ANHUI GUJING DISTILLERY COMPANY LIMITED
SEMI-ANNUAL FINANCIAL REPORT 2019
August 2019
I. Auditor’s Report
Whether the interim report has been audited?
□Yes √ No
The interim report of the Company has not been audited.II. Financial StatementsThe unit of the financial statements attached: RMB
1. Consolidated Balance Sheet
Prepared by Anhui Gujing Distillery Company Limited
30 June 2019
Unit: RMB
| Item | 30 June 2019 | 31 December 2018 |
| Current assets: | ||
| Monetary capital | 3,179,334,513.57 | 1,705,760,865.12 |
| Settlement reserve | ||
| Interbank loans granted | ||
| Trading financial assets | 1,573,596,291.10 | 0.00 |
| Financial assets at fair value through profit or loss | 0.00 | 622,892.96 |
| Derivative financial assets | ||
| Notes receivable | 1,317,423,562.34 | 1,347,427,811.34 |
| Accounts receivable | 30,086,692.70 | 29,748,068.74 |
| Financing backed by accounts receivable | ||
| Prepayments | 129,888,415.85 | 182,558,000.75 |
| Premiums receivable | ||
| Reinsurance receivables | ||
| Receivable reinsurance contract reserve | ||
| Other receivables | 48,528,411.45 | 43,342,878.22 |
| Including: Interest receivable | 30,443,178.08 | 24,923,178.08 |
| Dividends receivable | ||
| Financial assets purchased under resale agreements |
| Inventories | 2,417,356,086.41 | 2,407,306,664.86 |
| Contract assets | ||
| Assets classified as held for sale | ||
| Current portion of non-current assets | 300,000,000.00 | 300,000,000.00 |
| Other current assets | 29,538,776.67 | 3,012,478,687.20 |
| Total current assets | 9,025,752,750.09 | 9,029,245,869.19 |
| Non-current assets: | ||
| Loans and advances to customers | ||
| Investments in debt obligations | ||
| Available-for-sale financial assets | 0.00 | 206,393,107.46 |
| Investments in other debt obligations | ||
| Held-to-maturity investments | ||
| Long-term receivables | ||
| Long-term equity investments | 4,735,005.81 | 4,900,000.00 |
| Investments in other equity instruments | ||
| Other non-current financial assets | ||
| Investment property | 4,868,657.29 | 5,027,228.53 |
| Fixed assets | 1,684,243,384.48 | 1,763,988,530.56 |
| Construction in progress | 162,876,312.37 | 93,320,557.56 |
| Productive living assets | ||
| Oil and gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 733,039,684.21 | 742,083,609.10 |
| R&D expense | ||
| Goodwill | 478,283,495.29 | 478,283,495.29 |
| Long-term prepaid expense | 75,772,600.79 | 83,561,473.46 |
| Deferred income tax assets | 149,917,708.59 | 86,580,171.06 |
| Other non-current assets | 200,574,026.00 | 16,544,407.51 |
| Total non-current assets | 3,494,310,874.83 | 3,480,682,580.53 |
| Total assets | 12,520,063,624.92 | 12,509,928,449.72 |
| Current liabilities: | ||
| Short-term borrowings | ||
| Borrowings from central bank |
| Interbank loans obtained | ||
| Trading financial liabilities | ||
| Financial liabilities at fair value through profit or loss | ||
| Derivative financial liabilities | ||
| Notes payable | 476,808,340.53 | 349,203,413.72 |
| Accounts payable | 337,532,981.76 | 484,952,598.59 |
| Advances from customers | 517,109,674.60 | 1,149,143,310.48 |
| Financial assets sold under repurchase agreements | ||
| Customer deposits and interbank deposits | ||
| Payables for acting trading of securities | ||
| Payables for underwriting of securities | ||
| Payroll payable | 310,846,649.23 | 457,299,476.43 |
| Taxes payable | 368,743,282.05 | 372,993,624.18 |
| Other payables | 1,337,734,331.13 | 1,192,020,147.82 |
| Including: Interest payable | ||
| Dividends payable | ||
| Handling charges and commissions payable | ||
| Reinsurance payables | ||
| Contract liabilities | ||
| Liabilities directly associated with assets classified as held for sale | ||
| Current portion of non-current liabilities | ||
| Other current liabilities | 443,198,383.65 | 295,164,745.44 |
| Total current liabilities | 3,791,973,642.95 | 4,300,777,316.66 |
| Non-current liabilities: | ||
| Insurance contract reserve | ||
| Long-term borrowings | ||
| Bonds payable | ||
| Including: Preferred shares |
| Perpetual bonds | ||
| Lease liabilities | ||
| Long-term payables | ||
| Long-term payroll payable | ||
| Provisions | ||
| Deferred income | 74,300,122.46 | 76,636,500.55 |
| Deferred income tax liabilities | 104,491,018.40 | 102,764,515.11 |
| Other non-current liabilities | ||
| Total non-current liabilities | 178,791,140.86 | 179,401,015.66 |
| Total liabilities | 3,970,764,783.81 | 4,480,178,332.32 |
| Owners’ equity: | ||
| Share capital | 503,600,000.00 | 503,600,000.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 1,295,405,592.25 | 1,295,405,592.25 |
| Less: Treasury stock | ||
| Other comprehensive income | 0.00 | 4,794,830.59 |
| Specific reserve | ||
| Surplus reserves | 256,902,260.27 | 256,902,260.27 |
| General reserve | ||
| Retained earnings | 6,038,992,486.07 | 5,541,281,341.47 |
| Total equity attributable to owners of the Company as the parent | 8,094,900,338.59 | 7,601,984,024.58 |
| Non-controlling interests | 454,398,502.52 | 427,766,092.82 |
| Total owners’ equity | 8,549,298,841.11 | 8,029,750,117.40 |
| Total liabilities and owners’ equity | 12,520,063,624.92 | 12,509,928,449.72 |
Legal representative: Liang Jinhui The Company’s chief accountant: Ye ChangqingHead of the Company’s financial department: Zhu Jiafeng
2. Balance Sheet of the Company as the Parent
Unit: RMB
| Item | 30 June 2019 | 31 December 2018 |
| Current assets: | ||
| Monetary capital | 1,802,891,540.10 | 1,078,172,917.59 |
| Trading financial assets | 1,283,596,291.10 | 0.00 |
| Financial assets at fair value through profit or loss | 0.00 | 622,892.96 |
| Derivative financial assets | ||
| Notes receivable | 1,108,974,294.31 | 1,256,336,386.34 |
| Accounts receivable | 10,652,383.81 | 9,385,950.54 |
| Financings backed by accounts receivable | ||
| Prepayments | 32,040,928.40 | 10,869,911.54 |
| Other receivables | 105,037,195.62 | 110,800,665.19 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Inventories | 2,054,730,290.11 | 2,125,826,967.11 |
| Contract assets | ||
| Assets classified as held for sale | ||
| Current portion of non-current assets | ||
| Other current assets | 10,900,000.00 | 1,764,267,968.83 |
| Total current assets | 6,408,822,923.45 | 6,356,283,660.10 |
| Non-current assets: | ||
| Investments in debt obligations | ||
| Available-for-sale financial assets | 0.00 | 206,393,107.46 |
| Investments in other debt obligations | ||
| Held-to-maturity investments | ||
| Long-term receivables | ||
| Long-term equity investments | 1,148,213,665.32 | 1,148,213,665.32 |
| Investments in other equity instruments | ||
| Other non-current financial assets | ||
| Investment property | 4,868,657.29 | 24,715,657.40 |
| Fixed assets | 1,250,784,248.86 | 1,290,714,455.79 |
| Construction in progress | 152,636,993.95 | 86,634,753.93 |
| Productive living assets | ||
| Oil and gas assets |
| Right-of-use assets | ||
| Intangible assets | 186,197,455.70 | 189,968,142.25 |
| R&D expense | ||
| Goodwill | ||
| Long-term prepaid expense | 51,792,292.31 | 56,643,945.05 |
| Deferred income tax assets | 25,828,182.26 | 37,415,458.17 |
| Other non-current assets | 574,026.00 | 12,474,026.00 |
| Total non-current assets | 2,820,895,521.69 | 3,053,173,211.37 |
| Total assets | 9,229,718,445.14 | 9,409,456,871.47 |
| Current liabilities: | ||
| Short-term borrowings | ||
| Trading financial liabilities | ||
| Financial liabilities at fair value through profit or loss | ||
| Derivative financial liabilities | ||
| Notes payable | 49,462,005.58 | 28,648,913.72 |
| Accounts payable | 250,260,975.12 | 362,290,556.21 |
| Advances from customers | 1,270,017,763.69 | 1,123,125,892.84 |
| Contract liabilities | ||
| Payroll payable | 94,335,702.40 | 117,748,485.96 |
| Taxes payable | 155,090,249.07 | 161,176,957.25 |
| Other payables | 267,083,819.65 | 372,902,293.22 |
| Including: Interest payable | ||
| Dividends payable | ||
| Liabilities directly associated with assets classified as held for sale | ||
| Current portion of non-current liabilities | ||
| Other current liabilities | 3,203,092.77 | 32,605,794.55 |
| Total current liabilities | 2,089,453,608.28 | 2,198,498,893.75 |
| Non-current liabilities: | ||
| Long-term borrowings | ||
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds |
| Long-term payables | ||
| Long-term payroll payable | ||
| Provisions | ||
| Deferred income | ||
| Deferred income tax liabilities | 34,425,436.60 | 36,417,554.85 |
| Other non-current liabilities | 7,546,971.67 | 4,828,737.52 |
| Total non-current liabilities | ||
| Total liabilities | 41,972,408.27 | 41,246,292.37 |
| Owners’ equity: | 2,131,426,016.55 | 2,239,745,186.12 |
| Share capital | ||
| Other equity instruments | 503,600,000.00 | 503,600,000.00 |
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | ||
| Less: Treasury stock | 1,247,162,107.35 | 1,247,162,107.35 |
| Other comprehensive income | ||
| Specific reserve | 0.00 | 4,794,830.59 |
| Surplus reserves | ||
| General reserve | 251,800,000.00 | 251,800,000.00 |
| Retained earnings | 5,095,730,321.24 | 5,162,354,747.41 |
| Total owners’ equity | 7,098,292,428.59 | 7,169,711,685.35 |
| Total liabilities and owners’ equity | 9,229,718,445.14 | 9,409,456,871.47 |
3. Consolidated Income Statement
Unit: RMB
| Item | H1 2019 | H1 2018 |
| 1. Revenue | 5,988,112,999.09 | 4,783,083,895.33 |
| Including: Operating revenue | 5,988,112,999.09 | 4,783,083,895.33 |
| Interest income | ||
| Premium income | ||
| Handling charge and commission income | ||
| 2. Costs and expenses | 4,416,581,005.79 | 3,629,658,388.11 |
| Including: Cost of sales | 1,394,156,734.55 | 1,042,675,468.24 |
| Interest expense | ||
| Handling charge and commission expense | ||
| Surrenders | ||
| Net claims paid | ||
| Net amount provided as insurance contract reserve | ||
| Expenditure on policy dividends | ||
| Reinsurance premium expense | ||
| Taxes and surcharges | 869,527,762.04 | 729,467,173.53 |
| Selling expense | 1,840,489,439.70 | 1,597,300,315.17 |
| Administrative expense | 302,045,457.13 | 272,473,203.36 |
| R&D expense | 14,664,237.67 | 8,027,134.36 |
| Finance costs | -4,302,625.30 | -20,284,906.55 |
| Including: Interest expense | 14,173,972.09 | 0.00 |
| Interest income | 20,466,649.02 | 21,644,883.48 |
| Add: Other income | 30,783,918.68 | 4,487,036.05 |
| Return on investment (“-” for loss) | 77,347,047.53 | 68,775,019.95 |
| Including: Share of profit or loss of joint ventures and associates | ||
| Income from the derecognition of financial assets at amortized cost (“-” for loss) | ||
| Foreign exchange gain (“-” for loss) | ||
| Net gain on exposure hedges (“-” for loss) | ||
| Gain on changes in fair value (“-” for loss) | 11,320,345.56 | 236,707.77 |
| Credit impairment loss (“-” for loss) | ||
| Asset impairment loss (“-” for loss) | -6,421,818.07 | -1,171,911.36 |
| Asset disposal income (“-” for | 119,488.56 | 154,437.81 |
| loss) | ||
| 3. Operating profit (“-” for loss) | 1,684,680,975.56 | 1,225,906,797.44 |
| Add: Non-operating income | 11,150,763.53 | 14,758,797.76 |
| Less: Non-operating expense | 1,737,611.07 | 4,438,013.04 |
| 4. Profit before tax (“-” for loss) | 1,694,094,128.02 | 1,236,227,582.16 |
| Less: Income tax expense | 419,145,404.31 | 320,789,915.24 |
| 5. Net profit (“-” for net loss) | 1,274,948,723.71 | 915,437,666.92 |
| 5.1 By operating continuity | ||
| 5.1.1 Net profit from continuing operations (“-” for net loss) | 1,274,948,723.71 | 915,437,666.92 |
| 5.1.2 Net profit from discontinued operations (“-” for net loss) | ||
| 5.2 By ownership | ||
| 5.2.1 Net profit attributable to owners of the Company as the parent | 1,248,316,314.01 | 892,422,337.64 |
| 5.2.1 Net profit attributable to non-controlling interests | 26,632,409.70 | 23,015,329.28 |
| 6. Other comprehensive income, net of tax | 0.00 | -45,102,275.58 |
| Attributable to owners of the Company as the parent | 0.00 | -45,102,275.58 |
| 6.1 Items that will not be reclassified to profit or loss | ||
| 6.1.1 Changes caused by remeasurements on defined benefit pension schemes | ||
| 6.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method | ||
| 6.1.3 Changes in the fair value of investments in other equity instruments | ||
| 6.1.4 Changes in the fair value of the company’s credit risks | ||
| 6.1.5 Other | ||
| 6.2 Items that will be reclassified to profit or loss | 0.00 | -45,102,275.58 |
| 6.2.1 Other comprehensive income that will be reclassified to profit |
| or loss under the equity method | ||
| 6.2.2 Changes in the fair value of investments in other debt obligations | ||
| 6.2.3 Gain/Loss on changes in the fair value of available-for-sale financial assets | 0.00 | -45,102,275.58 |
| 6.2.4 Other comprehensive income arising from the reclassification of financial assets | ||
| 6.2.5 Gain/Loss arising from the reclassification of held-to-maturity investments to available-for-sale financial assets | ||
| 6.2.6 Allowance for credit impairments in investments in other debt obligations | ||
| 6.2.7 Reserve for cash flow hedges | ||
| 6.2.8 Differences arising from the translation of foreign currency-denominated financial statements | ||
| 6.2.9 Other | ||
| Attributable to non-controlling interests | ||
| 7. Total comprehensive income | 1,274,948,723.71 | 870,335,391.34 |
| Attributable to owners of the Company as the parent | 1,248,316,314.01 | 847,320,062.06 |
| Attributable to non-controlling interests | 26,632,409.70 | 23,015,329.28 |
| 8. Earnings per share | ||
| 8.1 Basic earnings per share | 2.48 | 1.77 |
| 8.2 Diluted earnings per share | 2.48 | 1.77 |
Legal representative: Liang Jinhui The Company’s chief accountant: Ye ChangqingHead of the Company’s financial department: Zhu Jiafeng
4. Income Statement of the Company as the Parent
Unit: RMB
| Item | H1 2019 | H1 2018 |
| 1. Operating revenue | 3,144,682,463.58 | 2,373,509,719.96 |
| Less: Cost of sales | 1,277,918,576.91 | 962,446,727.32 |
| Taxes and surcharges | 764,598,846.12 | 612,880,006.38 |
| Selling expense | 45,886,471.81 | 90,185,702.99 |
| Administrative expense | 202,658,261.68 | 183,435,604.67 |
| R&D expense | 9,036,129.81 | 7,385,784.90 |
| Finance costs | -2,059,057.16 | -17,205,534.12 |
| Including: Interest expense | 14,006,847.09 | 0.00 |
| Interest income | 17,740,923.04 | 20,244,281.30 |
| Add: Other income | 3,372,718.25 | 2,363,480.01 |
| Return on investment (“-” for loss) | 31,883,868.76 | 61,302,268.33 |
| Including: Share of profit or loss of joint ventures and associates | ||
| Income from the derecognition of financial assets at amortized cost (“-” for loss) | ||
| Net gain on exposure hedges (“-” for loss) | ||
| Gain on changes in fair value (“-” for loss) | 11,320,345.56 | 236,707.77 |
| Credit impairment loss (“-” for loss) | ||
| Asset impairment loss (“-” for loss) | -6,131,316.45 | -1,440,847.72 |
| Asset disposal income (“-” for loss) | 36,552.41 | 0.00 |
| 2. Operating profit (“-” for loss) | 887,125,402.94 | 596,843,036.21 |
| Add: Non-operating income | 9,342,723.23 | 12,278,301.09 |
| Less: Non-operating expense | 1,225,313.77 | 3,316,344.52 |
| 3. Profit before tax (“-” for loss) | 895,242,812.40 | 605,804,992.78 |
| Less: Income tax expense | 211,262,069.16 | 162,576,738.06 |
| 4. Net profit (“-” for net loss) | 683,980,743.24 | 443,228,254.72 |
| 4.1 Net profit from continuing operations (“-” for net loss) | 683,980,743.24 | 443,228,254.72 |
| 4.2 Net profit from discontinued operations (“-” for net loss) | ||
| 5. Other comprehensive income, net of tax | 0.00 | -45,064,475.58 |
| 5.1 Items that will not be reclassified to profit or loss | ||
| 5.1.1 Changes caused by remeasurements on defined benefit pension schemes | ||
| 5.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method | ||
| 5.1.3 Changes in the fair value of investments in other equity instruments | ||
| 5.1.4 Changes in the fair value of the company’s credit risks | ||
| 5.1.5 Other | ||
| 5.2 Items that will be reclassified to profit or loss | 0.00 | -45,064,475.58 |
| 5.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method | ||
| 5.2.2 Changes in the fair value of investments in other debt obligations | ||
| 5.2.3 Gain/Loss on changes in the fair value of available-for-sale financial assets | 0.00 | -45,064,475.58 |
| 5.2.4 Other comprehensive income arising from the reclassification of financial assets | ||
| 5.2.5 Gain/Loss arising from the reclassification of held-to-maturity investments to available-for-sale financial assets | ||
| 5.2.6 Allowance for credit impairments in investments in other debt obligations |
| 5.2.7 Reserve for cash flow hedges | ||
| 5.2.8 Differences arising from the translation of foreign currency-denominated financial statements | ||
| 5.2.9 Other | ||
| 6. Total comprehensive income | 683,980,743.24 | 398,163,779.14 |
| 7. Earnings per share | ||
| 7.1 Basic earnings per share | 1.36 | 0.88 |
| 7.2 Diluted earnings per share | 1.36 | 0.88 |
5. Consolidated Cash Flow Statement
Unit: RMB
| Item | H1 2019 | H1 2018 |
| 1. Cash flows from operating activities: | ||
| Proceeds from sale of commodities and rendering of services | 5,352,480,704.00 | 4,168,785,414.04 |
| Net increase in customer deposits and interbank deposits | ||
| Net increase in borrowings from central bank | ||
| Net increase in loans from other financial institutions | ||
| Premiums received on original insurance contracts | ||
| Net proceeds from reinsurance | ||
| Net increase in deposits and investments of policy holders | ||
| Interest, handling charges and commissions received | ||
| Net increase in interbank loans obtained | ||
| Net increase in proceeds from repurchase transactions | ||
| Net proceeds for acting trading of securities | ||
| Tax rebates | 15,816,253.89 | 1,526,552.28 |
| Cash generated from other operating activities | 276,731,904.68 | 578,221,173.31 |
| Subtotal of cash generated from operating activities | 5,645,028,862.57 | 4,748,533,139.63 |
| Payments for commodities and services | 899,005,913.59 | 805,659,265.35 |
| Net increase in loans and advances to customers | ||
| Net increase in deposits in central bank and in interbank loans granted | ||
| Payments for claims on original insurance contracts | ||
| Net increase in financial assets held for trading | ||
| Net increase in interbank loans granted | ||
| Interest, handling charges and commissions paid | ||
| Policy dividends paid | ||
| Cash paid to and for employees | 1,006,137,070.65 | 777,363,928.00 |
| Taxes paid | 2,001,653,338.87 | 1,875,377,764.19 |
| Cash used in other operating activities | 696,498,790.63 | 621,185,290.48 |
| Subtotal of cash used in operating activities | 4,603,295,113.74 | 4,079,586,248.02 |
| Net cash generated from/used in operating activities | 1,041,733,748.83 | 668,946,891.61 |
| 2. Cash flows from investing activities: | ||
| Proceeds from disinvestment | 2,576,300,054.88 | 1,050,984,415.12 |
| Return on investment | 72,002,136.32 | 64,643,822.92 |
| Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | 33,700.00 | 170,207.20 |
| Net proceeds from the disposal of subsidiaries and other business units | ||
| Cash generated from other investing activities | ||
| Subtotal of cash generated from | 2,648,335,891.20 | 1,115,798,445.24 |
| investing activities | ||
| Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | 152,296,054.86 | 160,906,209.61 |
| Payments for investments | 1,222,560,163.50 | 1,221,541,796.23 |
| Net increase in pledged loans granted | ||
| Net payments for the acquisition of subsidiaries and other business units | ||
| Cash used in other investing activities | ||
| Subtotal of cash used in investing activities | 1,374,856,218.36 | 1,382,448,005.84 |
| Net cash generated from/used in investing activities | 1,273,479,672.84 | -266,649,560.60 |
| 3. Cash flows from financing activities: | ||
| Capital contributions received | ||
| Including: Capital contributions by non-controlling interests to subsidiaries | ||
| Borrowings obtained | ||
| Net proceeds from issuance of bonds | ||
| Cash generated from other financing activities | ||
| Subtotal of cash generated from financing activities | ||
| Repayments of borrowings | ||
| Payments for interest and dividends | 755,400,000.00 | 503,600,000.00 |
| Including: Dividends paid by subsidiaries to non-controlling interests | ||
| Cash used in other financing activities | ||
| Subtotal of cash used in financing activities | 755,400,000.00 | 503,600,000.00 |
| Net cash generated from/used in financing activities | -755,400,000.00 | -503,600,000.00 |
| 4. Effect of foreign exchange rate changes on cash and cash equivalents | ||
| 5. Net increase in cash and cash | 1,559,813,421.67 | -101,302,668.99 |
| equivalents | ||
| Add: Cash and cash equivalents, beginning of the period | 835,560,865.12 | 1,024,088,626.40 |
| 6. Cash and cash equivalents, end of the period | 2,395,374,286.79 | 922,785,957.41 |
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
| Item | H1 2019 | H1 2018 |
| 1. Cash flows from operating activities: | ||
| Proceeds from sale of commodities and rendering of services | 3,351,164,696.89 | 1,823,943,040.35 |
| Tax rebates | ||
| Cash generated from other operating activities | 248,907,013.29 | 637,265,577.14 |
| Subtotal of cash generated from operating activities | 3,600,071,710.18 | 2,461,208,617.49 |
| Payments for commodities and services | 847,532,691.56 | 621,024,637.00 |
| Cash paid to and for employees | 355,855,901.15 | 299,547,110.96 |
| Taxes paid | 1,260,288,640.64 | 1,185,933,500.57 |
| Cash used in other operating activities | 145,296,084.94 | 122,550,902.77 |
| Subtotal of cash used in operating activities | 2,608,973,318.29 | 2,229,056,151.30 |
| Net cash generated from/used in operating activities | 991,098,391.89 | 232,152,466.19 |
| 2. Cash flows from investing activities: | ||
| Proceeds from disinvestment | 1,400,740,054.88 | 860,984,415.12 |
| Return on investment | 31,890,794.48 | 62,684,376.34 |
| Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | 41,304.23 | 0.00 |
| Net proceeds from the disposal of subsidiaries and other business units | ||
| Cash generated from other investing activities |
| Subtotal of cash generated from investing activities | 1,432,672,153.59 | 923,668,791.46 |
| Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | 116,751,759.47 | 84,656,707.92 |
| Payments for investments | 726,900,163.50 | 621,541,796.23 |
| Net payments for the acquisition of subsidiaries and other business units | ||
| Cash used in other investing activities | ||
| Subtotal of cash used in investing activities | 843,651,922.97 | 706,198,504.15 |
| Net cash generated from/used in investing activities | 589,020,230.62 | 217,470,287.31 |
| 3. Cash flows from financing activities: | ||
| Capital contributions received | ||
| Borrowings obtained | ||
| Net proceeds from the issuance of bonds | ||
| Cash generated from other financing activities | ||
| Subtotal of cash generated from financing activities | ||
| Repayments of borrowings | ||
| Payments for interest and dividends | 755,400,000.00 | 503,600,000.00 |
| Cash used in other financing activities | ||
| Subtotal of cash used in financing activities | 755,400,000.00 | 503,600,000.00 |
| Net cash generated from/used in financing activities | -755,400,000.00 | -503,600,000.00 |
| 4. Effect of foreign exchange rate changes on cash and cash equivalents | ||
| 5. Net increase in cash and cash equivalents | 824,718,622.51 | -53,977,246.50 |
| Add: Cash and cash equivalents, beginning of the period | 708,172,917.59 | 826,262,109.02 |
| 6. Cash and cash equivalents, end of the | 1,532,891,540.10 | 772,284,862.52 |
7. Consolidated Statements of Changes in Owners’ Equity
H1 2019
Unit: RMB
| Item | H1 2019 | ||||||||||||||
| Equity attributable to owners of the Company as the parent | Non-controlling interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | General reserve | Retained earnings | Other | Subtotal | |||||
| Preferred shares | Perpetual bonds | Other | |||||||||||||
| 1. Balances as at the end of the prior year | 503,600,000.00 | 1,295,405,592.25 | 4,794,830.59 | 256,902,260.27 | 5,541,281,341.47 | 7,601,984,024.58 | 427,766,092.82 | 8,029,750,117.40 | |||||||
| Add: Adjustments for changed accounting policies | -4,794,830.59 | 4,794,830.59 | |||||||||||||
| Adjustments for corrections of previous errors | |||||||||||||||
| Adjustments | |||||||||||||||
| for business combinations under common control | |||||||||||||||
| Other adjustments | |||||||||||||||
| 2. Balances as at the beginning of the year | 503,600,000.00 | 1,295,405,592.25 | 256,902,260.27 | 5,546,076,172.06 | 7,601,984,024.58 | 427,766,092.82 | 8,029,750,117.40 | ||||||||
| 3. Increase/ decrease in the period (“-” for decrease) | 492,916,314.01 | 492,916,314.01 | 26,632,409.70 | 519,548,723.71 | |||||||||||
| 3.1 Total comprehensive income | 1,248,316,314.01 | 1,248,316,314.01 | 26,632,409.70 | 1,274,948,723.71 | |||||||||||
| 3.2 Capital increased and reduced by owners | |||||||||||||||
| 3.2.1 Ordinary shares increased by |
| shareholders | |||||||||||||||
| 3.2.2 Capital increased by holders of other equity instruments | |||||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | |||||||||||||||
| 3.2.4 Other | |||||||||||||||
| 3.3 Profit distribution | -755,400,000.00 | -755,400,000.00 | -755,400,000.00 | ||||||||||||
| 3.3.1 Appropriation to surplus reserves | |||||||||||||||
| 3.3.2 Appropriation to general reserve | |||||||||||||||
| 3.3.3 Appropriatio | -755,400,000.00 | -755,400,000.00 | -755,400,000.00 |
| n to owners (or shareholders) | |||||||||||||||
| 3.3.4 Other | |||||||||||||||
| 3.4 Transfers within owners’ equity | |||||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | |||||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | |||||||||||||||
| 3.4.3 Loss offset by surplus reserves | |||||||||||||||
| 3.4.4 |
| Changes in defined benefit pension schemes transferred to retained earnings | |||||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | |||||||||||||||
| 3.4.6 Other | |||||||||||||||
| 3.5 Specific reserve | |||||||||||||||
| 3.5.1 Increase in the period | |||||||||||||||
| 3.5.2 Used in the period | |||||||||||||||
| 3.6 Other |
| 4. Balances as at the end of the period | 503,600,000.00 | 1,295,405,592.25 | 0.00 | 256,902,260.27 | 6,038,992,486.07 | 8,094,900,338.59 | 454,398,502.52 | 8,549,298,841.11 |
H1 2018
Unit: RMB
| Item | H1 2018 | ||||||||||||||
| Equity attributable to owners of the Company as the parent | Non-controlling interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | General reserve | Retained earnings | Other | Subtotal | |||||
| Preferred shares | Perpetual bonds | Other | |||||||||||||
| 1. Balances as at the end of the prior year | 503,600,000.00 | 1,295,405,592.25 | 53,520,827.44 | 256,902,260.27 | 4,349,649,698.42 | 6,459,078,378.38 | 382,100,628.33 | 6,841,179,006.71 | |||||||
| Add: Adjustments for changed accounting policies | |||||||||||||||
| Adjustments for corrections of previous errors | |||||||||||||||
| Adjustments for business combinations under common control | |||||||||||||||
| Other adjustments | |||||||||||||||
| 2. Balances as at the beginning of the year | 503,600,000.00 | 1,295,405,592.25 | 53,520,827.44 | 256,902,260.27 | 4,349,649,698.42 | 6,459,078,378.38 | 382,100,628.33 | 6,841,179,006.71 | |||||||
| 3. Increase/ decrease in the period (“-” for decrease) | -45,102,275.58 | 388,822,337.64 | 343,720,062.06 | 23,015,329.28 | 366,735,391.34 | ||||||||||
| 3.1 Total comprehensive income | -45,102,275.58 | 892,422,337.64 | 847,320,062.06 | 23,015,329.28 | 870,335,391.34 | ||||||||||
| 3.2 Capital increased and reduced by owners | |||||||||||||||
| 3.2.1 Ordinary shares |
| increased by shareholders | |||||||||||||||
| 3.2.2 Capital increased by holders of other equity instruments | |||||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | |||||||||||||||
| 3.2.4 Other | |||||||||||||||
| 3.3 Profit distribution | -503,600,000.00 | -503,600,000.00 | -503,600,000.00 | ||||||||||||
| 3.3.1 Appropriation to surplus reserves | |||||||||||||||
| 3.3.2 Appropriation to general reserve | |||||||||||||||
| 3.3.3 | -503,600,000.0 | -503,600,000.0 | -503,600,000.0 |
| Appropriation to owners (or shareholders) | 0 | 0 | 0 | ||||||||||||
| 3.3.4 Other | |||||||||||||||
| 3.4 Transfers within owners’ equity | |||||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | |||||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | |||||||||||||||
| 3.4.3 Loss offset by surplus reserves |
| 3.4.4 Changes in defined benefit pension schemes transferred to retained earnings | |||||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | |||||||||||||||
| 3.4.6 Other | |||||||||||||||
| 3.5 Specific reserve | |||||||||||||||
| 3.5.1 Increase in the period | |||||||||||||||
| 3.5.2 Used in the period |
| 3.6 Other | |||||||||||||||
| 4. Balances as at the end of the period | 503,600,000.00 | 1,295,405,592.25 | 8,418,551.86 | 256,902,260.27 | 4,738,472,036.06 | 6,802,798,440.44 | 405,115,957.61 | 7,207,914,398.05 |
8. Statements of Changes in Owners’ Equity of the Company as the Parent
H1 2019
Unit: RMB
| Item | H1 2019 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | Retained earnings | Other | Total owners’ equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| 1. Balances as at the end of the prior year | 503,600,000.00 | 1,247,162,107.35 | 4,794,830.59 | 251,800,000.00 | 5,162,354,747.41 | 7,169,711,685.35 | ||||||
| Add: Adjustments for changed accounting policies | -4,794,830.59 | 4,794,830.59 | ||||||||||
| Adjustments for corrections of previous errors | ||||||||||||
| Other adjustments | ||||||||||||
| 2. Balances as at the beginning of the year | 503,600,000.00 | 1,247,162,107.35 | 251,800,000.00 | 5,167,149,578.00 | 7,169,711,685.35 | |||||||
| 3. Increase/ decrease in the period (“-” for | -71,419,256.76 | -71,419,256.76 | ||||||||||
| decrease) | ||||||||||||
| 3.1 Total comprehensive income | 683,980,743.24 | 683,980,743.24 | ||||||||||
| 3.2 Capital increased and reduced by owners | ||||||||||||
| 3.2.1 Ordinary shares increased by shareholders | ||||||||||||
| 3.2.2 Capital increased by holders of other equity instruments | ||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | ||||||||||||
| 3.2.4 Other | ||||||||||||
| 3.3 Profit distribution | -755,400,000.00 | -755,400,000.00 | ||||||||||
| 3.3.1 Appropriation to surplus reserves | ||||||||||||
| 3.3.2 Appropriation to owners (or shareholders) | -755,400,000.00 | -755,400,000.00 | ||||||||||
| 3.3.3 Other |
| 3.4 Transfers within owners’ equity | ||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | ||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | ||||||||||||
| 3.4.3 Loss offset by surplus reserves | ||||||||||||
| 3.4.4 Changes in defined benefit pension schemes transferred to retained earnings | ||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | ||||||||||||
| 3.4.6 Other | ||||||||||||
| 3.5 Specific reserve | ||||||||||||
| 3.5.1 Increase in the period | ||||||||||||
| 3.5.2 Used in the period |
| 3.6 Other | ||||||||||||
| 4. Balances as at the end of the period | 503,600,000.00 | 1,247,162,107.35 | 0.00 | 251,800,000.00 | 5,095,730,321.24 | 7,098,292,428.59 |
H1 2018
Unit: RMB
| Item | H1 2018 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | Retained earnings | Other | Total owners’ equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| 1. Balances as at the end of the prior year | 503,600,000.00 | 1,247,162,107.35 | 53,454,736.38 | 251,800,000.00 | 4,103,151,843.38 | 6,159,168,687.11 | ||||||
| Add: Adjustments for changed accounting policies | ||||||||||||
| Adjustments for corrections of previous errors | ||||||||||||
| Other adjustments | ||||||||||||
| 2. Balances as at the beginning of the year | 503,600,000.00 | 1,247,162,107.35 | 53,454,736.38 | 251,800,000.00 | 4,103,151,843.38 | 6,159,168,687.11 | ||||||
| 3. Increase/ decrease in the period (“-” for decrease) | -45,064,475.58 | -60,371,745.28 | -105,436,220.86 | |||||||||
| 3.1 Total comprehensive | -45,064,475.58 | 443,228,254.72 | 398,163,779.14 | |||||||||
| income | ||||||||||||
| 3.2 Capital increased and reduced by owners | ||||||||||||
| 3.2.1 Ordinary shares increased by shareholders | ||||||||||||
| 3.2.2 Capital increased by holders of other equity instruments | ||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | ||||||||||||
| 3.2.4 Other | ||||||||||||
| 3.3 Profit distribution | -503,600,000.00 | -503,600,000.00 | ||||||||||
| 3.3.1 Appropriation to surplus reserves | ||||||||||||
| 3.3.2 Appropriation to owners (or shareholders) | -503,600,000.00 | -503,600,000.00 | ||||||||||
| 3.3.3 Other |
| 3.4 Transfers within owners’ equity | ||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | ||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | ||||||||||||
| 3.4.3 Loss offset by surplus reserves | ||||||||||||
| 3.4.4 Changes in defined benefit pension schemes transferred to retained earnings | ||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | ||||||||||||
| 3.4.6 Other | ||||||||||||
| 3.5 Specific reserve | ||||||||||||
| 3.5.1 Increase in the period |
| 3.5.2 Used in the period | ||||||||||||
| 3.6 Other | ||||||||||||
| 4. Balances as at the end of the period | 503,600,000.00 | 1,247,162,107.35 | 8,390,260.80 | 251,800,000.00 | 4,042,780,098.10 | 6,053,732,466.25 |
~37~
Anhui Gujing Distillery Company LimitedNotes to Financial Statements for H1 2019(Currency Unit Is RMB Unless Otherwise Stated)I. Company ProfileAuthorized by document WGZGZ (1996) No.053 of Anhui Administrative Bureau of State-owned Property, AnhuiGujing Distillery Company Limited (“the Company”) was established as a limited liability company with net assetsof RMB377,167,700 and state-owned shares of 155,000,000 shares and considered Anhui Gujing Company as theonly promoter. The registration place was Bozhou Anhui China. The Company was established on 5 March 1996 bydocument of WZM (1996) No.42 of Anhui People’s Government. The Company set up plenary session on 28 May1996 and registered in Anhui on 30 May 1996 with business license of 14897271-1.The Company has issued 60,000,000 domestic listed foreign shares (“B” shares) in June 1996 and 20,000,000ordinary shares (“A shares) on September 1996, ordinary shares are listed in national and par value is RMB1.00 pershare. Those A shares and B shares are listed in Shenzhen Stock exchange.Headquarter of the Company is located in Gujing Bozhou Anhui. The Company and its subsidiaries (the Company)specialize in producing and selling white spirit.Registered capitals of the Company were RMB235,000,000 with stocks of 235,000,000, of which 155,000,000shares were issued in China, B shares of 60,000,000 shares and A shares of 20,000,000 shares. The book value ofthe stocks of the Company was of RMB1 per share.On 29 May 2006, a shareholder meeting was held to discuss and approval a program of equity division of A share,the program was implement in June 2006. After implementation, all shares are outstanding share, which include147,000,000 shares with restrict condition on disposal, represent 62.55% of total equity, and 88,000,000 shareswithout restrict condition on disposal, represent 37.45% of total equity.The Company issued <Announcement of release restriction shares by Anhui Gujing Distillery Company Limited>on 27 June 2007, 11,750,000 outstanding shares with restrict condition on disposal are listed in stock market on 29June 2007. Up to that day, outstanding shares with restrict condition on disposal are 135,250,000, representing
57.55% of total equity, the share without restrict condition are 99,750,000, representing 42.45% of total equity.The Company issued <Announcement of release restriction shares by Anhui Gujing Distillery Company Limited>on 17 July 2008, 11,750,000 outstanding shares with restrict condition on disposal are listed in stock market on 18July 2008. Up to that day, outstanding shares with restrict condition on disposal are 123,500,000, representing
52.55% of total equity, the share without restrict condition are 111,500,000, representing 47.45% of total equity.The Company issued <Announcement of release restriction shares by Anhui Gujing Distillery Company Limited>on 24 July 2009, 123,500,000 outstanding shares with restrict condition on disposal are listed in stock market on 29July 2009. Up to that day, the Company’s all shares are all tradable.Approved by the CSRC Document Zheng-Jian-Xu-Ke [2011] No. 943, the Company privately offered 16,800,000
~38~
ordinary shares (A-shares) to special investors on 15 July 2011, with a par value of RMB1 and the price ofRMB75.00 per share, raising RMB1,260,000,000.00 in total, the net amount of raised funds stood atRMB1,227,499,450.27 after deducting RMB32,500,549.73 of various issuance expenses. Certified PublicAccountants verified the raised capital upon its arrival and issued the Capital Verification Report Reanda-Yan-Zi[2011] No. 1065. After private issuance, the share capital of the Company increased to RMB251.8 million.Pursuant to the Resolution of The 2011 Annual General Meeting, the Company that considered 251,800,000 sharesas base number on 31 December 2011 transferred capital reserve into share capital at a rate of “10 shares for per 10shares” accounting for 251,800,000 shares and implemented in the year of 2012. Upon the transference, theregistered capitals increased to RMB503,600,000.In April 2016, the Company entered a strategic cooperation agreement with Wuhan Tianlong Yellow Crane TowerCo., Ltd., creating a new age for cooperation related to Chinese famous spirit. As the only Chinese famous spirit inHubei Province, it features unique mellow taste, elegant appearance and tempting smell. Moreover, Yellow CraneTower White Spirit won the Golden Prize respectively in 1984 and 1989 National White Spirit AppraisalCompetition as one of the business card representing Hubei Province’s economy. At present, the Company hasestablished three major bases in Wuhan, Xianning and Suizhou, of which, Xianning Base has integrated modernism,ecologism and high technology as a new spirit-making base, known as “the most beautiful chateau in China”. In2016, Yellow Crane Tower Spirit won “2015 Top 10 Star Product in Hubei Province”.By 30 June 2019, the Company issued 503,600,000 shares.The Company is registered at Gujing Town, Bozhou City, Anhui Province.The approved business of the Company including procurement of grain (operating with business license),manufacture of distilled spirits, wine distilling facilities, packaging material, bottles, alcohol, grease (limited tobyproducts from wine manufacture), and research and development of high-tech, biotechnology development,agricultural and sideline products deep processing, as well as sale of self-manufacturing products.The Company as the parent and the final company as the parent is Anhui Gujing Company Co., Ltd in China.Financial statement of the Company will be released on 23 August 2019 by the Board of Directors.On 30 June 2019, there were 22 subsidiaries included in the consolidation scope. Please refer to Note VIII “Rightsand Interests in other Entities” for details. During the Reporting Period, only 1 subsidiary was added into theconsolidation scope when compared to that of the same period of last year. Please refer to Note VII “Change of theConsolidation Scope” for details.II. Basis for the Preparation of Financial Statements
1. Basis for the Preparation
With the going-concern assumption as the basis and based on transactions and other events that actually occurred,the Company prepared financial statements in accordance with the ASBE-Basic Standard (No. 33 issued decreed byMinistry of Finance and No. 76 revised decreed by Ministry of Finance), the 41 specific standards of Accounting
~39~
Standards for Business Enterprises issued by Ministry of Finance of the PRC on 15 February 2006 and revisedthereafter, Application Guidance of Accounting Standard for Business Enterprises, Interpretation of AccountingStandards for Business Enterprises and other regulations(hereinafter referred to as “the Accounting Standards forBusiness Enterprises”, “China Accounting Standards” or “CAS”), Rules for Preparation Convention of Disclosureof Public Offering Companies No.15 – General Regulations for Financial Reporting (revised in 2014) by ChinaSecurities Regulatory Commission.In line with relevant rules of ASBE, financial accounting of the Company is based on accrual system. Exceptfinancial instruments and instrument real estate, the financial statement is calculated on the basis of history costs.Available-for-sale non-current assets are calculated by the lower one of fair value deducting estimated costs andoriginal costs meeting the standard of available-for-sale. If assets confront impairment, it shall be withdrawnprovision for impairment in line with relevant stipulations.
2. Continuous Operation
The management of the Company executed the assessment on the continuation ability and had not discovered anyevent or situation caused significant suspicion on the continuation ability. Thus, the financial statements compiledbased on the hypothesis of the continuation.III. Declaration of Compliance with the Enterprise Accounting StandardsThe financial statements of the Company have been prepared in accordance with the Enterprise AccountingStandards to present truly and completely the financial position of the Company on 30 June 2019, operating results,cash flow from January to June in 2019 and other relevant information. The financial statement of the Companymet the relevant disclosure requirements of financial statement and notes of “Compiling stipulations of publicinformation disclosure No.15---general rules of financial statement” (revised in 2014).IV. Main Accounting Policies and Accounting EstimatesThe Company and various subsidiaries are mainly specialized in manufacturing and selling white spirit. Accordingto the actual production & operation and related ASBE provisions, this company and various subsidiaries haveformulated some specific accounting policies and estimations related to various transactions and matters includingrevenue recognition. Please refer to Note IV. 24 “Revenues” for details. For any description of major accountingjudgment and estimations made by the company’s management, please refer to Note IV. 28 “Other SignificantAccounting Policies and Estimates” for details.
1. Accounting Period
Accounting Period is divided to annual term and interim term. Accounting medium refers to reporting periodshorter than a complete accounting period. The Company employs a period of calendar days from January 1
sttoDecember 31
st
each year as accounting year.
2. Operating Cycle
Normal operating cycle refers to the period from the Company purchases the assets for processing to realize the
~40~
cash or cash equivalents. The Company regards 12 months as an operating cycle and regards which as the partitioncriterion of the mobility of the assets and liabilities.
3. Bookkeeping Base Currency
Renminbi is the dominant currency used in the economic circumstances where the Company and its domesticsubsidiaries are involved. Therefore, the Company and its domestic subsidiaries use Renminbi as their bookkeepingbase currency. And the Company adopted Renminbi as the bookkeeping base currency when preparing the financialstatements for the reporting period.
4. Accounting Treatment Methods for Business Combinations Under the Same Control and those not Underthe Same ControlThe term “business combinations” refers to a transaction or event bringing together two or more separateenterprises into one reporting entity. Business combinations are classified into the business combinations under thesame control and the business combinations not under the same control.
(1) Accounting treatment of the business combination that is under the same controlA business combination involving enterprises under common control is a business combination in which all of thecombining enterprises are ultimately controlled by the same party or parties both before and after the businesscombination, and that control is not transitory. The assets and liabilities obtained are measured at the carryingamounts as recorded by the enterprise being combined at the combination date. The difference between the carryingamount of the net assets obtained and the carrying amount of consideration paid for the combination (or the totalface value of shares issued) is adjusted to share premium in the capital reserve. If the balance of share premium isinsufficient, any excess is adjusted to retained earnings. Other direct expenses occur when the Company conductingbusiness combinations is recognized in current profit and loss. The combination date is the date on which onecombining enterprise effectively obtains control of the other combining enterprises.Those assets and liabilities obtained by the Company during the business combination should be recognized in thecarrying value of the equity of the merged party on the merger date. The difference between the carrying amount ofthe net assets obtained and carrying amount of the merger consideration (or total par value of issued shares) paidshall be adjusted to capital reserve. If the capital reserve is not sufficient to absorb the difference, any excess shallbe adjusted against retained earnings.Direct costs of a business combination shall be reckoned into current gains and losses.
(2) Accounting treatment of the business combination that is not under the same controlA business combination involving entities not under common control is a business combination in which all of thecombining entities are not ultimately controlled by the same party or parties both before and after the businesscombination. In business combination not under the same control, acquirer refers to party obtaining control of othercombining corporations in the date of acquisition and acquiree refers to corporation participating in combination.
~41~
Date of acquire refers to the date the acquirer actually obtaining control of the acquiree.As for combination not under the same control, costs of combination includes assets that acquirers occur in the dateof combination in order to obtain control of acquirees, loans, fair value of issued equity securities, intermediarycosts such as audit, legal services and evaluation consultation, and other administrative fees occurred in thereporting period. As for trading costs that acquirers as combination consideration issue equity securities or debtsecurities, it shall be reckoned into initial accounts of equity securities or debt securities. As for businesscombination realized by several exchanges and trades, in the combined financial statement of the Company, theCompany shall recalculate the stock right obtained by acquirees before the date of acquisition in line with fair valueof the stock right in the date of acquisition. When the Company acts as the combination party, the cost of a businesscombination paid by the acquirer is the aggregate of the fair value at the acquisition date of assets given (includingshare equity of the acquiree held before the combination date), liabilities incurred or assumed, and equity securitiesissued by the acquirer. Any excess of the cost of a business combination over the acquirer’s interest in the fair valueof the acquiree’s identifiable net assets is recognized as goodwill, while any excess of the acquirer’s interest in thefair value of the acquiree’s identifiable net assets over the cost of a business combination is recognized in profit orloss. The cost of equity securities or liability securities as on combination consideration offering is recognized ininitial recording capital on equity securities or liability securities. Other direct expenses occur when the Companyconducting business combinations is recognized in current profit and loss. The difference between the fair valueand the carrying amount of the assets given is recognized in profit or loss. The Company, at the acquisition date,recognized the acquiree’s identifiable asset, liabilities and contingent liabilities at their fair value at that date. Theacquisition date is the date on which the acquirer effectively obtains control of the acquiree.As for deductible temporary difference of acquirers obtained by acquirers which can’t be confirmed due to failureof meeting the confirmation requirements of deferred income tax assets, if there is newly information proving theexistence of relevant situation in the date of acquisition in a year after the acquisition date and financial benefits ofdeductible temporary difference of acquirers in the date of acquisition are estimated to be realized, deferred incometax assets shall be confirmed. At the same time, goodwill shall be decreased. If goodwill is insufficient, thedifference shall be reckoned into current gains and losses; except the above circumstance, reliable deferred incometax assets relevant to the Company shall be reckoned into current gains and losses.For a business combination not involving enterprise under common control, which achieved in stages that involvesmultiple exchange transactions, according to “The notice of the Ministry of Finance on the issuance of AccountingStandards Interpretation No. 5” (CaiKuai [2012] No. 19) and Article 51 of Accounting Standards for Enterprises No.33 – Consolidated Financial Statements on the “package deal” criterion (see Note IV. 5 (2)), to judge the multipleexchange transactions whether they are the “package deal”. If it belongs to the “package deal” in reference to thepreceding paragraphs of this section and the Notes described in Note IV. 14 “long-term equity investment”accounting treatment, if it does not belong to the “package deal” to distinguish the individual financial statements
~42~
and the consolidated financial statements related to the accounting treatment:
In the individual financial statements, the sum of the book value and new investment cost of the Company holds inthe acquiree before the acquiring date shall be considered as initial cost of the investment. Other relatedcomprehensive gains in relation to the equity interests that the Company holds in the acquiree before the acquiringdate shall be treated on the same basis as the acquiree directly disposes the related assets or liabilities whendisposing the investment (that is, except for the corresponding share in the changes in the net liabilities or assetswith a defined benefit plan measured at the equity method arising from the acquiree’s re-measurement, the othersshall be transferred into current investment gains).In the Company’s consolidated financial statements, as for the equity interests that the Company holds in theacquiree before the acquiring date, they shall be re-measured according to their fair values at the acquiring date; thepositive difference between their fair values and carrying amounts shall be recorded into the investment gains forthe period including the acquiring date. Other related comprehensive gains in relation to the equity interests that theCompany holds in the acquiree before the acquiring date shall be treated on the same basis as the acquiree directlydisposes the related assets or liabilities when disposing the investment (that is, except for the corresponding sharein the changes in the net liabilities or assets with a defined benefit plan measured at the equity method arising fromthe acquiree’s re-measurement, the others shall be transferred into current investment gains on the acquiring date).
5. Methods for Preparing Consolidated Financial Statements
(1) Principle for determining the consolidation scope
The consolidation scope for financial statements is determined on the basis of control. The term “control” is thepower of the Company upon an investee, with which it can take part in relevant activities of the investee to obtainvariable returns and is able to influence the amount of returns. The consolidated financial statements comprise thefinancial statements of the Company and its subsidiaries. A subsidiary is an enterprise or entity controlled by theCompany.The Company would reassess it if the involved relevant factors of above control definitions changed, which wascaused by changes of relevant facts and situations.
(2) Methods for preparing the consolidated financial statements
The Company begins to include subsidiaries into consolidation scope from the date obtaining net assets ofsubsidiaries and actual control of production and operation and terminates to include subsidiaries into consolidationscope from the date losing actual control of subsidiaries. As for the disposal of subsidiaries, operating results andcash flow are included in consolidated income statement and consolidated statement of cash flow before the date ofthe disposal; as for current disposal of subsidiaries, opening balance of the consolidated balance sheet shall not beadjusted. As for subsidiaries increased in the combination not under the same control, operating results and cashflow after the date of the acquisition are included in consolidated income statement and consolidated statement ofcash flow, in addition, opening balance of the consolidated balance sheet shall not be adjusted. As for subsidiaries
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increased in the combination under the same control and combined parties under acquisition, operating results andcash flow from the beginning of combination to the date of combination are included in consolidated incomestatement and consolidated statement of cash flow, in addition, opening balance of the consolidated balance sheetshall be adjusted.Where a subsidiary was acquired during the reporting period, through a business combination involving entitiesunder common control, the financial statements of the subsidiary are included in the consolidated financialstatements as if the combination had occurred at the date that common control was established. Therefore theopening balances and the comparative figures of the consolidated financial statements are restated. In thepreparation of the consolidated financial statements, the subsidiary’s assets, liabilities and results of operations areincluded in the consolidated balance sheet based on their carrying amounts; while results of operations are includedin the consolidated income statement, from the date that common control was established.All the significant inter-company balances, trading and unrealized profits shall be offset when preparing theconsolidated financial statement.If current loss shoulder by minority shareholders of a subsidy over the proportion enjoyed by minority shareholdersin a subsidy at owners’ equity at period-begin, its balance still offset minority shareholders’ equity.When the accounting period or accounting policies of a subsidiary are different from those of the Company, theCompany makes necessary adjustments to the financial statements of the subsidiary based on the Company’s ownaccounting period or accounting policies. Intra-Company balances and transactions, and any unrealized profit orloss arising from intra-Company transactions, are eliminated in preparing the consolidated financial statements.Unrealized losses resulting from intra-Company transactions are eliminated in the same way as unrealized gains butonly to the extent that there is no evidence of impairment.When losing control right of subsidiaries because of the disposal of stock right investment or other reasons, theCompany shall recalculate residual stock right in accordance to the fair value in the date of losing control right. Asfor remaining equity investment after disposal, the Company will re-account it according to the fair value at thedate the control was lost. Any profit or loss occurred shall be recorded into the investment income during the periodof losing control right. Then follow-up measurement of remaining equity shall be arranged in line with “No.2—Long-term Equity Investment” or “No. 22—Affirmation and Calculation of Financial Instrument”. More detailsplease refer to Note IV, 14 “Long-term Equity Investment” or Note IV, 9 “Financial Instrument”.The Company through multiple transactions step deals with disposal of the subsidiary's equity investment until theloss of control; need to distinguish between equity until the disposal of a subsidiary's loss of control over whetherthe transaction is package deal. Terms of the transaction disposition of equity investment in a subsidiary, subject tothe following conditions and the economic impact of one or more of cases, usually indicates that severaltransactions should be accounted for as a package deal: ① these transactions are considered simultaneously, or inthe case of mutual influence made, ② these transactions as a whole in order to achieve a complete business results;
③ the occurrence of a transaction depends on occurs at least one other transaction ; ④ a transaction look alone is
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not economical, but when considered together with other transaction is economical. If they do not belong to thepackage deal, each of them separately, as the case of a transaction in accordance with “without losing control overthe disposal of a subsidiary part of long-term equity investments” (see Note IV. 14. (2) ④)) and “due to the disposalof certain equity investments or other reasons lost control of a subsidiary of the original” (see previous paragraph)principles applicable accounting treatment. Until the disposal of the equity investment loss of control of asubsidiary of the transactions belonging to the package deal, the transaction will be used as a disposal of asubsidiary and the loss of control of the transaction. However, before losing control of the price of each disposalentitled to share in the net assets of the subsidiary's investment corresponding to the difference between thedisposals, recognized in the consolidated financial statements as other comprehensive income, loss of control overthe transferred together with the loss of control or loss in the period.
6. Classification of Joint Arrangements and Accounting Treatment of Joint OperationsA joint arrangement refers to an arrangement jointly controlled by two participants or above. The Companyclassifies joint arrangements into joint operations and joint ventures according to its rights and duties in the jointarrangements. A joint operation refers to a joint arrangement where the Company enjoys assets and has to bearliabilities related to the arrangement. A joint venture refers to a joint arrangement where the Company is onlyentitled to the net assets of the arrangement.The Company’s investments in joint ventures are measured at the equity method according to the accountingpolicies mentioned in Note IV. 14 (2) ② “Long-term equity investments measured at the equity method”.For a joint operation, the Company, as a joint operator, recognizes the assets and liabilities that it holds and bears inthe joint operation, and recognizes the jointly-held assets and jointly-borne liabilities according to the Company’sstake in the joint operation; recognizes the income from sale of the Company’s share in the output of the jointoperation; recognizes the income from sale of the joint operation’s outputs according to the Company’s stake in it;and recognizes the expense solely incurred to the Company and the expense incurred to the joint operationaccording to the Company’s stake in it.When the Company, as a joint operator, transfers or sells assets (the assets not constituting business, the samebelow) to the joint operation, or purchases assets from the joint operation, before the assets are sold to a third party,the Company only recognizes the share of the other joint operators in the gains and losses arising from the sale.Where impairment occurs to the assets as prescribed in <The Accounting Standard No. 8 for BusinessEnterprises—Asset Impairment>, the Company shall fully recognizes the loss for a transfer or sale of assets to ajoint operation; and shall recognize the loss according to its stake in the joint operation for a purchase of assetsfrom the joint operation.
7. Recognition Standard for Cash and Cash Equivalents
Cash and cash equivalents of the Company include cash on hand, ready usable deposits and investments havingshort holding term (normally will be due within three months from the day of purchase), with strong liquidity and
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easy to be exchanged into certain amount of cash that can be measured reliably and have low risks of change.
8. Foreign Currency Businesses and Translation of Foreign Currency Financial Statements
(1) Accounting treatments for translation of foreign currency transactions
The foreign currency transactions are recorded, on initial recognition in the functional currency, by applying [thespot exchange rate on the date of the transaction / an exchange rate that approximates the actual spot exchange rateon the date of transaction]. The exchange of foreign currency and transactions related to the foreign exchange aretranslated at the spot exchange rate.
(2) Accounting treatments for translation of foreign currency monetary items and non-monetary itemsAt the balance sheet date, foreign currency monetary items are translated using the spot exchange rate at thebalance sheet date. All the exchange differences thus resulted are taken to profit or loss, except for ① thoserelating to foreign currency borrowings specifically for construction and acquisition of qualifying assets, which arecapitalized in accordance with the principle of capitalization of borrowing costs, ② hedging accounting, theexchange difference related to hedging instruments for the purpose of net oversea operating investment is recordedin the comprehensive income till the date of disposal and recognized in profit or loss of the period; exchangedifference from changes of other account balance of foreign currency monetary items, ③available-for-trade isrecorded into profit or loss except for amortized cost.Non-monetary foreign currency items measured at historical cost shall still be translated at the spot exchange rateprevailing on the transaction date, and the amount denominated in the functional currency is not changed.Non-monetary foreign currency items measured at fair value are translated at the spot exchange rate prevailing atthe date when the fair values are determined. The exchange difference thus resulted are recognized in profit or lossfor the current period or as capital reserve.
9. Financial Instruments
The Company recognizes a financial asset or liability when it becomes a party of the relevant financial instrumentcontract.
(1) Classification, recognition and measurement of financial assets
The Company classifies the financial assets into financial assets measured at amortized cost, financial assetsmeasured by the fair value and the changes recorded in other comprehensive income and financial assets at fairvalue through profit or loss based on the business model for financial assets management and characteristics ofcontractual cash flow of financial assets. Financial assets initially recognized shall be measured at their fair values.For financial assets measured at their fair values and of which the variation is recorded into the profit or loss of thecurrent period, the transaction expenses thereof shall be directly included into the current profit or loss; for otherfinancial assets, the transaction expenses thereof shall be included into the initially recognized amount.
①Financial assets measured by the amortized cost
The business mode of the Company to manage the financial assets targets at collecting the contractual cash flow,
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that is, the cash flow generated in the specific date is the payment of the interest based on the principal andoutstanding principal amount. This kind of financial assets of the Company shall be subsequently measured basedon the amortized cost and effective interest method, and the gains or losses arising from the amortization,impairment shall be included into current profit and loss.
②Financial assets measured at the fair value with its changes included into other comprehensive incomeBusiness mode for managing financial assets of the Company takes contract cash flow collected as target andselling as target. The Company calculates such financial assets as per fair value whose change is included intocorresponding comprehensive income, but impairment loss or gain, exchange gain or loss and interest incomecalculated as per actual interest rate method are included into the current profit and loss. Furthermore, the Companydesignates partial non-tradable equity vehicle investment as the financial asset measured with fair value whosechange is included into other comprehensive income. The Company includes the related dividend income of suchfinancial assets into the current profit and loss with the change in fair value included into other comprehensiveincome. At the time of derecognition of such financial assets, accumulated gain or loss included into othercomprehensive income before will be shifted to retained earnings from other comprehensive incomes but notincluded into the current profit and loss.
③Financial assets at fair value through profit or loss
The Company classifies financial assets except for above-mentioned financial assets measured with amortized costand financial assets measured with fair value whose change is included into other comprehensive income intofinancial assets at fair value through profit or loss
(2) Classification, recognition and measurement of financial liabilities
The Group’s financial liabilities are, on initial recognition, classified into financial liabilities at fair value throughprofit or loss and financial liabilities measured with amortized cost.
①Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include trading financial liabilities which are subsequentlymeasured at fair value and the changes of fair value are recorded into the current profit or loss. When the liabilitiesare derecognized, the difference between their fair values and their initial recorded amount was recognized asinvestment income and at the same time the gains and losses of fair value shall be adjusted.
②Financial liabilities with amortized cost
Financial liabilities with amortized cost shall be subsequently measured at the amortized cost. And gains or lossesgenerated from derecognition or amortization shall be recorded into the current profit or loss.
(3) Recognition basis and measurement of financial assets transfer
A financial asset when one of the following conditions is met will be derecognized:
①the rights to receive cash flows from the asset have expired;
②the enterprise has transferred its rights to receive cash flows from the asset to a third party under a pass-through
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arrangement; or
③the enterprise has transferred its rights to receive cash flows from the asset and either (a) has transferredsubstantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all therisks and rewards of the asset, but has transferred control of the asset.For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, (a). the carrying amount ofthe financial asset transferred; and (b) the sum of the consideration received from the transfer and any cumulativegain or loss that had been recognized in other comprehensive income, is recognized in profit or loss. If a part of thetransferred financial asset qualifies for derecognition, the carrying amount of the transferred financial asset isallocated between the part that continues to be recognized and the part that is derecognized, based on the relativefair value of those parts. The difference between (a) the carrying amount allocated to the part derecognized; and (b)the sum of the consideration received for the part derecognized and any cumulative gain or loss allocated to the partderecognized which has been previously recognized in other comprehensive income, is recognized in profit or loss.If the Company endorses the financial assets sold by right of recourse and holding financial assets, it needs toconfirm that whether almost all risks and remuneration in the ownership of financial assets have been transferred ornot. Where an enterprise has transferred nearly all of the risks and rewards related to the ownership of the financialasset to the transferee, it shall stop recognizing the financial asset； If it retained nearly all of the risks and rewardsrelated to the ownership of the financial asset, it shall not stop recognizing the financial asset. If the Company doesnot transfer or retain nearly all of the risks and rewards related to the ownership of the financial asset, then itcontinuously judges that whether the Company retain the control of the assets, and conducts accounting treatmentaccording to the principles described in former paragraphs.
(4) De-recognition of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of thefinancial liability be terminated in all or partly. Where the Company (debtor) enters into an agreement with acreditor so as to substitute the existing financial liabilities by way of any new financial liability, and if thecontractual stipulations regarding the new financial liability is substantially different from that regarding theexisting financial liability, it terminates the recognition of the existing financial liability, and at the same timerecognizes the new financial liability. Where the recognition of a financial liability is totally or partially terminated,the enterprise concerned shall include into the profits and losses of the current period for the gap between the bookvalue which has been terminated from recognition and the considerations it has paid (including the non-cash assetsit has transferred out and the new financial liabilities it has assumed)
(5) Determination of financial assets and liabilities’ fair value
For a financial instrument which has an active market, the Company uses quoted price in the active market toestablish its fair value. For a financial instrument which does not have an active market, the Company establishesfair value by using a valuation technique. In valuation, the Company adopts applicable valuation techniques
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supported by sufficient utilizable data and other information in current circumstances, selects input valuesconsistent with asset or liability characteristics considered in relevant asset or liability transactions of marketparticipators and prioritizes the applying relevant observable input values. Unobservable input values shall not beapplied unless relevant observable input values are not accessible or feasible.
(6) Impairment of financial assets
The Company estimates the expected credit loss of financial assets measured at the amortized cost and thosemeasured at fair value and whose changes are included in other comprehensive income (debt instruments) based onexpected credit loss. The measurement of expected credit loss depends on whether the credit risk of financial assetshas increased significantly since the initial confirmation. In case of d significant increase, the Company measuresits loss provisions according to the amount equivalent to the expected credit loss of the financial instrument duringits entire life; otherwise, the Company measures its loss provisions according to the amount equivalent to theexpected credit loss of the financial instrument in the next 12 months, and the increased or reversed amount of lossprovisions resulting therefrom shall be included in profits and losses of the current period as impairment losses orgains.
10. Notes Receivable
All notes receivable settled of the Company are bank’s acceptance bill and L/C. Based on the credit riskcharacteristics of notes receivable and comprehensive evaluation of their credit risk characteristics, the Companydoes not withdraw credit impairment losses for notes receivable.
11. Receivables
The receivables by the Company include accounts receivable, and other receivables.
(1) Criteria for recognition of bad debts:
The Company carries out an inspection on the balance sheet date. Where there is any objective evidence provingthat the receivables have been impaired, an impairment provision shall be made:
1) A serious financial difficulty occurs to the issuer or debtor;
2) The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the payment ofinterests or the principal, etc.;
3) The debtor will probably become bankrupt or carry out other financial reorganizations;
4) Other objective evidences showing the impairment of the receivables.
(2) Method for bad debts provision
① Provisions of bad debts in accounts receivables that is individually significant.The Company recognized the accounts receivable which amounted to more than 2 million as the accountsreceivable that is individual significant.For an accounts receivable that is individually significant, the asset is individually assessed for impairment, the
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impairment loss is recognized at the difference between the present value of future cash flow less the carryingamount, and provision is made accordingly.
② Provisions of bad debts in accounts receivable that individually insignificant item with similar credit riskcharacteristics that have significant risk:
A. Evidence of credit risk characteristicsWhether the financial asset is individually significant or not individually significant, it is included in a group offinancial assets with similar credit risk characteristics and collectively assessed for impairment. Such credit riskreflects the repayment of all due amount under the contract, and is related to the estimation of future cash flowexpected to be derived from the assets.Evidence of portfolios:
| Item | Basis |
| Age portfolios | Age |
| Related party portfolios | Companies within the combination scope of the Company |
B. Provision by credit risk characteristicsDuring the Company impairment test, the amount of bad debts provisions is determined by the assessed result fromthe experience of historical loss and current economic status and the existing loss in the estimated accountreceivables according to the set of account receivables and credit risk characteristic.Provision for different portfolios:
| Item | Provision |
| Age portfolios | Age analysis method |
| Related party portfolios | Don’t withdraw the bad debts provision unless the related-party lost the repaying capability |
a. Portfolio by age analysis
| Aging | Proportion for accounts receivable (%) | Proportion for other receivables (%) |
| Within 1 year (including 1 year, similarly hereinafter) | ||
| Including: [within 6 months] | 1.00 | 1.00 |
| [7 to 12 months] | 5.00 | 5.00 |
| 1 to 2 years | 10.00 | 10.00 |
| 2 to 3 years | 50.00 | 50.00 |
| Over 3 years | 100.00 | 100.00 |
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③Accounts receivable with insignificant amount but being individually withdrawn bad debts provisionWhen making individual impairment test on accounts receivable with insignificant amount but high credit risk, theimpairment loss shall be recognized based on the difference of the book values higher than the present value offuture cash flows, then withdraw the bad debts provision. For example, accounts receivable of related parties;accounts receivable involving dispute or litigation, arbitration; accounts receivable having clear signs to indicatethat debtor probably cannot implement obligations of payment.
(3) Reversal of provision for bad debt
If there is any provident demonstrating recovery of the value of the accounts receivable and objectively correlatingto the issues after the confirmation of the losses, the original confirmed losses would be reversed and recorded intocurrent gains and losses. However, the reserved book value shall not exceed the amortized costs of the accountsreceivable under non-withdrawing impairment circumstance.
12. Inventory
(1) Category of inventory
Inventory mainly includes raw materials, packing materials, self-made semi-manufactured products, goods inprocess and finished goods, etc.
(2) Pricing method for outgoing inventories
Inventory is priced by actual costs when it is obtained. Inventory costs include procurement costs, processing costsand other costs. Weighted average method is used to price inventory when it is received and delivered.
(3) Recognition basis of net realizable value and withdrawal method of falling price provision for inventoriesNet realizable value in daily activity, it is referred to the estimated selling price minus the estimated sellingexpenses and related tax and fees in normal operating process. When confirming the net realizable value ofinventories, the Company shall take the intention of inventories into consideration and influence of issues afterbalance sheet date.On the balance sheet date, the evaluation criteria should base on the lower value between costs and net realizablevalue. When net realizable value is lower than costs, falling price provision of inventories shall be made. Undernormal circumstances, the Company withdraws the falling price provision in according to individual inventoryitems, but for large quantity and low-unit-price inventories, falling price provision of inventories shall be madebased on the category of inventories; for those inventories that relating to the same product line that have similarpurposes or end uses, are produced and marketed in the same geographical area, and cannot be practicablyevaluated separately from other items in that product line, their falling price provision of inventories shall beconsolidated.After withdrawing the depreciation reserves for inventories, if the factors, which cause any write-down of theinventories, have disappeared, the amount of write-down shall be recovered and reversed from the original amount
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of depreciation reserve for inventories. The reversed amount shall be included in the profits and losses of thecurrent period.
(4) Inventory system for inventories is perpetual inventory system
(5) Amortization method of the low-value consumption goods and packing articlesLow-value consumption goods: one-off amortization method; Packing articles: one-off amortization method
13. Assets Held for Sale and Disposal Group
The Company classifies a non-current asset or disposal group as held for sale if its carrying amount will berecovered principally through a sale transaction rather than through continuing use. For this to be the case, thefollowing conditions shall be met: a) the asset (or disposal group) must be available for immediate sale in itspresent condition subject to terms that are usual and customary for sales of such assets or disposal groups; b) thecompany has made the resolution on the disposal plan and must be committed to a plan to sell the asset (or disposalgroup); c) the sale is expected to be completed within one year from the date of classification. A disposal group is agroup of assets to be disposed of, by sale or otherwise, together as a group in a single transaction, and liabilitiesdirectly associated with those assets that will be transferred in the transaction. The group shall include goodwillacquired in a business combination if the group is a cash-generating unit to which goodwill has been allocated inaccordance with the requirements of Accounting Standard for Business Enterprises No. 8 – Impairment of assets.The Company measure a non-current asset or disposal group classified as held for sale at the lower of its carryingamount and fair value less costs to sell on initial recognition and subsequent remeasuremnt on the balance sheetdate. An impairment loss is recognized when the carrying amount is higher than the fair value less costs to sell, andallowance for impairment is recognized accordingly. For the disposal group, the recognized impairment loss onassets is offset against the carrying amount of the goodwill in the disposal group, and then reduced in proportion ofthe book value of the non-current assets applicable to "Accounting Standard for Business Enterprises No. 42 -Non-current Assets Held for Sale, Disposal Group and Discontinued Operations (hereinafter referred to as "held forsale accounting principle") measurement requirements. The company shall recognize a gain during the period forany subsequent increase in fair value less costs to sell of an asset, but not in excess of the cumulative impairmentloss that has been recognized after the reclassification to non-current assets held for sale. The book value of assetsin the disposal group is increased proportionately according to the proportion of the book value of each non-currentasset except for goodwill. Impairment loss recognized before the reclassification to non-current assets held for sellshall not be recovered.Non-current asset or non-current asset in the disposal group classified as held for sale is not subject to depreciationor amortization. The interest and other expenses on liabilities held in the disposal group for sale are continuouslyrecognized.Non-current assets or disposal group that no longer meet the conditions of non-current asset held for sell shall be
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removed from the category, and shall be measured at the lower of the following: (1) The carrying amount beforeclassification as held for sale after adjustment of depreciation, amortization or impairment that should berecognized if it is not classified as non-current assets held for sell; (2) recoverable amount.
14. Long-term Equity Investments
The long-term equity investments of this part refer to the long-term equity investments that the Company hascontrol, joint control or significant influence over the investees. The long-term equity investment that the Companydoes not have control, joint control or significant influence over the investees, should be recognized asavailable-for-sale financial assets or be measured by fair value with the changes should be included in the financialassets accounting of the current gains and losses, and please refer the details of the accounting policies to Notes IV.9 “Financial instrument”.Joint control, refers to the control jointly owned according to the relevant agreement on an arrangement by theCompany and the relevant activities of the arrangement should be decided only after the participants which sharethe control right make consensus. Significant influence refers to the power of the Company which could anticipatein the finance and the operation polices of the investees, but could not control or jointly control the formulation ofthe policies with the other parties.
(1) Recognition of investment costs
As for long-term equity investments acquired by enterprise merger, if the merger is under the same control, theshare of the book value of the owner’s equity of the merged enterprise, on the date of merger, is regarded as theinitial cost of the long-term equity investment. The difference between the initial cost of the long-term equityinvestment and the payment in cash, non-cash assets transferred as well as the book value of the debts borne by themerging party shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retainedearnings shall be adjusted. If the consideration of the merging enterprise is that it issues equity securities, it shall,on the date of merger, regard the share of the book value of the shareholder's equity of the merged enterprise on theconsolidated financial statement of the ultimate control party as the initial cost of the long-term equity investment.The total face value of the stocks issued shall be regarded as the capital stock, while the difference between theinitial cost of the long-term equity investment and total face value of the shares issued shall offset against thecapital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. The equities ofthe combined party which respectively acquired through multiple transaction under the same control that ultimatelyform into the combination of the enterprises under the same control, should be disposed according whether belongsto package deal; if belongs to package deal, each transaction would be executed accounting treatment by theCompany as a transaction of acquiring the control right. If not belongs to package deal, it shall, on the date ofmerger, regard the enjoyed share of the book value of the shareholder's equity of the merged enterprise on theconsolidated financial statement of the ultimate control party as the initial cost of the long-term equity investment,and as for the difference between the initial investment cost of the long-term equity investment and sum of the book
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value of the long-term equity investment before the combination and the book value of the consideration of the newpayment that further required on the combination date, should adjust the capital reserve; if the capital reserve isinsufficient to dilute, the retained earnings shall be adjusted. The equity investment held before the combinationdate which adopted the equity method for accounting, or the other comprehensive income confirmed for theavailable-for-sale financial assets, should not have any accounting disposal for the moment.For the long-term investment required from the business combination under different control, the initial investmentcost regarded as long-term equity investment on the purchasing date according to the combination cost, thecombination costs shall be the sum of the fair values of the assets paid, the liabilities incurred or assumed and theequity securities issued by the Company. The equities of the acquirees which respectively acquired throughmultiple transaction that ultimately form into the combination of the enterprises under the different control, shouldbe disposed according whether belongs to package deal; if belongs to package deal, each transaction would beexecuted accounting treatment by the Company as a transaction of acquiring the control right. If not belongs topackage deal, the sum of the book value of the original held equity investment of the acquirees and the newly addedinvestment cost should be regarded as the initial investment cost of the long-term equity investment that changed tobe accounted by cost method. If the original held equity is calculated by cost method, the other relevantcomprehensive income would not have any accounting disposal for the moment. If the original held equityinvestment is the financial assets available for sale, its difference between the fair value and the book value as wellas the accumulative changes of the fair value that include in the other comprehensive income, should transfer intothe current gains and losses.The commission fees for audit, law services, assessment and consultancy services and other relevant expensesoccurred in the business combination by the combining party or the purchase party, shall be recorded into currentprofits and losses upon their occurrence; the transaction expense from the issuance of equity securities or bondssecurities which are as consideration for combination by the combining party, should be recorded as the initialamount of equity securities and bonds securities.Besides the long-term equity investments formed by business combination, the other long-term equity investmentsshall be initially measured by cost, the cost is fixed in accordance with the ways of gaining, such as actual cashpayment paid by the Company, the fair value of equity securities issued by the Company, the agreed value of theinvestment contract or agreement, the fair value or original carrying amount of exchanged assets fromnon-monetary assets exchange transaction, the fair value of the long-term equity investments, etc. The expenses,taxes and other necessary expenditures directly related with gaining the long-term equity investments shall also berecorded into investment cost. The long-term equity investment cost for those could execute significant influenceson the investees because of appending the investment or could execute joint control but not form as control, shouldbe as the sum of the fair value of the original held equity investment and the newly added investment costrecognized according to the No. 22 of Accounting Standards for Business Enterprises—Recognition and
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Measurement of Financial Instrument.
(2) Subsequent measurement and recognition of gains or losses
A long-term equity investment where the investing enterprise has joint control (except for which forms intocommon operators) or significant influence over the investors should be measured by equity method. Moreover,long-term equity investment adopting the cost method in the financial statements, and which the Company hascontrol on invested entity.
① Long-term equity investment measured by adopting cost method
The price of a long-term equity investment measured by adopting the cost method shall be included at its initialinvestment cost and append as well as withdraw the cost of investing and adjusting the long-term equity investment.The return on investment at current period shall be recognized in accordance with the cash dividend or profitannounced to distribute by the invested entity, except the announced but not distributed cash dividend or profitincluded in the actual payment or consideration upon gaining the investment.
②Long-term equity investment measured by adopting equity method
If the initial cost of a long-term equity investment is more than the Company’s attributable share of the fair value ofthe invested entity’s identifiable net assets for the investment, the initial cost of the long-term equity investmentmay not be adjusted. If the initial cost of a long-term equity investment is less than the Company’s attributableshare of the fair value of the invested entity’s identifiable net assets for the investment, the difference shall beincluded in the current profits and losses and the cost of the long-term equity investment shall be adjustedsimultaneously.When measured by adopting equity method, respectively recognize investment income and other comprehensiveincome according to the net gains and losses as well as the portion of other comprehensive income which should beenjoyed or be shared, and at the same time adjust the book value of the long-term equity investment; correspondingreduce the book value of the long-term equity investment according to profits which be declared to distribute by theinvestees or the portion of the calculation of cash dividends which should be enjoyed; for the other changes exceptfor the net gains and losses, other comprehensive income and the owners’ equity except for the profits distributionof the investees, should adjust the book value of the long-term equity investment as well as include in the capitalreserve. The investing enterprise shall, on the ground of the fair value of all identifiable assets of the invested entitywhen it obtains the investment, recognize the attributable share of the net profits and losses of the invested entityafter it adjusts the net profits of the invested entity. If the accounting policies adopted by the investees is not accordwith that of the Company, should be adjusted according to the accounting policies of the Company and the financialstatement of the investees during the accounting period and according which to recognize the investment income aswell as other comprehensive income. For the transaction happened between the Company and associatedenterprises as well as joint ventures, if the assets launched or sold not form into business, the portion of the
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unrealized gains and losses of the internal transaction, which belongs to the Company according to the calculationof the enjoyed proportion, should recognize the investment gains and losses on the basis. But the losses of theunrealized internal transaction happened between the Company and the investees which belongs to the impairmentlosses of the transferred assets, should not be neutralized. The assets launched by the Company to the associatedenterprises or the joint ventures if could form into business, the long-term equity investment without control rightwhich acquired by the investors, should regard the fair value of the launched business as the initial investment costthe newly added long-term equity investment, and for the difference between the initial investment cost and thebook value of the launched business, should be included into the current gains and losses with full amount. Theassets sold by the Company to the associated enterprises or the joint ventures if could form into business, thedifference between the acquired consideration and the book value of the business should be included in the currentgains and losses with full amount. The assets purchased by the Company to the associated enterprises or the jointventures if could form into business, should be accounting disposed according to the regulations of No. 20 ofASBE—Business Combination, and should be recognized gains or losses related to the transaction with fullamount.The Company shall recognize the net losses of the invested enterprise until the book value of the long-term equityinvestment and other long-term rights and interests which substantially form the net investment made to theinvested entity are reduced to zero. However, if the Company has the obligation to undertake extra losses, it shallbe recognized as the estimated liabilities in accordance with the estimated duties and then recorded into investmentlosses at current period. If the invested entity realizes any net profits later, the Company shall, after the amount ofits attributable share of profits offsets against its attributable share of the un-recognized losses, resume recognizingits attributable share of profits.For the long-term equity investment held by the Company before the first execution of the new accounting criterionof the associated enterprises and joint ventures, if there is debit difference of the equity investment related to theinvestment, should be included in the current gains and losses according to the amount of the straight-lineamortization during the original remained period.
③ Acquiring shares of minority interest
In the preparation for the financial statements, the balance existed between the long-term equity investmentincreased by acquiring shares of minority interest and the attributable net assets on the subsidiary calculated by theincreased shares held since the purchase date (or combination date), the capital reserves shall be adjusted, if thecapital reserves are not sufficient to offset, the retained profits shall be adjusted.
④ Disposal of long-term equity investment
In the preparation of financial statements, the Company disposed part of the long-term equity investment onsubsidiaries without losing its controlling right on them, the balance between the disposed price and attributable netassets of subsidiaries by disposing the long-term equity investment shall be recorded into owners’ equity; where the
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Company losses the controlling right by disposing part of long-term equity investment on such subsidiaries, it shalltreated in accordance with the relevant accounting policies in Note IV. 5 (2) “Method on preparation of combinedfinancial statements”.For other ways on disposal of long-term equity investment, the balance between the book value of the disposedequity and its actual payment gained shall be recorded into current profits and losses.For the long-term equity investment measured by adopting equity method, if the remained equity after disposal stilladopts the equity method for measurement, the other comprehensive income originally recorded into owners’equity should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly disposedby the investees according to the corresponding proportion. The owners’ equity recognized owning to the changesof the other owners’ equity except for the net gains and losses, other comprehensive income and the profitsdistribution of the investees, should be transferred into the current gains and losses according to the proportion.For the long-term equity investment which adopts the cost method of measurement, if the remained equity stilladopt the cost method, the other comprehensive income recognized owning to adopting the equity method formeasurement or the recognition and measurement standards of financial instrument before acquiring the control ofthe investees, should adopt the same basis of the accounting disposal of the relevant assets or liabilities directlydisposed by the investees and should be carried forward into the current gains and losses according to theproportion; the changes of the other owners’ equity except for the net gains and losses, other comprehensiveincome and the profits distribution among the net assets of the investees which recognized by adopting the equitymethod for measurement, should be carried forward into the current gains and losses according to the proportion.For those the Company lost the control of the investees by disposing part of the equity investment as well as theremained equity after disposal could execute joint control or significant influences on the investees, should changeto measure by equity method when compiling the individual financial statement and should adjust the measurementof the remained equity to equity method as adopted since the time acquired; if the remained equity after disposalcould not execute joint control or significant influences on the investees, should change the accounting disposalaccording to the relevant regulations of the recognition and measurement standards of financial instrument, and itsdifference between the fair value and book value on the date lose the control right should be included in the currentgains and losses. For the other comprehensive income recognized by adopting equity method for measurement orthe recognition and measurement standards of financial instrument before the Company acquired the control of theinvestees, should execute the accounting disposal by adopting the same basis of the accounting disposal of therelevant assets or liabilities directly disposed by the investees when lose the control of them, while the changes ofthe other owners’ equity except for the net gains and losses, other comprehensive income and the profitsdistribution among the net assets of the investees which recognized by adopting the equity method for measurement,should be carried forward into the current gains and losses according to the proportion. Of which, for the disposedremained equity which adopted the equity method for measurement, the other comprehensive income and the other
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owners’ equity should be carried forward according to the proportion; for the disposed remained equity whichchanged to execute the accounting disposal according to the recognition and measurement standards of financialinstrument, the other comprehensive income and the other owners’ equity should be carried forward in full amount.For those the Company lost the control of the investees by disposing part of the equity investment, the disposedremained equity should change to calculate according to the recognition and measurement standards of financialinstrument, and difference between the fair value and book value on the date lose the control right should beincluded in the current gains and losses. For the other comprehensive income recognized from the original equityinvestment by adopting the equity method, should execute the accounting disposal by adopting the same basis ofthe accounting disposal of the relevant assets or liabilities directly disposed by the investees when terminate theequity method for measurement, while for the owners’ equity recognized owning to the changes of the otherowner’s equity except for the net gains and losses, other comprehensive income and the profits distribution of theinvestees, should be transferred into the current investment income with full amount when terminate adopting theequity method.The Company respectively disposes the equity investment of the subsidiaries through multiple transactions untillose the control right, if the above transactions belongs to the package deal, should execute the accounting disposalby regarding each transaction as a deal of disposing the equity investment of the subsidiaries until lose the controlright, while the difference between each expenses of the disposal and the book value of the long-term equityinvestment in accord with the disposed equity before losing the control right, should firstly be recognized as othercomprehensive income then be transferred into the current gains and losses of losing the control right along untilthe time when lose it.
15. Investment Property
Investment property is held to earn rentals or for capital appreciation or for both. Investment property includesleased or ready to transfer after capital appreciation land use rights and leased buildings. Besides, for the idleconstructions held by the Company for operation and lease, if the Board of Directors (or the similar institutions)made the written resolutions which affirmatively disclosed to use which for operation and lease with the intentionwould not change in the short term, should also be presented as the investment property.Investment property is initially measured at cost. Subsequent expenditures related to an investment real estate arelikely to flow about the economic benefits of the asset and its cost can be measured reliably, is included in the costof investment real estate. Other subsequent expenditures of gains or losses should be recorded in the current gainsand losses when occurred.The Company uses the cost model for subsequent measurement of investment property, and in accordance with thedepreciation or amortization of buildings or land use rights policy.Investment property impairment test method and impairment accrual method described in Note IV. 20 “Long-termassets impairment”.
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Occupied real estate for investment property or investment property is transferred to owner-occupied real estate orstock conversion as the recorded value after the conversion, according to the book value before the conversion.From the date of transference, investment properties shall be transferred into fixed assets or intangible assets wheninvestment properties transfer into self-owned properties. From the date of transference, fixed assets or intangibleassets shall be transferred into investment properties when the intention of self-owned properties changes to beearning rents. Upon transference, investment properties using cost modeling shall use its book value beforetransference as the entry value after transference; investment properties using fair value shall use its fair value inthe date of transference as the entry value after transference.As for investment property disposed or perpetually out of use, and estimated without economic benefits from thedisposal, confirmation shall be terminated. Disposal consideration of the investment property after sale,transference, discard or damage deducting its book value and relating taxes shall be recorded into current gains andlosses.
16. Fixed Assets
(1) Recognized standard of fixed assets
The term "fixed assets" refers to the tangible assets that simultaneously possess the features as follows: they areheld for the sake of producing commodities, rendering labor service, renting or business management; and theiruseful life is in excess of one fiscal year.
(2) Depreciation methods of fixed assets
The initial measurement of a fixed asset shall be made at its cost after considering the effect of expected discardexpenses. The Group shall withdraw the depreciation of fixed assets by adopting the straight-line method since thesecond month of its useful life. Useful life, expected net salvage value (refers to the expected amount that theGroup may obtain from the current disposal of a fixed asset after deducting the expected disposal expenses at theexpiration of its expected useful life) and annual depreciation rate of each fixed assets are as below:
| Category of fixed assets | Method | Useful life (Y) | Expected net salvage value (%) | Annual deprecation (%) |
| Housing and building | Straight-line method | 8.00-35.00 | 3.00-5.00 | 2.70-12.10 |
| Machinery equipments | Straight-line method | 5.00-10.00 | 3.00-5.00 | 9.50-19.40 |
| Transportation vehicle | Straight-line method | 4.00 | 3.00 | 24.25 |
| Office equipment and others | Straight-line method | 3.00 | 3.00 | 32.33 |
Expected net residual value of fixed assets is the balance of the Company currently obtained from the disposal ofthe asset less the estimated costs of disposal amount, assuming the asset is out of useful life and state the expectedservice life in the end.
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(3) Measurement and recognition of fixed assets impairment
Impairment and provisions of fixed assets are disclosed on Note IV. 21 “Long-term assets impairment”.
(4) Fixed Assets under finance leases
A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership of an asset. Titlemay or may not eventually be transferred. Fixed assets that are held under finance leases shall be depreciated byapplying the same policy as that for the fixed assets owned by the Company. If it can be reasonably determined thatthe ownership of the leased assets can be obtained at the end of the lease period, the leased assets are depreciatedover their useful lives; otherwise, the leased assets are depreciated over the shorter of the lease terms and the usefullives of the leased assets.
(5) Others
A fixed asset is recognized only when the economic benefits associated with the asset will probably flow to theCompany and the cost of the asset can be measured reliably. Subsequent expenditure incurred for a fixed asset thatmeet the recognition criteria shall be included in the cost of the fixed asset, and the carrying amount of thecomponent of the fixed asset that is replaced shall be derecognized. Otherwise, such expenditure shall berecognized in profit or loss in the period in which they are incurred.The revenue from selling or transferring, or disposing a fixed asset is booked into profit and loss after deduction ofcarrying value and related tax.The Company conducts a review of useful life, expected net realizable value and depreciation methods of the fixedasset at least on an annual base. Any change is regarded as change in accounting estimates.
17. Construction in Progress
Construction in progress is measured at its actual cost. The actual costs include various construction expendituresduring the construction period, borrowing costs capitalized before it is ready for intended use and other relevantcosts. Construction in progress is transferred to a fixed asset when it is ready for intended use.Testing method for provision impairment of construction in progress and accrued method for provision impairmentplease refer to Note IV. 21 “Long-term assets impairment”.
18. Borrowing Costs
Borrowing costs include interest, amortization of discounts or premiums related to borrowings, ancillary costsincurred in connection with the arrangement of borrowings, and exchange differences arising from foreign currencyborrowings. The borrowing costs that are directly attributable to the acquisition, construction or production of aqualifying asset are capitalized. The amounts of other borrowing costs incurred are recognized as an expense in theperiod in which they are incurred. Qualifying assets are asset (fixed assets, investment property and inventories,etc.) that necessarily take a substantial period of time for acquisition, construction or production to get ready fortheir intended use or sale.
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Where funds are borrowed for a specific-purpose, the amount of interest to be capitalized is the actual interestexpense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed fundsbefore being used on the asset or any investment income on the temporary investment of those funds. Where fundsare borrowed for a general-purpose, the amount of interest to be capitalized on such borrowings is determined byapplying a weighted average interest rate to the weighted average of the excess amounts of accumulatedexpenditure on the asset over and above the amounts of specific-purpose borrowings.During the capitalization period, exchange differences related to a specific-purpose borrowing denominating inforeign currency are all capitalized. Exchange differences in connection with general-purpose borrowings arerecognized in profit or loss in the period in which they are incurred.Assets qualified for capitalization are the fixed assets, investment properties or inventories which need a long timeof construction or production activities before ready for intended used or sale.Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or productionof a qualifying asset is interrupted by activities other than those necessary to prepare the asset for its intended useor sale, when the interruption is for a continuous period of more than 3 months. Borrowing costs incurred duringthese periods recognized as an expense for the current period until the acquisition, construction or production isresumed.
19. Intangible Assets
(1) Intangible asset
The term “intangible asset” refers to the identifiable non-monetary assets without physical shape, possessed orcontrolled by enterprises.The intangible assets are initially measured by its cost. Expenses related to intangible assets, if the economicbenefits related to intangible assets are likely to flow into the enterprise and the cost of intangible assets can bemeasured reliably, shall be recorded as cost of intangible assets. The expenses other than this shall be booked in theprofit or loss when they occur.Land use rights that are purchased by the Company are accounted for as intangible assets. Buildings, such as plantsthat are developed and constructed by the Company, and relevant land use rights and buildings, are accounted for asintangible assets and fixed assets, respectively. Payments for the land and buildings purchased are allocatedbetween the land use rights and the buildings; if they cannot be reasonably allocated all of the land use rights andbuildings should accounted for as fixed assets.When an intangible asset with a definite useful life is available for use, its original cost less net residual value andany accumulate impairment losses is amortized over its estimated useful life using the straight-line method. Anintangible asset with an indefinite useful life is not amortized.For an intangible asset with a definite useful life, the Company reviews the useful life and amortization method at
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the end of the period, and makes adjustment when necessary. An additional review is also carried out for useful lifeof the intangible assets with indefinite useful life. If there is evidence showing the foreseeable limit period ofeconomic benefits generated to the enterprise by the intangible assets, then estimate its useful life and amortizeaccording to the policy of intangible assets with definite useful life.
(2) Research and development cost
Cost of research and development is distinguished into the research phase and the development phases.Cost of the research phase is recognized in the profit or loss in the period in which it is incurred.Unless the following conditions are satisfied, cost of the development phase is recognized in the profit or loss in theperiod in which it is incurred:
① it is technically feasible to complete the intangible asset so as to use it or sell it;
② it is clearly invented to complete the intangible asset in order to use it or sell it;
③ it is probable that the intangible asset is capable of generating future economic benefit, such as the market forthe product produced by the intangible asset or the intangible asset itself, it is objectively evidential that theintangible asset is economically usable if it is going to be used internally;
④ there are sufficient technical, financial and other resources to complete the intangible asset and to use it or sell it;
⑤ the cost of the development of the intangible can be measured reliably.
If the cost cannot be distinguished into the search phase and the development phase, it is recognized in the profit orloss for the period in which it is incurred.
(3) Impairment of intangible assets
Impairment and provisions of intangible assets are disclosed on Note IV. 21 “Long-term assets impairment”.
20. Long-term Deferred Expenditure
An item long-term deferred expenses is an expense which has been incurred and which has a beneficial period (aperiod during which an expense is expected to bring economic benefits to an entity) which is longer than one yearand which includes at least part of the reporting period during which the expense was incurred and subsequentreporting periods. An item of long-term deferred expenses is recognized at the actual amount of the expenseincurred and allocated in each month of the beneficial period using the straight line method.
21. Long-term Assets Impairment
Non-financial assets with non-current nature include fixed assets, construction in progress, intangible assets withdefinite useful lives, investment properties measured by cost methods and long-term equity investment onsubsidiaries, jointly operations. The Company assesses whether there are any indicators of impairment for allnon-financial assets at the balance sheet date, and impairment test is carried out and recoverable value is estimatedif such an indicator exits. Goodwill and intangible assets with indefinite useful lives, as well as intangible assets notready for use, are tested for impairment annually regardless of indicators of impairment.
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Impairment of loss is calculated and provisions taken by the difference if the recoverable value of the assets islower than the book value. The recoverable value is the higher of estimated present value of the future expectedcash flows from the asset and net fair value of the asset less disposed cost. The fair value of asset is determined bythe sales agreement price within an arm’s length transaction. In case there is no sales agreement, but there is activemarket of assets, the fair value can be determined by the selling price. If there is neither sales agreement nor activemarket, the fair value of the asset can be estimated based on the best information obtained. Disposal expensesinclude expenses related to the legislation, taxes, transportations and the direct expense for the asset to be ready forsale. When calculating the present value of expected future cash flows from an asset or asset Group, themanagement shall estimate the expected future cash flows from the asset or asset Group and choose a suitablediscount rate in order to calculate the present value of those cash flows.Provision for asset impairment is calculated and determined on the individual basis. If the recoverable of individualasset is hard to estimate, the recoverable amount can be determined by the asset Group where subject asset belongs.Asset Group is the smallest set of assets that can have cash flow in independently.The Company determines whether goodwill is impaired at least on an annual basis. This requires an estimation ofthe present value of the future expected cash flows from the asset Groups or sets of asset Groups to which thegoodwill is allocated. Estimating the present value requires the Company to make an estimate of the expectedfuture cash flows from the asset Groups or sets of asset Groups and also choose a suitable discount rate in order tocalculate the present value of those cash flows.Once the loss from above asset impairment is recognized, the recoverable part cannot be reserved in the subsequentperiods.
22. Payroll
The payroll of the Company mainly includes the short-term employee compensation, welfare after demission,demission welfare and other long-term employee benefits. Of which:
Short-term compensation mainly including salary, bonus, allowances and subsidies, employee services and benefits,medical insurance premiums, birth insurance premium, industrial injury insurance premium, housing fund, laborunion expenditure and personnel education fund, non-monetary benefits etc. The short-term compensation actuallyhappened during the accounting period when the active staff offering the service for the Group should berecognized as liabilities and is included in the current gains and losses or relevant assets cost. Of which thenon-monetary benefits should be measured according to the fair value.Welfare after demission mainly includes setting drawing plan. Of which setting the drawing plan mainly includesbasic endowment insurance, unemployment insurance and annuity etc, and the corresponding payable and depositamount should be included into the relevant assets cost or the current gains and losses when happen.If an enterprise cancels the labor relationship with any employee prior to the expiration of the relevant laborcontract or brings forward any compensation proposal for the purpose of encouraging the employee to accept a
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layoff, and should recognize the payroll liabilities occurred from the demission welfare base on the earlier datebetween the time when the Group could not one-sided withdraw the demission welfare which offered by the plan orlayoff proposal owning to relieve the labor relationship and the date the Group recognizes the cost related to thereorganization of the payment of the demission welfare and at the same time includes which into the current gainsand losses. But if the demission welfare is estimated that could not totally pay after the end of the annual reportwithin 12 months, should be disposed according to other long-term payroll payment.The inside employee retirement plan is treated by adopting the same principle with the above dismiss ion welfare.The group would recorded the salary and the social security insurance fees paid and so on from the employee’sservice terminative date to normal retirement date into current profits and losses (dismiss ion welfare) under thecondition that they meet the recognition conditions of estimated liabilities.The other long-term welfare that the Group offers to the staffs, if met with the setting drawing plan, should beaccounting disposed according to the setting drawing plan, while the rest should be disposed according to thesetting revenue plan.
23. Provisions
Recognition of accrued liabilities:
Obligation with contingency factor such as external hypothecate, lawsuit or arbitrage in dispute, guarantee onquality of product, cut-down plan, loss of contract, recombine obligation, obligation on abandon fixed asset, andmeet the follow condition simultaneously would determined as liabilities: (1) This obligation is current obligationof the Company; and, (2) The performance of this obligation will probably cause economic benefits outflow of theCompany; and, (3) The amount of this obligation can be reliably measured.On balance sheet date the Company performed relate obligation that consider risk, incertitude, time value ofcurrency of contingency factor. According to the best estimate of the expenditure required to settle the presentobligation for estimated liabilities measured.If the expenditure required to settle the liability is expected to be fully or partly compensated by a third party, todetermine the amount of compensation will be received at the basic, separately recognized as an asset, and isrecognized in the amount of compensation does not exceed the carrying value of estimated liabilities.
24. Revenues
(1) Commodity sales revenues
No revenue from selling goods may be recognized unless the following conditions are met simultaneously: thesignificant risks and rewards of ownership of the goods have been transferred to the buyer by the enterprise; theenterprise retains neither continuous management right that usually keeps relation with the ownership nor effectivecontrol over the sold goods; the relevant amount of revenue can be measured in a reliable way; the relevanteconomic benefits may flow into the enterprise; and the relevant costs incurred or to be incurred can be measured in
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a reliable way.In the Company’s daily accounting practices, as for the domestic sales, when the products had shipped out of thelibrary and had handed over to the buyers, and the major risk as well as the reward on the ownership of the productshad transferred to them, without keeping any continued management right which commonly related to theownership nor carrying out any effective control of the products which had been sold, and at the same time theamounts received could be calculated reliably, and the relevant economic interest may flow into the enterprise, aswell as the relevant costs which had occurred or is going to occur could be calculated reliably, should recognize theimplementation of the commodity sales revenues. As for the overseas sales, should recognize the implementation ofthe revenues when the goods had made shipment and gained the customs export declaration.
(2) Revenues from providing labor services
If an enterprise can reliably estimate the outcome of a transaction concerning the labor services it provides, it shallrecognize the revenue from providing services employing the percentage-of-completion method on the balancesheet date. The percentage-of-completion is determined by the proportion of the costs incurred against theestimated total costs.The outcome of a transaction concerning the providing of labor services can be measured in a reliable way, meansthat the following conditions shall be met simultaneously: ① The amount of revenue can be measured in a reliableway; ② The relevant economic benefits are likely to flow into the enterprise; ③ The schedule of completion underthe transaction can be confirmed in a reliable way; ④ The costs incurred or to be incurred in the transaction can bemeasured in a reliable way.If the Company can not measure the result of a transaction concerning the providing of labor services in a reliableway, it shall be conducted in accordance with the following circumstances, respectively: If the cost of labor servicesincurred is expected to be compensated, the compensation amount for the cost of labor services shall be recognizedas the revenue from providing labor service, and the cost of labor service incurred shall be as the current cost; if thecost of labor services incurred is not expected to compensate, no revenue from the providing of labor services maybe recognized.Where a contract or agreement signed between Group and other enterprises concerns selling goods and providingof labor services, if the part of sale of goods and the part of providing labor services can be distinguished from eachother and can be measured respectively, the part of sale of goods and the part of providing labor services shall betreated respectively. If the part of selling goods and the part of providing labor services can not be distinguishedfrom each other, or if the part of sale of goods and the part of providing labor services can be distinguished fromeach other but can not be measured respectively, both parts shall be conducted as selling goods.
(3) Royalty revenue
In accordance with relevant contract or agreement, the amount of royalty revenue should be recognized as revenueon accrual basis. In the Company’s daily accounting practices, it should be calculated and recognized according tothe chargeable time and methods in accordance with the relevant contract or agreement.
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(4) Interest revenue
In accordance with the time that others use the Group’s monetary capital and the actual rate.
25. Government Subsidies
Government grants are transfer of monetary assets and non-monetary assets from the government to the Companyat no consideration, excluding the capital invested by the government as equity owner. Government grant can beclassified as grant related to the assets and grants related to the income. The government grants which wereacquired by the Company will be used to purchase or otherwise form become long-term assets will be defined asgrant related to the assets; the others will be defined as grants related to the income. If the files have not clearlydefined government grants objects, it will be divided in the following manner compartmentalize the grants into rantrelated to the assets and grants related to the income: (1) government documents defined specific projects targets,according to the relative proportion of the budgets of specific items included the expenditure of to form assets andthe expenditure will be charged into expense to be divided, the division ratio required at each balance sheet date forreview and make changes if necessary; (2) government documents to make a general presentation purposes only,does not specify a particular project, as grants related to the income.If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received orreceivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. If the fairvalue cannot be reliably determined, it is measured at a nominal amount. A government grant measured at anominal amount is recognized immediately in profit or loss for the period.When received the government grants actually, recognized and measured them by the actual amount received.However, there is strong evidence that the end of fiscal support policies able to meet the conditions specified in therelevant funds are expected to be able to receive financial support, measured at the amount receivable. Governmentgrants are measured according to the amount receivable shall also comply with the following conditions: (1) grantsreceivable of government departments issued a document entitled have been confirmed, or could reasonablyestimated in accordance with the relevant provisions of its own official release of financial resources managementapproach, and the expected amount of a material uncertainty which does not exist; (2) it is based on the localfinancial sector to be officially released and financial support for the project and its financial fund managementapproach voluntarily disclosed in accordance with the provisions of “Regulations on Disclosure GovernmentInformation”, and the management approach should be (inclusive of any compliance business conditions mayapply), and not specifically formulated for specific businesses;(3) related grants approval has been clearlycommitted the deadline, and is financed by the proceeds of a corresponding budget as a guarantee, so that will bereceived within the prescribed period with the a reasonable assurance; (4) according to the specific circumstancesof the Company and the subsidy matter, should satisfy the other conditions (if any).A government grant related to an asset is recognized as deferred income, and evenly amortized to profit or loss overthe useful life of the related asset in a reasonable and systematic manner. For a government grant related to income,
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if the grant is a compensation for related expenses or losses to be incurred in subsequent period, the grant isrecognized as deferred income, and recognized in profit or loss over the periods in which the related costs arerecognized. If the grant is a compensation for related expenses or losses already incurred, the grant is recognizedimmediately in profit or loss for the period.Government subsidies including both assets-related parts and income-related parts should be treated separately. If itis difficult to separate, the government subsidies as a whole will be classified as income-related government grants.The government grants related to the daily activities of the Company are included in other income or offset therelated costs according to the essence of the economic business. The government grants unrelated to the dailyactivities are included in the non-operating income and expenses.For repayment of a government grant already recognized, if there is a related deferred income, the repayment isoffset against the carrying amount of the deferred income, and any excess is recognized in profit or loss for theperiod. If there is no related deferred income, the repayment is recognized immediately in profit or loss for theperiod.
26. Deferred Tax Assets and Deferred Tax Liabilities
(1) Income tax for the current period
At the balance sheet date, current income tax liabilities or assets for the current and prior periods are measured atthe amount expected to be paid (or recovered) according to the requirements of tax laws. The calculation forincome tax expenses in the current period is based on the taxable income according to the related tax laws afteradjustment to the accounting profit of the reporting period.
(2) Deferred income tax assets and liabilities
For temporary differences between the carrying amount of certain assets or liabilities and their tax base, or betweenthe nil carrying amount of those items that are not recognized as assets or liabilities and their tax base that can bedetermined according to tax laws, deferred tax assets and liabilities are recognized using the balance sheet liabilitymethod.For temporary differences associated with the initial recognition of goodwill and the initial recognition of an assetor liability arising from a transaction (not a business combination) that affects neither the accounting profit nortaxable profits (or deductible losses) at the time of transaction, no deferred tax asset or liability is recognized. Fortaxable temporary differences associated with investments in subsidiaries and associates, and interests in jointventures, no deferred income tax liability related is recognized except where the Company is able to control thetiming of reversal of the temporary difference and it is probable that the temporary difference will not reverse in theforeseeable future. All deferred income tax liabilities arising from taxable temporary differences except the onesmentioned above are recognized.For temporary deductible differences associated with the initial recognition of an asset or liability arising from atransaction (not a business combination) that affects neither the accounting profit nor taxable profits (or deductible
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losses) at the time of transaction, no deferred tax asset is recognized. For taxable temporary deductible differencesassociated with investments in subsidiaries and associates, and interests in joint ventures, no deferred income taxasset related is recognized if it is impossible to reversal the temporary difference in the foreseeable future, or it isnot probable to obtain taxable income which can be used for the deduction of the temporary difference in the future.Except mentioned above, the Company recognizes other deferred income tax assets that can deduct temporarydifferences to the extent that it is probable that taxable profits will be available against which the deductibletemporary differences can be utilized.For the deductible losses and tax credit that can be carried forward, deferred tax assets for deductible temporarydifferences are recognized to the extent that it is probable that taxable profits will be available against which thedeductible temporary differences can be utilized.At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates according to tax laws,which are expected to apply in the period in which the asset is realized or the liability is settled.At the balance sheet date, the Company reviews the carrying amount of deferred tax assets. If it is no longerprobable that sufficient taxable profit will be available in future periods to allow the benefits of the deferred taxassets to be used, the Company reduces the carrying amount of deferred tax assets. The amount of such reduction isreversed when it becomes probable that sufficient taxable profit will be available.
(3) Income tax expenses
Income tax expenses consist of current income tax and deferred income tax.The expenses from income tax and deferred income tax, as well as the revenue, shall be recorded into profit or lossin current accounting period, except expense for income tax of the current period and deferred income tax thatbooked into other income or equity and adjusted carrying value of deferred income tax goodwill arose frombusiness combination.
(4) Income tax offset
When we have the legal right, and have intended to, to make settlement with net amount or through the assetacquisition and liability fulfillment simultaneously, the Company shall present the net value from the offsetbetween current income tax asset and current income tax liability in the financial statement.When the Company has the legal right to make a settlement with the current income tax asset and current incometax liability, and the deferred income tax asset and deferred income tax liability are related to the same taxablesubject under the same tax payer, or related to different taxable subject, but the intension of net value settlement inregard of the current income tax asset and current income tax liability, the Company shall present net value after theoffset of deferred income tax asset and deferred income tax liability.
27. Leases
A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership of an asset. Titlemay or may not eventually be transferred. An operating lease is a lease other than a finance lease.
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(1) The Company as Lessee under operating Lease
Lease payments under an operating lease are recognized by a lessee on a straight-line basis over the lease term, andeither included in the cost of the related asset or charged to profit or loss for the current period. The contingent rentsshall be recorded in the profit or loss of the period in which they actually arise.
(2) The Company as Leaser under operating Lease
Lease income from operating leases shall be recognized by the leaser in profit or loss on a straight-line basis overthe lease term. Initial direct cost of significance in amount shall be capitalized when incurred. If another basis ismore systematic and rational, that basis may be used. Contingent rents are credited to profit or loss in the period inwhich they actually arise.
(3) The Company as Lessee under financing Lease
For an asset that is held under a finance lease, at the lease commencement, the leased asset is recorded at the lowerof its fair value at the lease commencement and the present value of the minimum lease payments, and theminimum lease payment is recorded as the carrying amount of the long-term payables; the difference between therecorded amount of the leased asset and the recorded amount of the payable is accounted for as unrecognizedfinance charge, Initial direct costs incurred by the lessee during the process of negotiating and securing the leaseagreement shall be added to the amount recognized for the leased asset. The net amount of minimum lease paymentdeducted by the unrecognized finance shall be separated into long-term liabilities and long-term liability within oneyear for presentation.Unrecognized finance charge shall be computed by the effective interest method during the lease term. Contingentrent shall be booked into profit or loss when actually incurred.
(4) In the case of the lessor of a financing lease
For an asset that is leased out under a finance lease, the aggregate of the minimum lease receipts at the inception ofthe lease and the initial direct costs is recorded as a finance lease receivable, and unguaranteed residual value isrecorded at the same time; the difference between the aggregate of the minimum lease receipt, initial direct costs,and unguaranteed residual value, and the aggregate of their present values, is recognized as unearned financeincome, which is amortized using the effective interest rate method over each period during the lease term. Financelease receivable less unearned finance income shall be separated into long-term liabilities and long-term liabilitywithin one year for presentation.Unearned finance income shall be computed by the effective interest method during the lease term. Contingent rentshall be credited into profit or loss in which actually incurred.
28. Other Significant Accounting Policies and Estimates
The Company is required to make judgments, estimates and assumptions about the carrying amounts of items in thefinancial statements that cannot be measured accurately, due to the internal uncertainties of operation activities.These judgments, estimates and assumptions are based on historical experiences of the Company’s management as
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well as other factors that are considered to be relevant. These judgments, estimates and assumptions may affectvalue of the financial statements in revenue, expenses, assets and liabilities and the disclosure of contingency at thebalance sheet date. However, the result derived from those uncertainties in estimates may lead significantadjustments to the carrying amounts of the assets or liabilities affected in the future.The Company has reviews the judgments, estimates and assumptions regularly on the basis of going concern.Where the changes in accounting estimates only affect the period when changes occurred, and they are recognizedwithin the same period. Where the changes in accounting estimates affect both current period and future period, thechanges are recognized within the period of change and future period.At balance sheet date, the followings are the significant areas where the Company needs to make judgment,estimates and assumptions over the value of items in the financial statements:
(1) Classification of lease
The Company classifies leases as operating lease and financing lease according to the rule stipulated in theAccounting Standard for Business Enterprises No. 21—Leasing. The management shall make analysis andjudgment on whether the risks and rewards related to the title of leased assets has been transferred to the leaser, orwhether the Company has substantially held the risks and rewards related to the ownership of leased assets.
(2) Allowance for bad debt
According to the relevant accounting policies of the Company in receivables, allowance method is used for baddebt’s calculation. The impairment of receivables is calculated based on the assessment of recoverable ofreceivables. Assurance of receivable impairment needs judgments and estimations from the management. Thedifference between actual results and original estimates shall have impact on the carrying amount of receivablesand receivable bad debt provisions or the reverse during the change of estimation.
(3) Impairment of inventories
The Company measures inventories by the lower of cost and realizable net value according to the accountingpolicies in regard of inventories and provisions for decline in value of inventories are made if the cost is higher thantheir net realizable value and obsolete and slow-movement inventories. Inventories decline in value to netrealizable value is the estimated selling price in the ordinary course of business. Net realizable value is determinedon the basis of clear evidence obtained, and takes into consideration the purposes of holding inventories and effectof post balance sheet events. The difference between the actual result and the original estimates shall have impacton reverse of the carrying amount of the inventories and their decline in value or provisions during the period ofchange.
(4) The fair value of financial instruments
For a financial instrument which has no active market, the Company establishes fair value by using variousvaluation methods, including of discounted cash flow analysis model. The Company needs to estimate future cashflow, credit risk, volatility and relationship during the valuation and choose appropriate discount rate. Suchassumptions have uncertainties and their changes shall have impact on the fair value of financial instruments.
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(5) Impairment of long-term assets
The Company assesses whether there are any indicators of impairment for all non-current assets other thanfinancial assets at the balance sheet date. For an intangible asset that has indefinite useful life, impairment test ismade in addition to the annual impairment test if there is any indication of impairment. For non-current assets otherthan financial assets, impairment test is made when there is any indication that its account balance cannot berecovered.Impairment exists when the recoverable amount of an asset is the higher of its fair value less cost of disposal andpresent value of the future cash flows expected to be derived from the asset.Net value between the difference of fair value and disposal cost is determined by reference of the price of similarproduct in a sale agreement in an arm’s length transaction or an observable market price less the additional costdirectly attributable to the disposal of the asset.When estimating the present value of future cash flow, significant judgments are made over the asset’s production,selling price and relevant operating expenses, and discount rate used to calculate present value. All availablematerials that are considered to be relevant shall be used in the estimation of recoverable value. These materialsinclude estimations of production, selling price and operating expenses based on reasonable and supportableassumptions.The Company makes an impairment test for goodwill at least at each year end. This requires an estimation ofpresent value of future cash flow of the assets or assets group where goodwill has been allocated. The Companyshall makes estimation on the future cash flow derived from assets or assets group and determine an appropriatediscount rate for the present value of future cash flow when the estimation of present value of future cash flow ismade.
(6) Depreciation and amortization
Investment property, fixed assets and intangible assets are depreciated and amortized using the straight-line methodover their useful lives after taking into account residual value. The useful lives are regularly reviewed to determinethe depreciation and amortization costs charged in each reporting period. The useful lives are determined based onhistorical experience of similar assets and the estimated technical changes. If there is an indication that there hasbeen a change in the factor used to determine the depreciation or amortization, the rate of depreciation oramortization is revised.
(7) Deferred tax assets
The group shall recognize all unused tax losses as deferred tax assets to the extent that it is probable that futuretaxable profit will be available against which the unused tax losses and unused tax credits can be utilized. Thisrequires the management of the Company make a lot of judgments over the estimation of time period, value and taxplanning strategies when future taxable profit incurs so that the value of deferred tax assets can be determined.
(8) Income tax
There are some transactions where ultimate tax treatments and calculations have uncertainties in the Company’s
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everyday operation. If it is possible for any item to make expenditure before tax that needs to be approved fromcompetent tax authorities. If there is any difference between finalized determination value and their initialestimations value, the difference shall have the impact on the income tax and deferred income tax of the currentperiod during the final determination.
(9) Provisions
According with the terms of the contract, the existing knowledge and historical experience, product qualityassurance and expected contract losses, delay in delivery of liquidated damages are estimated and recognized asaccrued liabilities. In these matters has been the formation of a current obligation, and fulfilling the duty is likely tolead to the outflow of economic benefits of the Company, the Company or the best estimate of the currentobligation expenditure required recognized as a accrued liabilities. Recognition and measurement of accruedliabilities is dependent on the judgment of management. In the processing of judgment the company needed toappraise the related risks, uncertainties and time value of money and other factors.
29. Changes in Main Accounting Policies and Estimates
(1) Significant Changes in Accounting Policies
| Contents of changes in accounting policies and reasons thereof | Approval procedures | Note |
| The Ministry of Finance issued the Notice on Revising and Issuing of Formats of 2019 Financial Statements for General Enterprises (CK[2019]No.6) (hereinafter referred to as “Revising Notice”) on 30 April 2019, in which the formats of financial statements for general enterprises are revised and non-financial enterprises carrying out accounting standards for business enterprises are required to prepare the financial statements for 2019, H1 of 2019 and subsequent periods in accordance with provisions stipulated in accounting standards for business enterprises and the Revising Notice. The Company belongs to the company that has implemented the new standards governing financial instruments but not carried out the new standards governing revenue and new standards governing leases. The Company adjusted the formats of financial statements and presentation of some items as required by the Revising Notice. | Reviewed and approved on the 10th Meeting of the 8th Board of Directors and the 9th Meeting of the 8th Supervisory Committee | For details, please refer to the announcement on changes in accounting policies disclosed on http://www.cninfo.com.cn |
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In line with provisions of the Revising Notice, the Company adjusted the formats of financial statements asfollows:
① Balance sheet
The item of “notes receivable and accounts receivable” is split into two items of “notes receivable” and “accountsreceivable”;The item of “notes payable and accounts payable” is split into two items of “notes payable” and “accountspayable”;The item of “financing backed by accounts receivable” is added to reflect the notes receivable and accountsreceivable measured at fair value and changes thereof recorded into other comprehensive income on the balancesheet date.
② Income statement
The “less: asset impairment loss” is adjusted into “add: asset impairment loss (“-“ for loss)”;The “less: credit impairment loss” is adjusted into “add: credit impairment loss (“-“ for loss);For the item of “R&D expense”, the amortization of developing intangible assets recorded into administrativeexpense is supplemented;The item of “income from the derecognition of financial assets at amortized cost” is added to reflect gains or lossesof the Company from the derecognition of financial assets at amortized cost due to cases like transfer. This itemshall be filled based on the amount of classification item related to “investment income”, and “-“ for loss.
③ Cash flow statement
For cash flow statements, the filling requirements governing government subsidies are clarified that governmentsubsidies no matter related to assets or income are presented in the item of “cash generated from other operatingactivities”.
④ Statements of changes in owners’ equity
For statements of changes in owners’ equity, the filling requirements governing “capital increased by holders ofother equity instruments” are clarified to reflect the amount of capital increased by holders of financial instrumentsexcept ordinary shares issued by the Company and classified as equity instruments. The item is filled based on theamount of classification item related to financial instruments.
(2) Significant Changes in Accounting Estimates
Not applicable
(3) Adjustments to the Financial Statements at the Beginning of the First Execution Year of any New StandardsGoverning Financial Instruments, Revenue or Leases
Consolidated Balance Sheet
Unit: RMB
| Item | 31 December 2018 | 1 January 2019 | Adjusted |
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| Current assets: | |||
| Monetary capital | 1,705,760,865.12 | 1,705,760,865.12 | |
| Settlement reserve | |||
| Interbank loans granted | |||
| Trading financial assets | 0.00 | 2,965,016,000.42 | 2,965,016,000.42 |
| Financial assets at fair value through profit or loss | 622,892.96 | 0.00 | -622,892.96 |
| Derivative financial assets | |||
| Notes receivable | 1,347,427,811.34 | 1,347,427,811.34 | |
| Accounts receivable | 29,748,068.74 | 29,748,068.74 | |
| Financing backed by accounts receivable | |||
| Prepayments | 182,558,000.75 | 182,558,000.75 | |
| Premiums receivable | |||
| Reinsurance receivables | |||
| Receivable reinsurance contract reserve | |||
| Other receivables | 43,342,878.22 | 43,342,878.22 | |
| Including: Interest receivable | 24,923,178.08 | 24,923,178.08 | |
| Dividends receivable | |||
| Financial assets purchased under resale agreements | |||
| Inventories | 2,407,306,664.86 | 2,407,306,664.86 | |
| Contract assets | |||
| Assets classified as held for sale | |||
| Current portion of non-current assets | 300,000,000.00 | 300,000,000.00 | |
| Other current assets | 3,012,478,687.20 | 254,478,687.20 | -2,758,000,000.00 |
| Total current assets | 9,029,245,869.19 | 9,235,638,976.65 | 206,393,107.46 |
| Non-current assets: | |||
| Loans and advances to customers | |||
| Investments in debt obligations |
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| Available-for-sale financial assets | 206,393,107.46 | 0.00 | -206,393,107.46 |
| Investments in other debt obligations | |||
| Held-to-maturity investments | |||
| Long-term receivables | |||
| Long-term equity investments | 4,900,000.00 | 4,900,000.00 | |
| Investments in other equity instruments | |||
| Other non-current financial assets | |||
| Investment property | 5,027,228.53 | 5,027,228.53 | |
| Fixed assets | 1,763,988,530.56 | 1,763,988,530.56 | |
| Construction in progress | 93,320,557.56 | 93,320,557.56 | |
| Productive living assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 742,083,609.10 | 742,083,609.10 | |
| R&D expense | |||
| Goodwill | 478,283,495.29 | 478,283,495.29 | |
| Long-term prepaid expense | 83,561,473.46 | 83,561,473.46 | |
| Deferred income tax assets | 86,580,171.06 | 86,580,171.06 | |
| Other non-current assets | 16,544,407.51 | 16,544,407.51 | |
| Total non-current assets | 3,480,682,580.53 | 3,274,289,473.07 | -206,393,107.46 |
| Total assets | 12,509,928,449.72 | 12,509,928,449.72 | |
| Current liabilities: | |||
| Short-term borrowings | |||
| Borrowings from central bank | |||
| Interbank loans obtained | |||
| Trading financial liabilities | |||
| Financial liabilities at fair value through profit or loss | |||
| Derivative financial liabilities |
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| Notes payable | 349,203,413.72 | 349,203,413.72 | |
| Accounts payable | 484,952,598.59 | 484,952,598.59 | |
| Advances from customers | 1,149,143,310.48 | 1,149,143,310.48 | |
| Financial assets sold under repurchase agreements | |||
| Customer deposits and interbank deposits | |||
| Payables for acting trading of securities | |||
| Payables for underwriting of securities | |||
| Payroll payable | 457,299,476.43 | 457,299,476.43 | |
| Taxes payable | 372,993,624.18 | 372,993,624.18 | |
| Other payables | 1,192,020,147.82 | 1,192,020,147.82 | |
| Including: Interest payable | |||
| Dividends payable | |||
| Handling charges and commissions payable | |||
| Reinsurance payables | |||
| Contract liabilities | |||
| Liabilities directly associated with assets classified as held for sale | |||
| Current portion of non-current liabilities | |||
| Other current liabilities | 295,164,745.44 | 295,164,745.44 | |
| Total current liabilities | 4,300,777,316.66 | 4,300,777,316.66 | |
| Non-current liabilities: | |||
| Insurance contract reserve | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities |
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| Long-term payables | |||
| Long-term payroll payable | |||
| Provisions | |||
| Deferred income | 76,636,500.55 | 76,636,500.55 | |
| Deferred income tax liabilities | 102,764,515.11 | 102,764,515.11 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 179,401,015.66 | 179,401,015.66 | |
| Total liabilities | 4,480,178,332.32 | 4,480,178,332.32 | |
| Owners’ equity: | |||
| Share capital | 503,600,000.00 | 503,600,000.00 | |
| Other equity instruments | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserves | 1,295,405,592.25 | 1,295,405,592.25 | |
| Less: Treasury stock | |||
| Other comprehensive income | 4,794,830.59 | 0.00 | -4,794,830.59 |
| Specific reserve | |||
| Surplus reserves | 256,902,260.27 | 256,902,260.27 | |
| General reserve | |||
| Retained earnings | 5,541,281,341.47 | 5,546,076,172.06 | 4,794,830.59 |
| Total equity attributable to owners of the Company as the parent | 7,601,984,024.58 | 7,601,984,024.58 | |
| Non-controlling interests | 427,766,092.82 | 427,766,092.82 | |
| Total owners’ equity | 8,029,750,117.40 | 8,029,750,117.40 | |
| Total liabilities and owners’ equity | 12,509,928,449.72 | 12,509,928,449.72 |
Note for adjustment:
In 2017, the Ministry of Finance issued the revised Accounting Standards for Business Enterprises No. 22 - Recognition andMeasurement of Financial Instruments (CK[2017]No.7) , the Accounting Standards for Business Enterprises No. 23 – Transfer ofFinancial Assets (CK[2017]No.8), the Accounting Standards for Business Enterprises No. 24 – Hedging Accounting (CK[2017]No.9),and the Accounting Standards for Business Enterprises No. 37 – Presentation of Financial Instruments (CK[2017]No.14). TheCompany starts to implement aforesaid new standards since 1 January 2019. In line with the link up rules, when the data of financialstatements involved in prior years are inconsistent with the new standards, no adjustment is necessary. Specific items and amount
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thereof affected are presented in above adjustment statements.Balance Sheet of the Company as the Parent
Unit: RMB
| Item | 31 December 2018 | 1 January 2019 | Adjusted |
| Current assets: | |||
| Monetary capital | 1,078,172,917.59 | 1,078,172,917.59 | |
| Trading financial assets | 0.00 | 1,807,016,000.42 | 1,807,016,000.42 |
| Financial assets at fair value through profit or loss | 622,892.96 | 0.00 | -622,892.96 |
| Derivative financial assets | |||
| Notes receivable | 1,256,336,386.34 | 1,256,336,386.34 | |
| Accounts receivable | 9,385,950.54 | 9,385,950.54 | |
| Financings backed by accounts receivable | |||
| Prepayments | 10,869,911.54 | 10,869,911.54 | |
| Other receivables | 110,800,665.19 | 110,800,665.19 | |
| Including: Interest receivable | |||
| Dividends receivable | |||
| Inventories | 2,125,826,967.11 | 2,125,826,967.11 | |
| Contract assets | |||
| Assets classified as held for sale | |||
| Current portion of non-current assets | |||
| Other current assets | 1,764,267,968.83 | 164,267,968.83 | -1,600,000,000.00 |
| Total current assets | 6,356,283,660.10 | 6,562,676,767.56 | 206,393,107.46 |
| Non-current assets: | |||
| Investments in debt obligations | |||
| Available-for-sale financial assets | 206,393,107.46 | 0.00 | -206,393,107.46 |
| Investments in other debt obligations | |||
| Held-to-maturity investments | |||
| Long-term receivables |
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| Long-term equity investments | 1,148,213,665.32 | 1,148,213,665.32 | |
| Investments in other equity instruments | |||
| Other non-current financial assets | |||
| Investment property | 24,715,657.40 | 24,715,657.40 | |
| Fixed assets | 1,290,714,455.79 | 1,290,714,455.79 | |
| Construction in progress | 86,634,753.93 | 86,634,753.93 | |
| Productive living assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 189,968,142.25 | 189,968,142.25 | |
| R&D expense | |||
| Goodwill | |||
| Long-term prepaid expense | 56,643,945.05 | 56,643,945.05 | |
| Deferred income tax assets | 37,415,458.17 | 37,415,458.17 | |
| Other non-current assets | 12,474,026.00 | 12,474,026.00 | |
| Total non-current assets | 3,053,173,211.37 | 2,846,780,103.91 | -206,393,107.46 |
| Total assets | 9,409,456,871.47 | 9,409,456,871.47 | |
| Current liabilities: | |||
| Short-term borrowings | |||
| Trading financial liabilities | |||
| Financial liabilities at fair value through profit or loss | |||
| Derivative financial liabilities | |||
| Notes payable | 28,648,913.72 | 28,648,913.72 | |
| Accounts payable | 362,290,556.21 | 362,290,556.21 | |
| Advances from customers | 1,123,125,892.84 | 1,123,125,892.84 | |
| Contract liabilities | |||
| Payroll payable | 117,748,485.96 | 117,748,485.96 | |
| Taxes payable | 161,176,957.25 | 161,176,957.25 | |
| Other payables | 372,902,293.22 | 372,902,293.22 | |
| Including: Interest |
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| payable | |||
| Dividends payable | |||
| Liabilities directly associated with assets classified as held for sale | |||
| Current portion of non-current liabilities | |||
| Other current liabilities | 32,605,794.55 | 32,605,794.55 | |
| Total current liabilities | 2,198,498,893.75 | 2,198,498,893.75 | |
| Non-current liabilities: | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Long-term payables | |||
| Long-term payroll payable | |||
| Provisions | |||
| Deferred income | |||
| Deferred income tax liabilities | 36,417,554.85 | 36,417,554.85 | |
| Other non-current liabilities | 4,828,737.52 | 4,828,737.52 | |
| Total non-current liabilities | |||
| Total liabilities | 41,246,292.37 | 41,246,292.37 | |
| Owners’ equity: | 2,239,745,186.12 | 2,239,745,186.12 | |
| Share capital | |||
| Other equity instruments | 503,600,000.00 | 503,600,000.00 | |
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserves | |||
| Less: Treasury stock | 1,247,162,107.35 | 1,247,162,107.35 | |
| Other comprehensive income |
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| Specific reserve | 4,794,830.59 | 0.00 | -4,794,830.59 |
| Surplus reserves | |||
| General reserve | 251,800,000.00 | 251,800,000.00 | |
| Retained earnings | 5,162,354,747.41 | 5,167,149,578.00 | 4,794,830.59 |
| Total owners’ equity | 7,169,711,685.35 | 7,169,711,685.35 | |
| Total liabilities and owners’ equity | 9,409,456,871.47 | 9,409,456,871.47 |
Note for adjustment:
In 2017, the Ministry of Finance issued the revised Accounting Standards for Business Enterprises No. 22 - Recognition andMeasurement of Financial Instruments (CK[2017]No.7) , the Accounting Standards for Business Enterprises No. 23 – Transfer ofFinancial Assets (CK[2017]No.8), the Accounting Standards for Business Enterprises No. 24 – Hedging Accounting (CK[2017]No.9),and the Accounting Standards for Business Enterprises No. 37 – Presentation of Financial Instruments (CK[2017]No.14). TheCompany starts to implement aforesaid new standards since 1 January 2019. In line with the link up rules, when the data of financialstatements involved in prior years are inconsistent with the new standards, no adjustment is necessary. Specific items and amountthereof affected are presented in above adjustment statements.V. Taxation
1. Main Taxes and Tax Rate
| Category of taxes | Particulars about specific tax rate |
| VAT | Income tax was in accordance with 16%,13%, 10%,9% and 6% of tax rate to calculate output tax and according to the balance of the current the deductibility deduct the input tax to calculate value added tax. |
| Consumption tax | Sales of wine RMB1 per 1000 ml or per kg to calculate the amount of consumption tax, a flat rate, 20% of the annual turnover to calculate the amount of consumption tax at valorem. |
| Urban maintenance and construction tax | 1%, 5%, 7% of the actual taxable turnover amount. |
| Education expenses surcharge | 3% of the actual taxable turnover amount. |
| Local education surcharge | 2% of the actual taxable turnover amount. |
| Enterprise income tax | For details, see the table below. |
Table of income tax rate of different entities:
| Name of the entities | Income tax rate |
| Anhui Longrui Glass Co., Ltd | 15% |
| Anhui Ruisiweier Technology Co., Ltd | 15% |
| Bozhou Gujin Rubbish Recycling Co., Ltd | 5% |
| Wuhan Yashibo Technology Co., Ltd | 5% |
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| Name of the entities | Income tax rate |
| Hubei Hechuanyuan Trade Co., Ltd | 5% |
| Anhui Gujing Distillery Company Limited and its other subsidiaries | 5% |
| Anhui Longrui Glass Co., Ltd | 25% |
2. Tax Preference and Approval
(1) On 5 December 2016, the Company’s subsidiary Anhui Longrui Glass Co., Ltd. was attested to be qualified as ahi-tech enterprise and obtained Hi-tech Enterprise Certificate (NO. GR201634001204) which shall be valid in 3years. Corresponding corporate income tax was also paid at the rate of 15% from January to June in 2019;
(2) On 21 October 2016, the Company’s subsidiary Anhui Swisse Will Science & Technology Co., Ltd. wasattested to be qualified as a hi-tech enterprise and obtained Hi-tech Enterprise Certificate (NO. GR201634000832)which shall be valid in 3 years. Corresponding corporate income tax was also paid at the rate of 15% from Januaryto June in 2019;
(3) According to Notification for implementation of inclusive income tax relief policy for small enterprises withlow profits (Financial and taxation (2019) No. 13), published by Ministry of Finance of the People’s Republic ofChina and State Administration of Taxation, from 1 January 2019 to 31 December 2021, for small enterprises withlow profits, of which the annual taxable income amount is under RMB1 million, the income tax deduction shall be50% of the taxable income amount and the corporate income tax rate shall be reduced to 20%; and for the part ofthe annual taxable income amount exceeds RMB1 million but less than RMB3 million, the income tax deductionshall be 50% of the taxable income amount and the corporate income tax rate shall be reduced to 20%. Forsubsidiaries of the Company, Bozhou Gujing Recycling Co., Ltd, Wuhan Yashibo Technology Co., Ltd., HubeiJunhe Advertising Co., Ltd. and Hubei Yellow Crane Tower Beverage Co., Ltd., which satisfy conditions for smallenterprises with low profits, the actual prevailing tax shall be reduced to 5% from January to June in 2019.VI. Notes on Major Items in Consolidated Financial Statements of the CompanyThe following notes (including notes on major items in consolidated financial statements of the Company), unlessotherwise noted, the opening period was 1 January 2019, the closing period was 30 June 2019.
1. Monetary Funds
| Item | Ending balance | Beginning balance |
| Cash in treasury | 374,122.81 | 353,429.67 |
| Bank deposit | 3,164,869,696.55 | 1,705,175,643.46 |
| Other monetary funds | 14,090,694.21 | 231,791.99 |
| Total | 3,179,334,513.57 | 1,705,760,865.12 |
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| Item | Ending balance | Beginning balance |
| Of which: The total amount deposited in overseas | 0.00 | 0.00 |
Note: At the end of this period, the amount of RMB770 million is structural time deposit of the bank deposit thatcannot be withdrawn in advance before the due date; at the end of this period, the amount of RMB13,960,226.78was restricted for pledge due to the opening of bank’s acceptance bill among the other monetary fund. There’s nolimitation and restriction on the usage and remittance of funds deposited abroad due to pledge and mortgage, etc.
2. Trading Financial Assets
| Item | Ending balance | Beginning balance |
| Financial assets at fair value through profit or loss | 1,573,596,291.10 | 2,965,016,000.42 |
| Of which: | ||
| Equity instrument investment | 217,596,291.10 | 207,016,000.42 |
| Other | 1,356,000,000.00 | 2,758,000,000.00 |
| Total | 1,573,596,291.10 | 2,965,016,000.42 |
3. Notes Receivable
(1) Notes receivable Listed by Category
| Item | Ending balance | Beginning balance |
| Bank acceptance bill | 1,317,423,562.34 | 1,347,427,811.34 |
| Trade acceptance bill | 0.00 | 0.00 |
| Total | 1,317,423,562.34 | 1,347,427,811.34 |
(2) Notes Receivable Pledged at the Period-end
| Item | Pledged amount at the period-end |
| Bank acceptance bill | 159,686,231.66 |
| Trade acceptance bill | 0.00 |
| Total | 159,686,231.66 |
(3) Notes Receivable which had Endorsed by the Company or had Discounted and had not Due on the BalanceSheet Date at the Period-end
| Item | Amount of recognition termination at the period-end | Amount of not terminated recognition at the period-end |
| Bank acceptance bill | 1,257,471,419.07 | 0.00 |
~83~
| Item | Amount of recognition termination at the period-end | Amount of not terminated recognition at the period-end |
| Trade acceptance bill | 0.00 | 0.00 |
| Total | 1,257,471,419.07 | 0.00 |
4. Accounts Receivable
(1) Accounts Receivable Classified by Category
| Category | Ending balance | ||||
| Carrying amount | Bad debt provision | Carrying value | |||
| Amount | Proportion (%) | Amount | Withdrawal proportion (%) | ||
| Accounts receivable with significant single amount for which bad debt provision separately accrued | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Accounts receivable withdrawal of bad debt provision of by credit risks characteristics: | 30,811,517.08 | 100.00 | 724,824.38 | 2.35 | 30,086,692.70 |
| Accounts receivable with insignificant single amount for which bad debt provision separately accrued | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 30,811,517.08 | 100.00 | 724,824.38 | 2.35 | 30,086,692.70 |
(Continued)
| Category | Beginning balance | ||||
| Carrying amount | Bad debt provision | Carrying value | |||
| Amount | Proportion (%) | Amount | Withdrawal proportion (%) | ||
| Accounts receivable with significant single amount for which bad debt provision separately accrued | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Accounts receivable withdrawal of bad debt provision of by credit risks characteristics: | 30,397,358.01 | 100.00 | 649,289.27 | 2.14 | 29,748,068.74 |
| Accounts receivable with insignificant single amount for which bad debt provision separately accrued | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 30,397,35 | 100.00 | 649,289 | 2.14 | 29,748,06 |
~84~
| Category | Beginning balance | ||||
| Carrying amount | Bad debt provision | Carrying value | |||
| Amount | Proportion (%) | Amount | Withdrawal proportion (%) | ||
| 8.01 | .27 | 8.74 | |||
In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision
| Aging | Ending balance | ||
| Account receivable | Bad debt provision | Withdrawal proportion (%) | |
| Within 1 year | 29,358,361.66 | 422,193.75 | 1.44 |
| [Of which: within 6 months] | 26,143,108.14 | 261,431.08 | 1.00 |
| [7-12 months] | 3,215,253.52 | 160,762.67 | 5.00 |
| 1 to 2 years | 1,277,227.55 | 127,722.76 | 10.00 |
| 2 to 3 years | 2,040.00 | 1,020.00 | 50.00 |
| Over 3 years | 173,887.87 | 173,887.87 | 100.00 |
| Total | 30,811,517.08 | 724,824.38 | 2.35 |
(2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting PeriodThe reversed amount of the bad debt provision during the Reporting Period was of RMB75,535.11.
(3) Particulars of the Actual Verification of Accounts Receivable during the Reporting PeriodThere was no actual verification of accounts receivable during the Reporting Period.
(4) Top Five of the Ending Balance of the Accounts Receivable Collected According to the Arrears PartyThe total amount of top five of account receivable of ending balance collected by arrears party wasRMB12,677,581.98, 41.15% of total closing balance of account receivable, the relevant ending balance of bad debtprovision withdrawn was RMB246,974.31.
5. Prepayment
(1) List by Aging Analysis
| Aging | Ending balance | Beginning balance | ||
| Amount | Proportion | Amount | Proportion | |
| Within 1 year | 125,311,525.02 | 96.48 | 182,122,465.92 | 99.76 |
| 1 to 2 years | 4,576,890.83 | 3.52 | 145,534.83 | 0.08 |
~85~
| Aging | Ending balance | Beginning balance | ||
| Amount | Proportion | Amount | Proportion | |
| 2 to 3 years | 0.00 | 0.00 | 0.00 | |
| Over 3 years | 0.00 | 0.00 | 290,000.00 | 0.16 |
| Total | 129,888,415.85 | 100.00 | 182,558,000.75 | 100.00 |
(2) Top Five of the Ending Balance of the Prepayment Collected According to the Prepayment TargetThe total amount of top five of account receivable of ending balance collected by arrears party wasRMB60,552,355.25, 46.62% of total ending balance of account receivable.
6. Other Accounts Receivable
| Item | Ending balance | Beginning balance |
| Interest receivable | 30,443,178.08 | 24,923,178.08 |
| Dividend receivable | 0.00 | 0.00 |
| Other accounts receivable | 18,085,233.37 | 18,419,700.14 |
| Total | 48,528,411.45 | 43,342,878.22 |
(1) Interest Receivable
| Item | Ending balance | Beginning balance |
| Interest of certificate of deposit | 30,443,178.08 | 24,923,178.08 |
| Total | 30,443,178.08 | 24,923,178.08 |
(2) Other Accounts Receivable
① Other Accounts Receivable Disclosed by Category
| Category | Ending balance | ||||
| Carrying amount | Bad debt provision | Carrying value | |||
| Amount | Proportion (%) | Amount | Withdrawal proportion (%) | ||
| Other accounts receivable with significant single amount for which bad debt provision separately accrued | 40,850,949.35 | 67.12 | 40,850,949.35 | 100.00 | 0.00 |
| Other accounts receivable withdrawn bad debt provision according to credit risks characteristics | 20,009,405.04 | 32.88 | 1,924,171.67 | 9.62 | 18,085,233.37 |
| Other accounts receivable with insignificant single amount for which bad | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
~86~
| Category | Ending balance | ||||
| Carrying amount | Bad debt provision | Carrying value | |||
| Amount | Proportion (%) | Amount | Withdrawal proportion (%) | ||
| debt provision separately accrued | |||||
| Total | 60,860,354.39 | 100.00 | 42,775,121.02 | 70.28 | 18,085,233.37 |
(Continued)
| Category | Beginning balance | ||||
| Carrying amount | Bad debt provision | Carrying value | |||
| Amount | Proportion (%) | Amount | Withdrawal proportion (%) | ||
| Other accounts receivable with significant single amount for which bad debt provision separately accrued | 40,850,949.35 | 67.20 | 40,850,949.35 | 100.00 | 0.00 |
| Other accounts receivable withdrawn bad debt provision according to credit risks characteristics | 19,942,837.52 | 32.80 | 1,523,137.38 | 7.64 | 18,419,700.14 |
| Other accounts receivable with insignificant single amount for which bad debt provision separately accrued | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 60,793,786.87 | 100.00 | 42,374,086.73 | 69.70 | 18,419,700.14 |
A. Other receivable with single significant amount and withdrawal bad debt provision separately at end of period
| Other accounts receivable (by unit) | Ending balance | |||
| Other accounts receivable | Bad debt provision | Withdrawal proportion (%) | Withdrawal reason | |
| Hengxin Securities Co., Ltd. | 29,010,449.35 | 29,010,449.35 | 100.00 | Enter enterprise bankruptcy liquidation |
| Jianqiao Securities Co., Ltd. | 11,840,500.00 | 11,840,500.00 | 100.00 | Enter enterprise bankruptcy |
~87~
| Other accounts receivable (by unit) | Ending balance | |||
| Other accounts receivable | Bad debt provision | Withdrawal proportion (%) | Withdrawal reason | |
| Hengxin Securities Co., Ltd. | 29,010,449.35 | 29,010,449.35 | 100.00 | Enter enterprise bankruptcy liquidation |
| liquidation | ||||
| Total | 40,850,949.35 | 40,850,949.35 | 100.00 | |
B. In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision
| Aging | Ending balance | ||
| Other accounts receivable | Other accounts receivable | ||
| Within 1 year | 17,302,210.29 | 218,377.57 | 1.26 |
| [Of which: within 6 months] | 16,168,323.61 | 161,683.24 | 1.00 |
| [7-12 months] | 1,133,886.68 | 56,694.33 | 5.00 |
| 1 to 2 years | 861,702.24 | 86,170.22 | 10.00 |
| 2 to 3 years | 451,737.27 | 225,868.64 | 50.00 |
| Over 3 years | 1,393,755.24 | 1,393,755.24 | 100.00 |
| Total | 20,009,405.04 | 1,924,171.67 | 9.62 |
② Other Account Receivable Classified by Account Nature
| Nature | Ending carrying amount | Beginning carrying amount |
| Securities investment | 40,850,949.35 | 40,850,949.35 |
| Margin &cash pledge | 3,648,377.30 | 4,749,457.78 |
| Business travel borrowing charges | 1,176,663.88 | 426,435.85 |
| Rent and utilities fee | 8,688,782.19 | 6,786,659.62 |
| Others | 6,495,581.67 | 7,980,284.27 |
| Total | 60,860,354.39 | 60,793,786.87 |
③ Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting PeriodThe withdrawn bad debt provision of Reporting Period was of RMB401,034.29.
④ Particulars of the Actual Verification of Other Accounts Receivable during the Reporting PeriodThere was no actual verification of other accounts receivable during the Reporting Period.
~88~
⑤ Top 5 of the Ending Balance of the Other Accounts Receivable Collected According to the Arrears Party
| Name of the entity | Relationship | Nature | Ending balance | Aging | Proportion (%) | Bad debt provision Ending balance |
| No.1 | Non-related party | Securities investment | 29,010,449.35 | Over 3 years | 47.67 | 29,010,449.35 |
| No.2 | Non-related party | Securities investment | 11,840,500.00 | Over 3 years | 19.46 | 11,840,500.00 |
| No. 3 | Non-related party | Prepayment of oil fee | 5,935,503.54 | Within 6 months | 9.75 | 59,355.04 |
| No. 4 | Non-related party | Cash deposit | 640,288.05 | Within 6 months | 1.05 | 6,402.88 |
| No. 5 | Non-related party | Prepayment of oil fee | 500,000.00 | Within 6 months | 0.82 | 5,000.00 |
| Total | -- | -- | 47,926,740.94 | -- | 78.75 | 40,921,707.27 |
7. Inventory
(1) Category of Inventory
| Item | Ending balance | ||
| Carrying amount | Falling price reserves | Carrying value | |
| Raw materials& package | 158,807,985.16 | 19,753,803.07 | 139,054,182.09 |
| Homemade semi-finished products and goods in process | 2,107,408,415.79 | 0.00 | 2,107,408,415.79 |
| Finished product | 173,141,865.95 | 2,248,377.42 | 170,893,488.53 |
| Total | 2,439,358,266.90 | 22,002,180.49 | 2,417,356,086.41 |
(Continued)
| Item | Beginning balance | ||
| Carrying amount | Falling price reserves | Carrying value | |
| Raw materials& package | 144,856,930.02 | 13,808,554.40 | 131,048,375.62 |
| Homemade semi-finished products and goods in process | 1,957,452,112.24 | 0.00 | 1,957,452,112.24 |
| Finished product | 322,031,842.20 | 3,225,665.20 | 318,806,177.00 |
| Total | 2,424,340,884.46 | 17,034,219.60 | 2,407,306,664.86 |
~89~
(2) Falling Price Reserves of Inventory
| Item | Beginning balance | Increase | Decrease | Ending balance | ||
| Withdrawal | Others | Reverse or write-off | Others | |||
| Raw materials& package | 13,808,554.40 | 5,945,248.67 | 0.00 | 0.00 | 0.00 | 19,753,803.07 |
| Finished product | 3,225,665.20 | 0.00 | 0.00 | 977,287.78 | 0.00 | 2,248,377.42 |
| Total | 17,034,219.60 | 5,945,248.67 | 0.00 | 977,287.78 | 0.00 | 22,002,180.49 |
(3) Withdrawal Provision Basis of the Falling Price of the Inventory and the Reasons of the Reserve orWrite-off
| Item | Specific basis of withdrawal of falling price reserves of inventory | Reasons for reversal | Reasons for write-off |
| Raw materials& package | The realizable net value was lower than the cost | -- | The raw material withdrawn impairment disposed in Reporting Period |
| Finished product | The realizable net value was lower than the cost | -- | The raw material withdrawn impairment disposed in Reporting Period |
8. Other Current Assets
| Item | Ending balance | Beginning balance |
| Pledged reverse repurchase of national debt | 10,900,000.00 | 179,900,000.00 |
| Tax to be deducted | 18,638,776.67 | 74,578,687.20 |
| Total | 29,538,776.67 | 254,478,687.20 |
9. Current Portion of Non-current Assets
| Item | Ending balance | Beginning balance | Notes |
| Current portion of non-current assets | 300,000,000.00 | 300,000,000.00 | |
| Total | 300,000,000.00 | 300,000,000.00 |
10. Long-term Equity Investment
| Investee | Beginnin | Increase/decrease |
~90~
| g balance | Additional investment | Reduced investment | Gains and losses recognized under the equity method | Adjustment of other comprehensive income | Changes of other equity | |
| I.Associated enterprise | ||||||
| Beijing Guge Trading Co., Ltd. | 4,900,000.00 | 0.00 | 0.00 | -164,994.19 | 0.00 | 0.00 |
| Total | 4,900,000.00 | 0.00 | 0.00 | -164,994.19 | 0.00 | 0.00 |
(Continued)
| Investee | Increase/decrease | Ending balance | Ending balance impairment provision | ||
| Cash bonus or profits announced to issue | Withdrawal of impairment provision | Other | |||
| I.Associated enterprise | |||||
| Beijing Guge Trading Co., Ltd. | 0.00 | 0.00 | 0.00 | 4,735,005.81 | 0.00 |
| Total | 0.00 | 0.00 | 0.00 | 4,735,005.81 | 0.00 |
11. Investment Property
| Item | Houses and buildings | Land use right | Total |
| I. Original carrying value | |||
| 1. Beginning balance | 8,680,555.75 | 2,644,592.00 | 11,325,147.75 |
| 2. Increased amount of the period | 0.00 | 0.00 | 0.00 |
| 3. Decreased amount of the period | 0.00 | 0.00 | 0.00 |
| (1) Transfer to fixed assets | 0.00 | 0.00 | 0.00 |
| (2) Other transfer | 0.00 | 0.00 | 0.00 |
~91~
| Item | Houses and buildings | Land use right | Total |
| 4. Ending balance | 8,680,555.75 | 2,644,592.00 | 11,325,147.75 |
| II. Accumulative depreciation and accumulative amortization | |||
| 1. Beginning balance | 5,654,245.92 | 643,673.30 | 6,297,919.22 |
| 2. Increased amount of the period | 130,557.96 | 28,013.28 | 158,571.24 |
| Withdrawal or amortization | 130,557.96 | 28,013.28 | 158,571.24 |
| Transfer from fixed assets | 0.00 | 0.00 | 0.00 |
| 3. Decreased amount of the period | 0.00 | 0.00 | 0.00 |
| (1) Transfer to fixed assets | 0.00 | 0.00 | 0.00 |
| (2) Other transfer | 0.00 | 0.00 | 0.00 |
| 4. Ending balance | 5,784,803.88 | 671,686.58 | 6,456,490.46 |
| III. Depreciation reserves | |||
| 1. Beginning balance | 0.00 | 0.00 | 0.00 |
| 2. Increased amount of the period | 0.00 | 0.00 | 0.00 |
| Withdrawal | 0.00 | 0.00 | 0.00 |
| 3. Decreased amount of the period | 0.00 | 0.00 | 0.00 |
| (1) Transfer to fixed assets | 0.00 | 0.00 | 0.00 |
| (2) Other transfer | 0.00 | 0.00 | 0.00 |
| 4. Ending balance | 0.00 | 0.00 | 0.00 |
| IV. Carrying value | |||
| 1. Ending carrying value | 2,895,751.87 | 1,972,905.42 | 4,868,657.29 |
| 2. Beginning carrying value | 3,026,309.83 | 2,000,918.70 | 5,027,228.53 |
12. Fixed Assets
| Item | Ending balance | Beginning balance |
| Fixed assets | 1,684,243,384.48 | 1,763,988,530.56 |
| Disposal of fixed assets | 0.00 | 0.00 |
| Total | 1,684,243,384.48 | 1,763,988,530.56 |
(1) List of Fixed Assets
~92~
| Item | Houses and buildings | Machinery equipment | Transportation equipment | Office equipment and other | Total |
| I. Original carrying value | |||||
| 1. Beginning balance | 2,006,674,799.70 | 920,022,112.79 | 58,064,314.20 | 157,194,996.51 | 3,141,956,223.20 |
| 2. Increased amount of the period | 10,628,048.20 | 6,493,754.22 | 2,466,474.24 | 3,765,714.87 | 23,353,991.53 |
| (1) Purchase | 10,547,596.62 | 5,568,337.36 | 2,466,474.24 | 2,209,832.53 | 20,792,240.75 |
| (2) Transfer of project under construction | 80,451.58 | 925,416.86 | 0.00 | 1,555,882.34 | 2,561,750.78 |
| (3) Enterprise combination increase | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (4) Taking back of rental housing | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 3. Decreased amount of the period | 186,521.55 | 4,308,790.12 | 1,212,091.63 | 650,860.17 | 6,358,263.47 |
| (1) Disposal or scrap | 186,521.55 | 4,308,790.12 | 1,212,091.63 | 650,860.17 | 6,358,263.47 |
| (2) Transfer to investment property | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 4. Ending balance | 2,017,116,326.35 | 922,207,076.89 | 59,318,696.81 | 160,309,851.21 | 3,158,951,951.26 |
| II. Accumulative depreciation | |||||
| 1. Beginning balance | 737,756,223.41 | 495,710,974.90 | 49,030,197.42 | 90,459,858.92 | 1,372,957,254.65 |
| 2. Increased amount of the period | 35,879,060.65 | 49,319,894.61 | 2,484,811.80 | 14,393,028.27 | 102,076,795.33 |
| (1) Withdrawal | 35,879,060.65 | 49,319,894.61 | 2,484,811.80 | 14,393,028.27 | 102,076,795.33 |
| (2) Enterprise combination increase | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (3) Taking back of rental housing | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 3. Decreased amount of the period | 163,672.92 | 3,326,105.71 | 1,166,618.20 | 633,731.57 | 5,290,128.40 |
| (1) Disposal or scrap | 163,672.92 | 3,326,105.71 | 1,166,618.20 | 633,731.57 | 5,290,128.40 |
| (2) Transfer to investment property | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 4. Ending balance | 773,471,611.14 | 541,704,763.80 | 50,348,391.02 | 104,219,155.62 | 1,469,743,921.58 |
| III. Depreciation reserves | |||||
| 1. Beginning balance | 3,396,292.79 | 1,020,057.51 | 7,047.07 | 587,040.62 | 5,010,437.99 |
| 2. Increased amount of the period | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (1) Withdrawal | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 3. Decreased amount of the period | 17,252.98 | 27,856.30 | 0.00 | 683.51 | 45,792.79 |
| (1) Disposal or scrap | 17,252.98 | 27,856.30 | 0.00 | 683.51 | 45,792.79 |
~93~
| Item | Houses and buildings | Machinery equipment | Transportation equipment | Office equipment and other | Total |
| 4. Ending balance | 3,379,039.81 | 992,201.21 | 7,047.07 | 586,357.11 | 4,964,645.20 |
| IV. Carrying value | |||||
| 1. Ending carrying value | 1,240,265,675.40 | 379,510,111.88 | 8,963,258.72 | 55,504,338.48 | 1,684,243,384.48 |
| 2. Beginning carrying value | 1,265,522,283.50 | 423,291,080.38 | 9,027,069.71 | 66,148,096.97 | 1,763,988,530.56 |
(2) List of Temporarily Idle Fixed Assets
| Item | Original carrying value | Accumulative depreciation | Impairment provision | Carrying value | Notes |
| Houses and buildings | 10,553,688.29 | 7,074,810.79 | 3,379,039.81 | 99,837.69 | |
| Machinery equipment | 7,337,349.26 | 6,287,337.89 | 992,201.21 | 57,810.16 | |
| Transportation equipment | 58,119.66 | 49,329.00 | 7,047.07 | 1,743.59 | |
| Office equipment and others | 923,873.41 | 309,813.59 | 586,357.11 | 27,702.71 | |
| Total | 18,873,030.62 | 13,721,291.27 | 4,964,645.20 | 187,094.15 |
(3) Details of Fixed Assets Failed to Accomplish Certification of Property
| Item | Carrying value | Reason |
| Houses and building | 756,078,944.64 | In process |
| Total | 756,078,944.64 | -- |
13. Construction in Progress
| Item | Ending balance | Beginning balance |
| Construction in process | 162,876,312.37 | 93,320,557.56 |
| Engineering materials | 0.00 | 0.00 |
| Total | 162,876,312.37 | 93,320,557.56 |
(1) List of Construction in Progress
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Depreciation reserves | Carrying value | Carrying amount | Depreciation reserves | Carrying value | |
| Digital marketing system | 10,191,844.60 | 0.00 | 10,191,844.60 | 0.00 | 0.00 | 0.00 |
~94~
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Depreciation reserves | Carrying value | Carrying amount | Depreciation reserves | Carrying value | |
| SAP ERP system | 20,742,671.34 | 0.00 | 20,742,671.34 | 0.00 | 0.00 | 0.00 |
| Gujing Party Construction Cultural Center | 0.00 | 0.00 | 0.00 | 1,435,187.95 | 0.00 | 1,435,187.95 |
| Renovation project of potential safety concerns | 1,263,728.57 | 0.00 | 1,263,728.57 | 1,263,728.57 | 0.00 | 1,263,728.57 |
| Equipment installation project | 9,283,726.61 | 0.00 | 9,283,726.61 | 5,596,060.05 | 0.00 | 5,596,060.05 |
| Desulfurization and denitrification project | 29,676,888.70 | 0.00 | 29,676,888.70 | 28,768,115.33 | 0.00 | 28,768,115.33 |
| Technical improvement project of automation of brewing | 43,388,604.05 | 0.00 | 43,388,604.05 | 17,307,839.93 | 0.00 | 17,307,839.93 |
| Half open wine library in Gujing plant | 33,804,583.10 | 0.00 | 33,804,583.10 | 30,391,615.08 | 0.00 | 30,391,615.08 |
| Phase I of Suizhou new factory | 4,431,551.81 | 0.00 | 4,431,551.81 | 2,597,498.75 | 0.00 | 2,597,498.75 |
| Other projects with small single amount | 10,092,713.59 | 0.00 | 10,092,713.59 | 5,960,511.90 | 0.00 | 5,960,511.90 |
| Total | 162,876,312.37 | 0.00 | 162,876,312.37 | 93,320,557.56 | 0.00 | 93,320,557.56 |
(2) Changes of Significant Construction in Progress
~95~
| Name o f item | Estimated number | Beginning balance | Increase Amount | Amount that transferred to fixed assets of the period | Other decreased amount of the period | Ending balance |
| Digital marketing system | 3,500.00 | 0.00 | 10,191,844.60 | 0.00 | 0.00 | 10,191,844.60 |
| SAP, ERP system | 4,450.00 | 0.00 | 20,742,671.34 | 0.00 | 0.00 | 20,742,671.34 |
| Gujing Party Construction Cultural Center | 1,160.00 | 1,435,187.95 | 2,319,051.71 | 0.00 | 3,754,239.66 | 0.00 |
| Renovation project of potential safety concerns | 18,010.76 | 1,263,728.57 | 0.00 | 0.00 | 0.00 | 1,263,728.57 |
| Equipment installation project | 10,834.65 | 5,596,060.05 | 3,687,666.56 | 0.00 | 0.00 | 9,283,726.61 |
| Desulfurization and denitrification project | 7,176.00 | 28,768,115.33 | 908,773.37 | 0.00 | 0.00 | 29,676,888.70 |
| Technical improvement project of automation of brewing | 27,430.00 | 17,307,839.93 | 26,080,764.12 | 0.00 | 0.00 | 43,388,604.05 |
| Half open wine library in Gujing plant | 11,194.15 | 30,391,615.08 | 3,412,968.02 | 0.00 | 0.00 | 33,804,583.10 |
| Phase I of Suizhou new factory | 26,000.00 | 2,597,498.75 | 1,834,053.06 | 0.00 | 0.00 | 4,431,551.81 |
| Other projects with small single amount | 7,628.67 | 5,960,511.90 | 9,772,036.59 | 2,561,750.78 | 3,078,084.12 | 10,092,713.59 |
~96~
| Name o f item | Estimated number | Beginning balance | Increase Amount | Amount that transferred to fixed assets of the period | Other decreased amount of the period | Ending balance |
| Total | 117,384.23 | 93,320,557.56 | 78,949,829.37 | 2,561,750.78 | 6,832,323.78 | 162,876,312.37 |
(Continued)
| Project name | Proportion estimated of the project accumulative input (%) | Project Progress (%) | Accumulative amount of capitalized interests | Of which: the amount of the capitalized interests of the period | Capitalization rate of the interests of the period (%) | Capital resources |
| Digital marketing system | 29.12 | 65.00 | 0.00 | 0.00 | 0.00 | Self-owned fund |
| SAP, ERP system | 46.61 | 60.00 | 0.00 | 0.00 | 0.00 | Self-owned fund |
| Gujing Party Construction Cultural Center | 81.87 | 100.00 | 0.00 | 0.00 | 0.00 | Self-owned fund |
| Renovation project of potential safety concerns | 82.00 | 93.00 | 0.00 | 0.00 | 0.00 | Self-owned fund |
| Equipment installation project | 17.02 | 30.00 | 0.00 | 0.00 | 0.00 | Self-owned fund |
| Desulfurization and denitrification project | 41.67 | 96.00 | 0.00 | 0.00 | 0.00 | Self-owned fund |
| Technical improvement project of automation of brewing | 19.06 | 19.00 | 0.00 | 0.00 | 0.00 | Self-owned fund |
| Half open wine library in Gujing plant | 69.06 | 97.00 | 0.00 | 0.00 | 0.00 | Self-owned fund |
| Phase I of Suizhou new factory | 1.70 | 5.00 | 0.00 | 0.00 | 0.00 | Self-owned |
~97~
| Project name | Proportion estimated of the project accumulative input (%) | Project Progress (%) | Accumulative amount of capitalized interests | Of which: the amount of the capitalized interests of the period | Capitalization rate of the interests of the period (%) | Capital resources |
| fund | ||||||
| Other projects with small single amount | 82.13 | 82.00 | 0.00 | 0.00 | 0.00 | Self-owned fund |
| Total | -- | -- | 0.00 | 0.00 | 0.00 | -- |
14. Intangible Assets
| Item | Land use right | Patent right | Software | Trademark | Total |
| I. Original carrying value | |||||
| 1. Beginning balance | 683,451,302.56 | 45,889,466.19 | 32,106,185.73 | 169,116,600.00 | 930,563,554.48 |
| 2. Increased amount of the period | 0.00 | 0.00 | 3,151,610.32 | 0.00 | 3,151,610.32 |
| (1) Purchase | 0.00 | 0.00 | 188,679.29 | 0.00 | 188,679.29 |
| (2) Internal R & D | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (3) Transfer of construction in progress | 0.00 | 0.00 | 2,962,931.03 | 0.00 | 2,962,931.03 |
| 3. Decreased amount of the period | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (1) Disposal | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 4. Ending balance | 683,451,302.56 | 45,889,466.19 | 35,257,796.05 | 169,116,600.00 | 933,715,164.80 |
| II. Accumulated amortization | |||||
| 1. Beginning balance | 129,394,359.27 | 45,769,591.73 | 12,944,725.23 | 371,269.15 | 188,479,945.38 |
| 2. Increased amount of the period | 7,191,799.45 | 24,038.88 | 4,979,696.88 | 0.00 | 12,195,535.21 |
| (1) Withdrawal | 7,191,799.45 | 24,038.88 | 4,979,696.88 | 0.00 | 12,195,535.21 |
| 3. Decreased amount of the period | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (1) Disposal | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
~98~
| Item | Land use right | Patent right | Software | Trademark | Total |
| 4. Ending balance | 136,586,158.72 | 45,793,630.61 | 17,924,422.11 | 371,269.15 | 200,675,480.59 |
| III. Depreciation reserves | |||||
| 1. Beginning balance | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 2. Increased amount of the period | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (1) Withdrawal | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 3. Decreased amount of the period | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (1) Disposal | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 4. Ending balance | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| IV. Carrying value | |||||
| 1. Ending carrying value | 546,865,143.84 | 95,835.58 | 17,333,373.94 | 168,745,330.85 | 733,039,684.21 |
| 2. Beginning carrying value | 554,056,943.29 | 119,874.46 | 19,161,460.50 | 168,745,330.85 | 742,083,609.10 |
15. Goodwill
| Item | Beginning balance | Increase | Decrease | Ending balance | ||
| Generated from enterprise merger | Other | Disposal | Other | |||
| Yellow Crane Tower Distillery Co., Ltd. | 478,283,495.29 | 0.00 | 0.00 | 0.00 | 0.00 | 478,283,495.29 |
| Total | 478,283,495.29 | 0.00 | 0.00 | 0.00 | 0.00 | 478,283,495.29 |
16. Long-term Unamortized Expenses
| Item | Beginning balance | Increased amount | Amortization amount | Other decrease | Ending balance |
| Experience center | 36,671,977.31 | 36,354.70 | 4,748,907.28 | 0.00 | 31,959,424.73 |
| Pottery jar warehouse | 6,244,584.78 | 0.00 | 2,203,971.00 | 0.00 | 4,040,613.78 |
| Sewage Treatment Project | 3,050,000.00 | 1,640,000.00 | 461,311.50 | 0.00 | 4,228,688.50 |
| Yellow Crane Tower Chateau and museum | 16,531,666.46 | 0.00 | 2,328,900.37 | 0.00 | 14,202,766.09 |
| Gujing Party Construction | 5,909,090.91 | 3,754,239.66 | 1,112,331.25 | 0.00 | 8,550,999.32 |
~99~
| Item | Beginning balance | Increased amount | Amortization amount | Other decrease | Ending balance |
| Cultural Center | |||||
| Other projects with small single amount | 15,154,154.00 | 267,253.54 | 2,631,299.17 | 0.00 | 12,790,108.37 |
| Total | 83,561,473.46 | 5,697,847.90 | 13,486,720.57 | 0.00 | 75,772,600.79 |
17. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) List of Deferred Income Tax Assets
| Item | Ending balance | Beginning balance | ||
| Deductible temporary differences | Deferred income tax assets | Deductible temporary differences | Deferred income tax assets | |
| Bad debt provision | 43,499,945.40 | 10,866,529.15 | 43,023,376.00 | 10,749,392.31 |
| Impairment of inventories | 21,985,965.74 | 5,461,318.38 | 17,018,004.85 | 4,219,328.16 |
| Impairment provision of the fixed assets | 4,964,645.20 | 1,241,161.31 | 5,010,437.99 | 1,252,609.50 |
| Deferred income | 74,300,122.46 | 18,308,505.09 | 76,636,500.55 | 18,877,272.61 |
| Accrued expenses and discount | 437,378,318.85 | 109,344,579.72 | 153,988,413.40 | 38,497,103.35 |
| Deductible losses | 1,768,111.99 | 410,365.65 | 111,851.71 | 5,592.58 |
| Unrealized internal profits | 17,201,753.99 | 4,285,249.29 | 16,788,054.95 | 4,181,824.54 |
| Change of fair value of trading financial assets | 0.00 | 0.00 | 117,161.92 | 29,290.48 |
| Deducted payroll payable carryingforward to the next period | 0.00 | 0.00 | 35,071,030.14 | 8,767,757.53 |
| Total | 601,098,863.63 | 149,917,708.59 | 347,764,831.51 | 86,580,171.06 |
(2) Lists of Deferred Income Tax Liabilities
| Item | Ending balance | Beginning balance | ||
| Taxable temporary differences | Deferred income tax liabilities | Taxable temporary differences | Deferred income tax liabilities | |
| Change of fair value of trading | 17,596,291.10 | 4,399,072.78 | 0.00 | 0.00 |
~100~
| financial assets | ||||
| Change in fair value of available-for-sale financial assets | 6,393,107.46 | 1,598,276.87 | ||
| accelerated depreciation of difference of fixed assets | 12,591,595.58 | 3,147,898.89 | 12,921,842.60 | 3,230,460.65 |
| Asset evaluation increment of business combination not under the same control | 387,776,186.92 | 96,944,046.73 | 391,743,110.36 | 97,935,777.59 |
| Total | 417,964,073.60 | 104,491,018.40 | 411,058,060.42 | 102,764,515.11 |
(3) List of Unrecognized Deferred Income Tax Assets
| Item | Ending balance | Beginning balance |
| Deductible temporary difference | 16,214.75 | 16,214.75 |
| Deductible losses | 5,432,144.69 | 5,089,008.12 |
| Total | 5,448,359.44 | 5,105,222.87 |
18. Other Non-current Assets
| Item | Ending balance | Beginning balance |
| Certificate of deposit | 200,000,000.00 | 0.00 |
| Prepayment of equipment and house purchase | 574,026.00 | 16,544,407.51 |
| Total | 200,574,026.00 | 16,544,407.51 |
19. Notes Payable
| Category | Ending balance | Beginning balance |
| Bank acceptance bill | 428,927,100.00 | 320,554,500.00 |
| Trade acceptance | 47,881,240.53 | 28,648,913.72 |
| Total | 476,808,340.53 | 349,203,413.72 |
20. Accounts Payable
(1) List of Accounts Payable
| Item | Ending balance | Beginning balance |
| Payment for materials | 205,184,631.16 | 277,765,943.47 |
| Prepayment for projects and equipment | 67,828,201.29 | 111,498,555.89 |
| Others | 64,520,149.31 | 95,688,099.23 |
~101~
| Item | Ending balance | Beginning balance |
| Total | 337,532,981.76 | 484,952,598.59 |
(2) Significant Accounts Payable Aging over One Year
| Item | Ending balance | Unpaid/ Un-carry-over reason |
| A Company | 1,115,215.57 | Final payment of the project |
| B Company | 7,544,026.71 | Final payment of the project |
| C Company | 3,744,927.40 | Final payment of the project |
| D Company | 1,300,000.00 | Final payment of the project |
| E Company | 3,445,131.03 | Final payment of the project |
| Total | 17,149,300.71 | -- |
21. Advance from Customers
| Item | Ending balance | Beginning balance |
| Loans | 517,109,674.60 | 1,149,143,310.48 |
| Total | 517,109,674.60 | 1,149,143,310.48 |
22. Payroll Payable
(1) List of Payroll Payable
| Item | Beginning balance | Increase | Decrease | Ending balance |
| I. Short-term salary | 456,935,872.94 | 787,677,386.74 | 934,115,923.79 | 310,497,335.89 |
| II. Post-employment benefit-defined contribution plans | 363,603.49 | 69,442,152.68 | 69,456,442.83 | 349,313.34 |
| III. Termination benefits | 0.00 | 0.00 | 0.00 | 0.00 |
| IV. Other benefits due within one year | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 457,299,476.43 | 857,119,539.42 | 1,003,572,366.62 | 310,846,649.23 |
(2) List of Short-term Salary
| Item | Beginning balance | Increase | Decrease | Ending balance |
| 1. Salary, bonus, allowance, subsidy | 371,643,470.87 | 709,042,606.80 | 850,536,199.87 | 230,149,877.80 |
| 2. Employee welfare | 6,468,163.00 | 9,972,320.26 | 16,440,483.26 | 0.00 |
| 3. Social insurance | 233,210.91 | 27,163,747.13 | 27,393,663.48 | 3,294.56 |
~102~
| Item | Beginning balance | Increase | Decrease | Ending balance |
| Of which: Medical insurance premiums | 226,816.90 | 24,127,024.75 | 24,350,547.09 | 3,294.56 |
| Work-related injury insurance | 1,487.67 | 949,793.30 | 951,280.97 | 0.00 |
| Maternity insurance | 4,906.34 | 2,086,929.08 | 2,091,835.42 | 0.00 |
| 4. Housing fund | 2,867,327.46 | 30,502,119.49 | 29,425,126.35 | 3,944,320.60 |
| 5.Labor union budget and employee education budget | 75,723,700.70 | 10,996,593.06 | 10,320,450.83 | 76,399,842.93 |
| 6. Short-term paid absence | 0.00 | 0.00 | 0.00 | 0.00 |
| 7. Short-term profits sharing plan | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 456,935,872.94 | 787,677,386.74 | 934,115,923.79 | 310,497,335.89 |
(3) List of Drawing Scheme
| Item | Beginning balance | Increase | Decrease | Ending balance |
| 1. Basic pension benefits | 347,894.88 | 66,950,290.72 | 66,948,872.26 | 349,313.34 |
| 2. Unemployment insurance | 15,708.61 | 2,491,861.96 | 2,507,570.57 | 0.00 |
| Total | 363,603.49 | 69,442,152.68 | 69,456,442.83 | 349,313.34 |
23. Taxes Payable
| Item | Ending balance | Beginning balance |
| VAT | 89,384,986.50 | 162,028,367.23 |
| Consumption tax | 113,591,123.33 | 99,133,181.43 |
| Corporate income tax | 139,532,581.81 | 75,107,410.70 |
| Personal income tax | 1,564,596.45 | 1,307,281.11 |
| Urban maintenance and construction tax | 10,863,973.17 | 13,142,342.60 |
| Stamp tax | 746,938.60 | 549,270.06 |
| Education Surcharge | 10,275,939.43 | 12,301,477.16 |
| Others | 2,783,142.76 | 9,424,293.89 |
| Total | 368,743,282.05 | 372,993,624.18 |
24. Other Accounts Payable
| Nature | Ending balance | Beginning balance |
~103~
| Nature | Ending balance | Beginning balance |
| Interest payable | 0.00 | 0.00 |
| Dividend payable | 0.00 | 0.00 |
| Other accounts payable | 1,337,734,331.13 | 1,192,020,147.82 |
| Total | 1,337,734,331.13 | 1,192,020,147.82 |
(1) Other Accounts Payable
① Listed by Account Nature
| Nature | Ending balance | Beginning balance |
| Margin and cash pledge | 1,211,205,092.51 | 1,064,059,562.95 |
| Business travel charges advance | 72,197.21 | 145,447.82 |
| Quality guarantee deposit | 33,390,136.01 | 14,693,150.14 |
| Housing deduction | 3,944,320.60 | 2,867,327.46 |
| Unsettled sales discount | 18,404,995.42 | 30,212,626.88 |
| Others | 70,717,589.38 | 80,042,032.57 |
| Total | 1,337,734,331.13 | 1,192,020,147.82 |
② Significant Accounts Payable Aging over One Year
There is no significant account payable aging over one year at the end of period.
25. Other Current Liabilities
| Item | Ending balance | Beginning balance |
| Accrued expenses | 443,198,383.65 | 295,164,745.44 |
| Total | 443,198,383.65 | 295,164,745.44 |
26. Deferred Revenue
| Item | Beginning balance | Increase | Decrease | Ending balance | Formed reason |
| Government subsidies | 76,636,500.55 | 113,800.00 | 2,450,178.09 | 74,300,122.46 | Related to assets |
| Total | 76,636,500.55 | 113,800.00 | 2,450,178.09 | 74,300,122.46 | -- |
Of which, items involved in government subsidies:
| Item | Beginning balance | Newly-increased amount of subsidy | Recorded into non-operating revenue | Recorded into other income | Other changes | Ending balance | Related to assets/related to income |
~104~
| Item | Beginning balance | Newly-increased amount of subsidy | Recorded into non-operating revenue | Recorded into other income | Other changes | Ending balance | Related to assets/related to income |
| Technical reform of wine production system | 255,208.43 | 0.00 | 0.00 | 31,249.98 | 0.00 | 223,958.45 | Related to the assets |
| Instruments subsidies | 992,250.00 | 0.00 | 0.00 | 110,250.00 | 0.00 | 882,000.00 | Related to the assets |
| Intelligent solid brewing technology innovation project | 151,041.57 | 0.00 | 0.00 | 15,625.02 | 0.00 | 135,416.55 | Related to the assets |
| Anhui service industry development guide fund | 1,087,805.00 | 0.00 | 0.00 | 146,341.44 | 0.00 | 941,463.56 | Related to the assets |
| Anhui innovative province construction independent innovation ability construction subsidy | 2,678,665.00 | 0.00 | 0.00 | 365,272.50 | 0.00 | 2,313,392.50 | Related to the assets |
| Energy-saving and reform project of coal-fired industry boiler and glass furnace | 12,750.00 | 0.00 | 0.00 | 12,750.00 | 0.00 | 0.00 | Related to the assets |
| Bozhou city logistics center project | 60,000.00 | 0.00 | 0.00 | 30,000.00 | 0.00 | 30,000.00 | Related to the assets |
| Equipment subsidy | 1,252,062.37 | 0.00 | 0.00 | 101,399.82 | 0.00 | 1,150,662.55 | Related to the assets |
| Financial subsidy for technology innovation | 415,930.90 | 0.00 | 0.00 | 267,110.76 | 0.00 | 148,820.14 | Related to the assets |
| Special fund to enterprise development | 52,500.00 | 0.00 | 0.00 | 15,000.00 | 0.00 | 37,500.00 | Related to the assets |
| Iot traceability system project | 2,970,000.00 | 0.00 | 0.00 | 556,875.00 | 0.00 | 2,413,125.00 | Related to assets |
| Infrastructure subsidies of Suizhou new factory | 35,338,000.00 | 0.00 | 0.00 | 0.00 | 0.00 | 35,338,000.00 | Related to assets |
| Motor and boiler energy-saving reform project | 412,500.20 | 0.00 | 0.00 | 68,749.98 | 0.00 | 343,750.22 | Related to assets |
| Automated storage hook and | 359,375.00 | 0.00 | 0.00 | 46,875.00 | 0.00 | 312,500.00 | Related to assets |
~105~
| Item | Beginning balance | Newly-increased amount of subsidy | Recorded into non-operating revenue | Recorded into other income | Other changes | Ending balance | Related to assets/related to income |
| product quality online monitoring | |||||||
| Research fund on smart Koji-making technology | 886,200.00 | 113,800.00 | 0.00 | 0.00 | 0.00 | 1,000,000.00 | Related to assets |
| Renovation of Gujing Zhangji Spirit Room | 882,708.39 | 0.00 | 0.00 | 23,749.98 | 0.00 | 858,958.41 | Related to assets |
| Food security enhancement project | 827,586.25 | 0.00 | 0.00 | 68,965.50 | 0.00 | 758,620.75 | Related to assets |
| Key technical cooperation on isotopic authenticity of important food | 600,000.00 | 0.00 | 0.00 | 0.00 | 0.00 | 600,000.00 | Related to assets |
| Comprehensive subsidies for air pollution prevention | 2,608,083.33 | 0.00 | 0.00 | 131,500.02 | 0.00 | 2,476,583.31 | Related to assets |
| Fund of strategic emerging industries cluster development foundation | 1,020,800.00 | 0.00 | 0.00 | 111,360.00 | 0.00 | 909,440.00 | Related to assets |
| Land refund | 23,113,034.11 | 0.00 | 0.00 | 275,103.09 | 0.00 | 22,837,931.02 | Related to assets |
| Special fund to power demand side management | 660,000.00 | 0.00 | 0.00 | 72,000.00 | 0.00 | 588,000.00 | Related to assets |
| Total | 76,636,500.55 | 113,800.00 | 0.00 | 2,450,178.09 | 0.00 | 74,300,122.46 | -- |
27. Share Capital
| Item | Beginning balance | Increase/decrease in Reporting Period (+/-) | Ending balance | ||||
| Newly issue share | Bonus shares | Bonus issue from profit | Others | Subtotal | |||
| The sum of shares | 503,600,000.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 503,600,000.00 |
28. Capital Reserves
| Item | Beginning balance | Increase | Decrease | Ending balance |
| Capital premium | 1,262,552,456.05 | 0.00 | 0.00 | 1,262,552,456.05 |
~106~
| Item | Beginning balance | Increase | Decrease | Ending balance |
| Other capital reserves | 32,853,136.20 | 0.00 | 0.00 | 32,853,136.20 |
| Total | 1,295,405,592.25 | 0.00 | 0.00 | 1,295,405,592.25 |
29. Surplus Reserves
| Item | Beginning balance | Increase | Decrease | Ending balance |
| Statutory surplus reserves | 256,902,260.27 | 0.00 | 0.00 | 256,902,260.27 |
| Total | 256,902,260.27 | 0.00 | 0.00 | 256,902,260.27 |
Notes: Based on the regulations of the Corporation Law and Article of Association, the Company shouldwithdraw 10% of the statutory surplus reserves according to the net profits. If the accumulated amount of thestatutory surplus reserves exceeded the 50% of the registered capital, the Company could no more withdraw.
30. Retained Profits
| Item | Reporting Period | Same period of last year |
| Beginning balance of retained profits before adjustments | 5,541,281,341.47 | 4,349,649,698.42 |
| Total beginning balance of retained profits before adjustments (Increase+, decrease-) | 4,794,830.59 | 0.00 |
| Beginning balance of retained profits after adjustments | 5,546,076,172.06 | 4,349,649,698.42 |
| Add: Net profit attributable to owners of the Company | 1,248,316,314.01 | 1,695,231,643.05 |
| Less: Withdrawal of statutory surplus reserves | 0.00 | 0.00 |
| Withdrawal of discretional surplus reserves | 0.00 | 0.00 |
| Withdrawal of generic risk reserve | 0.00 | 0.00 |
| Dividend of common stock payable | 755,400,000.00 | 503,600,000.00 |
| Dividend of common stock transfer into share capital | 0.00 | 0.00 |
| Ending retained profits | 6,038,992,486.07 | 5,541,281,341.47 |
31. Operating Revenues and Costs
| Item | Reporting Period | Same period of last year | ||
| Sales revenue | Cost of sales | Sales revenue | Cost of sales | |
| Main operations | 5,958,624,293.86 | 1,380,565,871.04 | 4,761,127,411.98 | 1,030,168,914.20 |
| Other operations | 29,488,705.23 | 13,590,863.51 | 21,956,483.35 | 12,506,554.04 |
| Total | 5,988,112,999.09 | 1,394,156,734.55 | 4,783,083,895.33 | 1,042,675,468.24 |
~107~
32. Business Taxes and Surcharges
| Item | Reporting Period | Same period of last year |
| Consumption tax | 711,806,689.93 | 563,325,650.24 |
| Urban maintenance, construction tax and educational surcharge | 138,007,221.23 | 142,213,013.80 |
| Urban land use tax | 3,447,726.79 | 6,015,282.37 |
| Real estate tax | 4,547,732.36 | 8,375,687.33 |
| Stamp duty | 5,043,756.63 | 3,804,040.42 |
| Others | 6,674,635.10 | 5,733,499.37 |
| Total | 869,527,762.04 | 729,467,173.53 |
Note: The measurement standards of business tax and surcharges see Notes V. Taxation.
33. Sales Expenses
| Item | Reporting Period | Same period of last year |
| Employee’s remuneration | 197,359,561.67 | 136,422,226.05 |
| Business travel charges | 60,001,666.01 | 46,668,654.04 |
| Advertising expense | 442,193,538.62 | 340,669,501.89 |
| Transport fees | 27,580,054.90 | 26,869,004.77 |
| Comprehensive promotion fees | 787,961,795.81 | 815,172,181.29 |
| Labor cost | 281,570,342.23 | 194,269,250.64 |
| Other sales expenses | 43,822,480.46 | 37,229,496.49 |
| Total | 1,840,489,439.70 | 1,597,300,315.17 |
34. Administration Expenses
| Item | Reporting Period | Same period of last year |
| Employee’s remuneration | 180,945,738.54 | 156,429,758.02 |
| Office expenses | 17,415,335.29 | 15,386,308.57 |
| Repair charge | 17,708,807.57 | 30,444,032.33 |
| Depreciation charge | 30,873,944.56 | 29,064,059.09 |
| Amortization of intangible assets | 9,656,033.10 | 8,489,059.99 |
| Sewage charge | 9,730,796.01 | 6,066,176.72 |
~108~
| Item | Reporting Period | Same period of last year |
| Business travel charges | 1,375,252.69 | 1,093,709.89 |
| Water & electricity fees | 6,162,660.18 | 5,668,025.21 |
| Others | 28,176,889.19 | 19,832,073.54 |
| Total | 302,045,457.13 | 272,473,203.36 |
35. R&D Expenses
| Item | Reporting Period | Same period of last year |
| Employee’s remuneration | 8,702,736.52 | 4,225,844.44 |
| Direct input expense | 1,225,388.53 | 665,769.98 |
| Depreciation expense | 1,633,752.38 | 1,071,724.10 |
| Other related expense | 3,102,360.24 | 2,063,795.84 |
| Total | 14,664,237.67 | 8,027,134.36 |
36. Financial Expenses
| Item | Reporting Period | Same period of last year |
| Interest expenses | 14,173,972.09 | 0.00 |
| Less: Interest income | 20,466,649.02 | 21,644,883.48 |
| Exchange gains and losses | 1,577,281.36 | 608,331.71 |
| Others | 412,770.27 | 751,645.22 |
| Total | -4,302,625.30 | -20,284,906.55 |
Note: The interest expenses in the Reporting period are the discount interest of bank acceptance bills.
37. Asset Impairment Loss
| Item | Reporting Period | Same period of last year |
| Bad debt loss | -476,569.40 | 105,638.14 |
| Inventory falling price loss | -5,945,248.67 | -1,277,549.50 |
| Total | -6,421,818.07 | -1,171,911.36 |
38. Gain on Changes in Fair Value
| Sources | Reporting Period | Same period of last year |
| Trading financial assets | 11,320,345.56 | 236,707.77 |
| Of which: gains on changes in fair value of derivative financial assets | 0.00 | 0.00 |
~109~
| Sources | Reporting Period | Same period of last year |
| Total | 11,320,345.56 | 236,707.77 |
39. Investment Income
| Item | Reporting Period | Same period of last year |
| Long-term equity investment income accounted by equity method | -164,994.19 | 0.00 |
| Investment income from disposal of long-term equity investment | ||
| Investment income from holding of trading financial assets | ||
| Investment income from disposal of trading financial assets | 0.00 | 1,271,471.00 |
| Dividend income from holding of other equity instrument investment | ||
| Investment income from holding of held-to-maturity investment | 0.00 | 0.00 |
| Investment income from holding of available-for-dale financial assets | 0.00 | 50,743,630.89 |
| Investment income from disposal of available-for-sale financial assets | 0.00 | 10,999,123.54 |
| Investment income from disposal of held-to-maturity investment | ||
| Income from remeasurement of residual stock rights at fair value after losing control power | ||
| Interest income from holding of creditors’ investment | ||
| Interest income from holding of other creditors’ investment | ||
| Interest income from disposal of other creditors’ investment | ||
| Other investment income | 77,512,041.72 | 5,760,794.52 |
| Total | 77,347,047.53 | 68,775,019.95 |
40. Asset Disposal Income
| Item | Reporting Period | Same period of last year | Amount recorded in the current non-recurring profit or loss |
| Fixed assets disposal income | 119,488.56 | 154,437.81 | 119,488.56 |
~110~
| Item | Reporting Period | Same period of last year | Amount recorded in the current non-recurring profit or loss |
| Total | 119,488.56 | 154,437.81 | 119,488.56 |
41. Other Income
| Item | Reporting Period | Same period of last year | Amount recorded in the current non-recurring profit or loss |
| Tax rebates | 15,816,253.89 | 1,426,552.29 | 15,816,253.89 |
| Amortization of differed income | 2,450,178.09 | 2,566,383.76 | 2,450,178.09 |
| Government subsidy related to routine business activities | 12,517,486.70 | 494,100.00 | 12,517,486.70 |
| Total | 30,783,918.68 | 4,487,036.05 | 30,783,918.68 |
42. Non-operating Income
| Item | Reporting Period | Same period of last year | Amount recorded in the current non-recurring profit or loss |
| Gains from damage or scrap of non-current assets | 146,982.76 | 728,876.14 | 146,982.76 |
| Government subsidy unrelated to routine business activities | 20,000.00 | 221,000.00 | 20,000.00 |
| Income from penalty and compensations | 9,154,446.13 | 7,587,991.61 | 9,154,446.13 |
| Sales of scrap | 1,527,143.43 | 5,808,369.37 | 1,527,143.43 |
| Other | 302,191.21 | 412,560.64 | 302,191.21 |
| Total | 11,150,763.53 | 14,758,797.76 | 11,150,763.53 |
Government subsidies recorded into current profit or loss:
| Item | Reporting Period | Same period of last year | Related to the assets/related to income | ||||
| Recorded into non-operating income | Recorded into other income | Offset costs | Recorded into non-operating income | Recorded into other income | Offset costs | ||
| Other rewards | 20,000.00 | 0.00 | 0.00 | 21,000.00 | 0.00 | 0.00 | Related to income |
~111~
| Item | Reporting Period | Same period of last year | Related to the assets/related to income | ||||
| Recorded into non-operating income | Recorded into other income | Offset costs | Recorded into non-operating income | Recorded into other income | Offset costs | ||
| Reward of taxpayer in Xiannning high-tech zone | 0.00 | 0.00 | 0.00 | 100,000.00 | 0.00 | 0.00 | Related to income |
| Fund for postdoctoral innovation practice base | 0.00 | 0.00 | 0.00 | 100,000.00 | 0.00 | 0.00 | Related to income |
| Total | 20,000.00 | 0.00 | 0.00 | 221,000.00 | 0.00 | 0.00 | -- |
43. Non-operating Expense
| Item | Reporting Period | Same period of last year | Amount recorded in the current non-recurring profit or loss |
| Losses on damage or scrap of non-current assets | 576,926.25 | 4,303,286.91 | 576,926.25 |
| Other | 1,160,684.82 | 134,726.13 | 1,160,684.82 |
| Total | 1,737,611.07 | 4,438,013.04 | 1,737,611.07 |
44. Income Tax Expense
(1) List of Income Tax Expense
| Item | Reporting Period | Same period of last year |
| Current income tax expense | 479,158,161.69 | 452,080,424.72 |
| Deferred income tax expense | -60,012,757.38 | -131,290,509.48 |
| Total | 419,145,404.31 | 320,789,915.24 |
45. Cash Flow Statement
(1) Cash Generated from Other Operating Activities
| Item | Reporting Period | Same period of last year |
| Margin | 103,959,881.28 | 52,007,634.47 |
| Government subsidies | 11,786,600.00 | 615,100.00 |
| Interest income | 20,466,649.02 | 21,644,883.48 |
| Recovery of restricted monetary capital | 100,200,000.00 | 460,000,000.00 |
~112~
| Item | Reporting Period | Same period of last year |
| Other | 40,318,774.38 | 43,953,555.36 |
| Total | 276,731,904.68 | 578,221,173.31 |
(2) Cash Used in Other Operating Activities
| Item | Reporting Period | Same period of last year |
| Cash paid in selling expense and administrative expense | 657,188,029.24 | 526,682,839.55 |
| Pledged fixed term deposits used to issue notes payable or cash deposit of notes | 13,960,226.78 | 45,000,000.00 |
| Structural deposit not withdrawable in advance | 0.00 | 0.00 |
| Other | 25,350,534.61 | 49,502,450.93 |
| Total | 696,498,790.63 | 621,185,290.48 |
46. Supplemental Information for Cash Flow Statement
(1) Supplemental Information for Cash Flow Statement
| Supplemental information | Reporting Period | Same period of last year |
| 1. Reconciliation of net profit to net cash flows generated from operating activities | ||
| Net profit | 1,274,948,723.71 | 915,437,666.92 |
| Add: Provision for impairment of assets | 6,421,818.07 | 1,171,911.36 |
| Depreciation of fixed assets, oil-gas assets, and productive living assets | 102,076,795.33 | 96,520,768.95 |
| Amortization of investment property | 158,571.24 | 168,913.08 |
| Amortization of intangible assets | 12,195,535.21 | 8,489,059.99 |
| Amortization of long-term prepaid expenses | 13,486,720.57 | 10,844,242.64 |
| Losses on disposal of fixed assets, intangible assets and other long-lived assets (gains: negative) | -119,488.56 | 154,437.81 |
| Losses on scrap of fixed assets (gains: negative) | 429,943.49 | 3,574,410.77 |
| Losses from variation of fair value (gains: negative) | -11,320,345.56 | -236,707.77 |
| Finance costs (gains: negative) | 14,173,972.09 | 608,331.71 |
| Investment loss (gains: negative) | -77,347,047.53 | -68,775,019.95 |
| Decrease in deferred income tax assets (gains: negative) | -63,337,537.53 | -131,582,903.72 |
| Increase in deferred income tax liabilities (“-” means decrease) | 3,324,780.16 | 292,394.23 |
~113~
| Supplemental information | Reporting Period | Same period of last year |
| Decrease in inventory (gains: negative) | -14,040,094.66 | -77,733,707.57 |
| Decrease in accounts receivable generated from operating activities (gains: negative) | 146,484,134.95 | -1,205,967,657.32 |
| Increase in accounts payable used in operating activities (decrease: negative) | -463,552,554.06 | 708,414,366.71 |
| Amortization of deferred income | -2,450,178.09 | 2,566,383.76 |
| Certificate of deposit | 100,200,000.00 | 405,000,000.00 |
| Net cash generated from/used in operating activities | 1,041,733,748.83 | 668,946,891.61 |
| 2. Significant investing and financing activities without involvement of cash receipts and payments | ||
| Conversion of debt into capital | 0.00 | 0.00 |
| Convertible corporate bonds due within one year | 0.00 | 0.00 |
| Fixed assets under financing lease | 0.00 | 0.00 |
| 3. Net increase/decrease of cash and cash equivalents: | ||
| Ending balance of cash | 2,395,374,286.79 | 922,785,957.41 |
| Less: Beginning balance of cash | 835,560,865.12 | 1,024,088,626.40 |
| Add: Ending balance of cash equivalents | 0.00 | 0.00 |
| Less: Beginning balance of cash equivalents | 0.00 | 0.00 |
| Net increase in cash and cash equivalents | 1,559,813,421.67 | -101,302,668.99 |
(2) Cash and Cash Equivalent
| Item | Ending balance | Beginning balance |
| I. Cash | 2,395,374,286.79 | 835,560,865.12 |
| Of which: cash on hand | 374,122.81 | 353,429.67 |
| Bank deposits on demand | 2,394,869,696.55 | 835,175,643.46 |
| Other monetary funds on demand | 130,467.43 | 31,791.99 |
| II. Cash and cash equivalents | 0.00 | 0.00 |
| Of which: Bond investment due within three months | 0.00 | 0.00 |
| III. Ending balance of cash and cash equivalents | 2,395,374,286.79 | 835,560,865.12 |
(3) Non-cash Negotiability Amount of Trade Bills
~114~
| Item | Reporting Period |
| Negotiability amount of trade bills | 639,142,983.76 |
| Of which: Payment for goods | 630,885,014.82 |
| Purchase of fixed assets and other long-term assets | 8,257,968.94 |
47. Assets with Restricted Ownership or Use Right
| Item | Ending carrying value | Restriction reason |
| Other monetary capital | 770,000,000.00 | Structural deposit not withdrawable in advance, due within 3 months |
| Notes receivable | 159,686,231.66 | Pledge for issuing bank acceptance bill |
| Other monetary capital | 13,960,226.78 | Bill deposit |
| Total | 943,646,458.44 | -- |
48. Government Subsidy
(1) Information of Government Subsidy
| Category | Amount | Presented item | Amount recorded into current profit or loss |
| Tax rebates | 15,816,253.89 | Other income | 15,816,253.89 |
| Project fund of 2018 manufacturing industry province | 9,180,000.00 | Other income | 9,180,000.00 |
| Reward of demonstration enterprise in national intellectual property | 1,200,000.00 | Other income | 1,200,000.00 |
| Subsidy for stabilizing posts of unemployment insurance fund | 2,000.00 | Other income | 2,000.00 |
| Subsidy of Bureau of Science and Technology of Xianning | 50,000.00 | Other income | 50,000.00 |
| Subsidy for special workstation of Bureau of Science and Technology of Wuhan | 200,000.00 | Other income | 200,000.00 |
| Fund for industrial enterprise technology project in Xianning high-tech zone | 200,000.00 | Other income | 200,000.00 |
| Reward of Bureau of Science and Technology of Bozhou | 50,000.00 | Other income | 50,000.00 |
| Fund for robot project of Economy and Information Technology Committee | 300,000.00 | Other income | 300,000.00 |
| Research fund on smart Koji-making technology | 113,800.00 | Deferred income | 0.00 |
~115~
| Category | Amount | Presented item | Amount recorded into current profit or loss |
| Other rewards | 470,800.00 | Other income | 470,800.00 |
| Additional deduction of VAT | 864,686.70 | Other income | 864,686.70 |
| Other rewards | 20,000.00 | Non-operating income | 20,000.00 |
| Total | 28,467,540.59 | -- | 28,353,740.59 |
(2) The Return of Government Subsidy in the Reporting Period
There is no return of government subsidy in the Reporting Period.VII. Changes of Consolidation ScopeThe subsidiary, Hubei Yellow Crane Tower Beverage Co., Ltd. is newly established in the Reporting Period.VIII. Equity in Other Entities
1. Equity in Subsidiary
(1) Subsidiaries
| Name | Main operating place | Registration place | Nature of business | Holding percentage (%) | Way of gaining | |
| Directly | Indirectly | |||||
| Bozhou Gujing Sales Co., Ltd. | Bozhou, Anhui | Bozhou, Anhui | Business trading | 100.00 | Investment | |
| Anhui Longrui Glass Co., Ltd. | Bozhou, Anhui | Bozhou, Anhui | Production | 100.00 | Investment | |
| Bozhou Gujing Waste Reclamation Co., Ltd. | Bozhou, Anhui | Bozhou, Anhui | Waste cycled | 100.00 | Investment | |
| Anhui Jinyunlai Culture & Media Co., Ltd. | Hefei Anhui | Hefei Anhui | Ads marketing | 100.00 | Investment | |
| Anhui Swisse Will Science & Technology Co., Ltd. | Bozhou, Anhui | Bozhou, Anhui | Technology research | 100.00 | Investment | |
| Anhui Subway Cordial Wine Co., Ltd. | Bozhou, Anhui | Bozhou, Anhui | Production | 100.00 | Investment | |
| Shanghai Gujing Jinhao Hotel Management Co., Ltd. | Shanghai | Shanghai | Hotel management | 100.00 | Business combination under the same control | |
~116~
| Name | Main operating place | Registration place | Nature of business | Holding percentage (%) | Way of gaining | |
| Directly | Indirectly | |||||
| Bozhou Gujing Hotel Co., Ltd. | Bozhou, Anhui | Bozhou, Anhui | Hotel operating | 100.00 | Business combination under the same control | |
| Anhui Yuanqing Environmental Co. , Ltd. | Bozhou, Anhui | Bozhou, Anhui | Sewage Treatment | 100.00 | Investment | |
| Anhui Gujing Cloud E-commerce Co., Ltd. | Hefei, Anhui | Hefei, Anhui | E-commerce | 100.00 | Investment | |
| Anhui Zhenrui Construction Engineering Co., Ltd. | Bozhou, Anhui | Bozhou, Anhui | Engineering construction | 100.00 | Investment | |
| Anhui RunAnXinKe Testing Technology Co., Ltd | Bozhou, Anhui | Bozhou, Anhui | Food detection | 100.00 | Investment | |
| Wuhan Pride Yellow Crane Tower Distillery Co., Ltd. | Wuhan, Hubei | Wuhan, Hubei | Production | 51.00 | Business combination not under the same control | |
| Pride Yellow Crane Tower Distillery (Xianning) Co., Ltd. | Xianning, Hubei | Xianning, Hubei | Production | 51.00 | Business combination not under the same control | |
| Hubei Yellow Crane Tower Distillery Co., Ltd. | Suizhou, Hubei | Suizhou, Hubei | Production | 51.00 | Business combination not under the same control | |
| Tian Long Jin Di (Wuhan) Co., Ltd. | Wuhan, Hubei | Wuhan, Hubei | Commercial trade | 51.00 | Business combination not under the same control | |
| Xianning Junhe Sales Co., Ltd. | Xianning, Hubei | Xianning, Hubei | Commercial trade | 51.00 | Business combination not under the same control | |
| Hubei Junhe Advertising Co., Ltd. | Wuhan, Hubei | Wuhan, Hubei | Ads marketing | 51.00 | Business combination not under the same control | |
| Wuhan Junya Shibo Technology Co., | Wuhan, | Wuhan, Hubei | Technology | 51.00 | Investment | |
~117~
| Name | Main operating place | Registration place | Nature of business | Holding percentage (%) | Way of gaining | |
| Directly | Indirectly | |||||
| Ltd. | Hubei | development | ||||
| Wuhan Junya Sales Co., Ltd. | Wuhan, Hubei | Wuhan, Hubei | Commercial trade | 51.00 | Investment | |
| Suizhou Junhe Trading Co., Ltd. | Suizhou, Hubei | Suizhou, Hubei | Business trading | 51.00 | Investment | |
| Hubei Yellow Crane Tower Beverage Co., Ltd. | Xianning, Hubei | Xianning, Hubei | Business trading | 51.00 | Investment | |
Note: Hubei Yellow Crane Tower Beverage Co., Ltd. is set up in March 2019.The Composition of the Company
(2) Significant Not Wholly-owned Subsidiary
| Name | Shareholding proportion of non-controlling interests | The profit or loss attributable to non-controlling interests | Declaring dividends distributed to non-controlling interests | Ending balance of non-controlling interests |
| Wuhan Pride Yellow Crane Tower Distillery Co., Ltd. | 49.00 | 26,632,409.70 | 0.00 | 454,398,502.52 |
(3) The Main Financial Information of Significant Not Wholly-owned Subsidiary
| Name | Ending balance | |||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liability | Total liabilities | |
| Wuhan Pride Yellow Crane Tower Distillery Co., Ltd | 647,335,956.02 | 713,870,487.69 | 1,361,206,443.71 | 300,618,523.68 | 133,244,037.34 | 433,862,561.02 |
(Continued 1)
| Name | Beginning balance | |||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liability | Total liabilities | |
| Wuhan Pride Yellow Crane Tower Distillery | 587,458,925.80 | 731,191,284.72 | 1,318,650,210.52 | 311,342,786.19 | 134,315,398.16 | 445,658,184.35 |
~118~
| Name | Beginning balance | |||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liability | Total liabilities | |
| Co., Ltd | ||||||
(Continued 2)
| Name | Reporting Period | Same period of last year | ||||||
| Operating revenue | Net profit | Total comprehensive income | Cash flows from operating activities | Operating revenue | Net profit | Total comprehensive income | Cash flows from operating activities | |
| Wuhan Pride Yellow Crane Tower Distillery Co., Ltd. | 457,947,025.03 | 54,351,856.52 | 54,351,856.52 | 39,866,055.42 | 429,495,365.21 | 46,956,428.75 | 46,956,428.75 | 73,102,943.91 |
IX. The Risk Related to Financial Instruments
The main financial instruments of the Company are equity investment, financial product, trust investment,accounts receivable and accounts payable, etc, the specific explanation of each financial instrument are inrelevant item of Note VI. Risk related to these financial instruments and the risk management policies theCompany adopted to reduce the risk is as follows: the management of the Company monitors and manages therisk exposure to ensure the aforesaid risk within the limit scope of control.(I) Risk Management Objectives and PoliciesThe goals of the Company is to maintain a proper balance between the risk and the income, reduce thenegative influence of risk to the operation performance of the Company to a minimum, and maximize profitsof shareholders and other equity investors, basing on the risk management goal, the Company basis policiesare to recognize and analyze each risk the Company faced, establish proper risk bottom line and conduct riskmanagement, timely and reliably supervise each risk, control the risks within the limit scope .
1. Market Risk
(1) Foreign Exchange Risk
Foreign exchange risk is referred to the risk incurred due to loss of changes in exchange rate. Foreignexchange risk is referred to the risk of loss from the change of exchange rate. The main operation of theCompany is within the territory of China, mainly settled by RMB, only small amount of export business and
~119~
the influence of the proportion in the total income is rather small; the exchange rate risk is very little.
(2) Interest Rate Risk- Cash Flow Change Risk
The operation capital of the Company is sufficient, there is no external borrowing in the Company; the interestrate risk is very little.
(3) Other Price Risk
What the Company held are classified as available-for-sale financial assets and trading financial assetsmeasured at fair value on balance sheet date. Thus, the Company bares the risk change of securities market.The Company adopts variety of equity group to reduce the price risk in equity security investment.
2. Credit Risk
On 30 June 2019, the largest credit risk exposure what may lead to the financial losses was the other party ofthe contract failed to fulfill the obligations and causes loss of the Company’s financial assets and financialguarantee, which including: carrying value of financial assets recognized in consolidated balance sheet; as forthe financial instruments measured at fair value, the carrying value reflects its risk exposure, but not thelargest one, the largest risk exposure will change when the future fair value changes.The Company only trade with the third party authorized with good credit and large scale. In line with thepolicies of the Company and the items of sale contracts, the Company gives priority to first payment shipment,only small amount of credit transactions and examines and verifies the credit of the client who trading with bycredit way.The Company’s working capital was in bank with higher credit rating, so credit risk of working capital waslow.
3. Liquidity RiskWhen managing liquidity risk, the Company maintained the management’s believe that supervising thesufficient cash and cash equivalents to meet the operating demand of the Company and reduce the influence ofthe fluctuation of cash flow.
X. The Disclosure of Fair Value
1. Ending Fair Value of Assets and Liabilities at Fair Value
| Item | Ending fair value | |||
| Fair value measurement items at level 1 | Fair value measurement items at level 2 | Fair value measurement items at level 3 | Total | |
| I. Consistent fair value measurement | ||||
| (I) Trading financial assets | 1,573,596,291.10 | 1,573,596,291.10 | ||
| 1. Financial assets at fair value through profit or loss | ||||
~120~
| Item | Ending fair value | |||
| Fair value measurement items at level 1 | Fair value measurement items at level 2 | Fair value measurement items at level 3 | Total | |
| (1) Debt instrument investment | 1,356,000,000.00 | 1,356,000,000.00 | ||
| (2) Equity instrument investment | 217,596,291.10 | 217,596,291.10 | ||
| (3) Derivative financial assets | ||||
| Total assets consistently measured at fair value | 1,573,596,291.10 | 1,573,596,291.10 | ||
2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measurement Items atLevel 1The consistent fair value measurement items were the share public trade on Shanghai Stock Exchange orShenzhen Stock Exchange, the market price recognition basis was the closing price of the share on balancesheet date. When the shares held were in the restricted period, the price shall be determined according to therelevant valuation methods mentioned in SFC [2007] No. 21.XI. Connected Party and Connected Transaction
1. Information Related to the Company as the Parent of the Company
| Name | Registration place | Nature of business | Registered capital | Proportion of share held by the Company as the parent against the Company (%) | Proportion of voting rights owned by the Company as the parent against the Company (%) |
| Anhui Gujing Group Co., Ltd. | Anhui | Beverage, Construction materials, and plastic productions manufacture | 1,000,000,000.00 | 53.89 | 53.89 |
Notes: The finial controller of the Company was State-owned Assets Supervision Commission of People’sGovernment of Bozhou, Anhui
2. Subsidiaries of the Company
Refer to Note VIII-1. Equity in Subsidiaries.
3. Information on Other Connected Parties
| Name | Relationship |
| Anhui Ruifuxiang Food Co., Ltd | Affiliated enterprise of controlling shareholder and actual controller |
| Anhui Ruijing Restaurant Management Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
~121~
| Name | Relationship |
| Anhui Haochidian Catering Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Shanghai Ruiyao Hotel Management Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Shanghai Beihai Restaurant Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Anhui Ruijing Trade Travel (Group) Co., Ltd | Affiliated enterprise of controlling shareholder and actual controller |
| Bozhou Hotel Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Anhui Gujing Real Estates Group Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| East Ruijing Enterprise Investment Development Co., Ltd | Affiliated enterprise of controlling shareholder and actual controller |
| Anhui Hengxin Pawn Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Bozhou Ruineng Thermoelectricity Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Holiday Inn Hefei | Affiliated enterprise of controlling shareholder and actual controller |
| Bozhou Rufuxiang High-protein Feed Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Anhui Gujing Hotel Development Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Anhui Ruixin Pawn Co., Ltd | Affiliated enterprise of controlling shareholder and actual controller |
| Anhui Zhongxin Financial Leasing Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Anhui Huixin Finance Investment Group Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Hefei Longxin Financial Management Consulting Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Bozhou Anxin Microcredit Co., Ltd | Affiliated enterprise of controlling shareholder and actual controller |
| Large Central Plain Wine Valley Culture Tourism Development Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Anhui Xinyuan Government Landscape Engineering Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Anhui Lvyuan Ecological Agriculture Development Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Bozhou Gujing Hotel Co., Ltd | Affiliated enterprise of controlling shareholder and actual controller |
| Anhui Youxin Financing Guarantee Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Anhui Aoxin Real Estate Development Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Anhui Lixin E-Commerce Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
~122~
| Name | Relationship |
| Anhui Xinxin Property Management Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Bozhou Huisheng Building Catering Company | Affiliated enterprise of controlling shareholder and actual controller |
| Bozhou Gujing Junlai Hotel Management Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Bozhou Gujing Real Estates Management Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Bozhou Gujing Real Estates Development Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Anhui Gujing International Travel Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Anhui Jinzhai Gujing Real Estate Development Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Anhui Gujing Health Industry Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Anhui Lejiu Home Tourism Management Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Anhui Shenglong Trading Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
| Anhui Gujing International Development Co., Ltd. | Affiliated enterprise of controlling shareholder and actual controller |
4. List of Connected Transactions
(1) Information on Acquisition of Goods and Reception of Labor Service
① Information on Acquisition of Goods and Reception of Labor Service
| Connected party | Content | Reporting Period | Same period of last year |
| Anhui Gujing International Travel Co., Ltd. | Accepting labor service | 786,329.00 | 38,228.00 |
| Anhui Gujing Health Industry Co., Ltd. | Purchase of materials | 19,433.63 | 0.00 |
| Anhui Gujing Hotel Development Co., Ltd. | Accepting labor service | 31.51 | 156.04 |
| Anhui Gujing Hotel Development Co., Ltd. | Accepting food and accommodation services | 16,766.00 | 4,819.00 |
| Anhui Haochidian Catering Co., Ltd. | Purchase of materials | 245,594.50 | 0.00 |
| Anhui Haochidian Catering Co., Ltd. | Accepting food and accommodation services | 34,440.00 | 30,300.00 |
| Anhui Huixin Finance Investment Group Co., Ltd. | Accepting labor service | 55,722.40 | 134,803.75 |
| Anhui Lvyuan Ecological Agriculture Development Co., Ltd. | Accepting labor service | 25,821.13 | 0.00 |
| Anhui Lvyuan Ecological Agriculture Development Co., Ltd. | Afforestation fees | 404,865.62 | 0.00 |
| Anhui Ruijing Restaurant Management Co., | Accepting food and | 33,725.00 | 23,043.00 |
~123~
| Connected party | Content | Reporting Period | Same period of last year |
| Ltd. | accommodation services | ||
| Anhui Xinyuan Government Landscape Engineering Co., Ltd. | Afforestation fees | 31,849.06 | 482,050.39 |
| Beijing Anhui Building | Accepting food and accommodation services | 1,285.00 | 0.00 |
| Bozhou Hotel Co., Ltd. | Accepting food and accommodation services | 3,257,170.88 | 1,859,506.20 |
| Bozhou Huisheng Building Catering Company | Accepting food and accommodation services | 2,695,540.00 | 1,349,445.00 |
| Bozhou Gujing Junlai Hotel Management Co., Ltd. | Accepting food and accommodation services | 234,710.54 | 259,021.00 |
| Holiday Inn Hefei | Purchase of materials | 387,017.20 | 132,717.52 |
| Holiday Inn Hefei | Accepting food and accommodation services | 14,865.26 | 41,549.36 |
| Anhui Ruijing Trade Travel (Group) Co., Ltd | Purchase of materials | 3,076,852.09 | 0.00 |
| Anhui Gujing Group Co., Ltd. | Accepting labor service | 63,716.81 | 0.00 |
| Total | -- | 11,385,735.63 | 4,355,639.26 |
② Information of Sales of Goods and Provision of Labor Service
| Connected party | Content | Reporting Period | Same period of last year |
| Anhui Aoxin Real Estate Development Co., Ltd. | Sales of white spirit | 0.00 | 7,553.44 |
| Anhui Gujing Real Estates Group Co., Ltd. | Sales of white spirit | 0.00 | 531,449.33 |
| Anhui Gujing International Travel Co., Ltd. | Providing catering and accommodation services | 206.00 | 46,824.00 |
| Anhui Gujing International Travel Co., Ltd. | Sales of white spirit | 389.36 | 0.00 |
| Anhui Gujing International Travel Co., Ltd. | Sales of small sized materials | 404.78 | 470.95 |
| Anhui Gujing Group Co., Ltd. | Providing catering and | 87,090.19 | 124,239.79 |
~124~
| Connected party | Content | Reporting Period | Same period of last year |
| accommodation services | |||
| Anhui Gujing Group Co., Ltd. | Sales of small sized materials | 63,778.94 | 19,624.03 |
| Anhui Gujing Health Industry Co., Ltd. | Providing catering and accommodation services | 29,059.00 | 0.00 |
| Anhui Gujing Health Industry Co., Ltd. | Providing labor service | 501,596.23 | 0.00 |
| Anhui Gujing Health Industry Co., Ltd. | Sales of white spirit | 5,473,459.08 | 3,103.45 |
| Anhui Gujing Health Industry Co., Ltd. | Sales of small sized materials | 3,136.93 | 10,061.26 |
| Anhui Gujing Hotel Development Co., Ltd. | Sales of white spirit | 45,325.31 | 73,937.00 |
| Anhui Huixin Finance Investment Group Co., Ltd. | Sales of white spirit | 452,567.02 | 1,236,821.89 |
| Anhui Lejiu Home Tourism Management Co., Ltd. | Utilities | 179,311.29 | 0.00 |
| Anhui Lejiu Home Tourism Management Co., Ltd. | Sales of white spirit | 3,114.91 | 0.00 |
| Anhui Lejiu Home Tourism Management Co., Ltd. | Sales of small sized materials | 5,849.50 | 0.00 |
| Anhui Lixin E-Commerce Co., Ltd. | Sales of white spirit | 63,756.26 | 64,181.89 |
| Anhui Lvyuan Ecological Agriculture Development Co., Ltd | Sales of small sized materials | 3,724.33 | 0.00 |
| Anhui Xinyuan Government Landscape Engineering Co., Ltd. | Sales of small sized materials | 0.00 | 8,100.01 |
| Anhui Ruijing Trade Travel (Group) Co., Ltd. | Providing catering and accommodation services | 22,829.26 | 12,388.57 |
| Anhui Ruijing Trade Travel (Group) Co., Ltd. | Sales of white spirit | 2,979,148.41 | 5,718,162.07 |
| Anhui Ruixin Pawn Co., Ltd. | Sales of white | 2,731.85 | 9,755.53 |
~125~
| Connected party | Content | Reporting Period | Same period of last year |
| spirit | |||
| Anhui Shenglong Trading Co., Ltd. | Providing catering and accommodation services | 5,909.00 | 6,900.00 |
| Anhui Shenglong Trading Co., Ltd. | Sales of white spirit | 6,206.90 | 247,600.01 |
| Anhui Xinxin Property Management Co., Ltd. | Sales of white spirit | 0.00 | 23,587.69 |
| Anhui Youxin Financing Guarantee Co., Ltd. | Sales of white spirit | 2,203.45 | 4,374.98 |
| Anhui Zhongxin Finance Leasing Co., Ltd. | Sales of white spirit | 3,956.90 | 7,026.79 |
| Bozhou Anxin Small Loan Co., Ltd. | Sales of white spirit | 3,724.14 | 7,399.60 |
| Bozhou Hotel Co., Ltd. | Sales of white spirit | 17,379.31 | 47,383.29 |
| Bozhou Gujing Huishenglou Catering Co., Ltd. | Sales of white spirit | 17,767.24 | 34,082.23 |
| Bozhou Gujing Junlai Hotel Management Company | Sales of white spirit | 4,655.17 | 9,270.55 |
| Bozhou Ruifuxiang High Protein Feed Co., Ltd. | Sales of white spirit | 11,405.17 | 18,051.34 |
| Bozhou Ruinong Thermal Power Co., Ltd. | Sales of white spirit | 190,103.02 | 145,564.41 |
| Bozhou Gujing Hotel Co., Ltd. | Sales of white spirit | 0.00 | 9,363.27 |
| Large Central Plain Wine Valley Culture Tourism Development Co., Ltd. | Water and electricity | 36,105.11 | 39,974.95 |
| Large Central Plain Wine Valley Culture Tourism Development Co., Ltd. | Providing catering and accommodation services | 2,735.00 | 10,818.00 |
| Large Central Plain Wine Valley Culture Tourism Development Co., Ltd. | Providing | 15,665.68 | 15,057.68 |
~126~
| Connected party | Content | Reporting Period | Same period of last year |
| services | |||
| Large Central Plain Wine Valley Culture Tourism Development Co., Ltd. | Sales of white spirit | 902,976.02 | 1,135,798.58 |
| Large Central Plain Wine Valley Culture Tourism Development Co., Ltd. | Sales of small materials | 841.63 | 2,516.56 |
| Holiday Inn Hefei | Providing catering and accommodation services | 2,937.76 | 56,825.49 |
| Shanghai Beihai Restaurant Co., Ltd. | Sales of white spirit | 7,964.60 | 0.00 |
| Anhui Jinzhai Gujing Real Estate Development Co., Ltd. | Sales of white spirit | 0.00 | 95,255.39 |
| Anhui Gujing Real Estates Group Co., Ltd. | Providing services | 0.00 | 6,756.76 |
| Bozhou Ruineng Thermoelectricity Co., Ltd. | Providing services | 0.00 | 252,252.25 |
| Anhui Ruijing Trade Travel (Group) Co., Ltd. | Sales materials | 0.00 | 356.00 |
| Bozhou Rufuxiang High-protein Feed Co., Ltd. | Sales of white spirit | 0.00 | 331,900.64 |
| Anhui Hengxin Pawnbroking Co., Ltd. | Sales of white spirit | 0.00 | 3,683.59 |
| Anhui Haochidian Catering Co., Ltd. | Sales of white spirit | 0.00 | 25,571.62 |
| Hefei Longxin Financial Management Consulting Co., Ltd. | Sales of white spirit | 0.00 | 1,510.68 |
| Anhui Medieval Tourism Development Co., Ltd. | Sales of small materials | 0.00 | 120.85 |
| Anhui Medieval Tourism Development Co., Ltd. | Providing | 0.00 | 13,125.00 |
~127~
| Connected party | Content | Reporting Period | Same period of last year |
| catering and accommodation services | |||
| Bozhou Gujing Real Estate Development Co., Ltd. | Sales of white spirit | 0.00 | 11,475.45 |
| Bozhou Gujing Property Management Co., Ltd. | Sales of white spirit | 0.00 | 39,987.82 |
| Total | -- | 11,150,014.75 | 10,470,264.68 |
(2) Information on Connected Lease
The Company serves as the leasee
| Name of lessor | Category of leased assets | The lease income confirmed in the Reporting Period | The lease income confirmed in the Same period of last year |
| Anhui Gujing Group Co., Ltd. | Houses and buildings | 1,095,238.10 | 1,095,238.10 |
The Company serves as the lessor
| Name of lessee | Category of leased assets | The lease income confirmed in the Reporting Period | The lease income confirmed in the Same period of last year |
| Anhui Gujing Hotel Management Co., Ltd. | Houses and buildings | 689,124.81 | 246,190.48 |
5. Accounts Receivable and Payable of Connected Party
(1) Accounts Receivable
| Item | Ending balance | Beginning balance |
| Other accounts receivable: | ||
| Bozhou Ruineng Thermoelectricity Co., Ltd. | 14,521.45 | 14,521.45 |
| Anhui Gujing Real Estates Group Co., Ltd. | 0.00 | 25,342.50 |
| Total | 14,521.45 | 39,863.95 |
(2) Accounts Payable
| Item | Ending balance | Beginning balance |
| Advances from customers: | ||
| Anhui Ruijing Trade Travel (Group) Co., Ltd. | 1,866,176.31 | 4,085,856.31 |
~128~
| Item | Ending balance | Beginning balance |
| Large Central Plain Wine Valley Culture Tourism Development Co., Ltd. | 1,744,615.38 | 1,881,236.80 |
| Anhui Gujing Health Industry Co., Ltd. | 1,858,304.40 | 4,036,729.60 |
| Bozhou Ruineng Thermoelectricity Co., Ltd. | 0.00 | 43,200.00 |
| Anhui Shenglong Trading Co., Ltd. | 141,581.50 | 0.00 |
| Total | 5,610,677.59 | 10,047,022.71 |
| Other accounts payable: | ||
| Anhui Gujing Hotel Development Co., Ltd. | 50,000.00 | 50,000.00 |
| Large Central Plain Wine Valley Culture Tourism Development Co., Ltd. | 50,000.00 | 0.00 |
| Anhui Ruijing Trade Travel (Group) Co., Ltd. | 85,000.00 | 35,000.00 |
| Total | 185,000.00 | 85,000.00 |
XII. Commitments and Contingency
1. Significant Commitments
Operating Lease CommitmentsAs of the balance sheet date, the irrevocable operating lease contracts the Company signed were listed asfollows:
| Item | Ending balance | Beginning balance |
| Minimum lease payments of irrevocable operating lease | ||
| 1 year after balance date | 2,300,000.00 | 2,300,000.00 |
| 2 years after balance date | 2,300,000.00 | 2,300,000.00 |
| 3 years after balance date | 2,300,000.00 | 2,300,000.00 |
| Subsequent years | 18,208,333.33 | 19,358,333.33 |
| Total | 25,108,333.33 | 26,258,333.33 |
2. Contingency
(1) Due to the infringement behaviors on the Company’s trademark in the market, the Company filed lawsuits againstsuch infringement acts. Since the individual and overall amount of action was relatively small, the contingency isexpected to have no significant impacts on the Company.
(2) There was no other contingency of the Company other than the above-mentioned event.
~129~
XIII. Events after the Balance Sheet DateAs of 30 June 2019, there was no significant event of the Company after the balance sheet date.XIV. Other Significant EventsSegment InformationThere was no segment information based on operating segments to disclose, since the Company didn’t determineoperating segments in accordance with internal organizational structure, management requirements and internalreport systems.XV. Notes of Main Items in the Financial Statements of the Company
1. Accounts Receivable
(1) Accounts Receivable Disclosed by Category
| Category | Ending balance | ||||
| Carrying amount | Bad debt provision | Carrying value | |||
| Amount | Proportion (%) | Amount | Withdrawal proportion (%) | ||
| Accounts receivable with significant single amount for which bad debt provision separately accrued | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Accounts receivable withdrawal of bad debt provision of by credit risks characteristics: | 10,793,505.68 | 100.00 | 141,121.87 | 1.31 | 10,652,383.81 |
| Accounts receivable with insignificant single amount for which bad debt provision separately accrued | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 10,793,505.68 | 100.00 | 141,121.87 | 1.31 | 10,652,383.81 |
(Continued)
| Category | Beginning balance | ||||
| Carrying amount | Bad debt provision | Carrying value | |||
| Amount | Proportion (%) | Amount | Proportion (%) | ||
| Accounts receivable with significant single amount for which bad debt provision separately accrued | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Accounts receivable withdrawal of bad debt provision of by credit risks characteristics: | 9,527,072.41 | 100.00 | 141,121.87 | 1.48 | 9,385,950.54 |
| Accounts receivable with insignificant single amount for which bad debt | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
~130~
| Category | Beginning balance | ||||
| Carrying amount | Bad debt provision | Carrying value | |||
| Amount | Proportion (%) | Amount | Proportion (%) | ||
| provision separately accrued | |||||
| Total | 9,527,072.41 | 100.00 | 141,121.87 | 1.48 | 9,385,950.54 |
① In the groups, accounts receivable adopted aging analysis method to withdraw bad debt provision
| Aging | Ending balance | ||
| Accounts receivable | Bad debt provision | Withdrawal proportion (%) | |
| Within 1 year | 0.00 | 0.00 | 0.00 |
| [Of which: Within 6 months] | 0.00 | 0.00 | 0.00 |
| [7-12 months] | 0.00 | 0.00 | 0.00 |
| 1 to 2 years | 0.00 | 0.00 | 0.00 |
| 2 to 3 years | 0.00 | 0.00 | 0.00 |
| Over 3 years | 141,121.87 | 141,121.87 | 100.00 |
| Total | 141,121.87 | 141,121.87 | 100.00 |
② In the groups, accounts receivable adopted other methods to withdraw bad debt provision
| Name of the group | Ending balance | ||
| Accounts receivable | Bad debt provision | Withdrawal proportion (%) | |
| Connected group within the combination scope | 10,652,383.81 | 0.00 | 0.00 |
| Total | 10,652,383.81 | 0.00 | 0.00 |
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting PeriodThe amount of bad debt provision withdrawn during the Reporting Period was RMB 0.00.
(3) Particulars of Accounts Receivable with Actual Verification during the Reporting PeriodThe amount of accounts receivable actually verified during the Reporting Period was RMB 0.00.
(4) Top 5 Accounts Receivable in Ending Balance Collected according to the Arrears PartyTotal amount of the Top 5 accounts receivable in ending balance collected according to the arrears party wasRMB10,270,716.85, accounting for 95.16% of the total ending balance of accounts receivable, and the total ofending balance of bad debt provision withdrawn was RMB0.00.
~131~
2. Other Accounts Receivable
| Item | Ending balance | Beginning balance |
| Interest receivable | 0.00 | 0.00 |
| Dividend receivable | 0.00 | 0.00 |
| Other accounts receivable | 105,037,195.62 | 110,800,665.19 |
| Total | 105,037,195.62 | 110,800,665.19 |
(1) Other Accounts Receivable Disclosed by Category
| Category | Ending balance | ||||
| Carrying amount | Bad debt provision | Carrying value | |||
| Amount | Proportion (%) | Amount | Withdrawal proportion (%) | ||
| Other accounts receivable with significant single amount for which bad debt provision separately accrued | 40,850,949.35 | 27.82 | 40,850,949.35 | 100.00 | 0.00 |
| Other accounts receivable withdrawn bad debt provision according to credit risks characteristics | 106,003,851.26 | 72.18 | 966,655.64 | 0.91 | 105,037,195.62 |
| Other accounts receivable with insignificant single amount for which bad debt provision separately accrued | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 146,854,800.61 | 100.00 | 41,817,604.99 | 28.48 | 105,037,195.62 |
(Continued)
| Category | Beginning balance | ||||
| Carrying amount | Bad debt provision | Carrying value | |||
| Amount | Proportion (%) | Amount | Withdrawal proportion (%) | ||
| Other accounts receivable with significant single amount for which bad debt provision separately accrued | 40,850,949.35 | 26.80 | 40,850,949.35 | 100.00 | 0.00 |
| Other accounts receivable withdrawn bad debt provision according to credit risks characteristics | 111,581,253.05 | 73.20 | 780,587.86 | 0.70 | 110,800,665.19 |
| Other accounts receivable with insignificant | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
~132~
| Category | Beginning balance | ||||
| Carrying amount | Bad debt provision | Carrying value | |||
| Amount | Proportion (%) | Amount | Withdrawal proportion (%) | ||
| single amount for which bad debt provision separately accrued | |||||
| Total | 152,432,202.40 | 100.00 | 41,631,537.21 | 27.31 | 110,800,665.19 |
A. Other receivable with single significant amount for which bad debt provision separately accrued at the end
of the period
| Other accounts receivable (by unit) | Ending balance | |||
| Other accounts receivable | Bad debt provision | Withdrawal proportion (%) | Withdrawal reason | |
| Hengxin Securities | 29,010,449.35 | 29,010,449.35 | 100.00 | Under the bankruptcy liquidation |
| Jianqiao Securities | 11,840,500.00 | 11,840,500.00 | 100.00 | Under the bankruptcy liquidation |
| Total | 40,850,949.35 | 40,850,949.35 | -- | |
B. In the groups, other accounts receivable adopted aging analysis method to withdraw bad debt provision
| Aging | Ending balance | ||
| Other accounts receivable | Bad debt provision | Withdrawal proportion (%) | |
| Within 1 year | 3,685,136.21 | 49,084.05 | 1.33 |
| [Of which: Within 6 months] | 3,379,319.03 | 33,793.19 | 1.00 |
| [7-12 months] | 305,817.18 | 15,290.86 | 5.00 |
| 1 to 2 years | 392,570.00 | 39,257.00 | 10.00 |
| 2 to 3 years | 377,313.00 | 188,656.50 | 50.00 |
| Over 3 years | 689,658.09 | 689,658.09 | 100.00 |
| Total | 5,144,677.30 | 966,655.64 | 18.79 |
C. In the groups, other accounts receivable adopted other methods to withdraw bad debt provision
| Name of the group | Ending balance | ||
| Other accounts receivable | Bad debt provision | Withdrawal proportion (%) | |
~133~
| Name of the group | Ending balance | ||
| Other accounts receivable | Bad debt provision | Withdrawal proportion (%) | |
| Connected group within the consolidation scope | 100,859,173.96 | 0.00 | 0.00 |
| Total | 100,859,173.96 | 0.00 | 0.00 |
② Other Accounts Receivable Classified by Account Nature
| Nature | Ending carrying amount | Beginning carrying amount |
| Intercourse funds between entities within combination scope | 100,859,173.96 | 108,389,173.96 |
| Securities investment | 40,850,949.35 | 40,850,949.35 |
| Margin and cash pledge | 2,508,139.09 | 909,657.06 |
| Rent and utilities fee | 807,179.22 | 639,732.73 |
| Others | 1,829,358.99 | 1,642,689.30 |
| Total | 146,854,800.61 | 152,432,202.40 |
③ Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
The amount of bad debt provision withdrawn during the Reporting Period was RMB 186,067.78.
④ Particulars about Other Accounts Receivable with Actual Verification during the Reporting PeriodNo such cases in the Reporting Period.
⑤ Top 5 Other Accounts Receivable in Ending Balance Collected according to the Arrears Party
| Name of the entity | Relationship | Nature | Ending balance | Aging | Proportion to total ending balance of other accounts receivable (%) | Ending balance of bad debt provision |
| No.1 | Related party within combination scope | Related party within combination scope | 86,909,097.13 | Within 3 years | 59.18 | 0.00 |
| No.2 | Non-connected party | Securities investment | 29,010,449.35 | Over 3 years | 19.75 | 29,010,449.35 |
| No. 3 | Related party within combination | Related party within combination scope | 13,950,076.83 | Within 3 years | 9.50 | 0.00 |
~134~
| Name of the entity | Relationship | Nature | Ending balance | Aging | Proportion to total ending balance of other accounts receivable (%) | Ending balance of bad debt provision |
| scope | ||||||
| No. 4 | Non-connected party | Securities investment | 11,840,500.00 | Over 3 years | 8.06 | 11,840,500.00 |
| No. 5 | Non-connected party | Margin | 500,000.00 | Within 6 months | 0.34 | 5,000.00 |
| Total | -- | -- | 142,210,123.31 | -- | 96.83 | 40,855,949.35 |
3. Long-term Equity Investment
(1) Category of Long-term Equity Investment
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Depreciation reserve | Carrying value | Carrying amount | Depreciation reserve | Carrying value | |
| Investment to subsidiaries | 1,148,213,665.32 | 0.00 | 1,148,213,665.32 | 1,148,213,665.32 | 0.00 | 1,148,213,665.32 |
| Total | 1,148,213,665.32 | 0.00 | 1,148,213,665.32 | 1,148,213,665.32 | 0.00 | 1,148,213,665.32 |
(2) Investment to Subsidiaries
| Investee | Beginning balance | Increase | Decrease | Ending balance | Depreciation reserve withdrawn | Ending balance of depreciation reserve |
| Bozhou Gujing Sales Co., Ltd. | 68,949,286.89 | 0.00 | 0.00 | 68,949,286.89 | 0.00 | 0.00 |
| Anhui Longrui Glass Co., Ltd. | 85,267,453.06 | 0.00 | 0.00 | 85,267,453.06 | 0.00 | 0.00 |
| Shanghai Gujing Jinhao Hotel Management Co., Ltd. | 49,906,854.63 | 0.00 | 0.00 | 49,906,854.63 | 0.00 | 0.00 |
| Bozhou Gujing Hotel Co., Ltd. | 648,646.80 | 0.00 | 0.00 | 648,646.80 | 0.00 | 0.00 |
| Anhui Swisse Will Science & Technology Co., Ltd. | 40,000,000.00 | 0.00 | 0.00 | 40,000,000.00 | 0.00 | 0.00 |
| Anhui Subway Cordial Wine Co., Ltd. | 30,000,000.00 | 0.00 | 0.00 | 30,000,000.00 | 0.00 | 0.00 |
| Anhui Yuanqing Environmental Co. , Ltd. | 16,000,000.00 | 0.00 | 0.00 | 16,000,000.00 | 0.00 | 0.00 |
~135~
| Investee | Beginning balance | Increase | Decrease | Ending balance | Depreciation reserve withdrawn | Ending balance of depreciation reserve |
| Anhui Gujing Cloud E-commerce Co., Ltd. | 5,000,000.00 | 0.00 | 0.00 | 5,000,000.00 | 0.00 | 0.00 |
| Anhui Zhenrui Construction Engineering Co., Ltd. | 10,000,000.00 | 0.00 | 0.00 | 10,000,000.00 | 0.00 | 0.00 |
| Wuhan Pride Yellow Crane Tower Distillery Co., Ltd. | 816,000,000.00 | 0.00 | 0.00 | 816,000,000.00 | 0.00 | 0.00 |
| Anhui Jinyunlai Culture & Media Co., Ltd. | 15,000,000.00 | 0.00 | 0.00 | 15,000,000.00 | 0.00 | 0.00 |
| Bozhou Gujing Waste Reclamation Co., Ltd. | 1,441,423.94 | 0.00 | 0.00 | 1,441,423.94 | 0.00 | 0.00 |
| Anhui RunAnXinKe Testing Technology Co., Ltd | 10,000,000.00 | 0.00 | 0.00 | 10,000,000.00 | 0.00 | 0.00 |
| Total | 1,148,213,665.32 | 0.00 | 0.00 | 1,148,213,665.32 | 0.00 | 0.00 |
4. Operating Revenue and Cost of Sales
| Item | Reporting Period | Same period of last year | ||
| Operating revenue | Cost of sales | Operating revenue | Cost of sales | |
| Main operations | 3,104,047,962.07 | 1,254,351,553.67 | 2,331,145,973.42 | 930,097,754.58 |
| Other operations | 40,634,501.51 | 23,567,023.24 | 42,363,746.54 | 32,348,972.74 |
| Total | 3,144,682,463.58 | 1,277,918,576.91 | 2,373,509,719.96 | 962,446,727.32 |
5. Investment Income
| Item | Reporting Period | Same period of last year |
| Investment income generating from long-term equity accounted by cost method | ||
| Investment income generating from long-term equity accounted by equity method | ||
| Investment income from disposal of long-term equity investment | ||
| Investment income from holding of trading financial assets | 0.00 | 1,271,471.00 |
| Investment income from disposal of trading financial assets | ||
| Dividend income from holding of other equity instrument investment | ||
| Investment income from holding of |
~136~
| held-to-maturity investment | ||
| Investment income from holding of available-for-dale financial assets | 0.00 | 49,031,673.79 |
| Investment income from disposal of available-for-sale financial assets | 0.00 | 10,999,123.54 |
| Investment income from disposal of held-to-maturity investment | ||
| Income from remeasurement of residual stock rights at fair value after losing control power | ||
| Interest income from holding of credit investment | ||
| Interest income from holding of other credit investment | ||
| Interest income from disposal of other credit investment | ||
| Other investment income | 31,883,868.76 | 0.00 |
| Total | 31,883,868.76 | 61,302,268.33 |
XVI. Supplementary Materials
1. Items and Amounts of Non-recurring Profit or Loss
| Item | Amount | Explanation |
| Gains/losses on the disposal of non-current assets | -310,454.93 | |
| Tax rebates, reductions or exemptions due to approval beyond authority or the lack of official approval documents | ||
| Government grants recognized in the current period, except for those acquired in the ordinary course of business or granted at certain quotas or amounts according to the government’s unified standards | 30,803,918.68 | |
| Capital occupation charges on non-financial enterprises that are recorded into current gains and losses | ||
| Gains due to that the investment costs for the Company to obtain subsidiaries, associates and joint ventures are lower than the enjoyable fair value of the identifiable net assets of the investees when making the investments | ||
| Gain/loss on non-monetary asset swap | ||
| Gain/loss on entrusting others with investments or asset management |
~137~
| Item | Amount | Explanation |
| Asset impairment provisions due to acts of God such as natural disasters | ||
| Gains and losses from debt restructuring | ||
| Expenses on business reorganization, such as expenses on staff arrangements, integration, etc. | ||
| Gain/loss on the part over the fair value due to transactions with distinctly unfair prices | ||
| Current net gains and losses of subsidiaries acquired in business combination under the same control from period-begin to combination date | ||
| Profit and loss from contingencies irrelative to the normal business operations of company | ||
| Gain/loss from change of fair value of trading financial assets and liabilities, and investment gains from disposal of trading financial assets and liabilities and available-for-sale financial assets, other than valid hedging related to the Company’s common businesses | 83,312,387.28 | |
| Depreciation reserves returns of receivables with separate depreciation test | ||
| Gain/loss on entrustment loans | ||
| Gain/loss on change of the fair value of investing real estate of which the subsequent measurement is carried out adopting the fair value method | ||
| Effect on current gains/losses when a one-off adjustment is made to current gains/losses according to requirements of taxation, accounting and other relevant laws and regulations | ||
| Custody fee income when entrusted with operation | ||
| Other non-operating income and expense other than the above | 9,823,095.95 | |
| Project confirmed with the definition of non-recurring gains and losses and losses | ||
| Subtotal | 123,628,946.98 | |
| Income tax effects | 30,769,441.49 | |
| Non-controlling interests effects (after tax) | 10,414,170.58 | |
| Total | 82,445,334.91 |
Note: The number “+” among the non-current gains and losses items refers to profits and revenues, while “-”referred to losses or expenditure.The recognition of the non-current gains and losses items was executed according to the regulations of No.1 of theInformation Disclosure Explanatory Notice of the Companies Public Offering Securities-Non-current Gains andlosses (Z-J-H-Announcement [2008] No. 43) .
2. Return on Equity and Earnings Per Share
| Profit as of Reporting Period | Weighted average ROE (%) | EPS (Yuan/share) |
~138~
| EPS-basic | EPS-diluted | ||
| Net profit attributable to ordinary shareholders of the Company | 16.71 | 2.48 | 2.48 |
| Net profit attributable to ordinary shareholders of the Company after deduction of non-recurring profit and loss | 15.61 | 2.32 | 2.32 |