ltd. | America | America | Business development | 100.00% | Investment | |
| Luzhou Laojiao Electronic Commerce Co., Ltd. | Luzhou | Luzhou | Wine sales | 90.00% | Investment | |
| Luzhou Laojiao Whitail Liquor Industry Co., Ltd. Note | Luzhou | Luzhou | Wine sales | 35.00% | Investment | |
| Luzhou Baonuo Biotechnology Co., Ltd. | Luzhou | Luzhou | Fermented product manufacture | 100.00% | Investment | |
| Luzhou Laojiao Health Liquor Industry Co.,Ltd. | Luzhou | Luzhou | Health care wine manufacture and sales | 100.00% | Business combination under common control | |
| Luzhou Laojiao Health Sales Co., Ltd. | Luzhou | Luzhou | Health care wine sales | 100.00% | Business combination under common control |
Statement for that the proportion of share-holding is different from the proportion of voting rights:
As the Note 3.6, the Company holds less than 51% shares of Luzhou Laojiao Custom Liquor Co., Ltd.,Luzhou Laojiao Fruit Liquor Industry Co., Ltd., and Luzhou Laojiao Whitail Liquor Industry Co., Ltd.but in these companies’ board, among the five members, the Company has sent three persons, whichis in the majority. The Company has substantial control over these companies, so they are included inthe consolidation scope.
9.1.2. Important non-wholly-owned subsidiaries
Monetary 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% | 17,767,125.46 | 78,422,208.86 |
9.1.3. Major financial information of important non-wholly-owned subsidiaries
Monetary Unit: CNY
| Name of subsidiary | Closing Balance | Opening Balance | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Luzhou Laojiao Boda Liquor Industry Marketing Co., Ltd. | 325,240,019.20 | 325,240,019.20 | 11,551,183.78 | 11,551,183.78 | 384,313,678.76 | 664,998.84 | 384,978,677.60 | 142,358,344.01 | 142,358,344.01 | |||
Monetary 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. | 64,606,733.54 | 71,068,501.83 | 71,068,501.83 | -4,572,218.59 | 474,516,972.67 | 55,454,129.49 | 55,454,129.49 | 3,903,880.92 |
9.2. Interests in joint ventures and associates
9.2.1. 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 | |
Statement for that the proportion of shareholdings in joint ventures or associates is different from theproportion of voting rights:
The basis of holding less than 20% of the voting rights in other entities but having significant influenceor holding 20% or more than 20% of the voting rights in other entities but having insignificantinfluence:
The Company has the substantive decision-making power, so the Company still has significantinfluence on Huaxi Securities.
9.2.2. Major financial information of important associates
Monetary Unit: CNY
| Closing Balance/Amount in current period | Opening Balance/Amount in previous period | |
| Current assets | 86,768,241,815.71 | 86,844,635,628.06 |
| Non-current assets | 8,958,613,842.94 | 8,950,278,369.10 |
| Total assets | 95,726,855,658.65 | 95,794,913,997.16 |
| Current liabilities | 56,539,658,868.01 | 57,157,134,622.07 |
| Non-current liabilities | 16,832,807,057.19 | 16,233,476,784.79 |
| Total liabilities | 73,372,465,925.20 | 73,390,611,406.86 |
| Non-controlling shareholder interest | 25,253,884.71 | 26,409,206.44 |
| Shareholder interest attributable to parent company | 22,329,135,848.74 | 22,377,893,383.86 |
| Share of net assets calculated based on shareholding proportion | 2,320,793,782.15 | 2,325,861,429.43 |
| Adjusted | ||
| --Goodwill | ||
| --Unrealized profits of internal transactions | ||
| --Others | 167,466,735.90 | 167,466,735.90 |
| Book value of equity investments in associate companies | 2,487,268,124.46 | 2,493,328,165.33 |
| Fair value of equity investments in associate companies that have public quote | 2,138,996,168.96 | 2,687,386,768.40 |
| Operating revenue | 1,749,801,559.42 | 2,507,607,439.97 |
| Net profit | 290,468,284.96 | 980,557,738.54 |
| Net profit from discontinued operation | ||
| Other comprehensive income | -77,784,068.34 | 34,982,558.76 |
| Total comprehensive income | 212,684,216.62 | 1,015,540,297.31 |
| Dividends from associate companies this year |
9.2.3. Financial information summarized of unimportant joint ventures and associatecompanies
Monetary 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 | 169,782,599.32 | 133,416,070.92 |
| Total following items calculated on the basis of shareholding proportion | ||
| --Net profit | -11,746,550.86 | 5,372,490.27 |
| -- Total comprehensive income | -11,746,550.86 | 5,372,490.27 |
Other statements:
Unimportant associate companies refer to Sichuan Development Wine Investment Co., Ltd., SichuanTongniang Liquor Industry Technology Research Institute Co., Ltd., CTS Luzhou Laojiao CulturalTourism Development Co., Ltd. and Luzhou Laojiao Postdoctoral Workstation Science and InnovationCo., Ltd.
10. Risks related to financial instruments
The Company's primary financial instruments include monetary capital, trading financial assets,accounts receivable, receivables financing, receivables other than tax refundable, other equityinstruments, bills payable, accounts payable, other payables, lease liabilities and some other currentliabilities. A detailed description of each financial instrument is set out in Note V and notes to theConsolidated 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 policies
approved 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.
10.1. 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, andlarge 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 30 June 2022, the balance of the top fivecustomers of the Company's accounts receivable amounted to CNY 1,155,900.00, accounting for 77.48%of the balance of the Company's accounts receivable.
10.2. 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 to maintain a balance between financing sustainability and flexibility.As at 30 June 2022, the Company has been able to meet its own continuing operation requirementsthrough 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 | |
| Notes payable | ||||||
| Accounts payable | 1,728,943,332.96 | 1,728,943,332.96 | 1,728,943,332.96 | |||
| Other | 1,196,274,228.87 | 1,196,274,228.87 | 1,196,274,228.87 | |||
| payable | ||||||
| Non-current liabilities due within one year | 103,015,445.84 | 103,018,572.52 | 103,018,572.52 | |||
| Other current liabilities | 302,840,668.64 | 302,840,668.64 | 302,840,668.64 | |||
| Lease liabilities | 39,336,140.81 | 45,449,851.45 | 8,402,901.31 | 8,240,030.32 | 28,806,919.82 | |
| Subtotal | 3,370,409,817.12 | 3,376,526,654.44 | 3,331,076,802.99 | 8,402,901.31 | 8,240,030.32 | 28,806,919.82 |
10.3. Market risk
10.3.1. 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 movements on the Company's foreign exchange risk. As at 30 June 2022, theCompany's assets and liabilities are mainly in CNY balance. The Company's management considersthe impact of changes in foreign exchange risk on the Company's financial statements to be minimal.
10.3.2. Rate risk-changes in cash flow
The Company's operating capital is sufficient and in recent years there has been no external borrowing,so interest rate risk is minimal.
10.3.3. Other price risks
Other price risk refers to the risk of fluctuation caused by market price changes other than foreignexchange risk and interest rate risk, whether these changes are caused by factors related to a singlefinancial instrument or its issuer or all similar financial instruments traded in the market. Other pricerisks faced by the Company mainly come from available-for-sale financial assets measured at fair value.
11. Fair value disclosure
11.1. Closing fair value of assets and liabilities measured at fair value
Monetary Unit: CNY
| Item | Closing fair value | |||
| Level 1 | Level 2 | Level 3 | Total | |
| 1. Continuous measurement at fair value | -- | -- | -- | -- |
| 1.1 Held-for-trading financial assets | 1,302,911,871.28 | 1,302,911,871.28 | ||
| 1.1.1 Financial assets measured at fair value with their changes included into current profits/losses | 1,302,911,871.28 | 1,302,911,871.28 | ||
| 1.1.1.4 Wealth management products | 1,302,911,871.28 | 1,302,911,871.28 | ||
| 1.3 Investments in other equity | 303,610,149.78 | 34,458,125.87 | 338,068,275.65 | |
| instruments | ||||
| 1.6 Accounts receivable financing | 1,671,605,965.76 | 1,671,605,965.76 | ||
| Total assets continuously measured at fair value | 303,610,149.78 | 3,008,975,962.91 | 3,312,586,112.69 | |
| 2. Discontinuous measurement at fair value | -- | -- | -- | -- |
11.2. Determination basis of the market value of items measured continuously anddiscontinuously within Level 1 of the fair value hierarchyThe listed companies in mainland China determine the fair value of other equity instrument investmentaccording to the closing price on the last trading day of Shenzhen Stock Exchange or Shanghai StockExchange at the period-end. The companies listed in Hong Kong determine the fair value of otherequity instrument investment according to the closing price of Hong Kong Dollar on the last trading dayof Hong Kong Stock Exchange at the period-end and the median price of CNY exchange rate disclosedon the same day by China Foreign Exchange Trade System.
11.3. Valuation technique adopted and nature and amount determination ofimportant parameters for continuously and discontinuously within Level 2 of thefair value hierarchyNone
11.4. Valuation technique adopted and nature and amount determination ofimportant parameters for continuously and discontinuously within Level 3 of thefair value hierarchyTrading financial assets are wealth management products of the collective asset management plan andare measured at fair value at the end of the period based on the amount calculated on the basis of thenet unit value as presented in the report on net value of assets given by the asset manager.
Accounts receivable financing: As the timing and price of bills discounted may not be reliably estimateddue to the short maturity of the bills all being less than one year and the endorsement of the negotiablebills being valued at book value, the Company measures the bills receivable at their book value as areasonable estimate of fair value.
Other equity instrument investment: Due to no significant changes in business environment, businesscondition and financial situation of invested companies, the Company shall measure the fair valueaccording to the lower one between investment cost and the share of net assets enjoyed by investedcompanies on the base date as the reasonable estimation.
11.5. Continuous fair value measurement items at level 3, adjustment between thebeginning carrying value and the ending carrying value and sensitivity analysis onunobservable parametersNone
11.6. Explain the reason for conversion and the policy governing when theconversion happens if conversion happens among continuous fair valuemeasurement items at different levelNone
11.7. Changes in valuation techniques in the reporting period and reasons for thechanges
None
11.8. Fair value of financial assets and liabilities not measured at fair valueNone
12. Related parties and related party transactions
12.1. The parent company of the Company
| Parent company | Registration place | Business nature | Registered capital | Shareholding proportion by the parent company | Voting rights proportion by the parent company |
| Luzhou Laojiao Group Co., Ltd. | Luzhou, Sichuan | Investment and asset management | 2,798,818,800.00 | 25.90% | 50.77% |
Statements for situation of parent company:
The nature of parent company: Limited liability company (state-owned);Registration place: Ai Rentang Square, China Baijiu Golden Triangle Liquor Industry Park, Luzhou,Sichuan Province; Business Scope: Investment and asset management; investment in liquor, food,finance, trade, logistics, education, medical and health, cultural tourism, Internet industry; holdingcompany services; social economic consulting, business management consulting; enterprisemanagement services; supply chain management services; import and export business and tradeagency; food production, sales (including online); planting and sales of crops (including online). (TheCompany cannot start business activities until projects subject to approval according to law areapproved by relevant departments.)The final control party of the Company is SASAC of Luzhou.
12.2. Subsidiaries of the Company
For details please see Note 9.1. Interests in subsidiaries
12.3. Joint ventures and associates of the Company
For details please see Note 9.3. Interests in joint ventures and associates.Other statements:
There are no other joint ventures or associates that have related party transactions with the Companyin the current period or in the previous period and result in balance.
12.4. Other related party of the Company
| Name of Other Related Party | Relationship with the Company |
| Luzhou Jiachuang Wine Supply Chain Management Co., Ltd. | The same parent company |
| Luzhou Laojiao Zhitong Trading Co., Ltd. | The same parent company |
| Sichuan Hongxin Financing Guarantee Co., Ltd. | The same parent company |
| Sichuan Kangrun Investment Group Co., Ltd. | The same parent company |
| Sichuan Lianzhong Supply Chain Service Co., Ltd. | The same parent company |
| New Shottes Brook Private Company | The same parent company |
| Guangzhou Zhongying Gongyuan Energy Saving Technology Co., Ltd. | Sub-subsidiary of parent company |
| Sichuan Yukun Logistics Co., Ltd. | Sub-subsidiary of parent company |
| Sichuan Kangrun Group Construction and Installation Engineering Co., Ltd. | Sub-subsidiary of parent company |
| Luzhou Qingxigu Scenic Area Management Co., Ltd. | Sub-subsidiary of parent company |
| Luzhou Yuanhai Lianzhong Supply Chain Co., Ltd. Note 2 | Sub-subsidiary of parent company |
| Luzhou Sanrenxuan Liquor Industry Co., Ltd. | Joint venture of parent company |
| Sichuan Development Wine Investment Co., Ltd. | Joint venture |
| CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | Joint venture |
| Luzhou XingLu Water (Group) Co., Ltd. | Subsidiary of the second largest shareholder |
| Luzhou China Resources Xinglu Gas Co., Ltd. | Subsidiary of the second largest shareholder |
| Luzhou XingLu Property Management Co., Ltd. | Subsidiary of the second largest shareholder |
| Sichuan Meiheshan Village Winery Industry Co.,Ltd. | Minority shareholder of the subsidiary Fruit Wine Industry |
| Other subsidiaries of Luzhou XingLu Investment Group Co., Ltd. | Other subsidiary of the second largest shareholder |
| Other subsidiaries of Luzhou Laojiao Group Co., Ltd. | Other subsidiary of parent company |
Other statements:
1. On 31 December 2015, Laojiao Group and XingLu Investment Group, the second biggestshareholder, signed a concerted action agreement that when the parties in deal with the Company’sbusiness development and make decisions by shareholders meeting and board of directors accordingto the company law and other relevant laws and regulations and the articles of association, theparties should adopt the consistent actions. The agreement is valid as of 13 December 2015 andends on 1 June 2021. During the effective period of this agreement, before any party submitsproposals involving the major issues of the Company's business development to the shareholdersmeeting or exercise the voting rights at the shareholders meeting and the board of directors, theinternal coordination for relevant proposals and voting events shall be conducted by persons acting inconcert. If there are different opinions, it will be subject to Laojiao Group’s opinion. On 27 May 2021,Laojiao Group and XingLu Investment Group renewed the concerted action agreement. Theagreement is valid as of 1 June 2021 and ends on 31 May 2024.In view of this, the Company will disclose the transactions with XingLu Investment Group and itscontrolling enterprises as other related parties of the Company.
2. Luzhou COSCO Lianzhong Logistics Co., Ltd. was renamed Luzhou Yuanhai Lianzhong SupplyChain Co., Ltd. in the current period.
12.5. Related transactions
12.5.1. Related transactions of purchase and sales of goods / rendering and receipt ofservicesTable of purchase of goods / receipt of services
Monetary Unit: CNY
| Name of Related Party | Transaction | Amount in current period | Approved trading amount | Whether over approved trading amount | Amount in previous period |
| Receipt of services: | |||||
| Luzhou XingLu Investment Group Co., Ltd. and its other subsidiaries | Property management fee ,etc. | 11,777,837.70 | 5,310,943.19 | ||
| Laojiao Group and its other subsidiaries | Training, accommodation, storage, transportation services, property management fee, etc. | 10,038,101.46 | 13,826,965.44 | ||
| CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | Travel agency service fee, etc. | 43,818.00 | 3,404,282.00 | ||
| Purchase of goods: | |||||
| Laojiao Group and its other subsidiaries | Red wine, water, power, etc. | 15,407,103.04 | 19,883,752.63 | ||
| Luzhou XingLu Investment Group Co., Ltd. and its other subsidiaries | Water, gas | 6,281,248.54 | 6,203,699.11 | ||
| Luzhou XingLu Investment Group Co., Ltd. and its other subsidiaries | Purchase and construction of fixed assets (moving and transformation of pipelines, etc.) | 1,071,420.60 | |||
| Sichuan Meiheshan Village Winery Industry Co.,Ltd. | Other wine | 674,271.50 | |||
| Total | 43,548,108.74 | 50,375,334.47 |
Table of sales of goods and rendering of service
Monetary Unit: CNY
| Name of Related Party | Transaction | Amount in current period | Amount in previous period |
| Sales of goods: | |||
| Laojiao Group and its | Wine, water, power, etc. | 52,806.72 | 6,578,271.51 |
| subsidiaries | |||
| Luzhou Sanrenxuan Liquor Industry Co., Ltd. | Wine | 32,528,587.08 | 15,278,637.12 |
| CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | Wine | 30,708,670.79 | 53,519,643.03 |
| Rendering of service: | |||
| Laojiao Group and its subsidiaries | Rendering of service | 1,095,440.00 | |
| Total | 63,290,064.59 | 76,471,991.66 |
12.5.2. Related party leasing
The Company as lessor:
Monetary Unit: CNY
| Name of lessee | Type of leased asset | Leasing income recognized during current period | Leasing income recognized during previous period |
| Laojiao Group and its subsidiaries | House lease | 1,111,300.02 |
The Company as lessee:
Monetary Unit: CNY
| Name of lessor | Type of leased asset | Rental expenses of short-term lease simplified treated and low-value asset lease (if applicable) | Variable lease payments not included in the measurement of lease liabilities (if applicable) | Paid rent | Income expense of lease liabilities undertaken | Increased right-of-use assets | |||||
| Amount in current period | Amount in previous period | Amount in current period | Amount in previous period | Amount in current period | Amount in previous period | Amount in current period | Amount in previous period | Amount in current period | Amount in previous period | ||
| Laojiao Group and its subsidiaries | Lease | 1,430,038.43 | |||||||||
12.5.3. Key management compensation
Monetary Unit: CNY
| Item | Amount in current period | Amount in previous period |
| Key management | 3,813,084.72 | 3,770,000.24 |
12.6. Receivables and payables of related parties
12.6.1. Receivables
Monetary Unit: CNY
| Item | Related party | Closing Balance | Opening Balance | ||
| Book value | Provision for bad debt | Book value | Provision for bad debt | ||
| Accounts receivable | Luzhou Xinglu Property Management | 1,243.86 | 62.19 | ||
| Co., Ltd. | |||||
| Prepayment | New Shottes Brook private company | 611,542.54 | |||
| Prepayment | Luzhou China Resources Xinglu Gas Co., Ltd. | 21,497.85 | 19,536.30 | ||
| Prepayment | Luzhou XingLu Water (Group) Co., Ltd. | 680,348.88 | 690,115.49 | ||
| Prepayment | Sichuan Meiheshan Village Winery Industry Co.,Ltd. | 2,961,479.50 | 2,961,479.50 | ||
| Other receivables | CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | 2,506,590.68 | 247,689.88 | 3,590,790.65 | 354,539.53 |
12.6.2. Payables
Monetary Unit: CNY
| Item | Related party | Closing Balance | Opening Balance |
| Accounts payable | Guangzhou Zhongying Gongyuan Energy Saving Technology Co., Ltd. | 355,312.88 | 355,312.88 |
| Accounts payable | Sichuan Lianzhong Supply Chain Service Co., Ltd. | 648,998.20 | 3,679.25 |
| Accounts payable | Luzhou Yuanhai Lianzhong Supply Chain Co., Ltd. | 221,000.00 | |
| Accounts payable | CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | 413.50 | 10,838.00 |
| Accounts payable | Luzhou XingLu Property Management Co., Ltd. | 130,000.00 | |
| Accounts payable | Sichuan Yukun Logistics Co., Ltd. | 3,851.28 | |
| Contractual liabilities (tax inclusive) | Luzhou Sanrenxuan Liquor Industry Co., Ltd. | 41,732,509.92 | 14,745,240.00 |
| Contractual liabilities (tax inclusive) | Sichuan Lianzhong Supply Chain Service Co., Ltd. | 35,220.78 | 158,295.76 |
| Contractual liabilities (tax inclusive) | CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | 173,273.98 | 19,017,274.30 |
| Contractual liabilities (tax inclusive) | Luzhou Laojiao Group Co., Ltd. | 523,760.03 | |
| Contractual liabilities (tax inclusive) | Luzhou Laojiao Construction and Installation Engineering Co., Ltd. | 6,144.00 | |
| Contractual liabilities (tax inclusive) | Luzhou Laojiao Zhitong Trading Co., Ltd. | 55,586.00 | |
| Contractual liabilities (tax inclusive) | Luzhou Qingxigu Scenic Area Management Co., Ltd. | 460.80 | |
| Contractual liabilities (tax inclusive) | Luzhou Yuanhai Lianzhong Supply Chain Co., Ltd. | 37,762.51 | |
| Contractual liabilities (tax inclusive) | Sichuan Hongxin Financing Guarantee Co., Ltd. | 3,072.00 |
| Other payables | Luzhou Jiachuang Wine Supply Chain Management Co., Ltd. | 1,500,000.00 | |
| Other payables | Luzhou Sanrenxuan Liquor Industry Co., Ltd. | 150,000.00 | 150,000.00 |
| Other payables | Sichuan Lianzhong Supply Chain Service Co., Ltd. | 17,391,463.00 | 1,684,148.00 |
| Other payables | Sichuan Kangrun Group Construction and Installation Engineering Co., Ltd. | 34,175.78 | |
| Other payables | Luzhou Yuanhai Lianzhong Supply Chain Co., Ltd. | 200.00 | 50,200.00 |
| Other payables | CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | 396,000.00 |
12.7. Commitments of the related parties
None
13. Stock payment
13.1. The overall situation of share-based payments
? Applicable □ N/A
Monetary Unit: CNY
| Total equity instruments granted by the Company in the reporting period | 0.00 |
| Total equity instruments exercised by the Company in the reporting period | 0.00 |
| Total equity instruments of the Company expired in the reporting period | 66,000.001 |
| Scope of the exercise price of outstanding stock options of the Company at the end of the reporting period and remaining contract term | N/A |
| Scope of the exercise price of other outstanding equity instruments of the Company at the end of the reporting period and remaining contract term | N/A |
Note: 1. There were 4 incentive targets who voluntarily gave up subscripting all restricted sharesgranted by the Company with a total of 66,000 shares.
Other statements:
On 26 September 2021, the Proposal on the 2021 Restricted Share Incentive Plan (Draft) andSummary of Luzhou Laojiao Co., Ltd., the Proposal on the Performance Appraisal Methods for the2021 Restricted Share Incentive Plan of Luzhou Laojiao Co., Ltd., and the Proposal on theManagement Methods for the 2021 Restricted Share Incentive Plan of Luzhou Laojiao Co., Ltd. wereapproved at the Seventh Meeting of the 10
thBoard of Directors. On 29 December 2021, the aforesaidproposals were approved at the First Extraordinary General Meeting of Shareholders of 2021. On thesame day, the Proposal on the Grant of Restricted Shares to Awardees was approved at the 12
th
Meeting of the 10
thBoard of Directors. As such, it was decided to grant a total of 6.9286 millionrestricted shares to 444 eligible awardees at CNY 92.71/share in the first grant on 29 December 2021.
During the payment process after the grant date was determined, four awardees chose to waive atotal of 66 thousand restricted shares that the Company had intended to grant to them due topersonal reasons. Therefore, in fact, 6.8626 million restricted shares were granted to 437 awardeesas registered. On 22 February 2022, as the shares granted under the restricted share incentive planwere listed, the total shares of the Company increased from 1,464,752,476 shares to 1,471,615,076shares.
13.2. Equity-settled share-based payments
? Applicable □ N/A
Monetary Unit: CNY
| Method of determining the fair value of equity instruments on the grant date | The closing price of restricted stocks on the grant date deducted the grant price thereof |
| Basis to determine number of equity instrument that can be exercised | Making the best estimate based on the latest number of persons who can exercise rights |
| Reason for remarkable difference between the estimate of the current period and that of previous period | N/A |
| Total amount of equity-settled share-based payments included into capital reserves | 850,446,996.27 |
| Total costs of recognizing equity-settled share-based payments in the current period | 189,917,716.04 |
13.3. Cash-settled share-based payments
□ Applicable ? N/A
13.4. Modification and termination of share-based paymentsNone
14. Commitments and contingencies
14.1. Commitments
Significant commitments at the balance sheet dateNone
14.2. Contingencies
14.2.1. Significant contingencies at the balance sheet date
On 15 October 2014 and 10 January 2015, the Company disclosed three saving deposits involvingcontract disputes in Agricultural Bank of China Changsha Yingxin Sub-branch, Industrial andCommercial Bank of China Nanyang Zhongzhou Sub-branch and another bank, with a total amount ofCNY 500 million. The public security organization has investigated, and the investigation of relatedcases and the preservation of assets are under way. The Company has initiated a civil procedure torecover the loss from the responsible unit. As of the period-end, the Company has recovered theabovementioned saving deposits involving contract disputes with CNY 369,841,800.
Except for the above matters, the Company has no other significant contingencies that need to bedisclosed as the end of 30 June 2022.
14.2.2. Explanation shall be given even if there is no significant contingency for the Companyto discloseThere was no significant contingency in the Company to disclose.
15. Post balance sheet event
15.1 Significant non-adjusting events
(1) Grant of reserved restricted shares to awardees
As conditions had been satisfied for the grant of reserved restricted shares under the 2021 RestrictedShare Incentive Plan, and as authorized by the First Extraordinary General Meeting of 2021, theProposal on the Grant of Reserved Restricted Shares to Awardees was approved at the 18
thMeeting ofthe 10
th Board of Directors and the Ninth Meeting of the 10
th
Supervisory Committee on 25 July 2022.As such, it was decided that 342,334 reserved restricted shares would be granted to 46 awardees atthe price of CNY 92.71/share on 25 July 2022.
(2) Downward adjustment to the coupon rate of "19 Laojiao 01"
In accordance with the provisions of the Prospectus for Luzhou Laojiao Co., Ltd.’s Corporate BondsPublicly Offered in 2019 to Qualified Investors (Tranche 1), the Company, as the issuer of "19 Laojiao01" (bond code: 112959), has the right to decide the adjustment to the coupon rate of this bond for thelast two years of the duration at the end of the third year of the duration. According to the currentmarket situation, the Company decided to reduce the coupon rate of the bonds for the last two years by158 basis points, i.e., the coupon rate of "19 Laojiao 01" bonds for the last two years was adjusted from
3.58% to 2.00%.
(3) Proposed public offering of bonds for professional investors
The Company intended to issue corporate bonds with a total face value not exceeding CNY B2.5 billion(including CNY 2.5 billion) for professional investors. The proposal was deliberated and approved at theCompany's Extraordinary General Meeting of 2022.
15.2. Profit distribution
Monetary Unit: CNY
| Profits or dividends planned to distribute | 4,773,919,306.54 |
| Reviewed and approved profits or dividends declared to distribute | 4,773,919,306.54 |
| Profit distribution plan | In accordance with resolutions of shareholders’ meeting, a cash dividend of CNY 32.44 (tax inclusive) will be distributed for every 10 existing shares held, which has been carried out on 26 August 2022. |
15.3. Statement for other post balance sheet events
(1) Security deposits for travel service of Luzhou Laojiao Tourism Culture Co., Ltd.Luzhou Laojiao Tourism Culture Co., Ltd. completed business and tax cancellation in June 2022. Itssecurity deposits for travel service of CNY 1.4 million must be approved by the Ministry of Culture andTourism of the People’s Republic of China before the restriction can be lifted. The relevant procedureswere completed in August 2022 and the bank account was also cancelled.
(2) Implementation of Luzhou Laojiao’s technical upgrade program of intelligent brewing (PhaseI) by subsidiaryThe 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. The program has been approved at the First ExtraordinaryGeneral Meeting of 2022. For further information, see Announcement No. 2022-24 on theImplementation of Luzhou Laojiao’s Technical Upgrade Program of Intelligent Brewing (Phase I) bySubsidiary.
(3) Recovery of part of savings deposits involving contract disputesAfter 30 June 2022, the Company received more amounts associated with the savings depositsinvolving contract disputes. As of the date of this Report, the Company had recovered a total amount ofCNY 370.9505 million for the three disputes.
Except for the above matters, the Company has no other post balance sheet events that need to bedisclosed as of the disclosure date of this Report.
16. Other important information
16.1. Annuity plan
The Company carried out the enterprise annuity payment work normally during the reporting period.The enterprise annuity funds are paid by both the Company and employees. The Company'scontribution shall not exceed 8% of the Company's total salary in the previous year as stipulated bythe state, and the individual contribution shall be withheld by the Company according to 1% of totalsalary of the employee in the previous year.
16.2. Segment information
16.2.1 Recognition basis and accounting policies of reportable segmentExcept for the business on wine sales, the Company does not operate other businesses that have asignificant impact on operation results. In addition, the Company operates mainly in one area,
revenue mainly from China and main assets also located in China, so the Company does not need todisclose segment data.
16.3. Other significant events that can affect investors’ decision
16.3.1. Saving deposits involving contract disputes
As stated in Note 12.2, three saving deposits involved contract disputes in Agricultural Bank of ChinaChangsha Yingxin Sub-branch, Industrial and Commercial Bank of China Nanyang Zhongzhou Sub-branch and another bank, with a total amount of CNY 500 million. At present, the investigation ofrelated cases and the preservation of assets have been under way. The Company has initiated a civilprocedure to recover the loss from the responsible unit.
Taking into account the current amount of assets preserved by the public security authorities and thecontents of the professional legal opinion issued by Beijing Weiheng (Chengdu) Law Firm on 4 January2022 that "given that since the issuance of the previous legal opinion, a partial recovery has beenachieved through the execution of the civil judgment in force, totaling CNY 368 million. At the same time,it is expected that over CNY 10 million may be recovered in the future, and the actual loss that mayarise from the Company's abnormal deposits in the three aforementioned places is approximately CNY120 million", the Company has made a bad debt provision of CNY 120 million for savings depositinvolved in contractual disputes as at the end of the period, and the amount of the bad debt provisionmay be adjusted in the future based on the litigation process and recovery.
Except for the above matters, the Company has no other significant events that can affect investors’decision that need to be disclosed as of 30 June 2022.
17. Notes to the main Items of the financial statements of parentcompany (all currency unit is CNY, except other statements)
17.1. Accounts receivable
17.1.1. Analysis by categories
Monetary 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: | ||||||||||
| Accounts receivables tested for impairment by the | 2,471,988.46 | 100.00% | 1,491.75 | 0.06% | 2,470,496.71 | 1,209,701.49 | 100.00% | 2,223.86 | 0.18% | 1,207,477.63 |
| portfolio | ||||||||||
| Including: | ||||||||||
| Accounts receivables tested for impairment on the portfolio with characteristics of credit risk | 2,471,988.46 | 100.00% | 1,491.75 | 0.06% | 2,470,496.71 | 1,209,701.49 | 100.00% | 2,223.86 | 0.18% | 1,207,477.63 |
| Total | 2,471,988.46 | 100.00% | 1,491.75 | 0.06% | 2,470,496.71 | 1,209,701.49 | 100.00% | 2,223.86 | 0.18% | 1,207,477.63 |
Accounts receivables tested for impairment by the portfolio:
Monetary Unit: CNY
| Item | Closing Balance | ||
| Book balance | Provision for bad debt | Proportion | |
| Risk portfolio | 29,835.00 | 1,491.75 | 5.00% |
| Other portfolios | 2,442,153.46 | ||
| Total | 2,471,988.46 | 1,491.75 | |
Note: 1 Other portfolios refer to the receivable payment for goods from the subsidiary LuzhouPinchuang Technology Co., Ltd. and Luzhou Laojiao Electronic Commerce Co., Ltd. with no risks andprovision for bad and doubtful debt.Please refer to the relevant information of disclosure of provision for bad debt of other accountsreceivable if adopting the general mode of expected credit loss to withdraw provision for bad debt ofaccounts receivable.
□ Applicable ? N/A
Disclosure by aging
Monetary Unit: CNY
| Aging | Book balance |
| Within 1 year (including 1 year) | 2,471,988.46 |
| Total | 2,471,988.46 |
17.1.2. Provision and recovery for bad and doubtful debt in the current periodAllowance of provision for bad debt:
Monetary Unit: CNY
| Type | Opening Balance | Current Period | Closing Balance | |||
| Allowance | Reversal or recovery | Write-off | Other | |||
| Accounts receivables tested for impairment by | 2,223.86 | 732.11 | 1,491.75 | |||
| the portfolio | ||||||
| Total | 2,223.86 | 732.11 | 1,491.75 |
There is no accounts receivable reversed or recovered with significant amount during the reportingperiod.
17.1. 3. Top five entities with the largest balances of accounts receivable
Monetary Unit: CNY
| Company Name | Closing Balance | Proportion to total closing balance of accounts receivable | Closing Balance of provision for bad debt |
| Luzhou Pinchuang Technology Co., Ltd. | 2,442,153.46 | 98.79% | |
| CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | 25,335.00 | 1.03% | 1,266.75 |
| Luzhou Branch of China Tower Co., Ltd. | 4,500.00 | 0.18% | 225.00 |
| Total | 2,471,988.46 | 100.00% |
17.2. Other receivables
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| Dividends receivable | 35,361,832.34 | |
| Other receivables | 12,956,083,314.69 | 10,033,554,898.57 |
| Total | 12,991,445,147.03 | 10,033,554,898.57 |
17.2.1. Dividend receivable
17.2.1.1. Classification of dividend receivable
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance |
| North Chemical Industries Co.,Ltd. | 70,359.98 | |
| Huaxi Securities Co., Ltd. | 27,283,114.40 | |
| Guotai Junan Securities Co., Ltd. | 8,008,357.96 | |
| Total | 35,361,832.34 |
17.2.2. Other receivables
17.2.2.1. Other receivables disclosed by nature
Monetary Unit: CNY
| Nature | Closing book balance | Opening book balance |
| Intercourse funds of subsidiaries receivable | 12,938,362,692.73 | 10,015,555,743.27 |
| Intercourse funds and others | 8,205,217.88 | 6,158,145.13 |
| Petty cash | 2,574.63 | |
| Saving deposits involving contract disputes | 130,158,189.981 | 132,376,912.43 |
| Total | 13,076,726,100.591 | 10,154,093,375.46 |
Note: 1. In the 2014 Annual Report, the Company disclosed the information about three depositsamounting to CNY 500,000,000.00 with Changsha Yingxin Sub-branch of Agricultural Bank of Chinaand Nanyang Zhongzhou Sub-branch of Industrial and Commercial Bank of China. The deposits havelost the nature of monetary fund due to their involvement in contract disputes and have thus beentransferred into “other receivables”.
17.2.2.2. Provision for bad and doubtful other receivables in the current period
Monetary 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 2022 | 538,476.89 | 120,000,000.00 | 120,538,476.89 | |
| Balance of 1 January 2022 in the current period | ||||
| Allowance | 104,309.01 | 104,309.01 | ||
| Balance of 30 June 2022 | 642,785.90 | 120,000,000.00 | 120,642,785.90 |
Changes of carrying amount with significant amount changed of loss provision in the current period
□ Applicable ? N/A
Disclosure by aging
Monetary Unit: CNY
| Aging | Closing balance |
| Within 1 year (including 1 year) | 12,942,963,010.55 |
| 1-2 years | 3,522,100.06 |
| 2-3 years | 12,800.00 |
| Over 3 years | 130,228,189.98 |
| 3-4 years | 20,000.00 |
| Over 5 years | 130,208,189.98 |
| Total | 13,076,726,100.59 |
17.2.2.3. Provision and recovery for bad and doubtful other receivables in the current periodAllowance of provision for bad debt:
Monetary Unit: CNY
| Type | Opening Balance | Current Period | Closing Balance | |||
| Allowance | Reversal or recovery | Write-off | Other | |||
| Other receivables tested for impairment individually | 120,000,000.00 | 120,000,000.00 | ||||
| Other receivables tested for impairment by the portfolio | 538,476.89 | 104,309.01 | 642,785.90 | |||
| Total | 120,538,476.89 | 104,309.01 | 120,642,785.90 |
17.2.2.4. Top five entities with the largest balances of the other receivables
Monetary Unit: CNY
| Company Name | Nature | Closing Balance | Aging | Proportion in total receivables | Provisioning amount at period end |
| Luzhou Laojiao Brewing Co., Ltd. | Internal transactions | 12,668,231,895.15 | Within 1 year | 96.88% | |
| Luzhou Laojiao Import and Export Trade Co., Ltd. | Internal transactions | 190,758,585.30 | Within 1 year | 1.46% | |
| Agricultural Bank of China Changsha Yingxin Sub-branch, Industrial and Commercial Bank of China Nanyang Zhongzhou Sub-branch and another bank. | Saving deposits involving contract disputes | 130,158,189.98 | Over 5 years | 1.00% | 120,000,000.00 |
| Guangxi Luzhou Laojiao Imported Liquor Industry Co., Ltd. | Internal transactions | 48,519,812.18 | Within 1 year | 0.37% | |
| Luzhou Laojiao Health Liquor Industry Co., Ltd. | Internal transactions | 15,046,908.83 | Over 1 year | 0.11% | |
| Total | 13,052,715,391.44 | 99.82% | 120,000,000.00 |
17.3. Long-term equity investments
Monetary Unit: CNY
| Item | Closing Balance | Opening Balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Investment in subsidiary | 3,512,065,275.78 | 3,512,065,275.78 | 3,429,436,240.91 | 3,429,436,240.91 | ||
| Investment in associates and joint venture | 2,653,761,327.15 | 2,567,098.80 | 2,651,194,228.35 | 2,624,531,691.80 | 2,567,098.80 | 2,621,964,593.00 |
| Total | 6,165,826,602.93 | 2,567,098.80 | 6,163,259,504.13 | 6,053,967,932.71 | 2,567,098.80 | 6,051,400,833.91 |
17.3.1. Investment in subsidiary
Monetary Unit: CNY
| Investee | Opening Balance (book value) | Changes in current period | Closing Balance (book value) | Closing balance of provision for impairment | |||
| Increase | Decrease | Provision for impairment | Other | ||||
| Luzhou Pinchuang Technology Co., Ltd. | 59,136,031.69 | 8,508,292.65 | 67,644,324.34 | ||||
| Luzhou Laojiao Sales Co., Ltd. | 110,966,255.34 | 43,211,192.98 | 154,177,448.32 | ||||
| Luzhou Laojiao Brewing Co., Ltd. | 3,176,693,836.28 | 27,535,946.07 | 3,204,229,782.35 | ||||
| Luzhou Laojiao International Development (Hong Kong) Co., Ltd. | 5,706,190.40 | 1,634,403.78 | 7,340,594.18 | ||||
| Luzhou Laojiao Electronic Commerce Co., Ltd. | 52,525,326.26 | 3,649,229.07 | 56,174,555.33 | ||||
| Luzhou Baonuo Biotechnology Co., Ltd. | 20,000,000.00 | 20,000,000.00 | |||||
| Luzhou Laojiao Tourism Culture Co., Ltd. | 4,000,000.00 | 4,000,000.00 | |||||
| Luzhou Laojiao Health Liquor Industry Co., Ltd. | 408,600.94 | 2,089,970.32 | 2,498,571.26 | ||||
| Total | 3,429,436,240.91 | 86,629,034.871 | 4,000,000.00 | 3,512,065,275.78 |
Note: 1. The increase in the current period is due to the Company's restricted share incentivebusiness, where the parent company (the settlement enterprise) is an investor in the recipientsubsidiary (the service enterprise) and is recognized as a long-term equity investment in thesubsidiary (the recipient service enterprise) based on the fair value of the equity instruments at thedate of grant, and the capital reserve (other capital reserves) is recognized at the same time.
17.3.2. Investment in associate and joint venture
Monetary Unit: CNY
| Investee | Opening Balance (book value) | 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 | Changes in other equity | Cash divided or profit declared | Provision for impairment | Other | ||||
| 1. Joint Venture | |||||||||||
| 2. Associate | |||||||||||
| Huaxi | 2,493, | 30,289 | - | 27,283 | 2,487, | 2,567, | |||||
| Securities Co., Ltd. | 328,165.33 | ,606.80 | 9,066,533.27 | ,114.40 | 268,124.46 | 098.80 | |||||
| Sichuan Development Wine Investment Co., Ltd. | 5,726,848.36 | 110,262.94 | 5,837,111.30 | ||||||||
| CTS Luzhou Laojiao Cultural Tourism Development Co., Ltd. | 122,909,579.31 | -4,871,793.73 | 118,037,785.58 | ||||||||
| Luzhou Laojiao Postdoctoral Workstation Science and Innovation Co., Ltd. | 40,000,000.00 | 51,207.01 | 40,051,207.01 | ||||||||
| Subtotal | 2,621,964,593.00 | 40,000,000.00 | 25,579,283.02 | -9,066,533.27 | 27,283,114.40 | 2,651,194,228.35 | 2,567,098.80 | ||||
| Total | 2,621,964,593.00 | 40,000,000.00 | 25,579,283.02 | -9,066,533.27 | 27,283,114.40 | 2,651,194,228.35 | 2,567,098.80 |
17.4. Operating revenue and cost of sales
Monetary Unit: CNY
| Item | Current Period | Previous Period | ||
| Revenue | Cost of sales | Revenue | Cost of sales | |
| Primary business | 2,054,885,320.69 | 1,385,149,822.80 | 2,646,531,785.60 | 1,928,435,115.76 |
| Other business | 12,163,668.37 | 537,627.72 | 30,959,887.70 | 491,858.13 |
| Total | 2,067,048,989.06 | 1,385,687,450.52 | 2,677,491,673.30 | 1,928,926,973.89 |
Details:
Monetary Unit: CNY
| Contract category | Liquor sales | Total |
| Commodity type | 2,054,885,320.69 | 2,054,885,320.69 |
| Including: |
| Medium and high grade liquor | 2,048,322,416.00 | 2,048,322,416.00 |
| Other liquor | 6,562,904.69 | 6,562,904.69 |
| By operating segment | 2,054,885,320.69 | 2,054,885,320.69 |
| Including: | ||
| Domestic | 2,054,885,320.69 | 2,054,885,320.69 |
| Outbound | ||
| Contract type | 2,054,885,320.69 | 2,054,885,320.69 |
| Including: | ||
| Commodity sales contract | 2,054,885,320.69 | 2,054,885,320.69 |
| Total | 2,054,885,320.69 | 2,054,885,320.69 |
17.5. Investment income
Monetary Unit: CNY
| Item | Current Period | Previous Period |
| Investment income from long-term equity investments under equity method | 25,579,283.021 | 105,134,583.68 |
| Investment income from disposal of long-term equity investments | 7,530,591.92 | |
| Investment income gained during the period of holding held-for-trading financial assets | 6,795,921.96 | |
| Investment income from disposal of held-for-trading financial assets | 4,827,927.32 | |
| Dividends income gained during the period of holding other equity instrument investment | 8,078,717.94 | 6,657,660.52 |
| Total | 52,812,442.16 | 111,792,244.20 |
Note: 1. There is no major restriction on the repatriation of the Company's investment income. Thecurrent period decreased CNY 58,979,802.04 compared with previous period with a decrease by
52.76%, mainly due to the YoY decline in profitability of the investee Huaxi Securities Co., Ltd.
18. Supplementary information
18.1. Detailed statement of non-recurring gains and losses in the current period (+for gain, - for loss)? Applicable □ N/A
Monetary Unit: CNY
| Item | Amount | Note |
| Gain or loss from disposal of non-current assets (including the write-off portion of the impairment provision) | 19,789,402.07 | See "Section X Note 5.44" for details. |
| 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 consistently given at a fixed amount or quantity in accordance with the national policies or standards) | 9,141,196.38 | See "Section X Note 5.40 and 5.45" for details. |
| Gain or loss on fair-value changes on held-for-trading financial assets and liabilities & income from | 10,690,773.61 | See "Section X Note 5.41 and 5.42" for details. |
| disposal of held-for-trading financial assets and liabilities and available-for-sale financial assets (exclusive of the effective portion of hedges that arise in the Company’s ordinary course of business) | ||
| Other non-operating income and expenditure except above-mentioned items | 9,186,723.82 | See "Section X Note 5.45 and 5.46" for details. |
| Less: Corporate income tax | 11,930,835.44 | |
| Minority interests (after tax) | 1,216,762.50 | |
| Total | 35,660,497.94 |
Other items that meet the definition of non-recurring gain/loss:
□ Applicable ? N/A
No 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 Securitiesto the Public-Non-Recurring Gains and Losses as a recurring gain/loss item.
□ Applicable ? N/A
18.2. Return on equity and earnings per share
| Profit during reporting period | Weighted average ROE | EPS(CNY/Share) | |
| Basic EPS | Diluted EPS | ||
| Net profits attributable to common shareholders of the Company | 17.96% | 3.76 | 3.76 |
| Net profits attributable to common shareholders of the Company before non-recurring gains and losses | 17.85% | 3.74 | 3.74 |
18.3. Differences between accounting data under domestic and overseasaccounting standards
18.3.1. Differences of net profit and net assets disclosed in financial reports prepared underinternational and Chinese accounting standards
□ Applicable ? N/A
18.3.2. Differences of net profit and net assets disclosed in financial reports prepared underoverseas and Chinese accounting standards
□ Applicable ? N/A
18.3.3. Explain reasons for the differences between accounting data under domestic andoverseas accounting standards; for any adjustment made to the difference existing in the dataaudited by the foreign auditing agent, such foreign auditing agent’s name shall be clearlystated