Anhui Gujing Distillery Company Limited
Annual Report 2022
April 2023
Part I Important Notes, Table of Contents and Definitions
The Board of Directors (or the “Board”), the Supervisory Committee as well as thedirectors, supervisors and senior management of Anhui Gujing Distillery CompanyLimited (hereinafter referred to as the “Company”) hereby guarantee the factuality,accuracy and completeness of the contents of this Report and its summary, and shallbe jointly and severally liable for any misrepresentations, misleading statements ormaterial omissions therein.Liang Jinhui, the legal representative, and Zhu Jiafeng, the Deputy Chief Accountantand Board Secretary, hereby guarantee that the financial statements carried in thisReport are factual, accurate and complete.All the Company’s directors have attended the Board meeting for the review of thisReport and its summary.Any plans for the future and other forward-looking statements mentioned in thisReport shall NOT be considered as absolute promises of the Company to investors.Investors, among others, shall be sufficiently aware of the risk and shall differentiatebetween plans/forecasts and promises. Again, investors are kindly reminded to payattention to possible investment risks.Investors’ attention is kindly directed to the detailed description of possible risks inthe Company’s operations in “XI Prospects” under “Part III Management Discussionand Analysis”.The Board has approved a final dividend plan as follows: based on the Company’stotal share capital of 528,600,000 shares, a cash dividend of RMB30.00 (tax inclusive)per 10 shares is to be distributed to the shareholders, with no bonus issue from eitherprofit or capital reserves.This Report and its summary have been prepared in both Chinese and English.Should there be any discrepancies or misunderstandings between the two versions,the Chinese versions shall prevail.
Table of Contents
Part I Important Notes, Table of Contents and Definitions 2Part II Corporate Information and Key Financial Information 6Part III Management Discussion and Analysis 11Part IV Corporate Governance 40Part V Environmental and Social Responsibility 62Part VI Significant Events 67Part VII Share Changes and Shareholder Information 74Part VIII Preferred Shares 83Part IX Corporate Bonds 84Part X Financial Statements 85
Documents Available for Reference
(I) Financial statements signed and sealed by the Company’s legal representative, theCompany’s Chief Accountant and the head of the Company’s financial department(equivalent to financial manager);(II) The original copy of the Independent Auditor's Report stamped by the CPA firmas well as signed and stamped by the engagement certified public accountants;(III) All originals of the Company’s documents and announcements that have beenpublicly disclosed in the Reporting Period on the media designated by the ChinaSecurities Regulatory Commission; and(IV) This Report disclosed in other securities markets.
| Term | Definition |
| The “Company”, “ Gu Jing” or “we” | Anhui Gujing Distillery Company Limited inclusive of its consolidated subsidiaries, except where the context otherwise requires |
| Gujing Sales | Bozhou Gujing Sales Co., Ltd. |
| The Company as the parent | Anhui Gujing Distillery Company Limited exclusive of subsidiaries, except where the context otherwise requires |
| Gujing Group | Anhui Gujing Group Co., Ltd. |
| Yellow Crane Tower | Yellow Crane Tower Distillery Co., Ltd. |
| Mingguang | Anhui Mingguang Distillery Co., Ltd. |
| Longrui Glass | Anhui Longrui Glass Co., Ltd. |
Definitions
Part II Corporate Information and Key Financial Information
I Corporate Information
| Stock name | Gujing Distillery, Gujing Distillery-B | Stock code | 000596, 200596 |
| Changed stock name (if any) | |||
| Stock exchange for stock listing | Shenzhen Stock Exchange | ||
| Company name in Chinese | 安徽古井贡酒股份有限公司 | ||
| Abbr. | 古井 | ||
| Company name in English (if any) | ANHUI GUJING DISTILLERY COMPANY LIMITED | ||
| Abbr. (if any) | GU JING | ||
| Legal representative | Liang Jinhui | ||
| Registered address | Gujing Town, Bozhou City, Anhui Province, P.R.China | ||
| Zip code | 236820 | ||
| Change of registered address | N/A | ||
| Office address | Gujing Industrial Park, Gujing Town, Bozhou City, Anhui Province, P.R.China | ||
| Zip code | 236820 | ||
| Company website | http://www.gujing.com | ||
| Email address | gjzqb@gujing.com.cn | ||
II Contact Information
| Board Secretary | Securities Representative | |
| Name | Zhu Jiafeng | Mei Jia |
| Address | Gujing Town, Bozhou City, Anhui Province, P.R.China | Gujing Town, Bozhou City, Anhui Province, P.R.China |
| Tel. | （0558）5712231 | （0558）5710057 |
| Fax | （0558）5710099 | （0558）5710099 |
| Email address | gjzqb@gujing.com.cn | gjzqb@gujing.com.cn |
III Media for Information Disclosure and Place where this Report Is Lodged
| Website of the stock exchange where this Report is | The Shenzhen Stock Exchange（http://www.szse.cn） |
| disclosed | |
| Media and website where this Report is disclosed | China Securities Journal, Shanghai Securities News, Ta Kung Pao (HK) and http://www.cninfo.com.cn |
| Place where this Report is lodged | The Board Secretary’s Office |
IV Change to Company Registered Information
| Unified social credit code | 913400001519400083 |
| Change to principal activity of the Company since going public (if any) | No change |
| Every change of controlling shareholder since incorporation (if any) | No change |
V Other Information
The independent audit firm hired by the Company:
| Name | RSM China |
| Office address | Suite 901-22 to 901-26, Wai Jing Mao Building (Tower 1), No. 22 Fuchengmen Wai Street, Xicheng District, Beijing, China |
| Accountants writing signatures | Zhang Liping, Han Songliang, and Yang Fan |
The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
? Applicable □ Not applicable
| Sponsor | Office address | Representatives | Supervision period |
| China International Capital Corporation Limited | 27-28/F, China World Office 2, No. 1 Jianguomenwai Avenue, Chaoyang District, Beijing | Fang Lei, and Chen Jingjing | 2021.7.22-2022.12.31 |
The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
? Applicable □ Not applicable
| Financial advisor | Office address | Representatives | Supervision period |
| China International Capital Corporation Limited | 27-28/F, China World Office 2, No. 1 Jianguomenwai Avenue, Chaoyang District, Beijing | Fang Lei, and Chen Jingjing | 2021.7.22-2022.12.31 |
VI Key Financial InformationIndicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes ? No
| 2022 | 2021 | 2022-over-2021 | 2020 |
| change | ||||
| Operating revenue (RMB) | 16,713,234,153.52 | 13,269,826,266.04 | 25.95% | 10,292,064,534.41 |
| Net profit attributable to the listed company’s shareholders (RMB) | 3,143,144,732.08 | 2,297,894,413.25 | 36.78% | 1,854,576,249.29 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses (RMB) | 3,066,543,993.35 | 2,186,239,468.68 | 40.27% | 1,773,011,307.05 |
| Net cash generated from/used in operating activities (RMB) | 3,107,914,579.48 | 5,254,308,127.79 | -40.85% | 3,624,543,525.53 |
| Basic earnings per share (RMB/share) | 5.95 | 4.45 | 33.71% | 3.68 |
| Diluted earnings per share (RMB/share) | 5.95 | 4.45 | 33.71% | 3.68 |
| Weighted average return on equity (%) | 17.93% | 21.25% | -3.32% | 19.53% |
| 31 December 2022 | 31 December 2021 | Change of 31 December 2022 over 31 December 2021 | 31 December 2020 | |
| Total assets (RMB) | 29,789,822,298.65 | 25,418,086,447.80 | 17.20% | 15,186,625,708.79 |
| Equity attributable to the listed company’s shareholders (RMB) | 18,520,757,973.52 | 16,537,389,443.64 | 11.99% | 10,043,288,013.73 |
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptionalgains and losses was negative for the last three accounting years, and the latest independent auditor’s report indicated that there wasuncertainty about the Company’s ability to continue as a going concern.
□ Yes ? No
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptionalgains and losses was negative.
□ Yes ? No
VII Accounting Data Differences under China’s Accounting Standards for BusinessEnterprises (CAS) and International Financial Reporting Standards (IFRS) and ForeignAccounting Standards
1. Net Profit and Equity under CAS and IFRS
□ Applicable ? Not applicable
No difference for the Reporting Period.
2. Net Profit and Equity under CAS and Foreign Accounting Standards
□ Applicable ? Not applicable
No difference for the Reporting Period.
3. Reasons for Accounting Data Differences Above
□ Applicable ? Not applicable
VIII Key Financial Information by Quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating revenue | 5,274,316,915.03 | 3,727,689,008.39 | 3,762,643,542.44 | 3,948,584,687.66 |
| Net profit attributable to the listed company’s shareholders | 1,098,725,631.83 | 820,095,871.92 | 703,868,180.94 | 520,455,047.39 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses | 1,089,643,863.39 | 799,383,187.67 | 689,133,927.04 | 488,383,015.25 |
| Net cash generated from/used in operating activities | 2,776,260,991.07 | 1,414,985,808.72 | 871,486,637.93 | -1,954,818,858.24 |
Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differs materially from whathave been disclosed in the Company’s quarterly or interim reports.
□ Yes ? No
IX Exceptional Gains and Losses? Applicable □ Not applicable
Unit: RMB
| Item | 2022 | 2021 | 2020 | Note |
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | -4,666,425.09 | -5,976,856.98 | -3,692,640.09 | |
| Government subsidies charged to current profit or loss (exclusive of government subsidies consistently given in the Company’s ordinary course of business at fixed quotas or amounts as per governmental policies or standards) | 46,721,259.52 | 55,274,502.42 | 48,617,479.37 | |
| Gain or loss on fair-value changes in trading financial assets and liabilities & investment | 43,874,800.64 | 34,792,433.45 | 21,490,043.05 |
| income from disposal of trading financial assets and liabilities and available-for-sale financial assets (exclusive of effective portion of hedges that arise in the Company’s ordinary course of business) | ||||
| Reversed portion of impairment allowance for receivables which are tested individually for impairment | 423,337.78 | 1,949,809.53 | 43,554.94 | |
| Non-operating income and expense other than the above | 23,314,293.08 | 77,025,619.76 | 44,100,616.61 | |
| Less: Income tax effects | 27,082,435.88 | 40,243,159.73 | 27,033,395.22 | |
| Non-controlling interests effects (net of tax) | 5,984,091.32 | 11,167,403.88 | 1,960,716.42 | |
| Total | 76,600,738.73 | 111,654,944.57 | 81,564,942.24 | -- |
Particulars about other items that meet the definition of exceptional gain/loss:
□ Applicable ? Not applicable
No such cases for the Reporting Period.Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item listed in the Explanatory Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss Items:
□ Applicable ? Not applicable
No such cases for the Reporting Period.
Part III Management Discussion and AnalysisI Industry Overview for the Reporting Period
(I) Principal Activity of the CompanyThe Company primarily produces and markets baijiu. According to the Industry Categorization Guide for Listed Companies (Revisedin 2012) issued by the CSRC, baijiu making belongs to the “liquor, beverage and refined tea making industry" (C15). TheCompany’s principal operations remained unchanged in the Reporting Period.(II) Status of the Industry and Position of the Company in the Industry
1. Status of the Baijiu Industry
Since the beginning of the 21st century, China's baijiu industry has experienced three development stages. Before 2012, with rapideconomic growth, the income of urban and rural residents rose fast, and the demand for baijiu continued to increase, whileproduction and sales of baijiu continuously expanded at a fast pace. As a result, the baijiu industry witnessed booming supply anddemand. During that period, national baijiu brands and local regional renowned baijiu enterprises achieved rapid development. In thecontext of the rise in both the demand and price of baijiu, the sales income and total profits of baijiu enterprises increased quickly.From the second half of 2012 to 2016, China's economy once again entered a period of adjustment, as the Chinese governmentintroduced a string of policies to restrict the spending on official overseas visits, official vehicles and official hospitality, such as the"Eight-point Decision" and "Six Prohibitions", which include restrictions on the consumption of high-end alcohol with public funds.Consumption scenarios such as commercial consumption and government consumption were limited, leading to a drop in consumerdemand in a short time. Moreover, baijiu prices were under huge pressure. China's baijiu industry entered a period of profoundadjustment. After 2012, both the output growth and income growth of China's baijiu industry slowed down.The baijiu industry began to recover in the second half of 2016, with a rise in consumption demand by end-users, propelling thegrowth of the overall income and profits of the industry. Since 2017, the overall demand and price of baijiu have increased, and therecovery of mid- and high-end baijiu has picked up. In the future, benefiting from the consumption upgrade and the change ofconsumption concept, the growth of sub-high-end baijiu will be the key driver for the development of the baijiu industry. Theconsumption upgrade is the major driving force for the development of the baijiu industry. Baijiu enterprises need to fully grasp thegreat opportunities from the extensive consumption upgrade and strive to better meet the consumption needs of the market throughquality improvement, market segmentation and product innovation and other means, so as to advance the transformation and upgradeof the product structure.In 2022, the total output of alcoholic beverage made and brewed by domestic enterprises above the designated size in the alcoholicbeverage industry reached 54,275,000 kilolitres, increasing by 0.8% year on year. Specifically, the output of baijiu by domesticenterprises above the designated size totaled 6,712,000 kilolitres, decreasing by 5.6% year on year. With the acceleration ofconsumption upgrading, a trend of consumption upgrading for Chinese residents that advocates “drinking less but better liquor”gradually appears. During the period of the 14th Five-year Plan, the consumption growth of sub-high-end baijiu will bring morefierce competition in the sector of high-end baijiu.
2. Position of the Company in the Industry
China has a long history of baijiu. There are a large number of baijiu production enterprises in the country, but the regionaldistribution of baijiu consumers is particularly evident. The baijiu industry is characterized by full competition, with a high degree ofmarketization. The market competition is fierce, and the industry adjustments are constantly deepening. In the national market, thecompetitive edges of the enterprises come from their brand influence, product style and marketing & operation models. In a singleregional market, the competitive strengths of the enterprises depend on their brand influence in the region, the recognition of the
companies by regional consumers and comprehensive marketing capacity.As one of China’s traditional top eight liquor brands, the Company is the first listed baijiu company with both A and B stocks. It islocated in Bozhou City, Anhui Province in China, the hometown of historic figures Cao Cao and Hua Tuo, as well as one of theworld’s top 10 liquor-producing areas. No changes have occurred to the main business of the Company in the Reporting Period. Asthe main product of the Company, the Gujing spirit originated as a “JiuYunChun Spirit”, together with its making secrets, beingpresented as a hometown specialty by Cao Cao, a famous warlord in China’s history, to Emperor Han Xiandi (name: Liu Xie) in A.D.196, and was continually presented to the royal house since then. With crystalline liquid, rich aroma, a fine flavor and a lingeringaftertaste, the Gujing spirit has helped the Company win four national baijiu golden awards, a golden award at the 13th SIAL Paris,the title of China’s “Geographical Indication Product”, the recognition as a “Key Cultural Relics Site under the State Protection”, therecognition with a “National Intangible Cultural Heritage Protection Project”, a Quality Award from the Anhui provincialgovernment, a title of “National Quality Benchmark”, among other honors. In 2022, “Gujinggong” was ranked fourth in China'sbaijiu industry with a brand value of RMB227.027 billion in the 14th "Hua Zun Cup" China liquor brand value contest.In April 2016, Gujing Distillery signed a strategic cooperation agreement with Huanghelou Liquor Co., Ltd., opening a new era ofcooperation in China's famous liquor industry. Yellow Crane Tower Baijiu is the only famous Chinese liquor in Hubei. Its uniquestyle is "soft, mellow, elegant and cool, and has a long lingering fragrance". It won the two China gold medal in baijiu appreciation in1984 and 1989. At present, Huanghelou liquor industry has three bases: Wuhan, Xianning and Suizhou. Among them, HuanghelouLiquor Culture Expo Park in Wuhan base has been approved as national AAA scenic spot, and Huanghelou forest wine town inXianning base has been approved as national AAAA scenic spot.In January 2021, Gujing Distillery and Mingguang signed a strategic cooperation agreement. The unique mung bean flavor adds tothe famous liquor family of Gu Jing. The primary products of Mingguang Distillery include Mingguang Jianiang, Mingguang Daqu,Mingguang Youye, Mingguang Tequ, and 53% vol Mingluye. In December 2021, the Old Mingguang Brewing Technique wasselected for the sixth batch of provincial intangible cultural heritage list.
II Principal Activity of the Company in the Reporting PeriodThe Company is subject to the Guideline No. 14 of the Shenzhen Stock Exchange on Information Disclosure by Industry—for ListedCompanies Engaging in Food and Liquor & Wine Production.Main sales modelThe Company's key sales model is dealer model. Under the dealer model, the Company will select one or more dealers for sales of aproduct brand (or product sub-brand) according to the market capacity.Distribution model:
? Applicable □ Not applicable
1. Operating Performance by Distribution Channel and Product Category
Unit: RMB
| By | Operating revenue | Cost of sales | Gross profit margin | YoY change in operating revenue | YoY change in cost of sales | YoY change in gross profit margin |
| Channel | ||||||
| Online | 610,385,143.59 | 140,118,759.04 | 77.04% | 14.88% | 14.90% | -0.01% |
| Offline | 16,102,849,009.93 | 3,676,203,285.97 | 77.17% | 26.41% | 15.53% | 2.15% |
| Total | 16,713,234,153.52 | 3,816,322,045.01 | 77.17% | 25.95% | 15.50% | 2.07% |
| By | Operating revenue | Cost of sales | Gross profit margin | YoY change in operating revenue | YoY change in cost of sales | YoY change in gross profit margin |
| Product series | ||||||
| Original Vintage | 12,106,975,948.62 | 1,874,797,085.68 | 84.51% | 30.07% | 19.92% | 1.31% |
| Gujinggong Liquor | 1,873,975,744.19 | 754,796,177.30 | 59.72% | 16.45% | 13.33% | 1.11% |
| Yellow Crane Tower | 1,262,964,082.84 | 315,189,592.71 | 75.04% | 11.38% | 11.63% | -0.06% |
| Total | 15,243,915,775.65 | 2,944,782,855.69 | 80.68% | 26.50% | 17.24% | 1.52% |
2. Number of Distributors by Geographical Segment
| Segment | Increase | Decrease | Ending number |
| North China | 286 | 159 | 1,132 |
| South China | 154 | 76 | 530 |
| Central China | 690 | 507 | 2,721 |
| International | 4 | 0 | 16 |
| Total | 1,134 | 742 | 4,399 |
Proportion of store sales terminal exceeds 10%
□ Applicable ? Not applicable
Online direct sales? Applicable □ Not applicableThe major product varieties sold online are Original Vintage Series, and Gujinggong Liquor Series, among others. The main onlinesales platforms are Gujing Distillery platform, Tmall, JD.com, and Suning.com.Any over 30% YoY movements in the selling price of main products contributing over 10% of current total operating revenue
□ Applicable ? Not applicable
Model and contents of purchaseModel of purchase: The Company primarily adopts the bidding and strategic cooperation models. It also adopts the base plantingmodel in order to ensure the quality of some raw materials.Contents of purchase
| Purchase contents | Purchase model | Amount (RMB’0,000) | |
| 1 | Raw materials | Strategic purchasing | 79,853.37 |
| Tendering purchasing | 145,714.80 | ||
| 2 | Packing materials | Tendering purchasing | 287,066.19 |
| Total | 512,634.36 | ||
The proportion of raw materials purchased from cooperations or farmers to total purchase amount exceeds 30%
□ Applicable ? Not applicable
Any over 30% YoY movements in prices of main purchased raw materials
□ Applicable ? Not applicable
Main production modelThe Company's existing production model is sales-based production. Specifically, the Logistics Control Center is responsible forcoordinating the implementation of production plans, release of material production plans, and delivery and tracking of products, andprepares balanced production plans on a quarterly basis according to the product inventory. The logistics distribution system iscoordinated according to the production schedule and inventory with a view to ensuring timely delivery of products.Commissioned production
□ Applicable ? Not applicable
Breakdown of cost of sales
| Item | 2022 | 2021 | Change | ||
| Cost of sales (RMB) | As % of total cost of sales | Cost of sales (RMB) | As % of total cost of sales | ||
| Direct materials | 2,740,292,507.27 | 71.80% | 2,321,320,105.47 | 70.26% | 18.05% |
| Direct labor cost | 332,141,904.07 | 8.70% | 285,205,229.63 | 8.63% | 16.46% |
| Manufacturing expenses | 224,128,683.40 | 5.87% | 210,507,603.20 | 6.37% | 6.47% |
| Fuels | 96,765,210.22 | 2.54% | 91,709,296.08 | 2.78% | 5.51% |
| Total | 3,393,328,304.96 | 88.91% | 2,908,742,234.38 | 88.04% | 16.66% |
Output and inventory
1. Output, sales volume and inventory of main products for the Reporting Period and respective YoY changes thereof
Unit: ton
| Main product | Output | Sales volume | inventory | YoY changes of output | YoY changes of sales volume | YoY changes of inventory |
| Original Vintage Series | 63,415.45 | 52,622.84 | 24,602.26 | 25.60% | 21.77% | 78.15% |
| Gujinggong Liquor Series | 36,522.02 | 30,845.44 | 8,551.86 | 25.65% | 9.11% | 197.43% |
| Yellow Crane Tower Liquor Series | 9,833.21 | 9,654.56 | 960.69 | 17.76% | 5.13% | 22.84% |
| Other series | 23,615.68 | 21,571.37 | 4,196.00 | 7.14% | 5.81% | 95.01% |
2. Ending inventory of finished liquor and semi-product
| Category | Ending quantity (ton) |
| Finished liquor | 38,310.81 |
| Semi-product (including base liquor) | 191,550.88 |
3. Capacity
Unit: ton
| Main product | Designed capacity | Actual capacity | Capacity in progress |
| Finished liquor | 115,000 | 133,386 | 130,000 |
III Core Competitiveness Analysis
No significant changes occurred to the Company’s core competitiveness in the Reporting Period.
IV Analysis of Core Businesses
1. Overview
2022 was an extraordinary year, as well as a particularly difficult year. In the face of a complex external environment andincreasingly fierce competition in the industry, the Company continued to follow the guidance of Mr. Xi Jinping’s Thought onSocialism with Chinese Characteristics for a New Era, thoroughly implemented the guiding principles of the various sessions of the19th CPC Central Committee and the 20th CPC National Congress, as well as the guiding principles of the provincial and municipalParty congresses, implemented the new concept for development, centered on the annual objectives of the Company, and adhered tolong-term perspective mindset, the concept of excellence, and the awareness of high-quality products. The Company strengthened itsfoundations, improved development quality and operational efficiency, and sought faster growth in stability. As a result, it hassuccessfully accomplished various objectives and tasks.For 2022, the Company recorded operating revenue of RMB16.713 billion, up 25.95% compared to the prior year; a net profitattributable to the Company as the parent of RMB3.143 billion, increasing 36.78% from the year earlier; and earnings per share ofRMB5.95, 33.71% higher than last year. In the 14th "Hua Zun Cup" China liquor brand value contest, the brand value of"Gujinggong" reached a record high of RMB227.027 billion.The overall operating performance of the Company in the Reporting Period:
(I) The Company strengthened market development and promoted brand influenceWith adherence to the nationwide, sub-high-end, and “Gu 20+” development strategy, the Company adopted the implementationroute of “position occupation, market consolidation and customer acquisition” to accelerate its advancement toward the wholecountry and expansion in markets outside the base province, as well as to continuously improve its product structure. Moreover, withadherence to the communication strategy of “striving for influential brands, spiking hard from a high position and concentratingresources”, the Company promoted brand coordination and communication innovation, so that its brand influence increasedgradually.(II) The Company sought higher “quality” of baijiu productsThe Company improved its expression system of the quality of baijiu and issued “Gujinggong Liquor- Original Vintage” QualityControl Outline. As the Company officially put the first “transparent factory” in the industry into operation, its developmentregarding the “enterprise-university-research-management-user integration” was deepened. By continuously optimizingliquor-making processes, the Company comprehensively implemented the standardized production of liquor.(III) The Company consolidated the foundations for quality with technologyBy comprehensively implementing the farming of unprocessed grains in the Company’s unprocessed grain base, the Companyprovided a firm guarantee for “quality liquor-making”. Furthermore, by completing the implementation of the new national standardfor baijiu with high quality and efficiency, stricter management was comprehensively conducted throughout the Company and theCompany undertook its entity responsibilities for food security more thoroughly. Moreover, the Company continued to explore newideas of how to process the by-products of liquor-making. As a result, the Company owned nine invention patents and 62 authorized
patents for utility models. Additionally, multiple technological innovation results of the Company reached the international ordomestic leading level and were converted into applications by the Company.(IV) The Company continued to promote digital development based on the business-oriented approachThe Company comprehensively initiated digital transformation, as its informatized framework was completed, the state of being anisolated information island was altered and its business processes was optimized. Meanwhile, the Company centred on smartmanufacturing and green liquor making, set up an Internet platform for the baijiu industry, built a lighthouse factory, and promotedthe digital transformation of Gujing to a new level. The Company also made efforts to develop scenario-based applications, so as toempower business and achieve automated lean management. Moreover, the Company made rapid progress in the dual-platformdevelopment of the Industrial Internet of Things, namely the procurement and logistics platform, so as to provide an open and sharedcentralized procurement platform for downstream enterprises in the industry chain and contribute to the local economic development.As a result, the Company’s digital practice was successfully included in the Demonstration List of Pilot Practices of IntegratedDevelopment in the Next-generational Information Technology and Manufacturing Industry and won the 2022 Dingge Award.(V) The Company accelerated transformation and upgrading while continuously optimizing business managementThe Company relied on law-based measures to promote modern business management. By continuously enhancing internal riskcontrol, the Company strengthened compliance management. Meanwhile, the Company implemented the three-year action plan forthe reform of state-owned enterprises to promote the innovation of mechanisms and systems. Moreover, by implementing themechanism of open post competition for front-line and middle-level managers, the Company extensively activated its talent vitality.Additionally, as its internal control system was further improved, the objective of “four zeros” in production safety was achieved.(VI) The Company conducted more in-depth and practical cultural development by unwaveringly following the guidance ofParty buildingThe Company thoroughly conducted learning and publicity of the spirit of the 20th National Congress of the CPC, comprehensivelyimplemented the Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, and carried out regular learning of theParty history. The Company also continued to deepen conduct improvement. Meanwhile, the Company promoted ideologicalmanagement in accordance with the relevant requirements, formulated a grid-based pattern of ideological publicity work andpromoted the in-depth integration of Party building and production & operation.(VII) In the Reporting Period, the Company was still under pressure and had deficiencies as follows.
(1) The brand-based driving effect was not as strong as those of first-tier reputed liquor brands.
(2) The internal management system of the Company was not excellent, the mechanism was not vigorous, and its internal power wasyet to be stimulated.
(3) Daring innovation was required for aspects such as organizational incentives and talent incentives.
2. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
| 2022 | 2021 | Change | |||
| Operating revenue | As % of total operating revenue | Operating revenue | As % of total operating revenue | ||
| Total | 16,713,234,153.52 | 100% | 13,269,826,266.04 | 100% | 25.95% |
| By operating division | |||||
| Manufacturing | 16,713,234,153.52 | 100.00% | 13,269,826,266.04 | 100.00% | 25.95% |
| By product category | |||||
| Baijiu | 16,167,709,250.64 | 96.74% | 12,760,915,418.70 | 96.16% | 26.70% |
| Hotel services | 57,506,783.34 | 0.34% | 75,349,826.75 | 0.57% | -23.68% |
| Other | 488,018,119.54 | 2.92% | 433,561,020.59 | 3.27% | 12.56% |
| By operating segment | |||||
| North China | 1,325,791,564.93 | 7.93% | 1,070,574,558.72 | 8.07% | 23.84% |
| Central China | 14,354,624,988.86 | 85.89% | 11,311,204,419.40 | 85.23% | 26.91% |
| South China | 1,011,003,651.35 | 6.05% | 877,937,089.22 | 6.62% | 15.16% |
| Overseas | 21,813,948.38 | 0.13% | 10,110,198.70 | 0.08% | 115.76% |
| By sales model | |||||
| Online | 610,385,143.59 | 3.65% | 531,343,420.84 | 4.00% | 14.88% |
| Offline | 16,102,849,009.93 | 96.35% | 12,738,482,845.20 | 96.00% | 26.41% |
(2) Operating Division, Product Category, Operating Segment or Sales Model Contributing over 10% ofOperating Revenue or Operating Profit? Applicable □ Not applicable
Unit: RMB
| Operating revenue | Cost of sales | Gross profit margin | YoY change in operating revenue | YoY change in cost of sales | YoY change in gross profit margin | |
| By operating division | ||||||
| Manufacturing | 16,713,234,153.52 | 3,816,322,045.01 | 77.17% | 25.95% | 15.50% | 2.07% |
| By product category | ||||||
| Baijiu | 16,167,709,250.64 | 3,393,328,304.96 | 79.01% | 26.70% | 16.66% | 1.81% |
| Hotel services | 57,506,783.34 | 33,804,865.88 | 41.22% | -23.68% | -18.22% | -3.93% |
| Other | 488,018,119.54 | 389,188,874.17 | 20.25% | 12.56% | 9.94% | 1.90% |
| By operating segment | ||||||
| North China | 1,325,791,564.93 | 300,023,290.91 | 77.37% | 23.84% | 11.25% | 2.56% |
| Central China | 14,354,624,988.86 | 3,305,285,716.04 | 76.97% | 26.91% | 16.52% | 2.05% |
| South China | 1,011,003,651.35 | 203,868,748.58 | 79.84% | 15.16% | 4.59% | 2.04% |
| Overseas | 21,813,948.38 | 7,144,289.48 | 67.25% | 115.76% | 159.65% | -5.54% |
| By sales model | ||||||
| Online | 610,385,143.59 | 140,118,759.04 | 77.04% | 14.88% | 14.90% | -0.01% |
| Offline | 16,102,849,009.93 | 3,676,203,285.97 | 77.17% | 26.41% | 15.53% | 2.15% |
Core business data of the prior year restated according to the changed statistical caliber for the Reporting Period:
□ Applicable ? Not applicable
(3) Whether Revenue from Physical Sales is Higher than Service Revenue
? Yes □ No
| Operating division | Item | Unit | 2022 | 2021 | Change |
| Baijiu brewage | Sales volume | Ton | 114,694.21 | 101,054.70 | 13.50% |
| Output | Ton | 133,386.36 | 109,947.76 | 21.32% | |
| Inventory | Ton | 38,310.81 | 19,618.66 | 95.28% |
Any over 30% YoY movements in the data above and why:
? Applicable □ Not applicableInventory increased 95.28% compared to 2021, primarily driven by the increased inventories prepared for the Spring Festival.
(4) Execution Progress of Major Signed Sales and Purchase Contracts in the Reporting Period
□ Applicable ? Not applicable
(5) Breakdown of Cost of Sales
By operating division
Unit: RMB
| Operating division | Item | 2022 | 2021 | Change | ||
| Cost of sales | As % of total cost of sales | Cost of sales | As % of total cost of sales | |||
| Food manufacturing | Direct materials | 2,740,292,507.27 | 71.80% | 2,321,320,105.47 | 70.26% | 18.05% |
| Food manufacturing | Direct labor cost | 332,141,904.07 | 8.70% | 285,205,229.63 | 8.63% | 16.46% |
| Food manufacturing | Manufacturing expenses | 224,128,683.40 | 5.87% | 210,507,603.20 | 6.37% | 6.47% |
| Food manufacturing | Fuels | 96,765,210.22 | 2.54% | 91,709,296.08 | 2.78% | 5.51% |
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period? Yes □ NoCompared with the prior year, the following subsidiaries were added to the consolidated financial statements of the Reporting Period:
Anhui Gujinggong Liquor Original Vintage Theme Hotel Management Co., Ltd., Anhui Anjie Technology Co., Ltd., HuanggangJunya Trading Co., Ltd., Anhui Gujing Health Technology Co., Ltd., Anhui Maiqi Biotechnology Co., Ltd., Anhui YangshengtianxiaBrand Operation Co., Ltd., and Hainan Yangshengtianxia Biotechnology Development Co., Ltd.
(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
□ Applicable ? Not applicable
(8) Major Customers and Suppliers
Major customers:
| Total sales to top five customers (RMB) | 2,551,855,022.17 |
| Total sales to top five customers as % of total sales of the Reporting Period (%) | 15.27% |
| Total sales to related parties among top five customers as % of total sales of the Reporting Period (%) | 0.00% |
Information about top five customers:
| No. | Customer | Sales revenue contributed for the Reporting Period (RMB) | As % of total sales revenue |
| 1 | Distributor A | 784,771,005.75 | 4.70% |
| 2 | Distributor B | 777,903,397.06 | 4.65% |
| 3 | Distributor C | 572,031,493.11 | 3.42% |
| 4 | Distributor D | 220,161,445.23 | 1.32% |
| 5 | Distributor E | 196,987,681.02 | 1.18% |
| Total | -- | 2,551,855,022.17 | 15.27% |
Other information about major customers:
□ Applicable ? Not applicable
Major suppliers:
| Total purchases from top five suppliers (RMB) | 1,206,738,614.42 |
| Total purchases from top five suppliers as % of total purchases of the Reporting Period (%) | 23.54% |
| Total purchases from related parties among top five suppliers as % of total purchases of the Reporting Period (%) | 0.00% |
Information about top five suppliers:
| No. | Supplier | Purchase in the Reporting Period (RMB) | As % of total purchases |
| 1 | Supplier A | 319,640,970.89 | 6.24% |
| 2 | Supplier B | 286,628,802.15 | 5.59% |
| 3 | Supplier C | 262,643,832.88 | 5.12% |
| 4 | Supplier D | 181,345,279.52 | 3.54% |
| 5 | Supplier E | 156,479,728.98 | 3.05% |
| Total | -- | 1,206,738,614.42 | 23.54% |
Other information about major suppliers:
□ Applicable ? Not applicable
3. Expense
Unit: RMB
| 2022 | 2021 | Change | Reason for any significant change | |
| Selling expense | 4,668,185,055.13 | 4,008,075,483.08 | 16.47% | |
| Administrative expense | 1,166,780,389.23 | 1,022,181,419.74 | 14.15% | |
| Finance costs | -216,299,053.07 | -204,055,657.06 | -6.00% | |
| R&D expense | 56,667,203.01 | 51,449,475.36 | 10.14% |
The Company is subject to the Guideline No. 14 of the Shenzhen Stock Exchange on Information Disclosure by Industry—for ListedCompanies Engaging in Food and Liquor & Wine Production.Breakdown of selling expense:
Unit: RMB
| Item | 2022 | 2021 | Change | Reason |
| Employment benefits | 938,740,215.88 | 863,583,183.40 | 8.70% | |
| Travel fees | 169,521,676.66 | 161,091,812.25 | 5.23% | |
| Advertisement fees | 995,196,089.71 | 900,546,437.33 | 10.51% | |
| Comprehensive promotion costs | 1,814,692,295.39 | 1,268,396,513.56 | 43.07% | More sales promotion and marketing activities |
| Service fees | 638,147,336.90 | 705,368,563.00 | -9.53% | |
| Others | 111,887,440.59 | 109,088,973.54 | 2.57% | |
| Total | 4,668,185,055.13 | 4,008,075,483.08 | 16.47% |
Details about advertisement
| No. | Main way | Amount (RMB’0,000) |
| 1 | TV | 51,207.05 |
| 2 | Offline | 32,446.36 |
| 3 | Online | 15,866.20 |
| Total | 99,519.61 | |
4. R&D Investments
? Applicable □ Not applicable
| Names of main | Project objectives | Project progress | Objectives to be achieved | Expected impact on the future |
| R&D projects | development of the Company | |||
| Research of process and experiments on original grain for liquor distillation | Aiming at different types of raw materials, the process and experiments of liquor making are conducted to provide the Company with data support for the selection of original grain for liquor-making. | Promoted and applied. | The process of liquor-making with different types of original grain is explored to expand the scope of using original grain. | The experimental research on liquor making with different types of original grain will play an important role in optimized selection of original grain, and improvement of quality of original liquor. |
| Research on the process of making compound fragrant baijiu | The process of producing compound fragrant baijiu is explored to prepare for the development of new products and the design of liquor body of the Company. | The expanded group test has been conducted. | The Company aims to produce high-quality flavouring liquor with unique flavour to prepare for the development of its new products and the design of liquor body. | By exploring the process of making compound fragrant baijiu, the Company is expected to produce high-quality flavouring liquor with unique flavour, further enrich the product system of Gujinggong Liquor, and strengthen its market competitiveness. |
| Technology of producing the multi-grain fermentation starter and research on the liquor-making test based on the starter | The impact of multi-grain fermentation starters on the quality of raw liquor is explored to provide technological support for Gujing’s production of fermentation starters and improvement of crude liquor. | The project has been concluded. | The Company aims to explore the impact of multi-grain fermentation starters on the quality of crude liquor to provide Gujing with different styles of base liquor. | This project is expected to enrich the product system of Gujinggong liquor, provide different styles of baijiu products and improve the market share of Gujing’s products. |
| Research of process and experiments for making strongly fragrant baijiu | The experiments systematically optimize the production process of making strongly fragrant liquor, improve the sensory quality of Gujinggong liquor, making the product No. 1 in China in terms of strongly fragrant baijiu. | The process and experiments have been carried out for many times, and part of the experimental achievements have been promoted and applied. | Theoretically and practically, the various parameters of the strongly fragrant baijiu are revealed to be scientific and reasonable, which provides more scientific support for process execution. | The quality of Gujinggong liquor will be steadily improved to maintain the continuously improving quality of the brand. |
| Experimental study on the method of collecting scums floated in liquid in a micro-recirculation way | The taste and quality of crude liquor is improved to enhance the overall quality of liquor samples. | Part of the achievements of the project have been promoted. | The quality of the crude liquor on the high level of a liquor pit is improved | The taste of liquor body is enriched to provide the Company’s improvement of the quality of crude liquor with an exploration on process optimization. |
| Research on the mechanism of the gelatinization of unprocessed grains in liquor-making | This project is aimed at reducing the duration of gelatinization and the steam consumption in production without affecting the quality of the produced crude liquor. | The project has been concluded and its application has been popularized. | The Company aims to reduce the duration of gelatinization and the steam consumption in production without affecting the quality of the produced crude liquor, so as to shorten the production time and improve production efficiency. | It is expected to reduce the consumption of energy and other resources, the time and efficiency of production, as well as the operating cost of the Company. |
| Research on the | This project is aimed at | The nature of the | The Company aims to | The analysis of the unique |
| scientific theoretical system of the making of “Gujinggong Liquor- Original Vintage” | formulating a scientific theoretical system of the making of Original Vintage and analysing the unique features of the Original Vintage from a scientific perspective. | contribution of anaerobic bacteria in the fermentation pit mud to the taste of baijiu has been systematically analysed and a technological assessment system for the biological functions of Original Vintage of different ages in the intervention in liquor-making has been formulated. | establish an assessment system for the biological functions of Original Vintage and eventually formulate a scientific theoretical system of the making of Original Vintage. | features of the Original Vintage from a scientific perspective is expected to be conducted to facilitate the Company’s product upgrading. |
| Research on the integrated utilization of the by-products of the solid fermentation of strong flavour baijiu | This project is aimed at separating organic substances from the by-products and converting them into high-value products, so as to create benefits for the Company and reduce the cost of waste treatment. | The production line for the pilot test has been constructed and the contract of equipment purchases has been signed and approved. | The Company aims to complete the development of one or two resource products. | This project is expected to transform by-products into resources, so as to not only create benefits for the Company, but also enable energy conservation and emission reduction by building green factories. |
| Research of the production process of high-temperature Qu liquor | The production process of high-temperature Qu liquor is standardized to form standard operation documents. | Concluded and applied. | The parameters of the production process of high-temperature Qu liquor are determined, the quality of the liquor is improved, and the richness of original liquor is increased. | Standardized documents for operation and process will be provided for the Company to improve the production quality of high-temperature Qu liquor, and to stabilize the quality of the liquor. |
| Technology of producing daqu (dried bricks of fermentation starters) for Fen-flavour liquor and research on the liquor-making test based on the starter | This project is aimed at exploring the impact of daqu for Fen-flavour liquor on the quality of crude liquor based on the quality of the daqu and the quality of the crude liquor brewed with the daqu, so as to provide technological support for the improvement of the quality of Fen-flavour liquor. | The data analysis and summary for the three arrays of the test on daqu for Fen-flavour liquor has been completed. | The Company aims to explore the impact of daqu for Fen-flavour liquor on the quality of crude liquor based on the quality of the daqu and the quality of the crude liquor brewed with the daqu. | This project is expected to improve the Company’s product quality and provide the Company with different styles of baijiu products that can satisfy different consumer groups. |
Details about R&D personnel:
| 2022 | 2021 | Change | |
| Number of R&D personnel | 1,057 | 978 | 8.08% |
| R&D personnel as % of total employees | 9.35% | 9.10% | 0.25% |
| Educational background of R&D personnel | —— | —— | —— |
| Bachelor’s degree | 191 | 211 | -9.48% |
| Master’s degree | 47 | 41 | 14.63% |
| Other | 819 | 726 | 12.81% |
| Age structure of R&D personnel | —— | —— | —— |
| Below 30 | 155 | 164 | -5.49% |
| 30~40 | 384 | 321 | 19.63% |
| Over 40 | 518 | 493 | 5.07% |
Details about R&D investments:
| 2022 | 2021 | Change | |
| R&D investments (RMB) | 288,639,442.89 | 300,602,964.92 | -3.98% |
| R&D investments as % of operating revenue | 1.73% | 2.27% | -0.54% |
| Capitalized R&D investments (RMB) | 0.00 | 0.00 | 0.00% |
| Capitalized R&D investments as % of total R&D investments | 0.00% | 0.00% | 0.00% |
Reasons for any significant change to the composition of R&D personnel and the impact:
□ Applicable ? Not applicable
Reasons for any significant YoY change in the percentage of R&D investments in operating revenue:
□ Applicable ? Not applicable
Reasons for any sharp variation in the percentage of capitalized R&D investments and rationale:
□ Applicable ? Not applicable
5. Cash Flows
Unit: RMB
| Item | 2022 | 2021 | Change |
| Subtotal of cash generated from operating activities | 18,629,603,955.66 | 16,698,641,516.83 | 11.56% |
| Subtotal of cash used in operating activities | 15,521,689,376.18 | 11,444,333,389.04 | 35.63% |
| Net cash generated from/used in operating activities | 3,107,914,579.48 | 5,254,308,127.79 | -40.85% |
| Subtotal of cash generated from investing activities | 8,483,831,118.31 | 721,528,559.15 | 1,075.81% |
| Subtotal of cash used in investing activities | 3,215,119,847.70 | 9,582,979,679.33 | -66.45% |
| Net cash generated from/used in investing activities | 5,268,711,270.61 | -8,861,451,120.18 | 159.46% |
| Subtotal of cash generated from financing activities | 75,900,000.00 | 5,165,337,169.81 | -98.53% |
| Subtotal of cash used in financing activities | 1,404,702,593.47 | 1,137,547,692.56 | 23.49% |
| Net cash generated from/used in financing activities | -1,328,802,593.47 | 4,027,789,477.25 | -132.99% |
| Net increase in cash and cash equivalents | 7,047,823,256.62 | 420,646,484.86 | 1,575.47% |
Explanation of why any of the data above varies significantly:
? Applicable □ Not applicable
(1) Net cash generated from operating activities stood at RMB3,107,914,579.48 in the Reporting Period, down 40.85% year-on-year,primarily driven by the increased taxes and levies paid.
(2) Net increase in cash and cash equivalents stood at RMB7,047,823,256.62 in the Reporting Period, up 1,575.47% year-on-year,primarily driven by the disinvestment in wealth management products upon maturity and the decreased purchase of wealthmanagement products in the current period.Reasons for any big difference between the net operating cash flow and the net profit for this Reporting Period
□ Applicable ? Not applicable
V Analysis of Non-Core Businesses
□ Applicable ? Not applicable
VI Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
| 31 December 2022 | 1 January 2022 | Change in percentage | Reason for any significant change | |||
| Amount | As % of total assets | Amount | As % of total assets | |||
| Monetary assets | 13,772,561,141.30 | 46.23% | 11,924,922,771.76 | 46.92% | -0.69% | |
| Accounts receivable | 62,688,668.94 | 0.21% | 89,005,804.17 | 0.35% | -0.14% | |
| Inventories | 6,058,106,090.88 | 20.34% | 4,663,456,672.30 | 18.35% | 1.99% | |
| Investment property | 13,396,881.96 | 0.04% | 4,075,801.06 | 0.02% | 0.02% | |
| Long-term equity investments | 10,154,235.98 | 0.03% | 5,312,600.78 | 0.02% | 0.01% | |
| Fixed assets | 2,741,844,586.30 | 9.20% | 1,984,063,975.87 | 7.81% | 1.39% | |
| Construction in progress | 2,454,703,251.44 | 8.24% | 1,064,134,904.21 | 4.19% | 4.05% | |
| Right-of-use assets | 32,562,171.10 | 0.11% | 43,927,228.97 | 0.17% | -0.06% | |
| Short-term borrowings | 83,232,176.31 | 0.28% | 30,035,138.89 | 0.12% | 0.16% | |
| Contract liabilities | 826,636,478.35 | 2.77% | 1,825,447,705.85 | 7.18% | -4.41% | |
| Long-term borrowings | 44,944,737.91 | 0.15% | 172,356,255.83 | 0.68% | -0.53% | |
| Lease liabilities | 18,631,395.93 | 0.06% | 28,107,223.18 | 0.11% | -0.05% |
Indicate whether overseas account for a larger proportion in the total assets.
□ Applicable ? Not applicable
2. Assets and Liabilities at Fair Value
? Applicable □ Not applicable
Unit: RMB
| Item | Beginning amount | Gain/loss on fair-value changes in the Reporting Period | Cumulative fair-value changes charged to equity | Impairment allowance for the Reporting Period | Purchased in the Reporting Period | Sold in the Reporting Period | Other changes | Ending amount |
| Financial assets | ||||||||
| 1. Held-for-trading financial assets (excluding derivative financial assets) | 2,661,103,876.68 | 29,149,125.30 | 0.00 | 1,550,000,000.00 | 2,457,565,232.32 | 1,782,687,769.66 | ||
| 2. Investments in other equity instruments | 54,542,418.50 | 0.00 | 1,905,371.44 | 0.00 | 0.00 | 56,447,789.94 | ||
| Subtotal of financial assets | 2,715,646,295.18 | 29,149,125.30 | 1,905,371.44 | 1,550,000,000.00 | 2,457,565,232.32 | 1,839,135,559.60 | ||
| Total of the above | 2,715,646,295.18 | 29,149,125.30 | 1,905,371.44 | 1,550,000,000.00 | 2,457,565,232.32 | 1,839,135,559.60 | ||
| Financial liabilities | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Significant changes to the measurement attributes of the major assets in the Reporting Period:
□ Yes ? No
3. Restricted Asset Rights as at the Period-End
| Item | Ending carrying value | Reason for restriction |
| Monetary assets | 667,187,706.08 | Time deposits, certificate of deposit and cash deposits that are pledged for issuing bank acceptance bills |
| Fixed assets | 114,679,263.52 | Mortgaged for guarantee loans |
| Intangible assets | 179,235,930.32 | Mortgaged and pledged for guarantee loans |
| Total | 961,102,899.92 | -- |
VII Investments Made
1. Total Investment Amount
□ Applicable ? Not applicable
2. Major Equity Investments Made in the Reporting Period
□ Applicable ? Not applicable
3. Major Non-Equity Investments Ongoing in the Reporting Period
? Applicable □ Not applicable
Unit: RMB
| Item | Way of investment | Fixed assets investment or not | Industry involved | Input amount in the Reporting Period | Accumulative actual input amount as of the period-end | Capital resources | Progress | Estimated return on investment | Accumulative realized revenues as of the period-end | Reason for not reaching the schedule and anticipated income | Disclosure date (if any) | Disclosure index (if any) |
| The smart technology transformation project for liquor production | Self-built | Yes | Liquor production | 1,794,442,904.44 | 2,796,024,924.88 | Self-owned funds and raised funds | 33.73% | N/A | N/A | N/A | 3 March 2020 | For details, please refer to the Announcement on Investment in the Smart Technology Transformation |
| Project for Liquor Production disclosed by the Company on the website of Cninfo dated 3 March 2020. | ||||||||||||
| Total | -- | -- | -- | 1,794,442,904.44 | 2,796,024,924.88 | -- | -- | N/A | N/A | -- | -- | -- |
4. Financial Investments
(1) Securities Investments
? Applicable □ Not applicable
Unit: RMB
| Variety of securities | Code of securities | Name of securities | Initial investment cost | Accounting measurement model | Beginning carrying value | Gain/loss on fair value changes in the Reporting Period | Cumulative fair value changes charged to equity | Purchased in the Reporting Period | Sold in the Reporting Period | Gain/loss in the Reporting Period | Ending carrying value | Accounting title | Funding source |
| Fund | DAPU Asset Management | 200,000,000.00 | Fair value method | 203,538,644.36 | -1,203,773.87 | 202,334,870.49 | Held-for-trading financial assets | Self-owned funds | |||||
| Other ending holding securities investments | -- | -- | |||||||||||
| Total | 200,000,000.00 | -- | 203,538,644.36 | -1,203,773.87 | 202,334,870.49 | -- | -- | ||||||
| Disclosure date of the announcement about the board’s consent for the securities investment | The Company held the 10th Meeting of the 9th Board of Directors on 29 April 2022, reviewed and approved the proposal on cash entrusted for wealth management with idle self-owned funds by the Company. | ||||||||||||
| Disclosure date of the announcement about the general meeting’s consent for the securities investment (if any) | N/A | ||||||||||||
(2) Investments in Derivative Financial Instruments
? Applicable □ Not applicable
1) Investments in derivative financial instruments for the purpose of hedging during the Reporting Peirod
□ Applicable ? Not applicable
No such cases in the Reporting Period.
2) Investments in derivative financial instruments for the purpose of speculation during the Reporting Period? Applicable □ Not applicableNo such cases in the Reporting Period.
Unit: RMB’0,000
| Operator | Relationship with the Company | Connected transaction | Type of derivative | Initial investment amount | Starting date | Ending date | Beginning investment amount | Purchased in the Reporting Period | Sold in the Reporting Period | Impairment provision (if any) | Ending investment amount | Proportion of closing investment amount in the Company’s ending net assets | Actual gain/loss in the Reporting Period |
| Reverse repurchase of national debt | Naught | No | Reverse repurchase of national debt | 7,620.50 | 31 May 2022 | 4 January 2023 | 7,620.50 | 7,000.00 | 8,620.50 | 6,000.00 | 0.31% | 7.88 | |
| Total | 7,620.50 | -- | -- | 7,620.50 | 7,000.00 | 8,620.50 | 6,000.00 | 0.31% | 7.88 | ||||
| Capital source for derivative investment | Company’s own funds | ||||||||||||
| Lawsuits involved (if applicable) | N/A | ||||||||||||
| Disclosure date of board announcement approving derivative investment (if any) | 30 August 2013 | ||||||||||||
| Disclosure date of shareholders’ meeting announcement approving derivative investment (if any) | N/A |
| Analysis of risks and control measures associated with derivative investments held in the Reporting Period (including but not limited to market risk, liquidity risk, credit risk, operational risk, legal risk, etc.) | The Company had controlled the relevant risks strictly according to the Derivatives Investment Management System. |
| Changes in market prices or fair value of derivative investments during the Reporting Period (fair value analysis should include measurement method and related assumptions and parameters) | Naught |
| Significant changes in accounting policies and specific accounting principles adopted for derivative investments in the Reporting Period compared to previous reporting period | Naught |
| Opinion of independent directors on derivative investments and risk control | Based on the sustainable development of the main business and the sufficient free idle money, the Company increased the profits through investing in the reasonable financial derivative instruments, which was in favor of improving the service efficiency of the idle funds; in order to reduce the investment risks of the financial derivative instruments, the Company had set up corresponding supervision mechanism for the financial derivative instrument business and formulated reasonable accounting policy as well as specific principles of financial accounting; the derivative Investment business developed separately took national debts as mortgage object, which was met with the cautious and steady risks management principle and the interest of the Company and shareholders. Therefore, agreed the Company to develop the derivative Investment business of reverse repurchase of national debt not more than the limit of RMB0.3 billion. |
5. Use of Funds Raised
? Applicable □ Not applicable
(1) Overall Usage of Funds Raised
? Applicable □ Not applicable
Unit: RMB’0,000
| Year | Way of raising | Total funds raised | Total funds used in the Current Period | Accumulative fund used | Total funds with usage changed | Accumulative funds with usage changed | Proportion of accumulative funds with usage changed | Total unused funds | The usage and destination of unused funds | Amount of funds raised idle for over two years |
| 2021 | Private placement of stocks | 495,434.21 | 108,865.76 | 151,942.50 | 0.00 | 0.00 | 0.00% | 343,491.71 | Deposited in fund raising account and cash management | 0.00 |
| Total | -- | 495,434.21 | 108,865.76 | 151,942.50 | 0.00 | 0.00 | 0.00% | 343,491.71 | -- | 0.00 |
| Explanation of overall usage of funds raised | ||||||||||
| Through this issuance, the Company raised total proceeds of RMB5,000,000,000.00. After deducting the expenses related to the issuance of RMB45,657,925.15 (excluding VAT), the actual net proceeds raised were RMB4,954,342,074.85, and the actual amount received was RMB4,957,547,169.81. In 2022, the Company cumulatively used raised funds of RMB1088.6576 million and the interest from the special account of raised funds was RMB68.7933 million. As of the end of 2022, the balance of certificate of deposit and time deposits purchased with temporarily idle raised funds was RMB2.5 billion. The amount of balance due in the special account of raised funds on 31 December 2022 was RMB3,522.3479 million. | ||||||||||
(2) Commitment Projects of Fund Raised
? Applicable □ Not applicable
Unit: RMB’0,000
| Committed investment project and super raise fund arrangement | Changed or not (including partial | Committed investment amount | Investment amount after adjustment (1) | Investment amount in the Reporting | Accumulative investment amount as of | Investment schedule as the | Date of reaching intended use | Realized income in the Reporting | Whether reached anticipated | Whether occurred significant |
| changes) | Period | the period-end (2) | period-end (3)＝(2)/(1) | of the project | Period | income | changes in project feasibility | |||
| Committed investment project | ||||||||||
| The smart technology transformation project for liquor production | Not | 495,434.21 | 495,434.21 | 108,865.76 | 151,942.50 | 30.67% | 31 December 2024 | N/A | Not | |
| Subtotal of committed investment project | -- | 495,434.21 | 495,434.21 | 108,865.76 | 151,942.50 | -- | -- | -- | -- | |
| Total | -- | 495,434.21 | 495,434.21 | 108,865.76 | 151,942.50 | -- | -- | -- | -- | |
| Condition and reason for not reaching the schedule and anticipated income (by specific items) | N/A | |||||||||
| Notes of condition of significant changes occurred in project feasibility | N/A | |||||||||
| Amount, usage and schedule of super raise fund | N/A | |||||||||
| Changes in implementation address of investment project | N/A | |||||||||
| Adjustment of implementation mode of investment project | N/A | |||||||||
| Advance investments in projects financed with raised funds and swaps of such advance | N/A | |||||||||
| investments with subsequent raised funds | |
| Idle fund supplementing the current capital temporarily | N/A |
| Amount of surplus in project implementation and the reasons | N/A |
| Usage and destination of unused funds | As of 31 December 2022, the unused raised funds and the interest were deposited in the special account for raised funds, and idle raised funds of RMB2.5 billion were outstanding for cash management purposes. |
| Problems incurred in fund using and disclosure or other condition | N/A |
(3) Raised Funds Re-purposed
□ Applicable ? Not applicable
No such cases in the Reporting Period.
VIII Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable ? Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Interests
□ Applicable ? Not applicable
IX Principal Subsidiaries and Joint Stock Companies
? Applicable □ Not applicableMain subsidiaries and joint stock companies with an over 10% influence on the Company’s net profits
Unit: RMB
| Company name | Relationship with the Company | Main business scope | Registered capital | Total assets | Net assets | Operating revenues | Operating profit | Net profit |
| Bozhou Gujing Sales Co., Ltd | Subsidiary | Wholesales of baijiu, construction materials, feeds, assistant materials, etc. | 84,864,497.89 | 6,371,581,783.16 | 1,218,506,991.86 | 14,604,943,405.92 | 2,078,878,268.33 | 1,495,484,480.90 |
| Anhui Longrui Glass Co., Ltd | Subsidiary | Manufacture and sale of glass products, etc. | 86,660,268.98 | 499,292,798.93 | 400,064,157.13 | 389,998,081.80 | 46,651,029.71 | 42,829,815.31 |
| Yellow Crane Tower Wine Industry Co., Ltd | Subsidiary | Production and sales of baijiu, etc. | 400,000,000.00 | 1,901,671,345.17 | 845,680,877.84 | 1,753,497,722.05 | 290,057,815.07 | 218,782,173.16 |
| Shanghai Gujing Jinhao Hotel Management Co., Ltd. | Subsidiary | Hotel management, house lease, etc. | 54,000,000.00 | 187,706,189.57 | 79,041,066.87 | 52,644,754.91 | 2,950,997.85 | 2,029,617.03 |
Subsidiaries obtained or disposed in the Reporting Period:
? Applicable □ Not applicable
| Subsidiary | How subsidiary was obtained or disposed | Effects on overall operations and performance |
| Anhui Gujing Health Technology Co., Ltd. | Business combination not under the same control | Give full play to the advantages of Bozhou traditional Chinese |
| medicine and open up the big health industry track. | ||
| Anhui Maiqi Biotechnology Co., Ltd. | Business combination not under the same control | Give full play to the advantages of Bozhou traditional Chinese medicine and open up the big health industry track. |
| Anhui Yangshengtianxia Brand Operation Co., Ltd. | Business combination not under the same control | Give full play to the advantages of Bozhou traditional Chinese medicine and open up the big health industry track. |
| Hainan Yangshengtianxia Biotechnology Development Co., Ltd. | Business combination not under the same control | Give full play to the advantages of Bozhou traditional Chinese medicine and open up the big health industry track. |
| Anhui Gujinggong Liquor Original Vintage Theme Hotel Management Co., Ltd. | Incorporated with investment | Optimize the internal management structure and enhance the internal driving force. |
| Anhui Anjie Technology Co., Ltd. | Incorporated with investment | Optimize the internal management structure and enhance the internal driving force. |
| Huanggang Junya Trading Co., Ltd. | Incorporated with investment | Optimize the internal management structure and enhance the internal driving force. |
Notes to main controlled and joint stock companies:
Not applicable.
X Structured Bodies Controlled by the Company
□ Applicable ? Not applicable
XI Prospects(I) Development Prospect of the Industry the Company is in
1. The industry is seeking steady progress with a clear trend of consumption recovery
With the gradual recovery of the economy and consumption, consumption upgrading will remain to be the long-term trend of thebaijiu industry. In 2023, the consumption scenarios and willingness are expected to gradually recover. With a clear trend ofconsumption recovery, the overall pattern of a weak effect on driving sales and the slow recovery of consumption is improving in anaccelerating manner. From the perspective of the recovery route, the recovery may be accelerated the decelerated. The fundamentalof the baijiu industry will show a trend of QoQ improvements after reaching the bottom around the Spring Festival. In 2023, liquorproducers are expected to maintain a steadily accelerating growth of their general performance, and seeking steady progress will stillbe the most significant pattern of their development.
2. A brand-guided pattern has been formed with increased industrial concentration
In the context of the increasingly fierce market competition, the baijiu market gradually becomes more and more segmented. As thedevelopment trend of concentration in “advantageous brands, production capacity and production areas” remains, a part ofenterprises have relied on their advantages in brands, channels and capital to form a relatively stable leading market. In 2023, thetrend of “the strong is always strong and the weak becomes weaker” may become more obvious in the liquor industry. As leadingliquor producers are quite likely to achieve a growth in performance of more than 10%, the segmentation of the market shares ofsecond-tier brands and regional liquor producers will become more aggravated.
3. The baijiu industry is advancing toward high-quality development with the release of its production capacity“Production expansion” is arguably an important keyword for the baijiu industry. In 2022, multiple liquor producers announced toconduct production expansion. Different from previous situations, this round of production expansion is mainly concentrated onfamous liquor brands and representative liquor products. It is more driven by the pursuit of quality base liquor for vintage or agedliquor and is a pre-emptive action for brand competition in the sub-high-end and high-end liquor markets. It not only blows the hornfor the advancement of the domestic baijiu industry on the path of high-quality and sustainable development, but also indicates thatthe production capacity should be released to respond to the new situation after the pandemic. Therefore, the release of theproduction capacity of leading liquor producers will be an important orientation of the development of the liquor industry in 2023.
4. Industrial upgrading makes the trend of digitalization more and more obvious
The fourth industrial revolution represented by digitalization and intelligentialization has triggered reshuffle in many industries andput forward new topics of development for the traditional baijiu-making industry. With the continuous upgrading of consumerdemand and the aggravation of competition in the domestic baijiu market, digital transformation is helping liquor producers enhancetheir core competitiveness. Externally, the online-offline closed loop of traffic provides consumers with an omni-channel shoppingexperience, as the penetration in various digital channels, such as e-commerce, O2O, live streaming, and community group purchases,is increasing. Internally, lean management of all processes of operation based on digital platforms has been conducted tocontinuously reduce operation costs and improve operation efficiency.(II) Development Strategy of the Company
1. Firmly boost "Strategy 5.0, Five-Star Operation” Strategy
Comprehensively fulfill Strategy 5.0 and have the "User-Centered" thought fully and deeply implemented in the Company. Solidlycreate the "Five-Star Operation", enhance competitive force, improve quality and efficiency, optimize services and promote healthyand efficient operation of the enterprise.
2. Firmly boost reform and innovation strategy
Deeply boost marketing innovation, technological innovation and mechanism innovation and generate endogenous power of the
enterprise.
3. Firmly create “Talent Highland” strategy
Intensify talent recruitment and attraction and establish flexible talent attraction and wisdom experience borrowing mechanism.Innovate talent training mode and promote independent cultivation & development and absorption & attraction simultaneously.(III) Operating Revenue Plan of the Company in 2023In 2023, the Company plans to achieve the operating revenue of RMB20.1 billion, rising 20.26% compared with that of last year; andachieve a total profit of RMB6 billion, rising 34.21% compared with that of last year.(IV) Operating Risk of the Company
1. The adverse effect of the systematic risk in the macro-economic environment on the development of the industry and theCompany.
2. The strengthened concentration and intensified polarization in the baijiu industry, and continuously escalated competition forproduction capacity, market, and flavor in the era of famous liquor competition.
3. The more complex, severe and uncertain external environment.
(V) Operating Measures
1. Marketing
The Company will target a high level to improve the brand-based driving effect. The Company will adhere to the nationwide andsub-high-end strategy that advocates “spiking hard from a high position”. The Company will also continue to deepen the “ThreeOnes Project” and adhere to the implementation route of “position occupation, market consolidation and customer acquisition” toaccelerate its advancement toward the whole country and expansion in markets outside the base province. By making a targetedlayout, the Company aims to cultivate the market vitality. By brand resonance, the Company aims to deepen its marketing modes. Bymaking more efforts on terminals, the Company aims to enhance the cultivation of consumers. Meanwhile, the Company will deepenthe construction of its marketing system, continue to conduct upgrading regarding its brands, product quality and cultural vitality,continuously expand its brand influence and increase its brand reputation.
2. Product Management
The Company aims to implement the call on green and intelligent liquor-making. By actively responding to the national “dual carbon”goal and strictly implementing policies related to environment protection, the Company aims to achieve green production. TheCompany will also accelerate the progress of the intelligent industrial park project, so that the park can be put into operation sooner.Moreover, the Company will make concerted effort to conduct equipment upgrading and transformation, optimize processes andprocedure, and promote intelligent production.
3. Engineering Construction
The Company accelerated the construction of the smart technology transformation project (smart park) for liquor production, andadhered to high standards and high quality to promote the construction of smart park projects.
4. Informatization Construction
The Company will restructure business processes. With the construction of various systems, such as the APS, the MES, the SCADAand the bar code system, the Company will complete the construction of smart factories that are automatic, information-based,intelligent and driven by the integration of IT and OT. The Company will also achieve the interconnection of devices, as well asimprove the efficiency of device coordination and the ability of predictive device maintenance. Moreover, the Company willestablish a unified big data platform as the base of the big data governance system to provide flexible support for data analysis in theforeground and the background.
5. Safety and Environmental Protection
The Company will enhance the inspection and governance of safety hazards, emphasize accountability of duty performance, conducteffective long-term management and ensure the achievement of the objective of “four zeros”. By implementing green and low-carbonproduction, the Company will systematically implement energy conservation and consumption reduction to ensure that its dischargeand emissions will meet the relevant standards.
6. Internal Management
The Company also aims to deepen the implementation of the reform of state-owned enterprises. It will consolidate its achievementsin the three-year action of the reform of state-owned enterprises and conduct more in-depth and practical reform of the ThreeSystems. By revitalizing the mechanisms of post competition and employee appraisal, the Company aims to achieve the upward anddownward mobility of managers; by revitalizing the mechanisms of remuneration distribution and performance appraisal, theCompany aims to achieve the upward and downward mobility of employee income. Moreover, by continuously promote theoptimization of cost, models and procedure, the Company aims to improve its operation efficiency.
7. Corporate Culture Construction
Additionally, the Company will implement the spirit of the 20th National Congress of the CPC. It will continue to implement theimportant instructions of General Secretary Xi Jinping, thoroughly conduct themed publicity and education, continue to enhanceideology-related work, and conduct effective defence as a main venue for ideology-related work. It will also make efforts to developan innovation model with the in-depth integration of Party building and business. Furthermore, it will take advantage of theco-development and exchange platform for Party building to enhance abilities and promote development. Moreover, it will enhancethe ideological education of its employees by combining business training with ideological guidance.In 2023, the Company will continue to adhere to the guidance of the Xi Jinping Thought on Socialism with Chinese Characteristicsfor a New Era and thoroughly implement the spirit of the 20th National Congress of the CPC, as well as the decisions andarrangement of the Party committees of the base province and the base city. With adherence to “Three Stricts and Three Honests” and“do things immediately, genuinely, and solidly”, the Company will gather strength to build “China Liquor Town”. Additionally, theCompany will continuously implement the long-term perspective mindset, the concept of excellence, and the awareness ofhigh-quality products, maintain integrity and innovation, pursue progress while ensuring stability, and advance toward a higherobjective.XII Communications with the Investment Community such as Researches, Inquiries andInterviews
□ Applicable ? Not applicable
Part IV Corporate GovernanceI General Information of Corporate Governance
Indicate by tick market whether there is any material in-compliance with laws, administrative regulations and the regulatorydocuments issued by the CSRC governing the governance of listed companies.
□Yes ?No
The Company has enabled the General Meeting, the Board of Directors, the Board of Supervisors and the management to form astandardized and scientific decision-making mechanism of operation to sufficiently protect the rights and interests of investors, andsmall and medium investors in particular, and to intensify the standardized operation of the Company, in strict accordance withrelevant laws and regulations such as the Company Law, the Securities Law, the Code of Corporate Governance for ListedCompanies, the Rules for Stock Listing of Shenzhen Stock Exchange, and Self-Regulatory Guidelines No. 1 for Companies Listed onShenzhen Stock Exchange - Standard Operation of Listed Companies on the Main Board. During the Reporting Period, theCompany's actual situation of corporate governance met the relevant requirements of the normative documents on the governance oflisted companies issued by the China Securities Regulatory Commission. In strict accordance with the relevant laws and regulations,and the Company's requirements on internal rules, regulations, and management system, each of the directors, supervisors and seniormanagers of the Company executed his or her rights and obligations, to ensure transparent disclosure of the Company's information,its operation according to law, and honesty and trustworthiness.
1. Shareholders and General Meeting of Shareholders
The Company regulates the convening, holding, and voting procedures of the general meeting of shareholders in strict accordancewith the provisions and requirements of the Company Law, the Articles of Association, and the Rules of Procedure of the GeneralMeeting. During the Reporting Period, the convening and holding procedures of general meetings of shareholders, the qualificationsof attendants to the meetings and the voting procedures of the meetings all met the provisions of the Company Law, Rules ofProcedure of the General Meeting, and other laws and regulations. The Company equally treated all of its shareholders, and smalland medium shareholders in particular, to ensure full execution of rights of all shareholders.
2. The Company and Controlling Shareholders
The Company's controlling shareholders are able to strictly regulate their own behaviors, without any violation of provisions ofrelevant laws, regulations, and the Company's Articles of Association. They have not directly or indirectly interfered with theCompany's decision-making, and production and operation activities, nor have they occupied the Company's funds; the Company hasnot provided its controlling shareholders with any form of guarantee.
3. Directors and Board of Directors
The Company's Board of Directors consists of nine directors, three of whom are independent directors. The number of directors andthe personnel composition of the Board of Directors comply with the requirements of laws, regulations, and the Articles ofAssociation. All directors act in accordance with the Articles of Association, Rules of Procedure of the Board of Directors, and theWork Policy for Independent Directors, etc., attend the meetings of the Board of Directors and general meetings of shareholders,diligently and faithfully perform their duties and obligations. Meanwhile, they actively participate in relevant training, and getfamiliar with relevant laws and legislations. Under the Board of Directors, there are four special committees, i.e., the AuditCommittee, the Nominating Committee, the Remuneration and Appraisal Committee, and the Strategy Committee, which performtheir normal duties, to provide scientific and professional comments and references for decision-making of the Board of Directors.
4. Supervisors and Board of Supervisors
There are five supervisors in the Company's Board of Supervisors, including two employee supervisors. The number and
composition of the Board of Supervisors are in compliance with the requirements of laws and regulations. All supervisors are able toconscientiously perform their duties in accordance with the requirements of the Rules of Procedure of the Board of Supervisors,earnestly perform their duties, and supervise the major events, related-party transactions, financial status, law-and-regulationcompliance of performance of duties of directors and senior managers of the Company.
5. The Mechanism of Performance Appraisal, and Incentive and Constraint
The procedures for appointment and removal of directors, supervisors, and senior managers of the Company shall be open andtransparent, and in line with the relevant provisions of laws, regulations, and the Articles of Association; the Company's remunerationappraisal scheme shall specifically stipulate the evaluation to the Company's management team. The Company shall constantlyimprove the performance evaluation standard and incentive and constraint mechanism of directors, supervisors, and senior managers.
6. Fulfillment of Social Responsibilities, and Stakeholders
The Company is able to fully respect and protect the legitimate rights and interests of relevant stakeholders, achieve a balance ofinterests between the society, shareholders, the Company, suppliers, customers, employees, and other relevant parties, to promote thesustainable, stable, and healthy development of the Company.
7. Information Disclosure and Transparency
The Company faithfully performs the obligation of information disclosure in strict accordance with the Articles of Association of theCompany, Listing Rules of Shenzhen Stock Exchange, Self-Regulatory Guidelines No. 1 for Companies Listed on Shenzhen StockExchange - Standard Operation of Listed Companies on the Main Board, Self-regulatory Guidelines No. 5 for Companies Listed onShenzhen Stock Exchange - Management of Information Disclosure Affairs, and the relevant laws and regulations of China'sSecurities Regulatory Commission and Shenzhen Stock Exchange. The Company designates China Securities Journal, ShanghaiSecurities News, Ta Kung Pao, and Cninfo (http://www.cninfo.com.cn) as its information disclosure media and website, to guaranteeinvestors' right to know, and to ensure that all shareholders of the Company have a fair opportunity to obtain information of theCompany. Meanwhile, the Company has established diversified communication channels for investors, including special telephoneline, exclusive mailbox, and interactive platform for investors, and many other forms, to fully guarantee the right of a large numberof investors to know.
8. The formulation and implementation of the registration and management system on inside information and insidersIn accordance with the requirements of regulatory authorities, the Company and all of its controlling shareholders have formulatedthe system for registration and record on inside information and insiders, regulated the acts of managing inside information of theCompany and its controlling shareholder, strengthened the classification of inside information, and safeguarded the principle offairness for information disclosure. During the Reporting Period, in strict accordance with the Management System on InsideInformation and Insiders, the Company has made well classification of inside information, and registration and record on insiders.
II The Company’s Independence from Its Controlling Shareholder and Actual Controller inBusiness, Personnel, Asset, Organization and Financial Affairs
The Company and the controlling shareholder, Anhui Gujing Group Co., Ltd., realized five independences in terms of business,personnel, assets, organizations and financial affairs, with separate independent calculation, independent and complete business,independent operation ability, and independent responsibilities and risks. Majority shareholders cannot surpass the shareholders’general meeting to directly or indirectly interfere with the Company’s decisions and legal production as well as operation activities,and there is no same trade competition state of the same products between the company and majority shareholders.
1. Independence of Business
The Company is mainly engaged in the production and sale of baijiu, and the Company's business is mutually independent of itscontrolling shareholder Gujing Group and other enterprises controlled by the Group. The issuer owns independent research anddevelopment system, purchasing system, production system, and sale system, forming a complete business chain, all of which do notrely on its shareholders and their subordinate enterprises. Therefore, the issuer's business is independent of its controlling
shareholders.
2. Independence of Personnel
The Company has independent management systems of labor, personnel, salary, etc., and independent staff teams, in which the salarypayment and welfare expenditure of the Company are strictly independent of those of its shareholders and related parties. Thedirectors, supervisors and senior managers of the Company are all selected in strict accordance with the relevant provisions of theCompany Law and the Company's Articles of Association. All senior managers do not take other positions than directors orsupervisors in any of other entities controlled by the controlling shareholders or actual controllers of the Company, nor do theyreceive salary from any other entities controlled by the controlling shareholders or actual controllers of the Company. None of thefinancial staff members of the Company takes part-time positions in any of other entities controlled by the controlling shareholders oractual controllers of the Company.
3. Independence of Assets
The Company has its production system, auxiliary production system, and supporting facilities related to its production and operation;and legally has the ownership or use rights of the land, plants, machines, trademarks, and patents in relation to its production andoperation. Therefore, there is not any damage to the Company's interests in such a way that the assets and funds of the Company areoccupied by the Company's controlling shareholders and their related parties.
4. Independence of Organization
The Company has established a sound and integral governance structure of general meeting of shareholders, the Board of Directors,and the Board of Supervisors, and formulated the corresponding internal control management system. The Company independentlyexercises the duties and rights of operation and management, in which the Company's units of production, operation, and office arecompletely separated from the shareholding entities. Therefore, the Company does not make mixed operation and has mixed officewith its shareholding entities; the Company's shareholding entities and their related entities or persons do not interfere with theCompany's structural setup; there is not any subordinate relationship between the Company and its controlling shareholders, orbetween their functional departments.
5. Independence of Finance
The Company has set up an independent finance department with full-time personnel; and established an independent accountingsystem and financial management system, independently making financial decisions, and implementing a strict internal audit system.An independent bank account has been opened for the Company, without sharing the account with the Company's shareholdingentities or any other entity or person. The Company, as an independent taxpayer, declares taxes and fulfills tax payment obligationsindependently according to law, and does not pay taxes together with its shareholding entities.III Horizontal Competition
□ Applicable ? Not applicable
IV Annual and Extraordinary General Meetings Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
| Meeting | Type | Investor participation ratio | Date of the meeting | Disclosure date | Index to disclosed information |
| The 2021 Annual General Meeting | Annual General Meeting | 56.58% | 27 May 2022 | 28 May 2022 | Announcement on Resolutions of the 2021 Annual General Meeting |
disclosed onwww.cninfo.com.cn
2. Extraordinary General Meetings Convened at the Request of Preferred Shareholders with ResumedVoting Rights
□ Applicable ? Not applicable
V Directors, Supervisors and Senior Management
1. Basic Information
| Name | Office title | Incumbent/Former | Gender | Age | Start of tenure | End of tenure | Beginning shareholding (share) | Increase in the Reporting Period (share) | Decrease in the Reporting Period (share) | Other increase/decrease (share) | Ending shareholding (share) |
| Liang Jinhui | Chairman of the Board | Incumbent | Male | 57 | 23 April 2014 | 18 June 2023 | |||||
| Li Peihui | Director | Incumbent | Male | 50 | 23 August 2016 | 18 June 2023 | |||||
| Zhou Qingwu | Director, GM | Incumbent | Male | 49 | 23 April 2014 | 18 June 2023 | |||||
| Yan Lijun | Director, Executive Deputy GM | Incumbent | Male | 50 | 5 August 2016 | 18 June 2023 | |||||
| Xu Peng | Director, Deputy GM | Incumbent | Male | 53 | 23 August 2016 | 18 June 2023 | |||||
| Ye Changqing | Director | Incumbent | Male | 49 | 15 December 2011 | 18 June 2023 | |||||
| Zhang Guiping | Independent director | Incumbent | Male | 72 | 19 June 2020 | 18 June 2023 | |||||
| Wang Ruihua | Independent director | Incumbent | Male | 61 | 19 June 2020 | 18 June 2023 |
| Xu Zhihao | Independent director | Incumbent | Male | 47 | 19 June 2020 | 18 June 2023 | |||||
| Sun Wanhua | Chairman of Supervisory Committee | Incumbent | Male | 58 | 20 May 2019 | 18 June 2023 | |||||
| Yang Xiaofan | Supervisor | Incumbent | Male | 56 | 23 August 2016 | 18 June 2023 | |||||
| Lu Duicang | Supervisor | Incumbent | Male | 43 | 20 May 2019 | 18 June 2023 | |||||
| Zhang Bo | Employee supervisor | Incumbent | Male | 58 | 23 August 2016 | 18 June 2023 | |||||
| Cui Yujun | Employee supervisor | Incumbent | Male | 55 | 20 March 2022 | 18 June 2023 | |||||
| Zhang Lihong | Deputy GM | Incumbent | Male | 55 | 5 August 2016 | 18 June 2023 | |||||
| Gao Jiakun | Deputy GM | Incumbent | Male | 53 | 28 August 2020 | 18 June 2023 | |||||
| Li Anjun | Deputy GM | Incumbent | Male | 53 | 28 August 2020 | 18 June 2023 | |||||
| Zhu Xianghong | Deputy GM | Incumbent | Male | 49 | 28 August 2020 | 18 June 2023 | |||||
| Kang Lei | Deputy GM | Incumbent | Male | 45 | 23 September 2022 | 18 June 2023 | |||||
| Zhu Jiafeng | Deputy GM, Chief Accountant | Incumbent | Male | 46 | 23 September 2022 | 18 June 2023 | |||||
| Zhu Jiafeng | Secretary of the | Incumbent | Male | 46 | 29 October | 18 June |
| Board | 2021 | 2023 | |||||||||
| Wang Zibin | Employee supervisor | Former | Male | 53 | 23 August 2016 | 20 March 2022 | |||||
| Total | -- | -- | -- | -- | -- | -- |
Indicate by tick mark whether any directors or supervisors left or any senior management were disengaged during the ReportingPeriod?Yes □NoMr. Wang Zibin applied for resignation from the position of employee supervisor of the Company due to job adjustment.Change of Directors, Supervisors and Senior Management? Applicable □ Not applicable
| Name | Office title | Type of change | Date of change | Reason for change |
| Wang Zibin | Employee supervisor | Left | 20 March 2022 | Applied for resignation from the position of employee supervisor of the Company due to job adjustment |
| Cui Yujun | Employee supervisor | Elected | 20 March 2022 | Election |
| Kang Lei | Deputy GM | Appointed | 23 September 2022 | Appointment |
| Zhu Jiafeng | Deputy GM, Chief Accountant | Appointed | 23 September 2022 | Appointment |
2. Biographical Information
Professional backgrounds, major work experience and current duties in the Company of the incumbent directors, supervisors andsenior management:
1. Mr. Liang Jinhui, male, born in October 1966, member of CPC, is Political Engineer, a deputy to the 13
thNational People’sCongress, a deputy to the 14
th
National People’s Congress and Chinese Brewmaster with MBA degree, incumbent Secretary of CPCand president of the Company and president and Secretary of CPC of Gujing Group. He ever took the post of MD, GM, Deputy GM,GM of Bozhou Gujing Sales Co., Ltd., Supervisor of Third Supervisory Committee, Director of the 4
th
, 5
th
and 6th
Board of Directorsand Chairman of the 7
th and 8
th
Board of Directors of the Company.
2. Mr. Li Peihui, male, born in July 1973, member of CPC, is a holder of master degree. He is a senior accountant, CPA(non-practicing) and member of national leading accounting talents. At present, he acts as the Company’s Vice Secretary of CPC andpresident of Gujing Group. He had ever served as deputy GM and GM of Financial Department, deputy chief accountant, chiefaccountant, Secretary of Board of Directors and Director of the Company; Chairman of the Board of Anhui Ruijing Business TravelGroup Co. and Anhui Huixin Financial Investment Group; executive vice president and CFO of Gujing Group; and director of the 7
th
and 8thBoard of Directors.
3. Mr. Zhou Qingwu, male, born in February 1974, member of CPC, is a senior engineer, and China Chief Baijiu Taster witheducational experience of graduate student. At present, he is Vice Secretary of CPC, Director and General Manager of the Company,Vice Secretary of CPC of Gujing Group. He had ever acted as Deputy GM and deputy executive GM of the Company and Director ofthe 5th
, 6th, 7th
and 8thBoard of Directors of the Company.
4. Mr. Yan Lijun, male, June 1973, member of CPC, is a holder of master degree with Senior Taster. Now he is Vice Secretary ofCPC, Director, Executive Deputy GM of the Company, member of CPC Committee of Gujing Group, Chairman of the Board andGM of Bozhou Gujing Sales Co., Ltd. He once worked as a salesman of Sale Company, District Manager, Director of MarketResearch, Vice Manager of Planning Department, Director of Hefei Strategic Operations Center, Vice GM and director of the 7
th
and
th
Board of Directors of the Company.
5. Mr. Xu Peng, male, born in September 1970, member of CPC, has educational experience of undergraduate college. He is themember of CPC Committee, Director and Deputy GM of the Company, member of CPC Committee of Gujing Group, Secretary ofCPC and Chairman of the Board of Yellow Crane Tower Liquor Industry Co., Ltd. He had ever acted as Deputy Director and Directorof Finance Second Office of Finance Department of the Company, Manager of Finance Department of Anhui Laobada Co., Ltd., ViceManager and Manager of Finance Department of the Company, Deputy General Manager and Chief Supervisor of MarketSupervision Department of Bozhou Gujing Sales Company, Chairman of the 7
th Supervisory Committee and Director of the 7
thand
thBoard of Directors of the Company.
6. Mr. Ye Changqing, male, born in October 1974, member of CPC, senior accountant, is a member of national leading accountingtalents with master degree and International Certified Internal Auditor. He is the incumbent Director of the Company and CFO ofGujing Group. He had ever acted as Chief Auditor of Audit Department, Vice Manager of Audit Department and Vice Supervisor andSupervisor of Auditing& Supervision Department; and Supervisor of the 4
th
Supervisory Committee of the Company; Director andSecretary of the 5
th, 6
th
, 7
th
and 8thBoard of Directors, and Chief Accountant of the Company.
7. Zhang Guiping, male, born in August 1951, is a member of the Revolutionary Committee of the Chinese Kuomintang, a bachelor'sdegree holder and a member of the 13
thCPPCC National Committee. He is currently the Chairman of Sunning Global, Chairman andpresident of Suning Universal Co., Ltd., Independent Director of the Company, Chairman of the Entrepreneurs Association of theRevolutionay Committee of the Chinese Kuomintang, Deputy Director of the Central Economic Commission of the RevolutionaryCommittee of the Chinese Kuomintang, Supervisor of the Party and Government Style and Police Style of the Ministry of PublicSecurity of the Revolutionary Committee of the Chinese Kuomintang, Vice Chairman of Sun Yat-Sen Fraternity Foundation,Chairman of Commercial Culture Association of China, President of the Council of Anhui International Huishang ExchangeAssociation, Chairman of Anhui Chamber of Commerce in Jiangsu, and other social positions. Many awards have been bestowedupon him, including “National Model Worker”, “Excellent Contributor to Building of Socialism with Chinese Characteristics”, “RoleModel of the Revolutionary Committee of the Chinese Kuomintang”, “China Outstanding Private Entrepreneur”, “China’s MostInfluential Business Leader”, “Chinese Integrity Talent”, “TOP Ten Influential People in China’s Real Estate Industry” and“Outstanding Individual Contributor to China Charity”.
8. Wang Ruihua, male, born in January 1962, member of CPC, is a non-practicing Chinese CPA with a doctor’s degree inmanagement. Now he acts as the executive dean, a professor and doctoral advisor at Central University of Finance and Economics,Guangdong-Hong Kong-Macao Greater Bay Area (Huangpu) Research Institute & member of China National MBA EducationSupervisory Committee, member of Independent Director Committee of China Association for Public Companies, the independentdirector in the Company, independent director in Bank Of Beijing Co., Ltd., independent director of Harvest Fund Management Co.,Ltd., independent director of JD Technology Holding Co., Ltd., independent director of China Post Securities Co., Ltd.
9. Xu Zhihao, male, born in June 1976, is a senior engineer who graduated from Renmin University of China. He also holds amaster's degree from the PBC School of Finance, Tsinghua University, and is studying for a doctorate at Zhejiang University andSingapore Management University. He possesses the professional qualifications to engage in fund and securities businesses. He iscurrently Independent Director of the Company, CEO of Geely Technology Group Co., Ltd., Chairman of QJMOTOR, and Chairmanof Mintimes Investment Development Group Co., Ltd.
10. Sun Wanhua, male, was born in October 1965, member of CPC, with a bachelor degree. Now he acts as the Chairman of theSupervisory Committee of the Company, member of the Party Committee and vice president in Gujing Group. He once held the postsof the member of Standing Committee of CPC County Committee, the Party Secretary of People’s Armed Forces Department and
political commissar in Minquan County, Henan Province, member of Standing Committee of Discipline Inspection Committee inBozhou, Deputy Director of Bozhou Supervision Bureau and Deputy Secretary of Bozhou Discipline Inspection Committee,Chairman of the 8
thSupervisory Committee of the Company.
11. Mr. Yang Xiaofan, male, born in April 1967, member of CPC, is a holder of master degree. At present, he is Supervisor of theCompany and Vice President and member of CPC Committee of Gujing Group. He once acted as Vice President and GeneralManager of Anhui Gujing Real Estates Group Co., Ltd., Assistant to President of Gujing Group; Director of the 5
th, 6th and 7thBoardof Directors of the Company and Supervisor of the 7
th and 8th
Supervisory Committee of the Company.
12. Lu Duicang, male, born in March 1980, member of CPC, a senior accountant with a master degree. Now he serves as thesupervisor of the Company, the Chairman of Anhui Longrui Glass Co., Ltd. and director of Mengcheng Rural Commercial Bank Co.,Ltd. He once acted as the accountant, deputy director, and director of No.1 Center of Finance Department, factory director of theBaijiu Bottling Branch and Manager of Finished Product Department in the Company, Controller of the Financial ManagementCenter in Gujing Group, GM of Anhui Huixin Finance Investment Group Co., Ltd. Assistant Financial Controller in Gujing Groupand the Supervisor of the 5
th, 6th, 7th
and 8th
Supervisory Committee of the Company.
13. Mr. Zhang Bo, male, born in July 1965, member of CPC, is an economist with bachelor degree. Now, he serves as EmployeeSupervisor of the Company and director of 5A Management Committee (preparatory). He once worked as Chairman of the board andGM of Bozhou Gujing Printing Co., Ltd. and Bozhou Gujing Glassware Manufacturing Co., Ltd. as well as Chairman of the Board ofBozhou Ruineng Heat and Power Co., Ltd., Supervisor of the 7
th
and 8th
Supervisory Committee of the Company, Chairman of theLabor Union of Gujing Group and Chairman of the Board & GM of Anhui Mingguang Distillery Co., Ltd.
14. Mr. Cui Yujun, male, born in December 1968, member of CPC, is a holder of bachelor degree. He is incumbent the employeesupervisor of the Company and director of the Production Management Centre. He onced worked as the workshop manager, manager,GM Assistant and Deputy Director of the Company’s Production Management Centre.
15. Mr. Zhang Lihong, male, born in October 1968, member of CPC, is an economist with bachelor degree. He is incumbent ViceSecretary of CPC and Deputy GM of the Company and member of CPC Committee and deputy secretary of Commission forDiscipline and Inspection of Gujing Group. He once acted as clerk, Secretary of Operation Department and Market DevelopmentDepartment, Deputy GM, Director of General Office, Director of Service Centre of Bozhou Gujing Sales Co., Ltd., Director of HRDepartment and Administrative Service Center and GM Assistant of the Company.
16. Mr. Gao Jiakun, male, born in November 1970, member of CPC, is a holder of bachelor degree. He is incumbent member of theCPC and Deputy GM of the Company. He once served as GM of Production Management Department, Vice Director of ProductionManagement Centre, Chairman of the Board and GM of Bozhou Pairuite Packing Products Co., Ltd., Director of Finished ProductsFilling Centre and Production Management Centre, and assistant to GM of the Company.
17. Li Anjun, male, born in May 1970, is a member of CPC with a master's degree. He is currently a member of the Party Committee,Deputy General Manager and Chief Enginee of the Company. He served as the Deputy Director and Director of the Company'sTechnical Quality Center.
18. Mr. Zhu Xianghong, male, born in September 1974, member of CPC, is a senior Wine Taster with bachelor degree. He isincumbent Deputy GM of Company, GM of Yellow Crane Tower Liquor Industry Co., Ltd. He once acted as GM of ProductDepartment of Bozhou Gujing Sales Co., Ltd., GM of Hefei Office, regional GM of Northern Anhui Province, GM of AnhuiOperating Centre, standing Deputy GM of Sales Company and assistant to GM of the Company.
19. Kang Lei, male, born in July 1978, is a member of CPC with a college degree. He is currently Deputy GM, and Director of theEnterprise Management Center of the Company. He served as Deputy Director of the Financial Management Center of BozhouGujing Sales Company, Director and Assistant to General Manager of the Company's Administrative Service Center, and DeputyDirector of the President's Executive Office of Gujing Group.
20. Zhu Jiafeng, male, born in August 1977, is a member of CPC and senior accountant with a college degree. He is currently DeputyGM, Chief Accountant, Secretary of the Board and Director of the Financial Management Center of the Company. He served as the
Manager, Deputy Director, assistant to General Manager and Deputy Chief Accountant of the Financial Management Center of theCompany.Offices held concurrently in shareholding entities:
? Applicable □ Not applicable
| Name | Shareholding entity | Office held in the shareholding entity | Start of tenure | End of tenure | Remuneration or allowance from the shareholding entity |
| Liang Jinhui | Anhui Gujing Group Co., Ltd. | Chairman of the Board of Directors | 1 May 2014 | Yes | |
| Li Peihui | Anhui Gujing Group Co., Ltd. | President | 31 October 2017 | Yes | |
| Sun Wanhua | Anhui Gujing Group Co., Ltd. | Vice President | 31 October 2017 | Yes | |
| Yang Xiaofan | Anhui Gujing Group Co., Ltd. | Vice President | 1 November 2009 | Yes | |
| Ye Changqing | Anhui Gujing Group Co., Ltd. | CFO | 13 August 2021 | Yes | |
| Notes | The above-mentioned personnel, though they take posts in shareholders’ entities, comply with the relevant employment requirements of Company Law, Securities Law and never disciplined by CSRC, other relevant departments and the Stock Exchange. | ||||
Offices held concurrently in other entities:
? Applicable □ Not applicable
| Name | Other entity | Office held in other entity | Start of tenure | End of tenure | Remuneration or allowance from other entity |
| Zhang Guiping | Suning Universal Group Co.,Ltd | Chairman of the Board | December 2005 | No | |
| Suning Universal Co.,Ltd | Chairman of the Board, President | October 2017 | October 2023 | Yes | |
| Xu Zhihao | Geely Technology Group Co., Ltd. | CEO | January 2018 | Yes | |
| Zhejiang Qjiang Motorcycle Co.,Ltd. | Chairman of the Board | February 2020 | May 2024 | No | |
| Mintimes Investment Development Group Co., Ltd. | Chairman of the Board | August 2021 | August 2024 | No | |
| Wang Ruihua | Central University of Finance and Economics | Professor | July 1983 | Yes | |
| Bank Of Beijing Co., Ltd. | Independent director | December 2019 | December 2025 | Yes | |
| Harvest Fund Management Co., Ltd. | Independent | November 2017 | Yes |
| director | |||||
| JD Technology Holding Co., Ltd. | Independent director | June 2020 | Yes | ||
| China Post Securities Co., Ltd. | Independent director | February 2023 | Yes | ||
| Lu Duicang | Mengcheng Rural Commercial Bank Co., Ltd. | Director | March 2018 | No | |
| Notes | Zhang Guiping, Wang Ruihua and Xu Zhihua are independent directors of the Company. | ||||
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and seniormanagement as well as those who left in the Reporting Period:
? Applicable □ Not applicableOn 10 May 2022, Mr. Zhang Guiping, an independent director of the Company, received the Decision on Giving Zhang Guiping aNotice of Criticism from Shenzhen Stock Exchange due to the short-term trading of the Company’s stock made by his spouse.
3. Remuneration of Directors, Supervisors and Senior Management
Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisors and seniormanagement:
(1) Decision-making procedure of remuneration for Directors, Supervisors and Executive OfficersThe remuneration of independent directors is decided through the general meeting of shareholders, and the remuneration of thedirectors, supervisors, and senior managers assuming positions in the Company is defined in accordance with the relevant regulationsof the State-owned Assets Supervision and Administration Commission (the "SASAC") of Haozhou Municipal People's Government,and the relevant policies of the Company.
(2) Determination basis of remuneration for Directors, Supervisors and Executive OfficersThe remuneration is determined based on the annual performance of the Company and the appraisal result in accordance with thespirits in the Implementation Opinion on Deepening the System Reform of Remuneration of Chargers in Provincial Enterprises(WF[2015] No. 28), and the Interim Procedures of Remuneration Management of Chargers in Municipal Enterprises (GZG[2017] No.
21) issued by the CPC Anhui Provincial Committee and the People’s Government of Anhui.
(3) Actual Payment of remuneration for Directors, Supervisors and Executive Officers
Part of basic remuneration is paid on a monthly basis, and according to appraisal, performance-based remuneration is paid at the endof the year.Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB'0,000
| Name | Office title | Gender | Age | Incumbent/Former | Total before-tax remuneration from the Company | Any remuneration from related party |
| Liang Jinhui | Chairman of the Board | Male | 57 | Incumbent | Yes | |
| Li Peihui | Director | Male | 50 | Incumbent | Yes |
| Zhou Qingwu | Director, GM | Male | 49 | Incumbent | 100.73 | No |
| Yan Lijun | Director, Executive Deputy GM | Male | 50 | Incumbent | 392.70 | No |
| Xu Peng | Director, Deputy GM | Male | 53 | Incumbent | 229.66 | No |
| Ye Changqing | Director | Male | 49 | Incumbent | Yes | |
| Zhang Guiping | Independent director | Male | 72 | Incumbent | 20.00 | No |
| Wang Ruihua | Independent director | Male | 61 | Incumbent | 20.00 | No |
| Xu Zhihao | Independent director | Male | 47 | Incumbent | 20.00 | No |
| Sun Wanhua | Chairman of Supervisory Committee | Male | 58 | Incumbent | Yes | |
| Yang Xiaofan | Supervisor | Male | 56 | Incumbent | Yes | |
| Lu Duicang | Supervisor | Male | 43 | Incumbent | 93.28 | No |
| Zhang Bo | Employee supervisor | Male | 58 | Incumbent | Yes | |
| Cui Yujun | Employee supervisor | Male | 55 | Incumbent | 109.96 | No |
| Zhang Lihong | Deputy GM | Male | 55 | Incumbent | 155.84 | No |
| Gao Jiakun | Deputy GM | Male | 53 | Incumbent | 173.55 | No |
| Li Anjun | Deputy GM | Male | 53 | Incumbent | 165.74 | No |
| Zhu Xianghong | Deputy GM | Male | 49 | Incumbent | 358.95 | No |
| Kang Lei | Deputy GM | Male | 45 | Incumbent | 158.45 | No |
| Zhu Jiafeng | Deputy GM, Chief Accountant, Secretary of the Board | Male | 46 | Incumbent | 160.73 | No |
| Wang Zibin | Employee supervisor | Male | 53 | Former | Yes | |
| Total | -- | -- | -- | -- | 2,159.59 | -- |
VI Performance of Duty by Directors in the Reporting Period
1. Board Meeting Convened during the Reporting Period
| Meeting | Date of the meeting | Disclosure date | Meeting resolutions |
| The 10th Meeting of the 9th Board of Directors | 29 April 2022 | 30 April 2022 | Announcement on Resolutions of the 10th Meeting of the 9th Board of Directors of Anhui Gujing Distillery Company Limited (No.: 2022-010) disclosed on the website of Cninfo (www.cninfo.com.cn). |
| The 11th Meeting of the 9th Board of Directors | 30 August 2022 | 31 August 2022 | Announcement on Resolutions of the 11th Meeting of the 9th Board of Directors of Anhui Gujing Distillery Company Limited (No.: 2022-025) disclosed on the website of Cninfo (www.cninfo.com.cn). |
| The 12th Meeting of the 9th Board of Directors | 23 September 2022 | 24 September 2022 | Announcement on Resolutions of the 12th Meeting of the 9th Board of Directors of Anhui Gujing Distillery Company Limited (No.: 2022-030) disclosed on the website of Cninfo (www.cninfo.com.cn). |
| The 13th Meeting of the 9th Board of Directors | 28 October 2022 | N/A | Third Quarterly Report 2022 |
| The 14th Meeting of the 9th Board of Directors | 30 December 2022 | 31 December 2022 | Announcement on Resolutions of the 14th Meeting of the 9th Board of Directors of Anhui Gujing Distillery Company Limited (No.: 2022-035) disclosed on the website of Cninfo (www.cninfo.com.cn). |
2. Attendance of Directors at Board Meetings and General Meetings
| Attendance of directors at board meetings and general meetings | |||||||
| Director | Total number of board meetings the | Board meetings attended on | Board meetings attended by way of telecommunication | Board meetings attended | Board meetings the director failed | The director failed to attend two | General meetings attended |
| director was eligible to attend | site | through a proxy | to attend | consecutive board meetings (yes/no) | |||
| Liang Jinhui | 5 | 1 | 4 | 0 | 0 | No | 1 |
| Li Peihui | 5 | 1 | 4 | 0 | 0 | No | 1 |
| Zhou Qingwu | 5 | 1 | 4 | 0 | 0 | No | 1 |
| Yan Lijun | 5 | 1 | 4 | 0 | 0 | No | 1 |
| Xu Peng | 5 | 1 | 4 | 0 | 0 | No | 1 |
| Ye Changqing | 5 | 1 | 4 | 0 | 0 | No | 1 |
| Zhang Guiping | 5 | 1 | 4 | 0 | 0 | No | 1 |
| Wang Ruihua | 5 | 1 | 4 | 0 | 0 | No | 1 |
| Xu Zhihao | 5 | 1 | 4 | 0 | 0 | No | 1 |
3. Objections Raised by Directors on Matters of the Company
Indicate by tick mark whether any independent directors raised any objections on any matter of the Company.
□Yes ?No
No such cases in the Reporting Period.
4. Other Information about the Performance of Duty by Directors
Indicate by tick mark whether any suggestions from directors were adopted by the Company.?Yes □NoSuggestions from directors adopted or not adopted by the CompanyDuring the Reporting Period, the directors of the Company carried out their work diligently and conscientiously in strict accordancewith the Company Law, the Securities Law, the Code of Corporate Governance for Listed Companies, the Self-RegulatoryGuidelines No. 1 for Companies Listed on Shenzhen Stock Exchange - Standard Operation of Listed Companies on the Main Board,the Articles of Association, and Rules of Procedure of the Board of Directors. Based on the Company's reality, they put forwardrelevant opinions on the Company's major governance and operation decisions, and reached consensus through full communicationand discussion. They resolutely supervised and promoted the implementation of the resolutions of the Board of Directors to ensurescientific, timely, and efficient decision-making and safeguard the legitimate rights and interests of the Company and all of itsshareholders.
VII Performance of Duty by Specialized Committees under the Board in the Reporting Period
| Committee | Members | Number of meetings convened | Convened date | Content | Important opinions and suggestions raised | Other information about | Details about issues with |
| the performance of duty | objections (if any) | ||||||
| The Audit Committee under the Board | Zhang Guiping, Wang Ruihua, Xu Zhihao, Xu Peng, Ye Changqing | 1 | 21 March 2022 | Progress of the 2021 annual report audit; The summary of the 2021 internal audits and the work plan for the 2022 internal audits. | The Audit Committee carried out its work diligently and conscientiously in strict accordance with the Company Law, the regulations of the China Securities Regulatory Commission, the Articles of Association, and the Rules of Procedure of the Board of Directors. It put forward relevant opinions based on the reality of the Company. Upon full communication and discussion, all proposals were unanimously approved. | ||
| The Audit Committee under the Board | Zhang Guiping, Wang Ruihua, Xu Zhihao, Xu Peng, Ye Changqing | 1 | 26 April 2022 | The deliberation on the Company’s 2021 Internal Control Self-assessment Report, the deliberation on the Company’s 2021 Annual Report and Its Summary, the deliberation on the Company’s First Quarter Report for 2022 and Its Summary, the deliberation on the Company’s Appointment of the Audit Agency for 2022, and the deliberation on the Company’s Special Report on Deposit and Use of the Raised Funds of 2021. | The Audit Committee carried out its work diligently and conscientiously in strict accordance with the Company Law, the regulations of the China Securities Regulatory Commission, the Articles of Association, and the Rules of Procedure of the Board of Directors. It put forward relevant opinions based on the reality of the Company. Upon full communication and discussion, all proposals were unanimously approved. | ||
| The Audit | Zhang Guiping, | 1 | 25 | The deliberation on the | The Audit Committee |
| Committee under the Board | Wang Ruihua, Xu Zhihao, Xu Peng, Ye Changqing | August 2022 | Company’s 2022 Semi-annual Report and the deliberation on the Company’s Report on the Review of Deposit and Use of the Raised Funds between March and June of 2022. | carried out its work diligently and conscientiously in strict accordance with the Company Law, the regulations of the China Securities Regulatory Commission, the Articles of Association, and the Rules of Procedure of the Board of Directors. It put forward relevant opinions based on the reality of the Company. Upon full communication and discussion, all proposals were unanimously approved. | |||
| The Audit Committee under the Board | Zhang Guiping, Wang Ruihua, Xu Zhihao, Xu Peng, Ye Changqing | 1 | 25 October 2022 | The deliberation on the Company’s Third Quarter Report for 2022 and the deliberation on the Company’s Report on the Review of Deposit and Use of the Raised Funds of the Third Quarter of 2022. | The Audit Committee carried out its work diligently and conscientiously in strict accordance with the Company Law, the regulations of the China Securities Regulatory Commission, the Articles of Association, and the Rules of Procedure of the Board of Directors. It put forward relevant opinions based on the reality of the Company. Upon full communication and discussion, all proposals were unanimously approved. | ||
| The Nomination Committee under the Board | Zhang Guiping, Wang Ruihua, Xu Zhihao, Liang Jinhui, Li Peihui | 1 | 22 September 2022 | The deliberation on the Proposal on the Nomination of the Company’s Senior Managers. | The Nomination Committee carried out its work diligently and conscientiously in strict accordance with the Company Law, the regulations of the China Securities Regulatory |
| Commission, the Articles of Association, and the Rules of Procedure of the Board of Directors. It put forward relevant opinions based on the reality of the Company. Upon full communication and discussion, all proposals were unanimously approved. | |||||||
| The Nomination Committee under the Board | Zhang Guiping, Wang Ruihua, Xu Zhihao, Liang Jinhui, Li Peihui | 1 | 30 December 2022 | The deliberation on the Proposal on the Formulation of the Competitive Selection System for the Company’s Management Team. | The Nomination Committee carried out its work diligently and conscientiously in strict accordance with the Company Law, the regulations of the China Securities Regulatory Commission, the Articles of Association, and the Rules of Procedure of the Board of Directors. It put forward relevant opinions based on the reality of the Company. Upon full communication and discussion, all proposals were unanimously approved. | ||
| The Remuneration and Appraisal Committee under the Board | Zhang Guiping, Wang Ruihua, Xu Zhihao, Zhou Qingwu, Yan Lijun | 1 | 30 December 2022 | The deliberation on the Proposal on the Formulation of the Management Measures for the Remuneration and Appraisal of Members of the Company’s Management Team. | The Remuneration and Appraisal Committee carried out its work diligently and conscientiously in strict accordance with the Company Law, the regulations of the China Securities Regulatory Commission, the Articles of Association, and the Rules of Procedure of the Board of Directors. It put forward relevant opinions based on the reality of the Company. |
Upon full communicationand discussion, allproposals wereunanimously approved.
VIII Performance of Duty by the Supervisory Committee
Indicate by tick mark whether the Supervisory Committee found any risk to the Company during its supervision in the ReportingPeriod.
□Yes ?No
The Supervisory Committee raised no objections in the Reporting Period.IX Employees
1. Number, Functions and Educational Backgrounds of Employees
| Number of in-service employees of the Company as the parent at the period-end | 5,826 |
| Number of in-service employees of major subsidiaries at the period-end | 5,484 |
| Total number of in-service employees | 11,310 |
| Total number of paid employees in the Reporting Period | 11,310 |
| Number of retirees to whom the Company as the parent or its major subsidiaries need to pay retirement pensions | 1,511 |
| Functions | |
| Function | Employees |
| Production | 5,598 |
| Sales | 3,082 |
| Technical | 562 |
| Financial | 209 |
| Administrative | 1,039 |
| Other | 820 |
| Total | 11,310 |
| Educational backgrounds | |
| Educational background | Employees |
| Master or above | 130 |
| Bachelor | 3,133 |
| Junior college | 2,594 |
| High school or below | 5,453 |
| Total | 11,310 |
2. Employee Remuneration Policy
The remuneration policy was conducted strictly in line with the related law and regulations of the state, and the plan of operationperformance and profits of the Company and the relevant remuneration policy management.
3. Employee Training Plans
Employee training is significant in the Human resource management. The Company always pay high attention to the employeetraining and development, the Company sets up effective training plan combining with the current situation of the Company, annualplan, nature of the post and the demand of employee learning, which includes new employee induction training, on-job training,front-line employee operating skills training, management improvement training and part-time study. Continuously improve thewhole quality of the employees, realized a win-win situation and progress between the Company and the employees.
4. Labor Outsourcing
? Applicable □ Not applicable
| Total man-hours (hour) | 3,001,960.66 |
| Total remuneration paid (RMB) | 63,419,131.05 |
X Profit Distributions (in the Form of Cash and/or Stock)How the profit distribution policy, especially the cash dividend policy, was formulated, executed or revised in the Reporting Period:
? Applicable □ Not applicableThe 2021 Annual General Meeting held on 27 May 2022 reviewed and approved the Company’s Interest Distribution Scheme in2021 that based on the total shares of 528,600,000 of the Company on 31 December 2021, cash dividends was distributed atRMB22.00 per 10 shares (tax inclusive), and the total cash dividends distributed was RMB1,162,920,000.00 (tax inclusive), whichhas been carried out completely in June 2022.
| Special statement about the cash dividend policy | |
| In compliance with the Company’s Articles of Association and resolution of general meeting | Yes |
| Specific and clear dividend standard and ratio | Yes |
| Complete decision-making procedure and mechanism | Yes |
| Independent directors faithfully performed their duties and played their due role | Yes |
| Non-controlling interests are able to fully express their opinion and desire and their legal rights and interests are fully protected | Yes |
| In case of adjusting or changing the cash dividend policy, the conditions and procedures involved are in compliance with | No adjustments or changes |
applicable regulations and transparent
Indicate by tick mark whether the Company fails to put forward a cash dividend proposal for shareholders despite the facts that theCompany has made profits in the Reporting Period and the profits of the Company as the parent distributable to shareholders arepositive.
□Applicable ? Not applicable
Final dividend plan for the Reporting Period? Applicable □ Not applicable
| Bonus issue from capital reserves for every 10 shares (share) | 0 |
| Dividend for every 10 shares (RMB) (tax inclusive) | 30.00 |
| Bonus issue from profit for every 10 shares (share) | 0 |
| Total shares as the basis for the final dividend plan (share) | 528,600,000 |
| Total cash dividends (RMB) (tax inclusive) | 1,585,800,000.00 |
| Cash dividends in other ways (such as share repurchase) (RMB) | 0.00 |
| Total cash bonus (including other methods) (RMB) | 1,585,800,000.00 |
| Distributable profits (RMB) | 9,691,022,921.78 |
| Percentage of cash dividends (including other methods) to the total distributed profits | 100.00% |
| Particulars about the cash dividends | |
| If the Company is in a mature development stage and has plans for any significant expenditure, in profit allocation, the ratio of cash dividends in the profit allocation shall be 40% or above. | |
| Details of final dividend plan for the Reporting Period | |
| The Company intends to distribute RMB30.00 (tax included) per 10 shares based on the total shares of 528,600,000 at the end of the year, totaling RMB1,585,800,000.00. This year does not send bonus, does not transfer to increase capital stock with accumulation fund. | |
XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures forEmployees
□Applicable ? Not applicable
No such cases in the Reporting Period.XII Establishment and Execution of the Internal Control System for the Reporting Period
1. Establishment and Execution of the Internal Control System
In accordance with the provisions of the Basic Code for Internal Control of Enterprises and its supporting guidelines, the Companyhas set up a complete procedure system for internal control system, in which the assessment incorporates the entities, business,
matters, and high risk fields, covering all major aspects of the Company's operation and management, without material omissions.The Company's internal control is designed soundly and reasonably, and basically implemented effectively, without materialomissions. Through the operation, analysis, and assessment of the internal control system, the Company has effectively preventedrisks in operation and management, and promoted the realization of internal control objectives.
2. Material Internal Control Weaknesses Identified for the Reporting Period
□Yes ? No
XIII Management and Control over Subsidiaries by the Company for the Reporting Period
During the Reporting Period, In accordance with the relevant requirements for standard operation of listed companies, and therelevant internal control system of the Company, and by dispatching directors and supervisors to subsidiary companies, the Companyparticipated in the daily operation of the Board of Directors and the Board of Supervisors, thus realized the effective managementand supervision on such matters as overseas investment, related-party transactions, development planning, compliant operation, andhuman resources of subsidiary companies, specified the reporting system and deliberation procedure of major events, and in a timelymanner, followed up such major events as financial status, business operation, and investment operation of subsidiary companies.XIV Internal Control Self-Evaluation Report or Independent Auditor’s Report on InternalControl
1. Internal Control Self-Evaluation Report
| Disclosure date of the internal control self-evaluation report | 29 April 2023 | |
| Index to the disclosed internal control self-evaluation report | See www.cninfo.com.cn for the Anhui Gujing Distillery Company Limited Self-assessment Report of Internal Control | |
| Evaluated entities’ combined assets as % of consolidated total assets | 98.07% | |
| Evaluated entities’ combined operating revenue as % of consolidated operating revenue | 99.76% | |
| Identification standards for internal control weaknesses | ||
| Type | Weaknesses in internal control over financial reporting | Weaknesses in internal control not related to financial reporting |
| Nature standard | Critical defect: Separate defect or other defects that result in failure in preventing, finding out and correcting major wrong reporting in financial report in time. The following circumstances are deemed as critical defects: (1) Ineffective in controlling the environment; (2) Malpractice of directors, supervisors and senior management officers; | Any of the following circumstances shall be deemed as a critical defect, and other circumstances shall be deemed as major or minor defects according to their degree of impact. (1) Violate national laws, regulations or standardized documents; (2) Major decision making procedure is |
| (3) According to external auditing, there’s major wrong reporting in current financial report, which fails to be found by the company in its operating process; (4) Major defects found and reported to the top management fail to be corrected within a reasonable period of time; (5) The supervision of audit committee of the company and its internal audit department for internal control is ineffective; (6) Other defects that may affect correct judgment of users of statements. Major defect: Separate defect or other defects that result in failure in preventing, finding out and correcting wrong reporting in financial report in time, which shall be noted by the top management despite of not attaining or exceeding critical level. Minor defect: Other internal control defects not constituting critical or major defects. | not scientific; (3) Lack of systems results in systematic failure; (4) Critical or major defects fail to be rectified; (5) Other circumstances that have major impact on the company. | |
| Quantitative standard | Critical defect: (1) Wrong reporting ≥0.5% of total operating revenue; (2) Wrong reporting ≥5% of total profit; (3) Wrong reporting ≥0.5% of total assets; (4) Wrong reporting ≥0.5% of total owner’s equity. Major defect: (1) Wrong reporting ≥0.2% but ＜0.5% of total operating revenue; (2) Wrong reporting ≥2% but ＜5% of total profit; (3) Wrong reporting ≥0.2% but ＜0.5% of total assets; (4) Wrong reporting ≥0.2% but ＜0.5% of total owner’s equity. Minor defect: (1) Wrong reporting＜0.2% of total operating revenue; (2) Wrong reporting＜2% of total profit; (3) Wrong reporting＜0.2% of total assets; (4) Wrong reporting＜0.2% of total owner’s | Critical defect: The defect with direct property loss amounting to over RMB10 million, has great negative impact on the company and is disclosed in public in the form of announcement. Major defect: The defect with direct property loss amounting to RMB1 million to RMB10 million (included), or is penalized by governmental authority of the country but has not resulted in negative impact on the company. Minor defect: The defect with direct property loss no more than RMB1 million (included), or is penalized by governmental authority of the provincial-level or below but has not resulted in negative impact on the company. |
| equity. | ||
| Number of material weaknesses in internal control over financial reporting | 0 | |
| Number of material weaknesses in internal control not related to financial reporting | 0 | |
| Number of serious weaknesses in internal control over financial reporting | 0 | |
| Number of serious weaknesses in internal control not related to financial reporting | 0 | |
2. Independent Auditor’s Report on Internal Control
? Applicable □ Not applicable
| Opinion paragraph in the independent auditor’s report on internal control | |
| We believe that the Company has maintained effective internal control on financial report in all significant respects according to the Basic Rules for Enterprise Internal Control and relevant regulations on 31 December 2022. | |
| Independent auditor’s report on internal control disclosed or not | Disclosed |
| Disclosure date | 29 April 2023 |
| Index to such report disclosed | See www.cninfo.com.cn for Audit Report of Internal Control |
| Type of the auditor’s opinion | Unmodified unqualified opinion |
| Material weaknesses in internal control not related to financial reporting | None |
Indicate by tick mark whether any modified opinion is expressed in the independent auditor’s report on the Company’s internalcontrol.
□Yes ? No
Indicate by tick mark whether the independent auditor’s report on the Company’s internal control is consistent with the internalcontrol self-evaluation report issued by the Company’s Board.? Yes □NoXV Rectifications of Problems Identified by Self-inspection in the Special Action for ListedCompany Governance
After a comprehensive self-examination, the company adheres to the combination of party leadership and corporate governance in itsoperations, has a sound internal governance mechanism, a sound governance system, and transparent information disclosure, inaccordance with relevant laws, regulations, and normative documents.
Part V Environmental and Social Responsibility
I Major Environmental IssuesIndicate by tick mark whether the Company or any of its subsidiaries is a heavily polluting business identified by the environmentalprotection authorities of China.? Yes □No
Policies and industry standards pertaining to environmental protectionThe Company carries out environmental protection work in strict accordance with the requirements of laws and regulations such as"Environmental Protection Law of the People's Republic of China", "Air Pollution Prevention and Control Law of the People'sRepublic of China", "Water Pollution Prevention and Control Law of the People's Republic of China", "Solid Waste PollutionPrevention and Control Law of the People's Republic of China" and other laws and regulations, and strictly follows the "ManagementMeasures for the Disclosure of Enterprise Environmental Information According to Law" and "Measures for Self-monitoring andInformation Disclosure of National Key Monitoring Enterprises (Trial)". The Company discloses environmental information in atimely manner and consciously accepts social supervision. The Company implements the Emission Standards for Air Pollutants fromBoilers (GB13271-2014), Water Pollution Emission Standards for Fermented Alcohol and Baijiu Industry (GB27631-2011) andEnvironmental Noise Emission Standards for Industrial Enterprises (GB12348-2008) and other relevant standards.Environmental protection administrative license
| No. | Administrative matter | Serial number | Application time | Expiry date |
| 1 | Sewage discharge permit for Gujing plant | 913400001519400083001V | 19 July 2022 | 18 July 2027 |
| 2 | Sewage discharge permit for Zhangji plant | 913400001519400083002V | 19 July 2022 | 18 July 2027 |
| 3 | Sewage discharge permit for Headquarter plant | 913400001519400083003V | 19 July 2022 | 18 July 2027 |
| 4 | Sewage discharge permit for smart part plant | 913400001519400083004V | 17 October 2022 | 16 October 2027 |
| 5 | Sewage discharge permit for Longrui Glass | 91341600151946047T001U | 24 July 2020 | 23 July 2023 |
| 6 | Sewage discharge permit for Yellow Crane Tower (Xianning) | 91421200562735332N001V | 13 December 2022 | 12 December 2027 |
The regulations for industrial emissions and the particular requirements for controlling pollutant emissions those are associated withproduction and operational activities.
| Name of polluter | Type of major pollutants | Name of major pollutants | Way of discharge | Number of discharge outlets | Distribution of discharge outlets | Discharge concentration | Discharge standards implemented | Total discharge | Approved total discharge | Excessive discharge |
| Anbui Gujing Distillery | Waste water | COD | Directly discharge | 3 | Gujing plant, Zhangji plant, Headquarter | 15.13mg/L 24.98mg/L 12.06mg/L | Gujing plant≦50mg/L | Gujing plant: 13.31t Zhangji | Gujing plant: 105.916t Zhangji plant: | Naught |
| Co., Ltd. | plant | Zhangji plant、Headquarter plant≦100mg/L | plant: 6.03t Headquarter plant: 21.17t | 26.504t Headquarter plant: 116.0596t | ||||||
| Anbui Gujing Distillery Co., Ltd. | Waste water | NH3-N | Directly discharge | 3 | Gujing plant, Zhangji plant, Headquarter plant | 0.27mg/L 0.18mg/L 0.09mg/L | Gujing plant≦5mg/L Zhangji plant、Headquarter plant≦10mg/L | Gujing plant: 0.24t Zhangji plant: 0.04t Headquarter plant: 0.15t | Gujing plant: 10.5916t Zhangji plant: 2.6504t Headquarter plant: 11.60596t | Naught |
| Anbui Gujing Distillery Co., Ltd. | Waste gas | Smoke | Organized discharge through chimney | 3 | Gujing plant, Zhangji plant, Headquarter plant | 1.4mg/m? 1.22mg/m? 1.30mg/m? | Gujing plant、Headquarter plant≦10mg/m3 Zhangji plant≦20mg/ m3 | Gujing plant: 0.425t Zhangji plant: 0.39t Headquarter plant: 0.55t | Gujing plant: 4.301t Zhangji plant: / Headquarter plant: 5.01t | Naught |
| Anbui Gujing Distillery Co., Ltd. | Waste gas | Sulfur Dioxide | Organized discharge through chimney | 3 | Gujing plant, Zhangji plant, Headquarter plant | 7.07mg/m? 0.33mg/m? 0.79mg/m? | Gujing plant、Headquarter plant≦35mg/m3 Zhangji plant≦50mg/ m3 | Gujing plant: 2.15t Zhangji plant: 0.01t Headquarter plant: 0.33t | Gujing plant: 15.055t Zhangji plant: / Headquarter plant: 17.536t | Naught |
| Anbui Gujing Distillery Co., Ltd. | Waste gas | Nitrogen oxide | Organized discharge through chimney | 3 | Gujing plant, Zhangji plant, Headquarter plant | 18.56mg/m? 28.35mg/m? 22.46mg/m? | Gujing plant、Headquarter plant≦50mg/m3 Zhangji plant≦150mg/ m3 | Gujing plant: 5.65t Zhangji plant: 0.90t Headquarter plant: 9.54t | Gujing plant: 21.056t Zhangji plant: 10.318t Headquarter plant: 25.051t | Naught |
| Anhui Longrui Glass Co., Ltd | Waste gas | Smoke | Organized discharge through chimney | 2 | 1# furnace 2# furnace | 2.62mg/m? 1.83mg/m? | ≦10mg/m? | 1#furnace：0.36t 2#furnace：0.57t | / | Naught |
| Anhui Longrui Glass Co., Ltd | Waste gas | Sulfur Dioxide | Organized discharge through chimney | 2 | 1# furnace 2# furnace | 18.06mg/m? 11.36mg/m? | ≦50mg/m? | 1#furnace：2.55t 2#furnace：3.78t | / | Naught |
| Anhui Longrui Glass Co., Ltd | Waste gas | Nitrogen oxide | Organized discharge through chimney | 2 | 1# furnace 2# furnace | 82.31mg/m? 70.53mg/m? | ≦200mg/m? | 1#furnace：11.50t 2#furnace：24.00t | / | Naught |
| Yellow Crane Tower Wine Industry (Xianning) Co., Ltd | Waste water | COD | Indirectly discharge | 1 | Xianning plant | 15.89mg/L | ≦400mg/L | 0.156t | 6t | Naught |
| Yellow Crane Tower Wine Industry (Xianning) Co., Ltd | Waste water | NH3-N | Indirectly discharge | 1 | Xianning plant | 0.40 mg/L | ≤30mg/L | 0.004t | 1t | Naught |
Treatment of pollutants
1. Sewage treatment
(1) The sewage treatment capacity of the sewage treatment station of the headquarters of Anhui Gujing Distillery Co., Ltd is about4,300 tons per day. IC anaerobic jar, A?/O and in-depth treatment process has been adopted. The sewage is discharged after treatmentand up to the standard, and discharge of sewage is in compliance with the direct discharge requirements in GB27631-2011 DischargeStandard of Water Pollutants for Fermentation Alcohol and Baijiu Industry.
(2) The sewage treatment capacity of the sewage treatment station of Gujing Subsidiary under Anhui Gujing Distillery Co., Ltd isabout 2,600 tons per day. IC anaerobic jar, A?/O and in-depth treatment process is adopted. The sewage is discharged after treatmentand up to the standard, and discharge of sewage is in compliance with the direct discharge requirements in GB27631-2011 DischargeStandard of Water Pollutants for Fermentation Alcohol and Baijiu Industry.
(3) The sewage treatment capacity of the sewage treatment station of Zhangji plant of Anhui Gujing Distillery Co., Ltd is about 550tons per day. IC anaerobic jar, improved A?/O and in-depth treatment process has been adopted. The sewage is discharged aftertreatment and up to the standard, and discharge of sewage is in compliance with the direct discharge requirements in GB27631-2011Discharge Standard of Water Pollutants for Fermentation Alcohol and Baijiu Industry.
(4) The production and living sewage of Anhui Longrui Glass Co., Ltd is discharged into the sewage treatment station of ZhangjiPlant under Anhui Gujing Distillery Company Limited, and it is discharged after treatment and up to the standard.
(5) The design value of the sewage treatment capacity of the sewage treatment station of Yellow Crane Tower (Xianning) is 100 tonsper day and the actual average discharge value is 33 tons per day. Secondary A/O treatment process has been adopted. The sewage isdischarged after treatment and up to the standard, and discharge of sewage is in compliance with the indirect discharge requirementsin GB27631-2011 Discharge Standard of Water Pollutants for Fermentation Alcohol and Baijiu Industry.
2. Waste gas treatment
(1) The flue gas control facilities of thermal power stations of the Headquarters and Gujing Subsidiary of Anhui Gujing DistilleryCompany Limited run well, and waste gas is discharged through the 65-meter-tall exhaust funnel after the waste gas treatment is upto the standard, adopting the process of cloth-bag dust removal + Limestone - Wet flue gas Desulfurization+ SNCR Denitrification bynon-catalytic reduction + SCR Denitrification by catalytic reduction + Wet electrostatic precipitator, and discharge of flue gas meetsthe super-low discharge requirements (smoke ≤10mg/m
, SO2≤35mg/m
, NOx≤50mg/m
).
(2) The gas-fired boilers at Zhangji Plant under Anhui Gujing Distillery Company Limited operate in a steady manner, and waste gasis discharged through the 20-meter-tall exhaust funnel, of which and discharge of flue gas meets the requirements for gas-fired boilerin GB13271-2014 Emission Standard of Air Pollutants for Industrial Kiln and Furnace.
(3) 1#, 2# furnace flue gas treatment facilities of Anhui Longrui Glass Co., Ltd. are operating well. For 1# furnace, the company usesbag dust removal + dry desulfurization + SCR catalytic reduction denitrification process. After it meets the standard, the exhaust gaswill be discharged through a 48-meter high exhaust pipe. The flue gas emission is in line with the glass industry A-class enterpriseemission requirements as set out in Technical Guide for the Development of Emergency Emission Reduction Measures for KeyIndustries in Heavy Pollution Weather (soot ≤ 10 mg/m
, SO2 ≤ 50 mg/m
, NOx ≤ 200 mg/m
). For 2# furnace, the company adoptsbag dust removal + desulfurization tank + SCR low-temperature denitrification process, and the exhaust gas is discharged through a50-meter high exhaust pipe after it meets the standard. The flue gas emission meets the glass industry A-class enterprise emissionrequirements as set out in Technical Guide for the Development of Emergency Emission Reduction Measures for Key Industries inHeavy Pollution Weather (soot ≤ 10 mg/m
, SO2 ≤ 50mg/m
, NOx ≤ 200 mg/m
).
(4) The Headquarter of Anhui Gujing Distillery Company Limited and Gujing Branch finished product coding machine exhaust gastreatment facilities are operating well. By adopting photocatalytic oxidation technology, the Company’s flue gas emissions complywith the Table 1 standard requirements of DB12/524-2014 Emission Standard for Industrial Enterprises Volatile Organic Compounds.
(5) The Headquarters of Anhui Gujing Distillery Company Limited and the odor treatment facilities of Zhangji Sewage Station areoperating well. By adopting technologies like photocatalytic oxidation and activated carbon adsorption, and the Company’s emissionof exhaust gas meets the requirements of Table 2 of the Standard for Emission of Pollutants.In 2022, the environment protection facilities of the Company and its subsidiaries ran normally in general, main pollutants canachieve up-to-standard discharge, environment information is opened to the public normally, and they have performed their socialresponsibilities properly.Emergency plan for sudden environment affairsThe Company has formulated the Emergency Plan of Anhui Gujing Distillery Company Limited for Sudden Environmental PollutionAccident, which has been filed with Bureau of Ecology and Environment of Bozhou (File No. 341602-2021-006-H). Emergency plandrills have been carried out as planned.Anhui Longrui Glass Co., Ltd has formulated the Emergency Plan of Anhui Longrui Glass Co., Ltd for Sudden EnvironmentalPollution Accident, which has been filed with Bureau of Ecology and Environment of Bozhou (File No. 341602-2021-006-M).Emergency plan drills have been carried out as planned.Environmental self-monitoring schemeAnhui Gujing Distillery Co., Ltd. has formulated the Self-Monitoring Scheme of Anhui Gujing Distillery Company Limited andpublished it on the relevant website of Anhui Province.Anhui Longrui Glass Co., Ltd has formulated the Self-Monitoring Scheme of Anhui Longrui Glass Co., Ltd and published it on therelevant website of Anhui Province.Input in environment governance and protection and payment of environmental protection taxIn 2022, the input in environment governance and protection for the Company and its subsidiaries was RMB69.2409 million andpayment of environmental protection tax was RMB142,800.
Measures taken to decrease carbon emission in the Reporting Period and corresponding effects? Applicable □ Not applicable
1. Balanced production of thermal power plant: In order to improve the operation efficiency of a boiler, and reduce carbon emission,balanced production was conducted in Gujing plant area. After the execution of balanced production, the efficiency of coal burningwas increased by 13% year on year. Calculated on the basis of the coal consumption, fire coal was conserved by approximately 3,000tons year on year, converted to the standard coal of 2,140 tons, and carbon dioxide emission was reduced by approximately 5,000tons.
2. Intensified power conservation of the Company: (1) The Company organized 440 battery-driven vehicles of various types andvarious entities for peak-shifting charge. (2) The Company conserved power in offices, sufficiently utilized natural light, andprohibited lamps from shining all the time, replaced lamps in passageways with sound-controlled types, and strictly implemented therequirements of temperature setting on air-conditioners. (3) The Company conserved power used by street lamps, and strictlyspecified turn-off and turn-on time; through the above-mentioned measures, power wasted in offices has been greatly reduced, whichhas played an active role in the energy conservation and carbon reduction of the Company.Administrative penalties imposed for environmental issues during the Reporting Period
| Name | Reason | Case | Result | Influence on production and operation | Rectification measures |
| Naught | N/A | N/A | N/A | N/A | N/A |
Other environment information that should be disclosedNaughtOther related environment protection informationNaughtII Social Responsibility
For details, please refer to the Corporate Environmental, Social and Governance (ESG) Report for 2022 disclosed by the Companyon the website Cninfo dated 29 April 2023.III Consolidation and Expansion of Poverty Alleviation Outcomes, and Rural RevitalizationThe Company continued to conduct rural assistance based on the principle of “institutions target villages and individuals targetvillagers”, paid regular care to residents in Wuma Town who had overcome poverty, and timely supported the effective coordinationbetween the consolidation of the achievements of poverty alleviation and rural revitalization. The Company contributed to the ruralrevitalization in Hongguang Village of Lixin County by regularly conducting visits, investigations, interviews and communicationactivities. The Company organized employees to place orders for agricultural products, such as Shanghai bok choy from HongguangVillage of Lixin County, grape from Xiao County, “Qiu Yue” pear from Lide Town and walnut from Xinjiang, as well as to makedonations to two poverty-stricken residents in Dancheng Town and Qingtuan Town of Guoyang County and the community canteensfor elderly people there.
Part VI Significant EventsI Fulfillment of Commitments
1. Commitments of the Company’s Actual Controller, Shareholders, Related Parties and Acquirers, as wellas the Company Itself and other Entities Fulfilled in the Reporting Period or Ongoing at the Period-end
? Applicable □ Not applicable
| Commitment | Promisor | Type of commitment | Details of commitment | Date of commitment making | Term of commitment | Fulfillment |
| Commitments made in acquisition documents or shareholding alteration documents | Anhui Gujing Distillery Company Limited | Performance commitment | The Company promised that Yellow Crane Tower Distillery Co., Ltd. would realize the operating revenue of RMB2,040,675,000 (tax inclusive) and the net profit margin would be not lower than 11.00% in 2022. | 29 April 2016 | Y2017-Y2021 | Complete the performance commitment of the supplementary agreement in 2022. |
| Fulfilled on time | Yes | |||||
| Specific reasons for failing to fulfill commitments on time and plans for next step (if any) | Due to the force majeure, in 2020, market trading activities were seriously affected, resulting in part of the terms of the original agreement unable to be fulfilled on schedule. To this end, upon consultation by all parties, the Supplementary Agreement on Equity Transfer was entered into. For the commitments in respect of net sales interest rate, net sales profit and expected distributable profit of Yellow Crane Tower, the assessment period has been extended by one year from the execution date of the Supplementary Agreement. In other words, the year 2020 will not be regarded as the assessment year, and 2021 will be taken as the fourth assessment year and 2022 as the fifth assessment year. | |||||
2. Where there had been an earnings forecast for an asset or project and the Reporting Period was stillwithin the forecast period, explain why the forecast has been reached for the Reporting Period.
□Applicable ? Not applicable
II Occupation of the Company’s Capital by the Controlling Shareholder or any of Its RelatedParties for Non-Operating Purposes
□Applicable ? Not applicable
III Irregularities in the Provision of Guarantees
□Applicable ? Not applicable
IV Explanations Given by the Board of Directors Regarding the Latest “Modified Opinion”on the Financial Statements
□Applicable ? Not applicable
V Explanations Given by the Board of Directors, the Supervisory Board and the IndependentDirectors (if any) Regarding the Independent Auditor's “Modified Opinion” on the FinancialStatements of the Reporting Period
□Applicable ? Not applicable
VI YoY Changes to Accounting Policies, Estimates or Correction of Material AccountingErrors
□Applicable ? Not applicable
VII YoY Changes to the Scope of the Consolidated Financial Statements? Applicable □ Not applicable
| Name of subsidiary | Principal place of business | Registered place | Nature of the business | Stake（%） | Make way | |
| Directly | Indirect | |||||
| Anhui Gujing Health Technology Co., Ltd. | Bozhou, Anhui | Bozhou, Anhui | Manufacturing | 60.00 | Business combination not under the same control | |
| Anhui Maiqi Biotechnology Co., Ltd. | Bozhou, Anhui | Bozhou, Anhui | Technological development | 60.00 | Business combination not under the same control | |
| Anhui Yangshengtianxia Brand | Hefei, | Hefei, | Advertising | 60.00 | Business | |
| Name of subsidiary | Principal place of business | Registered place | Nature of the business | Stake（%） | Make way | |
| Directly | Indirect | |||||
| Operation Co., Ltd. | Anhui | Anhui | marketing | combination not under the same control | ||
| Hainan Yangshengtianxia Biotechnology Development Co., Ltd. | Lingshui, Hainan | Lingshui, Hainan | Trade and business | 60.00 | Business combination not under the same control | |
| Anhui Gujinggong Liquor Original Vintage Theme Hotel Management Co., Ltd. | Bozhou, Anhui | Bozhou, Anhui | Hotel operation | 100.00 | Incorporated with investment | |
| Anhui Anjie Technology Co., Ltd. | Bozhou, Anhui | Bozhou, Anhui | Food testing | 70.00 | Incorporated with investment | |
| Huanggang Junya Trading Co., Ltd. | Huanggang, Hubei | Huanggang, Hubei | Trade and business | 51.00 | Incorporated with investment | |
VIII Engagement and Disengagement of Independent Auditor
Current independent auditor
| Name of the domestic independent auditor | RSM Certified Public Accountants (LLP) |
| The Company’s payment to the domestic independent auditor (RMB’0,000) | 200.00 |
| How many consecutive years the domestic independent auditor has provided audit service for the Company | 4 |
| Names of the certified public accountants from the domestic independent auditor writing signatures on the auditor’s report | Zhang Liping, Han Songliang, Yang Fan |
| How many consecutive years the certified public accountants have provided audit service for the Company | 2 years for Zhang Liping and Han Songliang, 1 year for Yang Fan |
Indicate by tick mark whether the independent auditor was changed for the Reporting Period.
□Yes ? No
Independent auditor, financial advisor or sponsor engaged for the audit of internal controls:
? Applicable □ Not applicableIn 2022, the Company engaged RSM Certified Public Accountants (LLP) as the internal control auditor
IX Possibility of Delisting after Disclosure of this Report
□Applicable ? Not applicable
X Insolvency and Reorganization
□Applicable ? Not applicable
XI Major Legal Matters
□Applicable ? Not applicable
XII Punishments and Rectifications
□Applicable ? Not applicable
XIII Credit Quality of the Company as well as Its Controlling Shareholder and ActualController
□Applicable ? Not applicable
XIV Major Related-Party Transactions
1. Continuing Related-Party Transactions
□Applicable ? Not applicable
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests
□Applicable ? Not applicable
3. Related Transactions Regarding Joint Investments in Third Parties
□Applicable ? Not applicable
4. Credits and Liabilities with Related Parties
□Applicable ? Not applicable
5. Transactions with Related Finance Companies
□Applicable ? Not applicable
6. Transactions with Related Parties by Finance Companies Controlled by the Company
□Applicable ? Not applicable
7. Other Major Related-Party Transactions
□Applicable ? Not applicable
XV Major Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□Applicable ? Not applicable
(2) Contracting
□Applicable ? Not applicable
(3) Leases
□Applicable ? Not applicable
2. Major Guarantees
□Applicable ? Not applicable
3. Cash Entrusted for Wealth Management
(1) Cash Entrusted for Wealth Management
? Applicable □ Not applicableOverviews of cash entrusted for wealth management during the Reporting Period
Unit: RMB'0,000
| Specific type | Capital resources | Amount incurred | Undue balance | Unrecovered overdue amount | Unrecovered overdue amount with provision for impairment |
| Bank financial products | Raised funds | 442,000.00 | 0.00 | 0.00 | 0.00 |
| Bank financial products | Self-owned funds | 481,500.00 | 155,000.00 | 0.00 | 0.00 |
| Others | Self-owned funds | 20,000.00 | 20,000.00 | 0.00 | 0.00 |
| Total | 943,500.00 | 175,000.00 | 0.00 | 0.00 | |
Particulars of cash entrusted for wealth management with single significant amount or low security, bad liquidity, and no capitalpreservation
Unit: RMB’0,000
| Name of the trustee | Type of the trustee | Type of the product | Amount | Capital resource | Start date | End date | Use of fund | Determination method of remuneration | Annual yield for reference | Estimate profit (if any) | Amount of actual profit or loss in Reporting Period | Actual recovery of profit or loss in Reporting Period | Allowance for impairment (if any) | Legal procedures or not | Plan for entrusted asset management in the future or not | Overviews of events and query index (if any |
| DAPU Asset Management | Private fund manager | Fund | 20,000 | Self-funded | Purchasing new shares offline, products with fixed earnings, reverse repurchase of national debt, and etc. | 1.2% of products’ net value and 20% of excess earnings | 7.00% | 0.00 | Yes | Yes | ||||||
| Total | 20,000 | -- | -- | -- | -- | -- | -- | 0.00 | -- | -- | -- | -- | ||||
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment for cashentrusted for wealth management
□Applicable ? Not applicable
(2) Entrusted Loans
□Applicable ? Not applicable
4. Other Major Contracts
□Applicable ? Not applicable
XVI Other Significant Events
□Applicable ? Not applicable
XVII Significant Events of Subsidiaries
□Applicable ? Not applicable
Part VII Share Changes and Shareholder InformationI Share Changes
1. Share Changes
Unit: share
| Before | Increase/decrease in the Reporting Period (+/-) | After | |||||||
| Shares | Percentage (%) | New issues | Shares as dividend converted from profit | Shares as dividend converted from capital reserves | Other | Subtotal | Shares | Percentage (%) | |
| I. Restricted shares | 25,000,000 | 4.73% | -25,000,000 | -25,000,000 | 0 | 0.00% | |||
| 1. Shares held by the state | |||||||||
| 2. Shares held by state-owned corporations | 1,900,000 | 0.36% | -1,900,000 | -1,900,000 | 0 | 0.00% | |||
| 3. Shares held by other domestic investors | 21,600,000 | 4.09% | -21,600,000 | -21,600,000 | 0 | 0.00% | |||
| Among which: Shares held by domestic corporations | 21,600,000 | 4.09% | -21,600,000 | -21,600,000 | 0 | 0.00% | |||
| Shares held by domestic individuals | |||||||||
| 4. Shares held by foreign investors | 1,500,000 | 0.28% | -1,500,000 | -1,500,000 | 0 | 0.00% | |||
| Among which: Shares held by foreign corporations | 1,500,000 | 0.28% | -1,500,000 | -1,500,000 | 0 | 0.00% | |||
| Shares held by foreign individuals | |||||||||
| II. Non-restricted shares | 503,600,000 | 95.27% | 25,000,000 | 25,000,000 | 528,600,000 | 100.00% | |||
| 1. RMB ordinary shares | 383,600,000 | 72.57% | 25,000,000 | 25,000,000 | 408,600,000 | 77.30% | |||
| 2. Domestically listed foreign shares | 120,000,000 | 22.70% | 0 | 0 | 120,000,000 | 22.70% | |||
| 3. Overseas listed foreign shares | |||||||||
| 4. Other | |||||||||
| III. Total shares | 528,600,000 | 100.00% | 0 | 0 | 528,600,000 | 100.00% |
Reasons for share changes:
? Applicable □ Not applicableA total of 25,000,000 new shares of the Company non-publicly offered in 2021 were listed on Shenzhen Stock Exchange on 22 July2021. They were relieved on 24 January 2022 and could be traded on the market thereafter. For details, please refer to the SuggestiveAnnouncement on the Listing and Circulation of Restricted Non-publicly Offered Shares (2022-002) disclosed by the Company.Approval of share changes:
□ Applicable ? Not applicable
Transfer of share ownership:
□ Applicable ? Not applicable
Effects of share changes on the basic and diluted earnings per share, equity per share attributable to the Company’s ordinaryshareholders and other financial indicators of the prior year and the prior accounting period, respectively:
□ Applicable ? Not applicable
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ Applicable ? Not applicable
2. Changes in Restricted Shares
? Applicable □ Not applicable
Unit: Share
| Name of the shareholders | Restricted shares amount at the period-begin | Restricted shares increased of the period | Restricted shares relieved of the period | Restricted shares amount at the period-end | Restricted reasons | Restricted shares relieved date |
| JPMorgan Chase Bank, National Association | 750,000 | 0 | 750,000 | 0 | Private placement | 22 January 2022 |
| Guotai Junan Securities Co., Ltd. | 1,125,000 | 0 | 1,125,000 | 0 | Private placement | 22 January 2022 |
| E Fund Management Co., Ltd. | 12,750,000 | 0 | 12,750,000 | 0 | Private placement | 22 January 2022 |
| Caitong Fund Management Co., Ltd. | 1,130,000 | 0 | 1,130,000 | 0 | Private placement | 22 January 2022 |
| Taiping Fund Management Company Limited | 750,000 | 0 | 750,000 | 0 | Private placement | 22 January 2022 |
| Fullgoal Fund Management Co., Ltd. | 1,275,000 | 0 | 1,275,000 | 0 | Private placement | 22 January 2022 |
| Huatai Securities Co., Ltd. | 775,000 | 0 | 775,000 | 0 | Private placement | 22 January 2022 |
| Huatai Securities Asset Management Co., Ltd. | 750,000 | 0 | 750,000 | 0 | Private placement | 22 January 2022 |
| ICBC Credit Suisse Asset Management Co., Ltd. | 2,150,000 | 0 | 2,150,000 | 0 | Private placement | 22 January 2022 |
| Morgan Stanley & Co. International Plc | 750,000 | 0 | 750,000 | 0 | Private placement | 22 January 2022 |
| China Life Asset Management Co., Ltd. | 750,000 | 0 | 750,000 | 0 | Private placement | 22 January 2022 |
| China Merchants Fund Management Co., Ltd. | 2,000,000 | 0 | 2,000,000 | 0 | Private placement | 22 January 2022 |
| China Universal Asset Management Co., Ltd. | 45,000 | 0 | 45,000 | 0 | Private placement | 22 January 2022 |
| Total | 25,000,000 | 0 | 25,000,000 | 0 | -- | -- |
II. Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period
□ Applicable ? Not applicable
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
□ Applicable ? Not applicable
3. Existing Staff-Held Shares
□ Applicable ? Not applicable
III Shareholders and Actual Controller
1. Shareholders and Their Shareholdings at the Period-End
Unit: share
| Number of ordinary | 24,083 | Number of ordinary | 22,731 | Number of preferred | 0 | Number of preferred | 0 |
| shareholders | shareholders at the month-end prior to the disclosure of this Report | shareholders with resumed voting rights (if any) (see note 8) | shareholders with resumed voting rights at the month-end prior to the disclosure of this Report (if any) (see note 8) | ||||||||||||
| 5% or greater shareholders or top 10 shareholders | |||||||||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Total shares held at the period-end | Increase/decrease in the Reporting Period | Restricted shares held | Non-restricted shares held | Shares in pledge, marked or frozen | ||||||||
| Status | Shares | ||||||||||||||
| ANHUI GUJING GROUP COMPANY LIMITED | State-owned legal person | 51.21% | 270,701,422 | 270,701,422 | In pledge | 114,000,000 | |||||||||
| BANK OF CHINA-CHINA MERCHANTS CHINA SECURITIES BAIJIU INDEX CLASSIFICATION SECURITIES INVESTMENT FUND | Other | 2.23% | 11,789,208 | 11,789,208 | |||||||||||
| GAOLING FUND,L.P. | Foreign legal person | 2.02% | 10,684,222 | 10,684,222 | |||||||||||
| INDUSTRIAL AND COMMERCIAL BANK OF CHINA LIMITED- INVESCO GREAT WALL EMERGING GROWTH HYBRID | Other | 1.89% | 9,999,951 | 9,999,951 | |||||||||||
| SECURITIES INVESTMENT FUND | ||||||||
| AGRICULTURAL BANK OF CHINA－E FUND CONSUMPTION SECTOR STOCK SECURITIES INVESTMENT FUND | Other | 1.89% | 9,989,282 | 9,989,282 | ||||
| CHINA INTERNATIONAL CAPITAL CORPORATION HONG KONG SECURITIES LTD | Foreign legal person | 1.39% | 7,356,308 | 7,356,308 | ||||
| HONG KONG SECURITIES CLEARING COMPANY LTD. | Foreign legal person | 1.35% | 7,138,919 | 7,138,919 | ||||
| UBS (LUX) EQUITY FUND - CHINA OPPORTUNITY (USD) | Foreign legal person | 1.30% | 6,896,661 | 6,896,661 | ||||
| BANK OF CHINA- INVESCO GREAT WALL DINGYI HYBRID SECURITIES INVESTMENT FUND (LOF) | Other | 0.95% | 5,017,603 | 5,017,603 | ||||
| GREENWOODS CHINA ALPHA MASTER FUND | Foreign legal person | 0.87% | 4,614,326 | 4,614,326 | ||||
| Strategic investor or general legal person becoming a top-10 ordinary shareholder due to rights issue (if any) (see note 3) | N/A | |||||||
| Related or acting-in-concert parties | Among the shareholders above, the Company’s controlling shareholder—Anhui Gujing Group | |||||||
| among the shareholders above | Company Limited—is not a related party of other shareholders; nor are they parties acting in concert as defined in the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed Companies. As for the other shareholders, the Company does not know whether they are related parties or whether they belong to parties acting in concert as defined in the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed Companies. | ||
| Explain if any of the shareholders above was involved in entrusting/being entrusted with voting rights or waiving voting rights | N/A | ||
| Special account for share repurchases (if any) among the top 10 shareholders (see note 10) | N/A | ||
| Top 10 non-restricted shareholders | |||
| Name of shareholder | Non-restricted shares held at the period-end | Shares by type | |
| Type | Shares | ||
| ANHUI GUJING GROUP COMPANY LIMITED | 270,701,422 | RMB-denominated ordinary share | 270,701,422 |
| BANK OF CHINA-CHINA MERCHANTS CHINA SECURITIES BAIJIU INDEX CLASSIFICATION SECURITIES INVESTMENT FUND | 11,789,208 | RMB-denominated ordinary share | 11,789,208 |
| GAOLING FUND,L.P. | 10,684,222 | Domestically listed foreign share | 10,684,222 |
| INDUSTRIAL AND COMMERCIAL BANK OF CHINA LIMITED- INVESCO GREAT WALL EMERGING GROWTH HYBRID SECURITIES INVESTMENT FUND | 9,999,951 | RMB-denominated ordinary share | 9,999,951 |
| AGRICULTURAL BANK OF CHINA－E FUND CONSUMPTION SECTOR STOCK SECURITIES INVESTMENT FUND | 9,989,282 | RMB-denominated ordinary share | 9,989,282 |
| CHINA INTERNATIONAL CAPITAL CORPORATION HONG KONG SECURITIES LTD | 7,356,308 | Domestically listed foreign share | 7,356,308 |
| HONG KONG SECURITIES CLEARING COMPANY LTD. | 7,138,919 | RMB-denominated ordinary share | 7,138,919 |
| UBS (LUX) EQUITY FUND - CHINA OPPORTUNITY (USD) | 6,896,661 | Domestically listed foreign share | 6,896,661 |
| BANK OF CHINA- INVESCO GREAT WALL DINGYI HYBRID SECURITIES INVESTMENT FUND (LOF) | 5,017,603 | RMB-denominated ordinary share | 5,017,603 |
| GREENWOODS CHINA ALPHA MASTER FUND | 4,614,326 | Domestically listed foreign share | 4,614,326 |
| Related or acting-in-concert parties among top 10 unrestricted public shareholders, as well as between top 10 unrestricted public shareholders and top 10 shareholders | Among the shareholders above, the Company’s controlling shareholder—Anhui Gujing Group Company Limited—is not a related party of other shareholders; nor are they parties acting in concert as defined in the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed Companies. As for the other shareholders, the Company does not know whether they are related parties or whether they belong to parties acting in concert as defined in the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed Companies. | ||
| Top 10 ordinary shareholders involved in securities margin trading (if any) (see note 4) | Since October 2021, the Company's controlling shareholder Gujing Group has conducted the business of "Refinancing by Lending Securities", and as of 31 December 2022, 702,600 lent shares were outstanding with no transfer of the ownership of these shares. | ||
Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of theCompany conducted any promissory repo during the Reporting Period.
□ Yes ? No
No such cases in the Reporting Period.
2. Controlling Shareholder
Nature of the controlling shareholder: controlled by a local state-owned legal personType of the controlling shareholder: legal person
| Name of controlling shareholder | Legal representative/person in charge | Date of establishment | Unified social credit code | Principal activity |
| ANHUI GUJING GROUP COMPANY LIMITED | Liang Jinhui | 16 January 1995 | 91341600151947437P | Making beverage, construction materials and plastic products, etc. |
| Controlling shareholder’s holdings in other listed companies at home or abroad in the Reporting Period | As of 31 December 2022, the controlling shareholder ANHUI GUJING GROUP COMPANY LIMITED directly holds 130,000,000 shares of Huaan Securities Co., Ltd. owning the proportion of shares of 2.77%. | |||
Change of the controlling shareholder in the Reporting Period:
□Applicable ? Not applicable
No such cases in the Reporting Period.
3. Information about the Actual Controller and Acting-in-concert Parties
Nature of the actual controller: Local administrator for state-owned assetsType of the actual controller: legal person
| Name of actual controller | Legal representative/person in charge | Date of establishment | Unified social credit code | Principal activity |
| State-owned Assets Supervision and Administration Commission of the People’s Government of Bozhou | Zhao Liang | N/A | 113416007316875206 | N/A |
| Other listed companies at home or abroad controlled by the actual controller in the Reporting Period | N/A | |||
Change of the actual controller during the Reporting Period:
□Applicable ? Not applicable
No such cases in the Reporting Period.Ownership and control relations between the actual controller and the Company:
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset management.
□Applicable ? Not applicable
4. Number of Accumulative Pledged Shares held by the Company’s Controlling Shareholder or the LargestShareholder as well as Its Acting-in-Concert Parties Accounts for 80% of all shares of the Company heldby Them
□Applicable ? Not applicable
5. Other 10% or Greater Corporate Shareholders
□Applicable ? Not applicable
6. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,Reorganizer and Other Commitment Makers
□Applicable ? Not applicable
IV Specific Implementation of Share Repurchase during the Reporting Period
Progress on any share repurchase
□Applicable ? Not applicable
Progress on reducing the repurchased shares by means of centralized bidding
□Applicable ? Not applicable
Part VIII Preference Shares
□ Applicable ? Not applicable
No preference shares in the Reporting Period.
Part IX Bonds
□ Applicable ? Not applicable
Part X Financial StatementsI Independent Auditor’s Report
| Type of auditor’s opinion | Unmodified unqualified opinion |
| Date of signing the auditor’s report | 28 April 2023 |
| Name of the auditor | RSM China |
| No. of the auditor’s report | Rongcheng audit character [2023] 518Z0295 |
| Name of CPA | Zhang Liping, Han Songliang, Yang Fan |
Text of the Auditor’s Report
To the Shareholders of Anhui Gujing Distillery Company Limited:
I. OpinionWe have audited the financial statements of Anhui Gujing Distillery Co., Ltd. (hereafter referred to as “Anhui Gujing”), whichcomprises the consolidated and the parent company’s statement of financial position as at 31 December 2022, the consolidated andthe parent company’s statement of profit or loss and other comprehensive income, the consolidated and the parent company’sstatement of cash flows, the consolidated and the parent company’s statement of changes in equity for the year then ended, and thenotes to the financial statements.In our opinion, the accompanying Anhui Gujing’s financial statements present fairly, in all material respects, the consolidated and thecompany’s financial position as at 31 December 2022 and of their financial performance and cash flows for the year then ended inaccordance with Accounting Standards for Business Enterprises.II. Basis for OpinionWe conducted our audit in accordance with Chinese Standards on Auditing (CSAs). Our responsibilities under those standards arefurther described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independentof Anhui Gujing in accordance with the Code of Ethics for Professional Accountants of the Chinese Institute of Certified PublicAccountants, and we have fulfilled our other ethical responsibilities. We believe that the audit evidence we obtained is sufficient andappropriate to provide a basis for our opinion.III. Key Audit MattersKey audit matters are those matters that, in our professional judgment, were of the most significance in our audit of the financialstatements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, andinforming our opinion thereon, and we do not provide a separate opinion on these matters.(I) Revenue recognition
1. Description
Refer to notes to the consolidated financial statements "3. 27. Revenue" and "5. 38. Revenue and Cost of Sales ".In 2022, the Company achieved revenue of RMB16.713 billion, an increase of 25.95% compared with the same period in 2021. Asrevenue is one of the key performance indicators of the company, there may be the risk of material misstatement in whether therevenue is recognized in an appropriate accounting period. Therefore, we regard revenue recognition as a key audit matter.
2. Audit response
Our procedures for revenue recognition include:
(1) Understand the internal control process design related to the sales business, and execute the walk-through test, perform thecontrol test on the identified key control points;
(2) Interview with the management, check the samples of sales contract, analyze the significant risk and reward transferring pointrelated to revenue recognition of baijiu sales, and then evaluate whether the company's sales revenue recognition policy isreasonable;
(3) Sampling inspection of supporting documents related to baijiu sales revenue recognition, including sales orders, sales invoices,outbound orders, etc.;
(4) Compared with the baijiu sales data of other enterprises in the same industry, compared the liquor sales data of the last periodwith the current period, analyzed the overall rationality of revenue and gross margin;
(5) For the baijiu sales revenue recognized before and after the balance sheet date, select samples to check the sales orders, salesinvoices, outbound orders, etc., in order to evaluate whether the sales revenue is recorded in an appropriate accounting period;
(6) Confirm the amount of baijiu sold and the closing balance of the advance payment to the main distributor by sendingconfirmation letter.(II) Accuracy of inventory balances
1. Description
Refer to notes to the consolidated financial statements "3 12. Inventory" and "5. 7. Inventory".Anhui Gujing has a large inventory balance and needs to maintain an appropriate level of inventory to meet future market orproduction demand. The inventory balance accounts for 20.34% of the Company's total assets, and most of the inventory issemi-finished products and work in progress products. As the most important asset of baijiu production enterprises, inventory has ahigh balance at the end of the year and a large proportion of the total assets. Therefore, we regard the accuracy of the Company'sinventory balance as a key audit matter.
2. Audit response
Our procedures for the accuracy of inventory balances include:
(1) Understand the internal control process design related to inventory business, and carry out walk-through test, carry out controltests for identified key control points;
(2) Obtain the stocktaking plan and stocktaking results of the company, understand the stocktaking methods and review procedures ofthe company, and supervise the stocktaking;
(3) Understand the company's inventory cost accounting method, select several months of cost calculation sheet to review, and selectthe main categories of inventory to carry out valuation test;
(4) To understand the provision method of the company's inventory impairment, evaluate the appropriateness of the provision method,and review whether the provision amount is correct;
(5) Perform analytical procedures and compare with companies in the same industry.
IV. Other informationManagement of Anhui Gujing is responsible for the other information. The other information comprises the information included inthe Annual Report of Anhui Gujing for the year of 2022, but does not include the financial statements and our auditor’s reportthereon.Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusionthereon.In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit orotherwise appears to be materially misstated.If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are requiredto report that fact. We have nothing to report in this regard.V. Responsibilities of Management and Those Charged with Governance for the Financial StatementsManagement of Anhui Gujing is responsible for the preparation and fair presentation of the financial statements in accordance withAccounting Standards of Business Enterprises, and for the design, implementation and maintenance of such internal control asmanagement determines is necessary to enable the preparation of financial statements that are free from material misstatement,whether due to fraud or error.In preparing the financial statements, management is responsible for assessing Anhui Gujing’s ability to continue as a going concern,disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management eitherintends to liquidate Anhui Gujing or to cease operations, or have no realistic alternative but to do so.Those charged with governance are responsible for overseeing Anhui Gujing’s financial reporting process.VI. Auditor’s Responsibilities for the Audit of the Financial StatementsOur Objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from materialmisstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a highlevel of assurance, but is not a guarantee that an audit conducted in accordance with CSAs will always detect a material misstatementwhen it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they couldreasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.As part of an audit in accordance with CSAs, we exercise professional judgment and maintain professional skepticism throughout theaudit. We also:
1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and performaudit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for ouropinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraudmay involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosuresmade by management.
4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidenceobtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on Anhui Gujing’sability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in ourauditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions maycause Anhui Gujing to cease to continue as a going concern.
5. Evaluate the overall presentation, structure and content of the financial statements, and whether the financial statements representthe underlying transactions and events in a manner that achieves fair presentation.
6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within AnhuiGujing to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of thegroup audit. We remain solely responsible for our audit opinion.We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit andsignificant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regardingindependence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on ourindependence, and where applicable, related safeguards.From the matters communicated with those charged with governance, we determine those matters that were of most significance inthe audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in ourauditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, wedetermine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably beexpected to outweigh the public interest benefits of such communication.
| RSM China CPA LLP | [Name of CPA]：Zhang Liping |
| China·Beijing | [Name of CPA]：Han Songliang [Name of CPA]：Yang Fan |
28 April 2023
II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Anhui Gujing Distillery Company Limited
31 December 2022
Unit: RMB
| Item | 31 December 2022 | 1 January 2022 |
| Current assets: | ||
| Monetary assets | 13,772,561,141.30 | 11,924,922,771.76 |
| Settlement reserve | ||
| Interbank loans granted | ||
| Held-for-trading financial assets | 1,782,687,769.66 | 2,661,103,876.68 |
| Derivative financial assets | ||
| Notes receivable | ||
| Accounts receivable | 62,688,668.94 | 89,005,804.17 |
| Accounts receivable financing | 217,419,441.32 | 545,204,103.42 |
| Prepayments | 233,995,661.69 | 156,570,970.99 |
| Premiums receivable | ||
| Reinsurance receivables | ||
| Receivable reinsurance contract reserve | ||
| Other receivables | 73,337,415.74 | 71,753,212.24 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Financial assets purchased under resale agreements | ||
| Inventories | 6,058,106,090.88 | 4,663,456,672.30 |
| Contract assets | 1,855,188.15 | 0.00 |
| Assets held for sale | ||
| Current portion of non-current assets | ||
| Other current assets | 125,568,725.51 | 178,222,222.56 |
| Total current assets | 22,328,220,103.19 | 20,290,239,634.12 |
| Non-current assets: | ||
| Loans and advances to customers | ||
| Investments in debt obligations | ||
| Investments in other debt obligations | ||
| Long-term receivables | ||
| Long-term equity investments | 10,154,235.98 | 5,312,600.78 |
| Investments in other equity instruments | 56,447,789.94 | 54,542,418.50 |
| Other non-current financial assets | ||
| Investment property | 13,396,881.96 | 4,075,801.06 |
| Fixed assets | 2,741,844,586.30 | 1,984,063,975.87 |
| Construction in progress | 2,454,703,251.44 | 1,064,134,904.21 |
| Productive living assets | ||
| Oil and gas assets | ||
| Right-of-use assets | 32,562,171.10 | 43,927,228.97 |
| Intangible assets | 1,108,125,157.05 | 1,063,468,842.61 |
| Development costs | ||
| Goodwill | 561,364,385.01 | 561,364,385.01 |
| Long-term prepaid expense | 51,012,977.31 | 55,908,338.03 |
| Deferred income tax assets | 425,120,227.37 | 283,828,000.24 |
| Other non-current assets | 6,870,532.00 | 7,220,318.40 |
| Total non-current assets | 7,461,602,195.46 | 5,127,846,813.68 |
| Total assets | 29,789,822,298.65 | 25,418,086,447.80 |
| Current liabilities: | ||
| Short-term borrowings | 83,232,176.31 | 30,035,138.89 |
| Borrowings from the central bank | ||
| Interbank loans obtained | ||
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 695,740,000.00 | 127,114,336.16 |
| Accounts payable | 2,054,063,559.15 | 1,020,437,321.89 |
| Advances from customers | ||
| Contract liabilities | 826,636,478.35 | 1,825,447,705.85 |
| Financial assets sold under repurchase agreements | ||
| Customer deposits and interbank deposits | ||
| Payables for acting trading of securities | ||
| Payables for underwriting of securities | ||
| Employee benefits payable | 795,138,305.63 | 709,671,787.74 |
| Taxes payable | 1,205,028,130.02 | 873,270,986.71 |
| Other payables | 3,261,763,838.80 | 2,280,937,078.12 |
| Including: Interest payable | ||
| Dividends payable | ||
| Handling charges and commissions payable |
| Reinsurance payables | ||
| Liabilities directly associated with assets held for sale | ||
| Current portion of non-current liabilities | 42,237,345.11 | 13,190,399.32 |
| Other current liabilities | 1,044,664,441.58 | 799,522,562.60 |
| Total current liabilities | 10,008,504,274.95 | 7,679,627,317.28 |
| Non-current liabilities: | ||
| Insurance contract reserve | ||
| Long-term borrowings | 44,944,737.91 | 172,356,255.83 |
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | 18,631,395.93 | 28,107,223.18 |
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provisions | ||
| Deferred income | 103,714,978.95 | 91,101,512.05 |
| Deferred income tax liabilities | 281,173,154.70 | 194,033,257.93 |
| Other non-current liabilities | ||
| Total non-current liabilities | 448,464,267.49 | 485,598,248.99 |
| Total liabilities | 10,456,968,542.44 | 8,165,225,566.27 |
| Owners’ equity: | ||
| Share capital | 528,600,000.00 | 528,600,000.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 6,224,747,667.10 | 6,224,747,667.10 |
| Less: Treasury stock | ||
| Other comprehensive income | 408,739.61 | -2,735,058.19 |
| Specific reserve | ||
| Surplus reserves | 269,402,260.27 | 269,402,260.27 |
| General reserve | ||
| Retained earnings | 11,497,599,306.54 | 9,517,374,574.46 |
| Total equity attributable to owners of the Company as the parent | 18,520,757,973.52 | 16,537,389,443.64 |
| Non-controlling interests | 812,095,782.69 | 715,471,437.89 |
| Total owners’ equity | 19,332,853,756.21 | 17,252,860,881.53 |
| Total liabilities and owners’ equity | 29,789,822,298.65 | 25,418,086,447.80 |
Legal representative: Liang Jinhui The Company’s chief accountant: Zhu Jiafeng
Head of the Company’s financial department: Zhu Jiafeng
2. Balance Sheet of the Company as the Parent
Unit: RMB
| Item | 31 December 2022 | 1 January 2022 |
| Current assets: | ||
| Monetary assets | 7,338,284,192.52 | 6,701,949,499.06 |
| Held-for-trading financial assets | 1,267,195,966.38 | 2,611,037,013.67 |
| Derivative financial assets | ||
| Notes receivable | ||
| Accounts receivable | ||
| Accounts receivable financing | 233,465,242.96 | 269,471,899.40 |
| Prepayments | 39,599,180.34 | 85,579,299.60 |
| Other receivables | 202,279,154.63 | 290,480,736.49 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Inventories | 4,670,562,760.80 | 3,667,928,608.55 |
| Contract assets | ||
| Assets held for sale | ||
| Current portion of non-current assets | ||
| Other current assets | 63,929,024.28 | 142,527,867.24 |
| Total current assets | 13,815,315,521.91 | 13,768,974,924.01 |
| Non-current assets: | ||
| Investments in debt obligations | ||
| Investments in other debt obligations | ||
| Long-term receivables | ||
| Long-term equity investments | 1,586,749,613.68 | 1,547,415,641.38 |
| Investments in other equity instruments | ||
| Other non-current financial assets | ||
| Investment property | 13,396,881.96 | 4,075,801.06 |
| Fixed assets | 1,715,114,776.31 | 1,375,344,792.42 |
| Construction in progress | 1,597,185,086.35 | 692,315,065.86 |
| Productive living assets | ||
| Oil and gas assets | ||
| Right-of-use assets | 31,004,490.39 | 40,811,867.62 |
| Intangible assets | 483,601,950.48 | 437,919,619.31 |
| Development costs | ||
| Goodwill |
| Long-term prepaid expense | 22,817,228.71 | 41,319,866.13 |
| Deferred income tax assets | 28,512,224.61 | 28,775,933.22 |
| Other non-current assets | ||
| Total non-current assets | 5,478,382,252.49 | 4,167,978,587.00 |
| Total assets | 19,293,697,774.40 | 17,936,953,511.01 |
| Current liabilities: | ||
| Short-term borrowings | ||
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | ||
| Accounts payable | 950,887,301.03 | 672,018,963.99 |
| Advances from customers | ||
| Contract liabilities | 3,432,162.83 | 23,438,890.01 |
| Employee benefits payable | 276,482,563.00 | 160,404,100.41 |
| Taxes payable | 548,241,724.13 | 473,881,384.92 |
| Other payables | 726,494,649.90 | 632,857,371.46 |
| Including: Interest payable | ||
| Dividends payable | ||
| Liabilities directly associated with assets held for sale | ||
| Current portion of non-current liabilities | 10,574,121.12 | 11,633,827.85 |
| Other current liabilities | 16,403,036.11 | 15,080,461.56 |
| Total current liabilities | 2,532,515,558.12 | 1,989,315,000.20 |
| Non-current liabilities: | ||
| Long-term borrowings | ||
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | 18,631,395.93 | 26,476,999.19 |
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provisions | ||
| Deferred income | 38,926,909.02 | 27,176,546.19 |
| Deferred income tax liabilities | 43,726,162.12 | 21,499,021.71 |
| Other non-current liabilities | ||
| Total non-current liabilities | 101,284,467.07 | 75,152,567.09 |
| Total liabilities | 2,633,800,025.19 | 2,064,467,567.29 |
| Owners’ equity: | ||
| Share capital | 528,600,000.00 | 528,600,000.00 |
| Other equity instruments |
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 6,176,504,182.20 | 6,176,504,182.20 |
| Less: Treasury stock | ||
| Other comprehensive income | -529,354.77 | -1,385,311.78 |
| Specific reserve | ||
| Surplus reserves | 264,300,000.00 | 264,300,000.00 |
| Retained earnings | 9,691,022,921.78 | 8,904,467,073.30 |
| Total owners’ equity | 16,659,897,749.21 | 15,872,485,943.72 |
| Total liabilities and owners’ equity | 19,293,697,774.40 | 17,936,953,511.01 |
3. Consolidated Income Statement
Unit: RMB
| Item | 2022 | 2021 |
| 1. Revenue | 16,713,234,153.52 | 13,269,826,266.04 |
| Including: Operating revenue | 16,713,234,153.52 | 13,269,826,266.04 |
| Interest revenue | ||
| Insurance premium income | ||
| Handling charge and commission income | ||
| 2. Costs and expenses | 12,315,714,961.34 | 10,213,542,938.71 |
| Including: Cost of sales | 3,816,322,045.01 | 3,304,077,011.92 |
| Interest costs | ||
| Handling charge and commission expense | ||
| Surrenders | ||
| Net insurance claims paid | ||
| Net amount provided as insurance contract reserve | ||
| Expenditure on policy dividends | ||
| Reinsurance premium expense | ||
| Taxes and surcharges | 2,824,059,322.03 | 2,031,815,205.67 |
| Selling expense | 4,668,185,055.13 | 4,008,075,483.08 |
| Administrative expense | 1,166,780,389.23 | 1,022,181,419.74 |
| R&D expense | 56,667,203.01 | 51,449,475.36 |
| Finance costs | -216,299,053.07 | -204,055,657.06 |
| Including: Interest costs | 5,679,645.21 | 7,036,575.14 |
| Interest revenue | 221,450,532.78 | 210,634,326.57 |
| Add: Other income | 46,721,259.52 | 55,269,628.48 |
| Return on investment (“-” for loss) | -10,804,384.45 | 4,692,379.15 |
| Including: Share of profit or loss of joint ventures and associates | 941,635.20 | 397,024.95 |
| Income from the derecognition of financial assets at amortized cost (“-” for loss) | ||
| Exchange gain (“-” for loss) | ||
| Net gain on exposure hedges (“-” for loss) | ||
| Gain on changes in fair value (“-” for loss) | 29,149,125.30 | 7,225,961.17 |
| Credit impairment loss (“-” for loss) | 403,221.49 | -6,492,841.44 |
| Asset impairment loss (“-” for loss) | -11,144,233.30 | -16,738,156.85 |
| Asset disposal income (“-” for loss) | 886,286.45 | 1,368,763.13 |
| 3. Operating profit (“-” for loss) | 4,452,730,467.19 | 3,101,609,060.97 |
| Add: Non-operating income | 50,767,945.38 | 80,358,158.20 |
| Less: Non-operating expense | 33,006,363.84 | 10,673,284.61 |
| 4. Profit before tax (“-” for loss) | 4,470,492,048.73 | 3,171,293,934.56 |
| Less: Income tax expense | 1,218,657,884.24 | 796,962,295.09 |
| 5. Net profit (“-” for net loss) | 3,251,834,164.49 | 2,374,331,639.47 |
| 5.1 By operating continuity | ||
| 5.1.1 Net profit from continuing operations (“-” for net loss) | 3,251,834,164.49 | 2,374,331,639.47 |
| 5.1.2 Net profit from discontinued operations (“-” for net loss) | ||
| 5.2 By ownership | ||
| 5.2.1 Net profit attributable to shareholders of the Company as the parent | 3,143,144,732.08 | 2,297,894,413.25 |
| 5.2.1 Net profit attributable to non-controlling interests | 108,689,432.41 | 76,437,226.22 |
| 6. Other comprehensive income, net of tax | 3,878,826.81 | -2,702,255.36 |
| Attributable to owners of the Company as the parent | 3,143,797.80 | -2,735,058.19 |
| 6.1 Items that will not be reclassified to profit or loss | 857,417.15 | 312,174.31 |
| 6.1.1 Changes caused by |
| remeasurements on defined benefit 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 | 857,417.15 | 312,174.31 |
| 6.1.4 Changes in the fair value arising from changes in own credit risk | ||
| 6.1.5 Other | ||
| 6.2 Items that will be reclassified to profit or loss | 2,286,380.65 | -3,047,232.50 |
| 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 Other comprehensive income arising from the reclassification of financial assets | 2,286,380.65 | -3,047,232.50 |
| 6.2.4 Credit impairment allowance for investments in other debt obligations | ||
| 6.2.5 Reserve for cash flow hedges | ||
| 6.2.6 Differences arising from the translation of foreign currency-denominated financial statements | ||
| 6.2.7 Other | ||
| Attributable to non-controlling interests | 735,029.01 | 32,802.83 |
| 7. Total comprehensive income | 3,255,712,991.30 | 2,371,629,384.11 |
| Attributable to owners of the Company as the parent | 3,146,288,529.88 | 2,295,159,355.06 |
| Attributable to non-controlling interests | 109,424,461.42 | 76,470,029.05 |
| 8. Earnings per share | ||
| 8.1 Basic earnings per share | 5.95 | 4.45 |
| 8.2 Diluted earnings per share | 5.95 | 4.45 |
Legal representative: Liang Jinhui The Company’s chief accountant: Zhu JiafengHead of the Company’s financial department: Zhu Jiafeng
4. Income Statement of the Company as the Parent
Unit: RMB
| Item | 2022 | 2021 |
| 1. Operating revenue | 8,436,854,425.33 | 6,861,927,173.56 |
| Less: Cost of sales | 3,150,072,247.44 | 2,685,143,091.93 |
| Taxes and surcharges | 2,427,479,945.90 | 1,709,930,259.58 |
| Selling expense | 214,565,182.08 | 57,374,585.54 |
| Administrative expense | 828,752,411.76 | 638,615,142.40 |
| R&D expense | 24,437,179.22 | 24,789,072.53 |
| Finance costs | -146,277,487.29 | -146,376,995.59 |
| Including: Interest expense | 1,571,025.57 | 2,057,303.09 |
| Interest revenue | 147,476,627.30 | 148,286,685.55 |
| Add: Other income | 9,829,030.03 | 12,884,387.21 |
| Return on investment (“-” for loss) | 516,451,555.38 | 740,925,389.76 |
| Including: Share of profit or loss of joint ventures and associates | 769,710.25 | 0.00 |
| 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) | 13,657,322.02 | 7,159,098.16 |
| Credit impairment loss (“-” for loss) | -259,373.20 | 1,569,395.15 |
| Asset impairment loss (“-” for loss) | -9,004,878.11 | -9,447,015.13 |
| Asset disposal income (“-” for loss) | 448,814.15 | 1,217,988.71 |
| 2. Operating profit (“-” for loss) | 2,468,947,416.49 | 2,646,761,261.03 |
| Add: Non-operating income | 32,757,400.28 | 45,118,776.84 |
| Less: Non-operating expense | 22,709,736.17 | 5,010,863.26 |
| 3. Profit before tax (“-” for loss) | 2,478,995,080.60 | 2,686,869,174.61 |
| Less: Income tax expense | 529,519,232.12 | 479,562,073.53 |
| 4. Net profit (“-” for net loss) | 1,949,475,848.48 | 2,207,307,101.08 |
| 4.1 Net profit from continuing operations (“-” for net loss) | 1,949,475,848.48 | 2,207,307,101.08 |
| 4.2 Net profit from discontinued operations (“-” for net loss) | ||
| 5. Other comprehensive income, net of | 855,957.01 | -1,385,311.78 |
| tax | ||
| 5.1 Items that will not be reclassified to profit or loss | ||
| 5.1.1 Changes caused by remeasurements on defined benefit 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 arising from changes in own credit risk | ||
| 5.1.5 Other | ||
| 5.2 Items that will be reclassified to profit or loss | 855,957.01 | -1,385,311.78 |
| 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 Other comprehensive income arising from the reclassification of financial assets | 855,957.01 | -1,385,311.78 |
| 5.2.4 Credit impairment allowance for investments in other debt obligations | ||
| 5.2.5 Reserve for cash flow hedges | ||
| 5.2.6 Differences arising from the translation of foreign currency-denominated financial statements | ||
| 5.2.7 Other | ||
| 6. Total comprehensive income | 1,950,331,805.49 | 2,205,921,789.30 |
| 7. Earnings per share | ||
| 7.1 Basic earnings per share | 3.69 | 4.18 |
| 7.2 Diluted earnings per share | 3.69 | 4.18 |
5. Consolidated Cash Flow Statement
Unit: RMB
| Item | 2022 | 2021 |
| 1. Cash flows from operating activities: | ||
| Proceeds from sale of commodities | 17,348,587,209.08 | 15,533,370,561.71 |
| and rendering of services | ||
| Net increase in customer deposits and interbank deposits | ||
| Net increase in borrowings from the 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 from acting trading of securities | ||
| Tax rebates | 45,693,991.49 | 10,939,461.17 |
| Cash generated from other operating activities | 1,235,322,755.09 | 1,154,331,493.95 |
| Subtotal of cash generated from operating activities | 18,629,603,955.66 | 16,698,641,516.83 |
| Payments for commodities and services | 3,108,670,928.12 | 2,476,695,652.35 |
| Net increase in loans and advances to customers | ||
| Net increase in deposits in the central bank and in interbank loans granted | ||
| Payments for claims on original insurance contracts | ||
| Net increase in interbank loans granted | ||
| Interest, handling charges and commissions paid | ||
| Policy dividends paid | ||
| Cash paid to and for employees | 3,185,038,494.67 | 2,764,878,720.68 |
| Taxes paid | 5,307,487,437.35 | 3,745,603,413.41 |
| Cash used in other operating activities | 3,920,492,516.04 | 2,457,155,602.60 |
| Subtotal of cash used in operating activities | 15,521,689,376.18 | 11,444,333,389.04 |
| Net cash generated from/used in | 3,107,914,579.48 | 5,254,308,127.79 |
| operating activities | ||
| 2. Cash flows from investing activities: | ||
| Proceeds from disinvestment | 8,260,205,000.00 | 685,446,809.53 |
| Return on investment | 221,663,163.09 | 27,570,964.03 |
| Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | 1,962,955.22 | 8,510,785.59 |
| Net proceeds from the disposal of subsidiaries and other business units | ||
| Cash generated from other investing activities | ||
| Subtotal of cash generated from investing activities | 8,483,831,118.31 | 721,528,559.15 |
| Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | 1,580,221,258.51 | 578,154,171.08 |
| Payments for investments | 1,613,900,000.00 | 8,939,702,000.00 |
| Net increase in pledged loans granted | ||
| Net payments for the acquisition of subsidiaries and other business units | 20,998,589.19 | 65,123,508.25 |
| Cash used in other investing activities | ||
| Subtotal of cash used in investing activities | 3,215,119,847.70 | 9,582,979,679.33 |
| Net cash generated from/used in investing activities | 5,268,711,270.61 | -8,861,451,120.18 |
| 3. Cash flows from financing activities: | ||
| Capital contributions received | 6,000,000.00 | 4,962,827,169.81 |
| Including: Capital contributions by non-controlling interests to subsidiaries | 6,000,000.00 | 5,280,000.00 |
| Borrowings raised | 69,900,000.00 | 202,510,000.00 |
| Cash generated from other financing activities | ||
| Subtotal of cash generated from financing activities | 75,900,000.00 | 5,165,337,169.81 |
| Repayment of borrowings | 177,180,000.00 | 357,436,327.65 |
| Interest and dividends paid | 1,211,279,690.92 | 760,093,886.59 |
| Including: Dividends paid by subsidiaries to non-controlling interests | 41,909,624.65 | 0.00 |
| Cash used in other financing activities | 16,242,902.55 | 20,017,478.32 |
| Subtotal of cash used in financing activities | 1,404,702,593.47 | 1,137,547,692.56 |
| Net cash generated from/used in financing activities | -1,328,802,593.47 | 4,027,789,477.25 |
| 4. Effect of foreign exchange rates changes on cash and cash equivalents | ||
| 5. Net increase in cash and cash equivalents | 7,047,823,256.62 | 420,646,484.86 |
| Add: Cash and cash equivalents, beginning of the period | 6,057,550,178.60 | 5,636,903,693.74 |
| 6. Cash and cash equivalents, end of the period | 13,105,373,435.22 | 6,057,550,178.60 |
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
| Item | 2022 | 2021 |
| 1. Cash flows from operating activities: | ||
| Proceeds from sale of commodities and rendering of services | 9,518,152,761.40 | 6,255,940,908.12 |
| Tax rebates | 2,094,742.52 | 136,317.05 |
| Cash generated from other operating activities | 1,926,489,095.98 | 1,011,350,323.14 |
| Subtotal of cash generated from operating activities | 11,446,736,599.90 | 7,267,427,548.31 |
| Payments for commodities and services | 2,746,340,485.31 | 1,619,308,652.04 |
| Cash paid to and for employees | 1,081,372,305.15 | 893,957,837.80 |
| Taxes paid | 3,459,006,681.54 | 2,421,277,549.92 |
| Cash used in other operating activities | 2,992,541,464.72 | 257,177,069.10 |
| Subtotal of cash used in operating activities | 10,279,260,936.72 | 5,191,721,108.86 |
| Net cash generated from/used in operating activities | 1,167,475,663.18 | 2,075,706,439.45 |
| 2. Cash flows from investing activities: | ||
| Proceeds from disinvestment | 7,606,205,000.00 | 546,849,809.53 |
| Return on investment | 665,639,717.09 | 43,845,258.48 |
| Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | 2,031,105.25 | 6,000,032.69 |
| Net proceeds from the disposal of subsidiaries and other business units | 0.00 | 13,673,346.37 |
| Cash generated from other investing activities | ||
| Subtotal of cash generated from investing activities | 8,273,875,822.34 | 610,368,447.07 |
| Payments for the acquisition of fixed | 1,411,407,863.94 | 793,665,435.61 |
| assets, intangible assets and other long-lived assets | ||
| Payments for investments | 1,063,900,000.00 | 8,151,105,000.00 |
| Net payments for the acquisition of subsidiaries and other business units | 21,225,000.00 | 440,643,400.00 |
| Cash used in other investing activities | ||
| Subtotal of cash used in investing activities | 2,496,532,863.94 | 9,385,413,835.61 |
| Net cash generated from/used in investing activities | 5,777,342,958.40 | -8,775,045,388.54 |
| 3. Cash flows from financing activities: | ||
| Capital contributions received | 0.00 | 4,957,547,169.81 |
| Borrowings raised | ||
| Cash generated from other financing activities | ||
| Subtotal of cash generated from financing activities | 0.00 | 4,957,547,169.81 |
| Repayment of borrowings | ||
| Interest and dividends paid | 1,164,491,025.57 | 755,400,000.00 |
| Cash used in other financing activities | 13,992,902.55 | 18,667,478.32 |
| Subtotal of cash used in financing activities | 1,178,483,928.12 | 774,067,478.32 |
| Net cash generated from/used in financing activities | -1,178,483,928.12 | 4,183,479,691.49 |
| 4. Effect of foreign exchange rates changes on cash and cash equivalents | ||
| 5. Net increase in cash and cash equivalents | 5,766,334,693.46 | -2,515,859,257.60 |
| Add: Cash and cash equivalents, beginning of the period | 1,571,949,499.06 | 4,087,808,756.66 |
| 6. Cash and cash equivalents, end of the period | 7,338,284,192.52 | 1,571,949,499.06 |
7. Consolidated Statements of Changes in Owners’ Equity
2022
Unit: RMB
| Item | 2022 | ||||||||||||||
| 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. Balance as at the end of the prior year | 528,600,000.00 | 6,224,747,667.10 | -2,735,058.19 | 269,402,260.27 | 9,517,374,574.46 | 16,537,389,443.64 | 715,471,437.89 | 17,252,860,881.53 | |||||||
| Add: Adjustment for change in accounting policy | |||||||||||||||
| Adjustment for correction of previous error | |||||||||||||||
| Adjustment for business combination under common control | |||||||||||||||
| Other adjustments | |||||||||||||||
| 2. Balance as at the beginning of the year | 528,600,000.00 | 6,224,747,667.10 | -2,735,058.19 | 269,402,260.27 | 9,517,374,574.46 | 16,537,389,443.64 | 715,471,437.89 | 17,252,860,881.53 | |||||||
| 3. Increase/ decrease in the period (“-” for decrease) | 3,143,797.80 | 1,980,224,732.08 | 1,983,368,529.88 | 96,624,344.80 | 2,079,992,874.68 | ||||||||||
| 3.1 Total comprehensive income | 3,143,797.80 | 3,143,144,732.08 | 3,146,288,529.88 | 109,424,461.42 | 3,255,712,991.30 | ||||||||||
| 3.2 Capital increased and reduced by owners | 29,109,508.03 | 29,109,508.03 | |||||||||||||
| 3.2.1 Ordinary shares increased by | 6,000,000.00 | 6,000,000.00 |
| owners | |||||||||||||||
| 3.2.2 Capital increased by holders of other equity instruments | |||||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | |||||||||||||||
| 3.2.4 Other | 23,109,508.03 | 23,109,508.03 | |||||||||||||
| 3.3 Profit distribution | -1,162,920,000.00 | -1,162,920,000.00 | -41,909,624.65 | -1,204,829,624.65 | |||||||||||
| 3.3.1 Appropriation to surplus reserves | |||||||||||||||
| 3.3.2 Appropriation to general reserve | |||||||||||||||
| 3.3.3 Appropriation to owners | -1,162,920,000.00 | -1,162,920,000.00 | -41,909,624.65 | -1,204,829,624.65 |
| (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 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. Balance as at the end of the period | 528,600,000.00 | 6,224,747,667.10 | 408,739.61 | 269,402,260.27 | 11,497,599,306.54 | 18,520,757,973.52 | 812,095,782.69 | 19,332,853,756.21 |
2021
Unit: RMB
| Item | 2021 | ||||||||||||||
| 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. Balance as at the end of the prior year | 503,600,000.00 | 1,295,405,592.25 | 256,902,260.27 | 7,987,380,161.21 | 10,043,288,013.73 | 405,562,772.65 | 10,448,850,786.38 | ||||||||
| Add: Adjustment for change in accounting policy | |||||||||||||||
| Adjustment for correction of previous error | |||||||||||||||
| Adjustment for business combination | |||||||||||||||
| under common control | |||||||||||||||
| Other adjustments | |||||||||||||||
| 2. Balance as at the beginning of the year | 503,600,000.00 | 1,295,405,592.25 | 256,902,260.27 | 7,987,380,161.21 | 10,043,288,013.73 | 405,562,772.65 | 10,448,850,786.38 | ||||||||
| 3. Increase/ decrease in the period (“-” for decrease) | 25,000,000.00 | 4,929,342,074.85 | -2,735,058.19 | 12,500,000.00 | 1,529,994,413.25 | 6,494,101,429.91 | 309,908,665.24 | 6,804,010,095.15 | |||||||
| 3.1 Total comprehensive income | -2,735,058.19 | 2,297,894,413.25 | 2,295,159,355.06 | 76,470,029.05 | 2,371,629,384.11 | ||||||||||
| 3.2 Capital increased and reduced by owners | 25,000,000.00 | 4,929,342,074.85 | 4,954,342,074.85 | 233,438,636.19 | 5,187,780,711.04 | ||||||||||
| 3.2.1 Ordinary shares increased by owners | 25,000,000.00 | 4,929,342,074.85 | 4,954,342,074.85 | 4,954,342,074.85 | |||||||||||
| 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 | 233,438,636.19 | 233,438,636.19 | |||||||||||||
| 3.3 Profit distribution | 12,500,000.00 | -767,900,000.00 | -755,400,000.00 | -755,400,000.00 | |||||||||||
| 3.3.1 Appropriation to surplus reserves | 12,500,000.00 | -12,500,000.00 | |||||||||||||
| 3.3.2 Appropriation to general reserve | |||||||||||||||
| 3.3.3 Appropriation to owners (or shareholders) | -755,400,000.00 | -755,400,000.00 | -755,400,000.00 |
| 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 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. Balance as at the end of the period | 528,600,000.00 | 6,224,747,667.10 | -2,735,058.19 | 269,402,260.27 | 9,517,374,574.46 | 16,537,389,443.64 | 715,471,437.89 | 17,252,860,881.53 |
8. Statements of Changes in Owners’ Equity of the Company as the Parent
2022
Unit: RMB
| Item | 2022 | |||||||||||
| 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. Balance as at the end of the prior year | 528,600,000.00 | 6,176,504,182.20 | -1,385,311.78 | 264,300,000.00 | 8,904,467,073.30 | 15,872,485,943.72 | ||||||
| Add: Adjustment for change in accounting policy | ||||||||||||
| Adjustment for correction of previous error | ||||||||||||
| Other adjustments | ||||||||||||
| 2. Balance as at the beginning of the year | 528,600,000.00 | 6,176,504,182.20 | -1,385,311.78 | 264,300,000.00 | 8,904,467,073.30 | 15,872,485,943.72 | ||||||
| 3. Increase/ decrease in the period (“-” for decrease) | 855,957.01 | 786,555,848.48 | 787,411,805.49 | |||||||||
| 3.1 Total comprehensive income | 855,957.01 | 1,949,475,848.48 | 1,950,331,805.49 | |||||||||
| 3.2 Capital increased and reduced by owners | ||||||||||||
| 3.2.1 Ordinary shares increased by owners | ||||||||||||
| 3.2.2 Capital increased by holders of other equity | ||||||||||||
| instruments | ||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | ||||||||||||
| 3.2.4 Other | ||||||||||||
| 3.3 Profit distribution | -1,162,920,000.00 | -1,162,920,000.00 | ||||||||||
| 3.3.1 Appropriation to surplus reserves | ||||||||||||
| 3.3.2 Appropriation to owners (or shareholders) | -1,162,920,000.00 | -1,162,920,000.00 | ||||||||||
| 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 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. Balance as at the end of the period | 528,600,000.00 | 6,176,504,182.20 | -529,354.77 | 264,300,000.00 | 9,691,022,921.78 | 16,659,897,749.21 |
2021
Unit: RMB
| Item | 2021 | |||||||||||
| 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. Balance as at the end of the prior year | 503,600,000.00 | 1,247,162,107.35 | 251,800,000.00 | 7,465,059,972.22 | 9,467,622,079.57 | |||||||
| Add: Adjustment for change in accounting policy | ||||||||||||
| Adjustment for correction of previous error | ||||||||||||
| Other adjustments | ||||||||||||
| 2. Balance as at the beginning of the year | 503,600,000.00 | 1,247,162,107.35 | 251,800,000.00 | 7,465,059,972.22 | 9,467,622,079.57 | |||||||
| 3. Increase/ decrease in the period (“-” for decrease) | 25,000,000.00 | 4,929,342,074.85 | -1,385,311.78 | 12,500,000.00 | 1,439,407,101.08 | 6,404,863,864.15 | ||||||
| 3.1 Total comprehensive income | -1,385,311.78 | 2,207,307,101.08 | 2,205,921,789.30 | |||||||||
| 3.2 Capital increased and reduced by owners | 25,000,000.00 | 4,929,342,074.85 | 4,954,342,074.85 | |||||||||
| 3.2.1 Ordinary shares increased by owners | 25,000,000.00 | 4,929,342,074.85 | 4,954,342,074.85 | |||||||||
| 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 | 12,500,000.00 | -767,900,000.00 | -755,400,000.00 |
| distribution | ||||||||||||
| 3.3.1 Appropriation to surplus reserves | 12,500,000.00 | -12,500,000.00 | ||||||||||
| 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 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. Balance as at the end of the period | 528,600,000.00 | 6,176,504,182.20 | -1,385,311.78 | 264,300,000.00 | 8,904,467,073.30 | 15,872,485,943.72 |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
Anhui Gujing Distillery Company Limited
Notes to the Financial Statementsfor the Year Ended 31 December 2022
(Unless otherwise stated, all amounts are expressed in CNY Yuan.)
Note 1 Company profile
1.1 Company profile
The Anhui State-owned Asset Management Bureau approved through WanGuoZiGongZi(1996) Di 053 Hao the incorporation of Anhui Gujing Distillery Company Limited (theCompany and GJ Distillery) by Anhui Gujing Group Company Limited (GJ Group), as thesole founder, by the operating assets of Anhui Bozhou Gujing Distillery Factory (GJDistillery Factory), which is the core operating unit of GJ Group. The incorporation wasfurther approved by the Anhui People's Government through WanZhengMi (1996) 42 Hao.The incorporation General Meeting was held on 28 May 1996 and the incorporation wasregistered with the Anhui Admistration Bureau for Commerce and Industry on 30 May 1996with the registered address at Bozhou, Anhui, the People’s Republic of China (the PRC). Atincorporation, the Company’s total number of shares stood at 155 million with a valuation ofCNY 377 .17million, which was the fair value of the operating assets of GJ Distillery Factoryupon appraisal.The Company initiated public offering of 60 million domestic listed shares held by foreigninvestors (known as “B share(s)”) in June 1996 and 20 million domestic listed CNY ordinaryshares (known as “A share(s)”) in September 1996. The par value of both the B share and Ashare is CNY 1.00 per share. The B shares and A shares issued were listed on the ShenzhenStock Exchange.The Company is headquartered at Gujing, Bozhou, Anhui. The Company and its subsidiaries(collectively, the Group) operates in the food manufacturing sector and engages in theproduction and sales of distilled wine.As of the public listing, the Company has 235 million shares in total with the share capital atCNY 235 million. The Company’s at public listing comprised 155 million state-owned shares,60 million B shares and 20 million A shares. Each of the Company’s shares has a par value atCNY 1.00 per share.
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
In accordance with the resolution of the General Meeting held on 29 May 2006, the Companyexercised the share reorganisation plan in June 2006. Immediately after the implementation ofthe share reorganisation plan, the Company had in total 235 million shares, comprising 147million shares with restriction of disposal (equal to 62.55% of total shares) and 88 millionfree-floating shares (equal to 37.45% of total shares).Upon the Company’s publication of the Notice of Lifting Restriction of Shares on 27 June2007, the restriction on disposal on 11.75 million shares was lifted on 29 June 2007.Immediately after the lifting, the Company had in total 235 million shares, comprising 135.25million shares with restriction of disposal (equal to 57.55% of total shares) and 99.75 millionfree-floating shares (equal to 42.45% of total shares).Upon the Company’s publication of the Notice of Lifting Restriction of Shares on 17 July2008, the restriction on disposal on 11.75 million shares was lifted on 18 July 2008.Immediately after the lifting, the Company had in total 235 million shares, comprising 123.5million shares with restriction of disposal (equal to 52.55% of total shares) and 111.5 millionfree-floating shares (equal to 47.45% of total shares).Upon the Company’s publication of the Notice of Lifting Restriction of Shares on 24 July2009, the restriction on disposal on 123.5 million shares was lifted on 29 July 2009.Immediately after the lifting, the Company had in total 235 million shares, comprising 235million free-floating shares (equal to 100% of total shares).Upon approval by the China Securities Regulatory Commission (CSRC) throughZhengJianXuKe [2011] 943 Hao, the Company issued on 15 July 2011 through privateoffering of 16.8 million A shares with the par value at CNY 1.00 to designated investors. Theshares were issued at CNY 75.00 per share. Gross proceeds from this issuance was CNY1,260 million and the respective net proceeds after deduction of the cost of issuance (CNY
32.5 million) was CNY 1,227.5 million. The subscription for the issuance was verified byReanda CPAs Co., Ltd. through Reanda YanZi [2011] Di 1065 Hao. Immediately after thisprivate offering, the share capital of the Company increased to CNY 251.8 million.In accordance with the resolution of the Company’s 2011 General Meeting, a bonus issue of10 shares for every 10 shares held at 31 December 2011 through utilisation of capital reserveswas exercised in 2012. 251.8 bonus shares were issued in total. Immediately after the exerciseof the bonus issue, the Company’s share capital increased to CNY 503.6 million.
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
Upon approval by the CSRC through ZhengJianXuKe [2021] 1422 Hao, the Company issuedon 22 July 2021 through private offering of 25 million A shares with the par value at CNY
1.00 to designated investors. The shares were issued at CNY 200.00 per share. Gross proceedsfrom this issuance was CNY 5,000 million and the respective net proceeds after deduction ofthe cost of issuance (CNY 45.66 million) was CNY 4,954.34 million. The subscription for theissuance was verified by RSM China CPAs LLP through RSM Yan [2021] No. 518Z0050.Immediately after this private offering, the share capital of the Company increased to CNY
528.6 million.
As of 31 December 2022, total number of the Company’s shares stood at 528.6 million. SeeNote 5.33 for further details.Place of registration: Gujing, Bozhou, Anhui.Registered scope of operation: grain purchase (operation under permit), production of distilledwine, brewery equipments, packaging materials, glass bottles, alcohol, fat (as by-product ofalcohol production), development of innovative technology and biological technology, deepprocessing of agricultural and auxillary products, and sales of owned produced goods.These financial statements are approved on 28 April 2023 by the Company’s Board ofDirectors for publication.
1.2 Scope of consolidation
1.2.1 Subsidiaries included in the Company’s scope of consolidation as of the statement date
| Subsidiary | Abbreviation | Shareholding % | ||
| Direct | Indirect | |||
| 1 | Bozhou Gujing Sales Co., Ltd. | GJ Sales | 100 | - |
| 2 | Anhui Jinyunlai Culture Media Co., Ltd. | Jinyunlai | 100 | - |
| 3 | Anhui Ruisi Weier Technology Co., Ltd. | Ruisi Weier | 100 | - |
| 4 | Anhui Longrui Glass Co., Ltd. | Longrui Glass | 100 | - |
| 5 | Shanghai Gujing Jinhao Hotel Management Co., Ltd. | Jinhao Hotel | 100 | - |
| 6 | Baozhou Gujing Guest House Co., Ltd. | GJ Guest House | 100 | - |
| 7 | Anhui Yuanqing Environment Protection Co., Ltd. | YQ Environment | 100 | - |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Subsidiary | Abbreviation | Shareholding % | ||
| Direct | Indirect | |||
| Protection | ||||
| 8 | Anhui Gujing Yunshang E-Commerce Co., Ltd. | GJ E-Commerce | 100 | - |
| 9 | Anhui Runan Xinke Testing Technology Co., Ltd. | Runan Xinke | 100 | - |
| 10 | Anhui Jiuan Electric Equipments Co., Ltd. | Jiuan Electric | 100 | - |
| 11 | Anhui Jiudao Culture Media Co., Ltd. | Jiudao Media | 100 | - |
| 12 | Anhui Gujing Distillery Wine Theme Hotel Management Co., Ltd | Theme Hotel | 100 | |
| 13 | Anhui Anjie Technology Co., Ltd. | Anjie Technology | - | 70 |
| 14 | Anhui Jiuhao ChinaRail Construction Engineering Co., Ltd. | Jiuhao ChinaRail | 52 | - |
| 15 | Anhui Zhenrui Construction Engineering Co., Ltd. | Zhenrui Construction | - | 52 |
| 16 | Huanghelou Distillery Co., Ltd. | HHL Distillery | 51 | - |
| 17 | HHL Distillery (Suizhou) Co., Ltd. | HHL Suizhou | - | 51 |
| 18 | Hubei Junlou Culture Travel Co., Ltd. | Junlou Culture | - | 51 |
| 19 | Hubei HHL Beverage Co., Ltd. | HHL Beverage | - | 51 |
| 20 | HHL Distillery (Xianning) Co., Ltd. | HHL Xianning | - | 51 |
| 21 | Wuhan Yashibo Technology Co., Ltd. | Yashibo | - | 51 |
| 22 | Hubei Xinjia Testing Technology Co., Ltd. | Xinjia Testing | - | 51 |
| 23 | Wuhan Tianlong Jindi Technology Development Co., Ltd. | Tianlong Jindi | - | 51 |
| 24 | Wuhan Junya Sales Co., Ltd. | Junya Sales | - | 51 |
| 25 | Xianning Junhe Sales Co., Ltd. | Xianning Junhe | - | 51 |
| 26 | Suizhou Junhe Trading Co., Ltd. | Suizhou Junhe | - | 51 |
| 27 | Huanggang Junya Trading Co., Ltd. | Huanggang Junya | - | 51 |
| 28 | Guizhou Renhuai Maotai Treasure Distillery Co., Ltd. | Treasure Distillery | 60 | - |
| 29 | Anhui Mingguang Distillery Co., Ltd. | Mingguang Distillery | 60 | - |
| 30 | Mingguang Tiancheng Mingjiu Sales Co., Ltd. | Tiancheng Sales | - | 60 |
| 31 | Fengyang Xiaogangcun Mingjiu Distillery Co., Ltd. | FY Xiaogangcun | - | 42 |
| 32 | Anhui Gujing Health Technology Co., Ltd | GJ HealthTechnology | 60 | - |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Subsidiary | Abbreviation | Shareholding % | ||
| Direct | Indirect | |||
| 33 | Anhui Maiqi Biotechnology Co., Ltd | Maiqi Biotechnology | - | 60 |
| 34 | Anhui Yangshengtianxia Brand Operation Co. , Ltd. | Brand Operation | - | 60 |
| 35 | Hainan Yangshengtianxia Biotechnology Development Co., Ltd | Biotechnology | - | 60 |
See Note 7 for further details.
1.2.2 Change of the scope of consolidation in the period
See Note 7 for further details. Theme Hotel, Huanggang Junya,Anjie Technology, GJ HealthTechnology,, Maiqi Biotechnology, Brand Operation and Biotechnology were included in theCompany’s scope of consolidation in the period for the first time.
Note 2 Basis of preparation for the financial statements
2.1 Basis of preparation
Based on going concern, according to actually occurred transactions and events, the Companyprepares its financial statements in accordance with the Accounting Standards for BusinessEnterprises – Basic standards and concrete accounting standards, Accounting Standards forBusiness Enterprises – Application Guidelines, Accounting Standards for BusinessEnterprises – Interpretations and other relevant provisions (collectively known as“Accounting Standards for Business Enterprises” or ASBE(s)). At the same time, theCompany discloses relevant financial information in accordance with Disclosure Rule forCompanies with Publicly Traded Securities No. 15 – General Provisions for FinancialStatements (Revised in 2014) issued by the CSRC.
2.2 Going concern
The Company has assessed its ability to continually operate for the next twelve months fromthe end of the reporting period, and no any matters that may result in doubt on its ability as agoing concern were noted. Therefore, it is reasonable for the Company to prepare financialstatements on the going concern basis.
Note 3 Significant account policies and accounting estimates
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
The following significant accounting policies and accounting estimates of the Company areformulated in accordance with the Accounting Standards for Business Enterprises. Businessesnot mentioned are complied with relevant accounting policies of the Accounting Standards forBusiness Enterprises.
3.1 Statement of compliance with the Accounting Standards for Business EnterprisesThe Company prepares its financial statements in accordance with the requirements of theAccounting Standards for Business Enterprises, truly and completely reflecting theCompany’s financial position as at 31 December 2022, and its operating results, changes inshareholders' equity, cash flows and other related information for the year then ended.
3.2 Accounting period
The accounting year of the Company is from January 1 to December 31 in calendar year.
3.3 Operating cycle
The normal operating cycle of the Company is twelve months.
3.4 Functional currency
The functional currency of the Company is CNY Yuan. An Overseas subsidiary (or branch)uses the currency prominent in its business activities as its functional currency.
3.5 Business combination under common control and business combination not undercommon contorl
3.5.1 Business combination under common control
The assets and liabilities that the Company obtains in a business combination under commoncontrol are measured at their carrying amounts as consolidated in the ultimate controller’sconsolidated statement of financial position at the combination date. If the accounting policyadopted by the acquired entity is different from that adopted by the Company, the Company,according to accounting policy it adopts, adjusts the relevant items in the financial statementsof the acquired entity based on the principle of materiality. the Company’s capital reserve(capital premium or share premium) is adjusted by the difference between the carryingamount of the net assets obtained by the Company and the carrying amount of theconsideration paid for the combination; where the capital reserve (capital premium or sharepremium) is not sufficient to absorb the difference, the excess is adjusted to the Company’ssurplus reserves, and retained earnings if needed.
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
See Note 3.6.6 for business combination under common control through multiple transactions.
3.5.2 Business combination not under common control
The identifiable assets and liabilities that the Company obtains in a business combination notunder common control are measured at their fair value at the acquisition date. If theaccounting policy adopted by the acquired entity is different from that adopted by theCompany, the Company, according to accounting policy it adopts, adjusts the relevant itemsin the financial statements of the acquired entity based on the principle of materiality. TheCompany recognises the excess of the cost of combination over the fair value of theidentifiable net assets it obtains from the acquired entity as goodwill. Where the fair value ofthe identifiable net assets obtained by the Company is higher than the cost of combination, theCompany review the measurement of the fair values of the identifiable assets, liabilities andcontingent liabilities it obtains from the acquired entity as well as the cost of combination;where the excess remains upon the review, the Company recognises the excess through profitor loss for the period in which the combination occurs.See Note 3.6.6 for business combination not under common control through multipletransactions.
3.5.3 Transaction costs of a business combination
The intermediary costs such as audit, legal services and valuation consulting and other relatedmanagement costs that are directly attributable to the business combination are charged toprofit or loss in the period in which they are incurred. The costs to issue equity or debtsecurities for the consideration of business combination are recorded as a part of the value ofthe respect equity or debt securities upon initial recognition.
3.6 Consolidated financial statements
3.6.1 Scope of consolidation
The scope of consolidation is determined on the basis of control. It not only includessubsidiaries determined based on voting power (or similar) or other arrangement, but alsostructured entities under one or several contract arrangements.Control exists when the Company has all the following: power over the investee; exposure, orrights to variable returns from the Company’s involvement with the investee; and the ability
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
to use its power over the investee to affect the amount of the investor’s returns. Subsidiariesare the entities that controlled by the Company (including a legal entity, a divisible part of theinvestee, and a structured entity controlled by a legal entity). A structured entity (sometimescalled a Special Purpose Entity) is an entity that has been designed so that voting or similarrights are not the dominant factor in deciding who controls the entity.
3.6.2 Accounting policies applicable to an investing entity
Where an entity is an investing entity, it consolidates its subsidiaries to the extent that thesubsidiaries which provide services to the investing entity; investment by the investing entityin other subsidiaries of the investing entity which are not consolidated by the investing entityis reocgnised as financial assets at fair value through profit or loss.An entity is an investing entity is all of the following conditions are satisfied:
I. the entity obtains funds from one or more investors for the purpose of providing thoseinvestors with investment management services;II. the entity commits to its investors that its business purpose is to invest funds solely forreturns from capital appreciation, investment income or both; andIII. the entity measures and evaluates the performance of substantially all of its investmentson a fair value basis.Where a non-investing entity becomes an investing entity, subsidiaries excluded fromconsolidation upon the change in status are accounted for in accordance with the principle ofpartial disposal not giving rise to loss of control.Where an investing entity becomes a non-investing entity, subsidiairies which were notpreviously consolidated are consolidated into the non-investing entity upon the change instatus in accordance with the principle of business combination not under common controlwhile their fair value as of the date of change in status is recognised by the non-investingentity as cost of combination.
3.6.3 Preparation of the consolidated financial statements
The consolidated financial statements are prepared by the Company based on the financialstatements of the Company and its subsidiaries, and using other related information.When preparing consolidated financial statements, the Company considers the entire group as
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
an accounting entity, adopts uniform accounting policies and applies the requirements ofAccounting Standard for Business Enterprises related to recognition, measurement andpresentation. The consolidated financial statements reflect the overall financial position,operating results and cash flows of the group.I. Like items of assets, liabilities, equity, income, expenses and cash flows of the parent arecombined with those of the subsidiaries.II. The carrying amount of the parent’s investment in each subsidiary is eliminated (off-set)against the parent’s portion of equity of each subsidiary.III. The impact of intragroup transactions between the Company and the subsidiaries orbetween subsidiaries are eliminated, and when intragroup transactions indicate an impairmentof related assets, the losses are recognised in full.IV. Adjustments are made for special transactions from the perspective of the group.
3.6.4 Accounting for inclusion into and exclusion from the scope of consolidation
3.6.4.1 Inclusion into the scope of consolidation
I. Subsidiaries or businesses acquired through business combination under common controlWhen preparing the consolidated statements of financial position, the opening balances areadjusted. Related items of comparative financial statements are adjusted as well, deeming thatthe combined entity has always existed ever since the ultimate controlling party began tocontrol.Incomes, expenses and profits of the subsidiary arising from the beginning of the reportingperiod to the end of the reporting period are included into the consolidated statement ofcomprehensive income. Related items of comparative financial statements are adjusted aswell, deeming that the combined entity has always existed ever since the ultimate controllingparty began to control.Cash flows from the beginning of the reporting period to the end of the reporting period areincluded into the consolidated statement of cash flows. Related items of comparative financialstatements are adjusted as well, deeming that the combined entity has always existed eversince the ultimate controlling party began to control.II. Subsidiaries or businesses acquired through business combination not under commoncontrol
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
When preparing the consolidated statements of financial position, the opening balances of theconsolidated statements of financial position are not adjusted.Incomes, expenses and profits of the subsidiary arising from the acquisition date to the end ofthe reporting period are included into the consolidated statement of comprehensive income.Cash flows from the acquisition date to the end of the reporting period are included into theconsolidated statement of cash flows.
3.6.4.2 Exclusion from the scope of consolidation resulted from disposal of subsidiaries orbusinessesWhen preparing the consolidated statements of financial position, the opening balances of theconsolidated statements of financial position are not adjusted.Incomes, expenses and profits incurred from the beginning of the subsidiary to the disposaldate are included into the consolidated statement of comprehensive income.Cash flows from the beginning of the subsidiary to the disposal date are included into theconsolidated statement of cash flows.
3.6.5 Special consideration in consolidation elimination
3.6.5.1 Long-term equity investment held by the subsidiaries to the Company is recognised astreasury stock of the Company, which is offset with equity, represented as “treasury stock”under “equity” in the consolidated statement of financial position.Long-term equity investment held by subsidiaries between each other is accounted for takinglong-term equity investment held by the Company to its subsidiaries as reference. That is, thelong-term equity investment is eliminated (off- set) against the portion of the correspondingsubsidiary’s equity.
3.6.5.2 Due to not belonging to share capital and capital reserve, and being different fromretained earnings and undistributed profit, “Specific reserves” is recovered based on theproportion attributable to owners of the parent company after long-term equity investment tothe subsidiaries is eliminated with the subsidiaries’ equity.
3.6.5.3 If temporary timing difference between the book value of the assets and liabilities inthe consolidated statement of financial position and their tax basis is generated as a result ofelimination of unrealised inter-company transaction profit or loss, deferred tax assets ofdeferred tax liabilities are recognised, and income tax expense in the consolidated statement
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
of comprehensive income is adjusted simultaneously, excluding deferred taxes related totransactions or events directly recognised in equity or business combination.
3.6.5.4 Unrealised inter-company transactions profit or loss generated from the Companyselling assets to its subsidiaries is eliminated against “net profit attributable to theshareholders of the parent company” in full. Unrealised inter-company transactions profit orloss generated from the subsidiaries selling assets to the Company is eliminated between “netprofit attributable to the shareholders of the parent company” and “net profit attributable tonon-controlling shareholders” pursuant to the proportion of the Company in the relatedsubsidiaries. Unrealised inter-company transactions profit or loss generated from the assetssales between the subsidiaries is eliminated between “net profit attributable to theshareholders of the parent company” and “net profit attributable to non-controllingshareholders” pursuant to the proportion of the Company in the selling subsidiaries.
3.6.5.5 If loss attributable to the non-controlling shareholders of a subsidiary in current periodis more than the proportion of non-controlling interest in this subsidiary at the beginning ofthe period, non-controlling interest is still to be written down.
3.6.6 Accounting for special transactions
3.6.6.1 Acquiring shares from non-controlling shareholders
Where, the Company purchases non-controlling interests of its subsidiary, in the separatefinancial statements of the Company, the cost of the long-term equity investment obtained inpurchasing non-controlling interests is measured at the fair value of the consideration paid. Inthe consolidated financial statements, difference between the cost of the long-term equityinvestment newly obtained in purchasing non-controlling interests and share of thesubsidiary’s net assets from the acquisition date or combination date continuingly calculatedpursuant to the newly acquired shareholding proportion shall be adjusted into capital reserve(capital premium or share premium). If capital reserve is insufficient for offset, surplusreserve and retained earnings shall be offset in turn.
3.6.6.2 Gaining control over a subsidiary in stages through multiple transactionsI. Business combination under common control through multiple transactionsOn the combination date, in the separate financial statement, initial cost of the long-termequity investment is determined according to the share of carrying amount of the acquiree’snet assets in the ultimate controlling entity’s consolidated financial statements aftercombination. The difference between the initial cost of the long-term equity investment and
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
the carrying amount of the long -term investment held prior of control plus book value ofadditional consideration paid at acquisition date is adjusted into capital reserve (capitalpremium or share premium). If the capital reserve is not enough to absorb the difference, anyexcess is adjusted against surplus reserve and undistributed profit in turn.In the consolidated financial statements, the assets and liabilities acquired during thecombination are recognised at their carrying amounts in the ultimate controlling entity’sconsolidated financial statements on the combination date unless any adjustment is resultedfrom the difference in accounting policies. The difference between the carrying amount of theinvestment held prior of control plus book value of additional consideration paid on theacquisition date and the net assets acquired through the combination is adjusted into capitalreserve (capital premium or share premium). If the capital reserve is not enough to absorb thedifference, any excess is adjusted against retained earnings.If the acquiring entity holds equity investment in the acquired entity prior to the combinationdate and the equity investment is accounted for under the equity method, related profit or loss,other comprehensive income and other changes in equity which have been recognised duringthe period from the later of the date of the Company obtaining original equity interest and thedate of both the acquirer and the acquiree under common control of the same ultimatecontrolling party to the combination is offset against the opening balance of retained earningsat the comparative financial statements period respectively.II. Business combination not under common control through multiple transactionsOn the consolidation date, in the separate financial statements, the initial cost of long-termequity investment is determined according to the carrying amount of the original long-terminvestment plus the cost of new investment.In the consolidated financial statements, the equity interest of the acquired entity held prior tothe acquisition date is re-measured at its fair value on the acquisition date. Difference betweenthe fair value of the equity interest and its book value is recognised as investment income.Other comprehensive income related to the equity interest held prior to the acquisition datecalculated through equity method is transferred to current investment income of theacquisition period, excluding other comprehensive income resulted from the remeasurementof defined benefit plans. The Company discloses acquisition-date fair value of the equityinterest held prior to the acquisition date, and the related gains or losses due to theremeasurement based on fair value.
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
3.6.6.3 Disposal of investment in subsidiaries without a loss of controlFor partial disposal of a long-term equity investment in a subsidiary without a loss of control,when the Company prepares consolidated financial statements, difference betweenconsideration received from the disposal and the corresponding share of subsidiary’s netassets cumulatively calculated from the acquisition date or combination date is adjusted intocapital reserve (capital premium or share premium). If the capital reserve is not enough toabsorb the difference, any excess is adjusted against retained earnings.
3.6.6.4 Disposal of investment in subsidiaries with a loss of control
I. Loss of control through one single transactionIf the Company loses control in an investee through partial disposal of the equity investment,when the consolidated financial statements are prepared, the retained equity interest isre-measured at fair value at the date of loss of control. The difference between i) the fair valueof consideration received from the disposal plus non-controlling interest retained; ii) share ofthe former subsidiary’s net assets cumulatively calculated from the acquisition date orcombination date according to the original proportion of equity interest, is recognised incurrent investment income when control is lost.Moreover, other comprehensive income and other changes in equity related to the equityinvestment in the former subsidiary is transferred into current investment income whencontrol is lost, excluding other comprehensive income resulted from the remeasurement ofdefined benefit plans.II. Loss of control through multiple transactionsIn the consolidated financial statements, whether the transactions should be accounted for as“a single transaction” needs to be decided firstly.If the disposal through multiple transactions is not classified as “a single transaction”, in theseparate financial statements, for transactions prior to the date of loss of control, carryingamount of each disposal of long-term equity investment is de-recognised at upon disposal,and the difference between consideration received and the carrying amount of long-termequity investment corresponding to the equity interest disposed is recognised in currentinvestment income; in the consolidated financial statements, the disposal transaction isaccounted for in accordance with 3.6.6.3.If the disposal through multiple transactions is classified as “a single transaction”, these
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
transactions should be accounted for as one single transaction of disposal of subsidiaryresulting in loss of control. In the separate financial statements, for each transaction prior tothe date of loss of control, difference between consideration received and the carrying amountof long-term equity investment corresponding to the equity interest disposed is recognised inother comprehensive income firstly, and transferred to profit or loss as a whole when controlis lost; in the consolidated financial statements, for each transaction prior to the date of loss ofcontrol, difference between consideration received and proportion of the subsidiary’s netassets corresponding to the equity interest disposed is recognised in profit or loss as a wholewhen control is lost.In considering of the terms and conditions of the transactions as well as their economic impact,the presence of one or more of the following indicators may lead to account for multipletransactions as a single transaction:
i. The transactions are entered into simultaneously or in contemplation of one another.ii. The transactions form a single transaction designed to achieve an overall commercialeffect.iii. The occurrence of one transaction depends on the occurrence of at least one othertransaction.iv. One transaction, when considered on its own merits, does not make economic sense, butwhen considered together with the other transaction or transactions would be consideredeconomically justifiable.
3.6.6.5 Diluting equity share of parent company in its subsidiaries due to additional capitalcontribution by the subsidiaries’ non-controlling shareholders.Other shareholders (non-controlling shareholders) of the subsidiaries inject additional capitalin the subsidiary, which results in the dilution of equity interest of parent company in thesubsidiary. In the consolidated financial statements, difference between share of thecorresponding subsidiary’s net assets calculated based on the parent’s equity interest beforeand after the capital injection is adjusted into capital reserve (capital premium or sharepremium). If the capital reserve is not enough to absorb the difference, any excess is adjustedagainst retained earnings.
3.7 Joint arrangement
A joint arrangement is an arrangement of which two or more parties have joint control. Joint
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
arrangement of the Company is classified as either a joint operation or a joint venture.
3.7.1 Joint operation
A joint operation is a joint arrangement whereby the parties that have joint control of thearrangement have rights to the assets, and obligations for the liabilities, relating to thearrangement.The Company recognises the following items in relation to shared interest in a joint operation,and accounts for them in accordance with relevant accounting standards of the AccountingStandards for Business Enterprises:
I. its assets, including its share of any assets held jointly;II. its liabilities, including its share of any liabilities incurred jointly;III. its revenue from the sale of its share of the output arising from the joint operation;IV. its share of the revenue from the sale of the output by the joint operation; andV. its expenses, including its share of any expenses incurred jointly.
3.7.2 Joint venture
A joint venture is a joint arrangement whereby the parties that have joint control of thearrangement have rights to the net assets of the arrangement.The Company accounts for its investment in the joint venture by applying the equity methodof long-term equity investment.
3.8 Cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cashequivalents include short-term (generally within three months of maturity at acquisition),highly liquid investments that are readily convertible into known amounts of cash and whichare subject to an insignificant risk of changes in value.
3.9 Foreign currency
3.9.1 Translation of a transaction denominated in a foreign currency
At the time of initial recognition of a foreign currency transaction, the amount in the foreigncurrency is translated into the amount in the functional currency at the spot exchange rate ofthe transaction date, or at an exchange rate which is determined through a systematic andreasonable method and is approximate to the spot exchange rate of the transaction date
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(hereinafter referred to as the approximate exchange rate).
3.9.2 Translation of monetary items denominated in foreign currencies on a balance-sheetdateThe foreign currency monetary items are translated at the spot exchange rate on the balancesheet date. The balance of exchange arising from the difference between the spot exchangerate on the balance sheet date and the spot exchange rate at the time of initial recognition orprior to the balance sheet date shall be recorded into the profits and losses at the currentperiod. The foreign currency non-monetary items measured at the historical cost are translatedat the spot exchange rate on the transaction date; the foreign currency non-monetary itemsrestated to a fair value measurement are translated at the spot exchange rate at the date whenthe fair value was determined, the difference between the restated functional currency amountand the original functional currency amount shall be recorded into the profits and losses at thecurrent period.
3.9.3 Translation of financial statements denominated in a foreign currencyBefore translating the financial statements of foreign operations, the accounting period andaccounting policies are adjusted so as to conform to the Company’s accounting period andaccounting policies. The adjusted foreign operation financial statements denominated inforeign currency (other than functional currency) are translated in accordance with thefollowing method:
I. The asset and liability items in the statement of financial position shall be translated at thespot exchange rates at the date of that statement of financial position. The equity items exceptretained earnings are translated at the spot exchange rates when they are incurred.II. The income and expense items in the statement of comprehensive income are translated atthe spot exchange rates or approximate exchange rate at the date of transaction.III. Foreign currency cash flows and cash flows of foreign subsidiaries are translated at thespot exchange rate or approximate exchange rate when the cash flows are incurred. The effectof exchange rate changes on cash is presented separately in the statement of cash flows as anadjustment item.IV. The differences arising from the translation of foreign currency financial statements arepresented separately as “other comprehensive income” under the equity items of the
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consolidated statement of financial position.When disposing a foreign operation involving loss of control, the cumulative amount of theexchange differences relating to that foreign operation recognised under other comprehensiveincome in the statement of financial position are reclassified into current profit or lossaccording to the proportion disposed.
3.10 Financial instruments
A financial instrument is any contract which gives rise to both a financial asset of one entityand a financial liability or equity instrument of another entity.
3.10.1 Recognition and derecognition of a financial instrument
A financial asset or a financial liability is recognised in the statement of financial positionwhen, and only when, an entity becomes party to the contractual provisions of the instrument.A financial asset can only be derecognised when the rights to the contractual cash flows fromthe financial asset expire; orA financial liability (or a part of a financial liability) is derecognised in on of the followingways:
I. a financial liability (or a part of the financial liability) is derecognised when the obligationassociated with the financial liability (or the part of the financial liability) is released;II. Where an existing financial liability is replaced by a new financial liability by anagreement with the counter party and the new financial liability is substantially different fromthe existing financial liability, the existing financial liability is derecognised while the newfinancial liablity is recognised;III. Where the contractual terms of a financial liability (or a part of a financial liability) aresubstantially altered, the financial liablity is dercognised in full and a new financial liablityreflecting the contractual terms after alteration is recognised.Purchase or sale of a financial instrument in a regular-way is recognised and derecognisedusing trade date accounting. A regular-way purchase or sale of a financial instrument is atransaction under a contract whose terms require delivery of the instrument within thetimeframe established generally by regulations or convention in the market place concerned.Trade date is the date on which the entity commits itself to purchase or sell aA financialinstrument.
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3.10.2 Classification and measurement of financial assets
A financial asset is recognised as one of the following upon initial recognition based on boththe business model for managing the financial asset and the contractual cash flowcharacteristics of the financial asset:
I. a financial asset at amortised cost;II. a financial asset at fair value through profit or loss (FVATPL); orIII. a financial asset at fair value through other comprehensive income (FVATOCI).Reclassification of a financial asset is permitted if, and only if, the objective of the entity’sbusiness model for managing the financial asset changes. In this circumstance, all affectedfinancial assets are reclassified on the first day of the first reporting period after the changesin business model; otherwise a financial asset cannot be reclassified after initial recognition.Financial assets shall be measured at initial recognition at fair value. For financial assetsmeasured at fair value through profit or loss, transaction costs are recognised in current profitor loss. For financial assets not measured at fair value through profit or loss, transaction costsshould be included in the initial measurement. Notes receivable or accounts receivable thatarise from sales of goods or rendering of services are initially measured at the transactionprice defined in the accounting standard of revenue where the transaction does not include asignificant financing component.Subsequent measurement of financial assets will be based on their categories:
I. Financial assets at amortised costA financial asset is classified as a financial asset at amortised cost when both the followingconditions are satisfied:
i. the financial asset is held within the business model whose objective is to hold the financialasset in order to collect contractual cash flows; andii. the contractual term of the financial asset gives rise to cash flows on specified dates that aresolely payment of principal and interest on the outstanding principal amount.A financial asset at amortised cost is subsequently measured at amortised cost by adopting theeffective interest rate method. Any gain or loss arising from derecognition, amortisationcomputed using the effective interest rate method, and impairment are recognised in currentprofit or loss.
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II. Financial assets at fair value through other comprehensive income (FVATOCI)A financial asset is classified as a FVATOCI when both the following conditions are satisfied:
i. the financial asset is held within the business model whose objective is achieved by bothcollecting contractual cash flows and selling financial asset; andii. the contractual term of the financial asset gives rise to cash flows on specified dates that aresolely payment of principal and interest on the outstanding principal amount.A FVATOCI is subsequently measured at fair value with changes in fair value recognised inother comprehensive income excep for the following gain or loss, which is recognised incurrent profit or loss:
i. gain or loss arising from impairment or exchange differences; andii. interest income calculated based on the effective interest rateWhere a non-trading equity instrument investment is irrevocably designated as a FVTAOCI,fair value change is recognised in other comprehensive income and dividend income isrecognised in current profit or loss. Upon derecognised, cumulative gain or loss previouslyrecognised in other comprehensive income is reclassified to retained earnings.III Financial assets at fair value through profit or loss (FVATPL)A financial asset which is neither a financial asset at amortised cost nor a FVATOCI isclassified as a FVATPL. A FVATPL is subsequently measured as fair value with changes infair value recognised in current profit or loss.
3.10.3 Classification and measurement of financial liabilities
The Company classified the financial liabilities as financial liabilities at fair value throughprofit or loss (FVLTPL), loan commitments at a below-market interest rate, financialguarantee contracts, and financial liablities at amortised cost.Subsequent measurement of financial assets will be based on the classification:
I. Financial liabilities at fair value through profit or loss (FVLTPL)Held-for-trading financial liabilities (including derivatives that are financial liabilities) andfinancial liabilities designated as FVLTPL are classified as financial liabilities at FVLTPL.After initial recognition, any gain or loss (including interest expense) are recognised incurrent profit or loss except for those to which hedge accounting is applied. For a financial
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liability that is designated as a FVLTPL, changes in the fair value of the financial liability thatis attributable to changes in the own credit risk of the issuer is recognised in othercomprehensive income. At derecognition, cumulative gain or loss previously recognisedunder other comprehensive income is reclassified to retained earnings.II. Loan commitments and financial guarantee contractsA loan commitment is a commitment by the Company to provide a loan to customer underspecified contract terms. The provision of impairment losses of loan commitments isrecognised based on expected credit losses model.A financial guarantee contract is a contract that requires the Company to make specifiedpayments to reimburse the holder for a loss it incurs because a specified debtor fails to makepayment when due in accordance with the original or modified terms of a debt instrument. Afinancial guarantee contract liability shall be subsequently measured at the higher of theamount determined in accordance with the accounting policies applicable to impairment of afinancial asset and the amount initially recognised less the cumulative amortisation calculatedin accordance with the accounting policies applicable to revenue.III. Financial liabilities at amortised costA financial liability at amortised cost is subsequently measured at its amortised costcalculated using the effective interest rate method.Unless in exceptional case, financial liabilities and equity instruments are classfified in thefollowing ways:
I. Where the issuer of a financial instrument has no uncondintional right to avoid deliveryingcash or another financial asset(s) to fulfill an obligation, this obligation meets the definition ofa financial liablity. A contract of a financial instrument may not explicitly comprise terms andconditions relating to a obligation of delivery cash or another financial asset(s), it mayimplicitly include such obligation through other terms and conditions.II. Where a financial instrument can only or may be settled by the issuer’s own equityinstruments:
i. if the issuer’s equity instruments are a substitution of cash or other financial asset(s), thefinancial instrument is the issuer’s liability;ii. if the issuer’s equity instruments enable the holder to the issuer’s residual interest afterdeducting all of the issuer’s liabilities from all of the issuer’s assets, the financial instrument
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is the issuer’s equity instrument.In certain cases, a financial instrument can only or may be settled by the issuer’s own equityinstruments and the settlement amount is calculated by multiplying the number of equityinstruments deliverable with the fair value of the equity instrument at the settlement date, theinstrument is the issuer’s financial liablity regardless of whether the settlement amount isfixed or determinable wholly or partly by variables other than the market price of the issuer’sown equity instrument (such as interest rate, market price of a commodity, or price of afinancial instrument).
3.10.4 Derivatives and embedded derivatives
A financial derivative is initially measured at its fair value at the inception date of thederivative contract and subsequently measured at fair value. At initial recognition, a financialderiivative with fair value at positive amount is recognised as an asset and as a liability is thefair value is at negative amount.
Except for the change of fair value of the effective portion of a cash flow hedge, which isrecognised other comprehensive income and reclassified to profit or loss upon cease ofhedging effectiveness, change of fair value of a financial financial derivative in recognised incurrent profit or loss.Where the non-derivative part of a hybrid instrument is a financial asset, the hybridinstrument is as a whole accounted for a financial asset.Where the non-derivative part of a hybrid instrument is a non-financial asset, the derivativepart is separately accounted for as a financial derivative if all of the following conditions aresatisfied:
I. the hybrid instrument is not accounted for at fair value through profit or loss;II. the economic characteristics and risks of the derivative part is not closely related to thoseof the non-derivative part; andIII. a stand-alone instrument with characteristics similar to the derivative part is a financialderivative.Where the fair value of the derivative part of a hybrid instrument with the non-derivative partbeing a non-financial asset cannot be inidividually measured either upon or subsequent to
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initial recognition, the hybrid instrument as a whole is accounted as either a FVATPL orFVLTPL.
3.10.5 Impairment of financial instruments
Impairment allowance for financial assets at amortised costs, FVATOCI, contract assets, leasereceivables, loan commitments and financial guarantee contracts is recognised on the basis oftheir expected credit loss.I. Measurement of expected credit lossExpected credit loss are the weighted average of credit loss of a financial instrument with therespective risks of a default occurring as the weights. Credit loss is the difference between allcontractual cash flows that are due to the Company in accordance with the contract and all thecash flows that the Company expects to receive (ie all cash shortfalls), discounted at theoriginal effective interest rate or credit-adjusted effective interest rate in the case of purchasedcredit-impaired financial assets or financial assets with origninated credit impairment.Lifetime expected credit losses are the expected credit losses that result from all possibledefault events over the expected life of a financial instrument.12-month expected credit losses are the portion of lifetime expected credit losses thatrepresent the expected credit losses that result from default events on a financial instrumentthat are possible within the 12 months after the reporting date (or the expected lifetime, if theexpected life of a financial instrument is less than 12 months).At each reporting date, the Company classifies financial instruments into three stages andmakes provisions for expected credit losses accordingly. A financial instrument of which thecredit risk has not significantly increased since initial recognition is at stage 1. The Companyshall measure the loss allowance for that financial instrument at an amount equal to 12-monthexpected credit losses. A financial instrument with a significant increase in credit risk sinceinitial recognition but is not considered to be credit-impaired is at stage 2. The Company shallmeasure the loss allowance for that financial instrument at an amount equal to the lifetimeexpected credit losses. A financial instrument is considered to be credit-impaired as at the endof the reporting period is at stage 3. The Company shall measure the loss allowance for thatfinancial instrument at an amount equal to the lifetime expected credit losses.The Company may assume that the credit risk on a financial instrument has not increasedsignificantly since initial recognition if the financial instrument is determined to have low
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credit risk at the reporting date and measure the loss allowance for that financial instrument atan amount equal to 12-month expected credit losses.For financial instrument at stage 1, stage 2 and those have low credit risk, the interest revenueshall be calculated by applying the effective interest rate to the gross carrying amount of afinancial asset (ie, impairment loss not been deducted). For financial instrument at stage 3,interest revenue shall be calculated by applying the effective interest rate to the amortised costafter deducting of impairment loss.For notes receivable, accounts receivable and accounts receivable financing, no matter itcontains a significant financing component or not, the Company shall measure the lossallowance at an amount equal to the lifetime expected credit losses.i. ReceivablesFor the notes receivable, accounts receivable, other receivables, accounts receivablefinancing and long-term receivables which are demonstrated to be impaired by anyobjective evidence, or applicable for individual assessment, the Company shallindividually assess for impairment and recognise the loss allowance for expected creditlosses. If the Company determines that no objective evidence of impairment exists fornotes receivable, accounts receivable, other receivables, accounts receivable financing andlong-term receivables, or the expected credit loss of a single financial asset cannot beassessed at reasonable cost, such notes receivable, accounts receivable, other receivables,accounts receivable financing and long-term receivables shall be divided into severalgroups with similar credit risk characteristics and collectively calculated the expectedcredit loss. The determination basis of groups is as following:
A. Notes receivables:
Group 1: Commercial acceptanceGroup 2: Bank acceptanceFor each group, the Company calculates expected credit losses through default exposure andthe lifetime expected credit losses rate, taking reference to historical experience for creditlosses and considering current condition and expectation for the future economic situation.B. Accounts receivable:
Group 1: Related parties within the scope of consolidation
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Group 2: Receivables due from third partiesThe expected credit loss for a portfolio of accounts receivable is computed using theexpected credit loss rate over the entire lifes of the accounts receivable and the age groupsof these accouns receivable while taking into consideration of their historical credit lossand the assessment for current and expected general economic conditions.C. Other receivables:
Group 1: Related parties within the scope of consolidationGroup 2: Receivables due from third partiesThe expected credit loss for a portfolio of other receivables is computed using the expectedcredit loss rate over the next 12 months of the other receivables and their exposure to defaultrisk while taking into consideration of their historical credit loss and the assessment forcurrent and expected general economic conditions.ii. Debts investment and other debt investmentsThe expected credit loss for a debt investment or other debt investment is computed using theexpected credit loss rate over the next 12 months or the entire life of the investment and itsexposure to default risk while taking into consideration of its nature.II. Low credit riskIf the financial instrument has a low risk of default, the borrower has a strong capacity to meetits contractual cash flow obligations in the near term and adverse changes in economic andbusiness conditions in the longer term may, but will not necessarily, reduce the ability of theborrower to fulfill its contractual cash flow obligations.III. Significant increase in credit riskThe Company shall assess whether the credit risk on a financial instrument has increasedsignificantly since initial recognition, using the change in the risk of a default occurring overthe expected life of the financial instrument, through the comparison of the risk of a defaultoccurring on the financial instrument as at the reporting date with the risk of a defaultoccurring on the financial instrument as at the date of initial recognition.To make that assessment, the Company shall consider reasonable and supportable information,that is available without undue cost or effort, and that is indicative of significant increases incredit risk since initial recognition, including forward-looking information. The information
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considered by the Company are as following:
i. significant changes in internal price indicators of credit risk as a result of a change in creditrisk since inception;ii. existing or forecast adverse change in the business, financial or economic conditions of theborrower that results in a significant change in the borrower’s ability to meet its debtobligations;iii. an actual or expected significant change in the operating results of the borrower; An actualor expected significant adverse change in the regulatory, economic, or technologicalenvironment of the borrower;iv. significant changes in the value of the collateral supporting the obligation or in the qualityof third-party guarantees or credit enhancements, which are expected to reduce the borrower’seconomic incentive to make scheduled contractual payments or to otherwise have an effect onthe probability of a default occurring;v. significant change that are expected to reduce the borrower’s economic incentive to makescheduled contractual paymentsvi. expected changes in the loan documentation including an expected breach of contract thatmay lead to covenant waivers or amendments, interest payment holidays, interest ratestep-ups, requiring additional collateral or guarantees, or other changes to the contractualframework of the instrument;vii. significant changes in the expected performance and behaviour of the borrowerviii. contractual payments are not less than 30 days past due.Depending on the nature of the financial instruments, the Company shall assess whether thecredit risk has increased significantly since initial recognition on an individual financialinstrument or a group of financial instruments. When assessed based on a group of financialinstruments, the Company can group financial instruments on the basis of shared credit riskcharacteristics, for example, past due information and credit risk rating.Generally, the Company shall determine the credit risk on a financial asset has increasedsignificantly since initial recognition when contractual payments are more than 30 days pastdue. The Company can only rebut this presumption if the Company has reasonable andsupportable information that is available without undue cost or effort, that demonstrates that
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the credit risk has not increased significantly since initial recognition even though thecontractual payments are more than 30 days past due.IV. Credit-impaired financial assetThe Company shall assess at each reporting date whether the credit impairment has occurredfor financial asset at amortised cost and debt investment at fair value through othercomprehensive income. A financial asset is credit-impaired when one or more events thathave a detrimental impact on the estimated future cash flows of that financial asset haveoccurred. Evidences that a financial asset is credit-impaired include observable data about thefollowing events:
Significant financial difficulty of the issuer or the borrower；a breach of contract, such as adefault or past due event; the lender(s) of the borrower, for economic or contractual reasonsrelating to the borrower’s financial difficulty, having granted to the borrower a concession(s)that the lender(s) would not otherwise consider；it is becoming probable that the borrower willenter bankruptcy or other financial reorganisation；the disappearance of an active market forthat financial asset because of financial difficulties；the purchase or origination of a financialasset at a deep discount that reflects the incurred credit losses.
V. Presentation of impairment of expected credit lossIn order to reflect the changes of credit risk of financial instrument since initial recognition,the Company shall at each reporting date remeasure the expected credit loss and recognise inprofit or loss, as an impairment gain or loss, the amount of expected credit losses addition(orreversal). For financial asset at amortised cost, the loss allowance shall reduce the carryingamount of the financial asset in the statement of financial position; for debt investment at fairvalue through other comprehensive income, the loss allowance shall be recognised in othercomprehensive income and shall not reduce the carrying amount of the financial asset in thestatement of financial position.VI. Write-offThe Company shall directly reduce the gross carrying amount of a financial asset when theCompany has no reasonable expectations of recovering the contractual cash flow of afinancial asset in its entirety or a portion thereof. Such write-off constitutes a derecognition of
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the financial asset. This circumstance usually occurs when the Company determines that thedebtor has no assets or sources of income that could generate sufficient cash flow to repay thewrite-off amount.Recovery of financial asset written off shall be recognised in profit or loss as reversal ofimpairment loss.
3.10.6 Transfer of financial assets
An entity may transfer a financial asset by either transferring the contractual rights to the cashflows of the financial asset to another party or transferring the financial asset to another partywhile retaining the contractual rights to the cash flows of the financial asset and assuming thecontractual obligations to deliver cash flows received to one or multiple parties.I. Derecognition of transferred assetsIf the Company transfers substantially all the risks and rewards of ownership of the financialasset, or neither transfers nor retains substantially all the risks and rewards of ownership ofthe financial asset but has not retained control of the financial asset, the financial asset shallbe derecognised.Whether the Company has retained control of the transferred asset depends on the transferee’sability to sell the asset. If the transferee has the practical ability to sell the asset in its entiretyto an unrelated third party and is able to exercise that ability unilaterally and without needingto impose additional restrictions on the transfer, the Company has not retained control.The Company judges whether the transfer of financial asset qualifies for derecognition basedon the substance of the transfer.If the transfer of financial asset qualifies for derecognition in its entirety, the differencebetween the following shall be recognised in profit or loss:
i. the carrying amount of transferred financial asset;ii. the sum of consideration received and the part derecognised of the cumulative changes infair value previously recognised in other comprehensive income (The financial assetsinvolved in the transfer are classified as financial assets at fair value through othercomprehensive income in accordance with Article 18 of the Accounting Standards forBusiness Enterprises - Recognition and Measurement of Financial Instruments).If the transferred asset is a part of a larger financial asset and the part transferred qualifies forderecognition, the previous carrying amount of the larger financial asset shall be allocated
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between the part that continues to be recognised (For this purpose, a retained servicing assetshall be treated as a part that continues to be recognised) and the part that is derecognised,based on the relative fair values of those parts on the date of the transfer. The differencebetween following two amounts shall be recognised in profit or loss:
i. the carrying amount (measured at the date of derecognition) allocated to the partderecognisedii. the sum of the consideration received for the part derecognised and part derecognised ofthe cumulative changes in fair value previously recognised in other comprehensive income(The financial assets involved in the transfer are classified as financial assets at fair valuethrough other comprehensive income in accordance with Article 18 of the AccountingStandards for Business Enterprises - Recognition and Measurement of Financial Instruments).II. Continuing involvement in transferred assetsIf the Company neither transfers nor retains substantially all the risks and rewards ofownership of a transferred asset, and retains control of the transferred asset, the Companyshall continue to recognise the transferred asset to the extent of its continuing involvementand also recognise an associated liability.The extent of the Company’s continuing involvement in the transferred asset is the extent towhich it is exposed to changes in the value of the transferred asset.
III. Continue to recognise the transferred assetsIf the Company retains substantially all the risks and rewards of ownership of the transferredfinancial asset, the Company shall continue to recognise the transferred asset in its entiretyand the consideration received shall be recognised as a financial liability.The financial asset and the associated financial liability shall not be offset. In subsequentaccounting period, the Company shall continuously recognise any income (gain) arising fromthe transferred asset and any expense (loss) incurred on the associated liability.
3.10.7 Offsetting financial assets and financial liabilities
Financial assets and financial liabilities shall be presented separately in the statement offinancial position and shall not be offset. When meets the following conditions, financialassets and financial liabilities shall be offset and the net amount presented in the statement of
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financial position:
The Company currently has a legally enforceable right to set off the recognised amounts; TheCompany intends either to settle on a net basis, or to realise the asset and settle the liabilitysimultaneously.In accounting for a transfer of a financial asset that does not qualify for derecognition, theCompany shall not offset the transferred asset and the associated liability.
3.10.8 Determination of fair value of financial instruments
See Note 3.11 for determination of fair value of financial instruments.
3.11 Determination of fair value
Fair value refers to the price that would be received to sell an asset or paid to transfer aliability in an orderly transaction between market participants at the measurement date.The Company determines fair value of the related assets and liabilities based on market valuein the principal market, or in the absence of a principal market, in the most advantageousmarket price for the related asset or liability. The fair value of an asset or a liability ismeasured using the assumptions that market participants would use when pricing the asset orliability, assuming that market participants act in their economic best interest.The principal market is the market in which transactions for an asset or liability take placewith the greatest volume and frequency. The most advantageous market is the market whichmaximizes the value that could be received from selling the asset and minimizes the valuewhich is needed to be paid in order to transfer a liability, considering the effect of transportcosts and transaction costs both.If the active market of the financial asset or financial liability exists, the Company shallmeasure the fair value using the quoted price in the active market. If the active market of thefinancial instrument is not available, the Company shall measure the fair value usingvaluation techniques.A fair value measurement of a non-financial asset takes into account a market participant’sability to generate economic benefits by using the asset in its highest and best use or byselling it to another market participant that would use the asset in its highest and best use.
3.11.1 Valuation techniques
The Company uses valuation techniques that are appropriate in the circumstances and for
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which sufficient data are available to measure fair value, including the market approach, theincome approach and the cost approach. The Company shall use valuation techniquesconsistent with one or more of those approaches to measure fair value. If multiple valuationtechniques are used to measure fair value, the results shall be evaluated considering thereasonableness of the range of values indicated by those results. A fair value measurement isthe point within that range that is most representative of fair value in the circumstances.When using the valuation technique, the Company shall give the priority to relevantobservable inputs. The unobservable inputs can only be used when relevant observable inputsis not available or practically would not be obtained. Observable inputs refer to theinformation which is available from market and reflects the assumptions that marketparticipants would use when pricing the asset or liability. Unobservable Inputs refer to theinformation which is not available from market and it has to be developed using the bestinformation available in the circumstances from the assumptions that market participantswould use when pricing the asset or liability.
3.11.2 Fair value hierarchy
To Company establishes a fair value hierarchy that categorises into three levels the inputs tovaluation techniques used to measure fair value. The fair value hierarchy gives the highestpriority to Level 1 inputs and second to the Level 2 inputs and the lowest priority to Level 3inputs. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets orliabilities that the entity can access at the measurement date. Level 2 inputs are inputs otherthan quoted prices included within Level 1 that are observable for the asset or liability, eitherdirectly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.
3.12 Inventories
3.12.1 Classification of inventories
Inventories are finished goods or products held for sale in the ordinary course of business, inthe process of production for such sale, or in the form of materials or supplies to be consumedin the production process or in the rendering of services, including raw materials,semi-finished goods, work in progress, finished goods, merchandises, consumables, etc.
3.12.2 Measurement method applicable to issuance of inventories
Inventories are measured at actual cost at recognition. The actual cost of an item ofinventories comprises the purchase cost, cost of processing and other costs. Inventories are
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issued at weighted average cost.
3.12.3 Inventory system
The perpetual inventory system is adopted. The inventories should be counted at least once ayear, and surplus or losses of inventory stocktaking shall be included in current profit andloss.
3.12.4 Provision for impairment of inventory
Inventories are stated at the lower of cost and net realizable value. The excess of cost over netrealisable value of the inventories is recognised as provision for impairment of inventory, andrecognised in current profit or loss.Net realizable value of the inventory should be determined on the basis of reliable evidenceobtained, and factors such as purpose of holding the inventory and impact of post balancesheet event shall be considered.
3.12.4.1 In normal operation process, finished goods, products and materials for direct sale,their net realizable values are determined at estimated selling prices less estimated sellingexpenses and relevant taxes and surcharges; for inventories held to execute sales contract orservice contract, their net realizable values are calculated on the basis of contract price. If thequantities of inventories specified in sales contracts are less than the quantities held by theCompany, the net realizable value of the excess portion of inventories shall be based ongeneral selling prices. Net realizable value of materials held for sale shall be measured basedon market price.
3.12.4.2 For materials in stock need to be processed, in the ordinary course of production andbusiness, net realisable value is determined at the estimated selling price less the estimatedcosts of completion, the estimated selling expenses and relevant taxes. If the net realisablevalue of the finished products produced by such materials is higher than the cost, the materialsshall be measured at cost; if a decline in the price of materials indicates that the cost of thefinished products exceeds its net realisable value, the materials are measured at net realisablevalue and differences shall be recognised at the provision for impairment.
3.12.4.3 Provisions for inventory impairment are generally determined on an individual basis.For inventories with large quantity and low unit price, the provisions for inventoryimpairment are determined on a category basis.
3.12.4.4 If any factor rendering write-downs of the inventories has been eliminated at the
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reporting date, the amounts written down are recovered and reversed to the extent of theinventory impairment, which has been provided for. The reversal shall be included in profit orloss.
3.12.5 Amortisation method of low-value consumables
A low-value consumable is amortised in full upon issuance. A packaging material isamortised in full upon issuance.
3.13. Contract assets and contract liabilities
Contract assets and contract liabilities are reocgnised on the basis of fulfilment ofperformance obligations and payment received from clients. A right to receive a promisedconsideration from a client resulting from goods transferred to or services provided to theclient (where the right to consideration is dependent on factors other than the passage of time)is reocgnised a contract asset. A payment received from a client for which goods shall betransferred to or services shall be provided to the client is recognised as a contract liability.See Note 3.10 for impairment of contract assets.Contract assets and contract liabilities are presentd as line items on the statement of financialposition. A contract asset and contract liability arising from one contract are presented in net;while the net amount is a debit balance, it is presented in contract assets or other non-currentassets depending on liquidity; while the net amount is a credit balance, it is presented incontract liabilities or other non-current liabilities depending on liquidity. Contract assets andcontract liabilities arising form different contracts are not be offset.
3.14 Contract costs
Costs for a contract include costs to fulfill the contract and costs to obtain the contract.An asset is recognised for the costs incurred to fulfill a contract on if those costs meet all ofthe following criteria:
I. the costs are directly associated with a contract or an anticipated contract, explicitlychargeable to the client under the contract, incurred only for the contract;II. the costs generate or enhance resouces of the Company that will be used in satisfyingperformance obligations in the future; andIII. the costs are expected to be recovered.
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
An asset is recognised for the costs incurred to obtain a contract with a client if those costs areexpected to be recovered.An asset recognised for the costs of a contract are amortised on a systematic basis that isconsistent with recognition of revenue arising from the contract. Where the costs incurred toobtain a contract would be amortised for a period less than one year should they be recognisedas an asset, the costs are recognised in the current profit or loss as incurred.An impairment is recognised for an asset recognised for the costs of a contract to the extentthat the carrying amount of the asset exceeds:
I. the remaining amount of consideration that is expected to be received in exchange for thegoods or services to which the asset relates; lessII. the costs that relate directly to providing those goods or services and that have not beenrecognised as expenses.Upon recognition of the impairment, further consideration is given for provision for anonerous contract, in necessary.A reversal of some or all of an impairment loss previously recognised for an asset for thecosts of a contract when the impairment conditions no longer exist or have improved. Theincreased carrying amount of the asset is cappted by the amount that would have beendetermined (net of amortisation) if no impairment loss had been recognised previously.An asset recognised for the costs to fulfill a contract is presented in inventories if itsamortisation is not longer than 1 year or an operating cycle upon initial recognition; otherwise,it is presented in other non-current assets.An asset recognised for the costs to obtain a contract is presented in other current assets if itsamortisation is not longer than 1 year or an operating cycle upon initial recognition; otherwise,it is presented in other non-current assets.
3.15 Long-term equity investments
Long-term equity investments refer to equity investments where an investor has control of, orsignificant influence over, an investee, as well as equity investments in joint ventures.Associates of the Company are those entities over which the Company has significantinfluence.
3.15.1 Determination basis of joint control or significant influence over the investee
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
Joint control is the relevant agreed sharing of control over an arrangement, and the arrangedrelevant activity must be decided under unanimous consent of the parties sharing control. Inassessing whether the Company has joint control of an arrangement, the Company shall assessfirst whether all the parties, or a group of the parties, control the arrangement. When all theparties, or a group of the parties, considered collectively, are able to direct the activities of thearrangement, the parties control the arrangement collectively. Then the Company shall assesswhether decisions about the relevant activities require the unanimous consent of the partiesthat collectively control the arrangement. If two or more groups of the parties could controlthe arrangement collectively, it shall not be assessed as have joint control of the arrangement.When assessing the joint control, the protective rights are not considered.Significant influence is the power to participate in the financial and operating policy decisionsof the investee but is not control or joint control of those policies. In determination ofsignificant influence over an investee, the Company should consider not only the existingvoting rights directly or indirectly held but also the effect of potential voting rights held by theCompany and other entities that could be currently exercised or converted, including theeffect of share warrants, share options and convertible corporate bonds that issued by theinvestee and could be converted in current period.If the Company holds, directly or indirectly 20% or more but less than 50% of the votingpower of the investee, it is presumed that the Company has significant influence of theinvestee, unless it can be clearly demonstrated that in such circumstance, the Company cannotparticipate in the decision-making in the production and operating of the investee.
3.15.2 Determination of initial investment cost
3.15.2.1 Long-term equity investments arising from business combination
3.15.2.1.1 For a business combination involving enterprises under common control, if theCompany makes payment in cash, transfers non-cash assets or bears liabilities as theconsideration for the business combination, the share of carrying amount of the owners’equity of the acquiree in the consolidated financial statements of the ultimate controlling partyis recognised as the initial cost of the long-term equity investment on the combination date.The difference between the initial investment cost and the carrying amount of cash paid,non-cash assets transferred and liabilities assumed shall be adjusted against the capital reserve;if capital reserve is not enough to be offset, undistributed profit shall be offset in turn.
3.15.2.1.2 For a business combination involving enterprises under common control, if the
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
Company issues equity securities as the consideration for the business combination, the shareof carrying amount of the owners’ equity of the acquiree in the consolidated financialstatements of the ultimate controlling party is recognised as the initial cost of the long-termequity investment on the combination date. The total par value of the shares issued isrecognised as the share capital. The difference between the initial investment cost and thecarrying amount of the total par value of the shares issued shall be adjusted against the capitalreserve; if capital reserve is not enough to be offset, undistributed profit shall be offset in turn.
3.15.2.1.3 For business combination not under common control, the assets paid, liabilitiesincurred or assumed and the fair value of equity securities issued to obtain the control of theacquiree at the acquisition date shall be determined as the cost of the business combinationand recognised as the initial cost of the long-term equity investment. The audit, legal,valuation and advisory fees, other intermediary fees, and other relevant general administrativecosts incurred for the business combination, shall be recognised in profit or loss as incurred.
3.15.2.2 Long-term equity investments not arising from business combination
3.15.2.2.1 For long-term equity investments acquired by payments in cash, the initial cost isthe actually paid purchase cost, including the expenses, taxes and other necessaryexpenditures directly related to the acquisition of long-term equity investments.
3.15.2.2.2 For long-term equity investments acquired through issuance of equity securities,the initial cost is the fair value of the issued equity securities.
3.15.2.2.3 For the long-term equity investments obtained through exchange of non-monetaryassets, if the exchange has commercial substance, and the fair values of assets traded out andtraded in can be measured reliably, the initial cost of long-term equity investment traded inwith non-monetary assets are determined based on the fair values of the assets traded outtogether with relevant taxes. Difference between fair value and book value of the assets tradedout is recorded in current profit or loss. If the exchange of non-monetary assets does not meetthe above criterion, the book value of the assets traded out and relevant taxes are recognisedas the initial investment cost.
3.15.2.2.4 For long-term equity investment acquired through debt restructuring, the initial costis measured at the fair value of the equity investment obtained. Difference between the fairvalue of the equity investment obtained and the book value of the debt given away isrecognised in current profit or loss.
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
3.15.3 Subsequent measurement and recognition of profit or loss
Long-term equity investment to an entity over which the Company has ability of control shallbe accounted for at cost method. Long-term equity investment to a joint venture or anassociate shall be accounted for at equity method.
3.15.3.1 Cost method
For Long-term equity investment at cost method, cost of the long-term equity investment shallbe adjusted when additional amount is invested or a part of it is withdrawn. The Companyrecognises its share of cash dividends or profits which have been declared to distribute by theinvestee as current investment income.
3.15.3.2 Equity method
If the initial cost of the investment is in excess of the share of the fair value of the netidentifiable assets in the investee at the date of investment, the difference shall not be adjustedto the initial cost of long-term equity investment; if the initial cost of the investment is inshort of the share of the fair value of the net identifiable assets in the investee at the dateinvestment, the difference shall be included in the current profit or loss and the initial cost ofthe long-term equity investment shall be adjusted accordingly.The Company recognises the share of the investee’s net profits or losses, as well as its shareof the investee’s other comprehensive income, as investment income or losses and othercomprehensive income respectively, and adjusts the carrying amount of the investmentaccordingly. The carrying amount of the investment shall be reduced by the share of anyprofit or cash dividends declared to distribute by the investee. The investor’s share of theinvestee’s owners’ equity changes, other than those arising from the investee’s net profit orloss, other comprehensive income or profit distribution, shall be recognised in the investor’sequity, and the carrying amount of the long-term equity investment shall be adjustedaccordingly. The Company recognises its share of the investee’s net profits or losses aftermaking appropriate adjustments of investee’s net profit based on the fair values of theinvestee’s identifiable net assets at the investment date. If the accounting policy andaccounting period adopted by the investee is not in consistency with the Company, thefinancial statements of the investee shall be adjusted according to the Company’s accountingpolicies and accounting period, based on which, investment income or loss and othercomprehensive income, etc., shall be adjusted. The unrealized profits or losses resulting frominter-company transactions between the company and its associate or joint venture are
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
eliminated in proportion to the company’s equity interest in the investee, based on whichinvestment income or losses shall be recognised. Any losses resulting from inter-companytransactions between the investor and the investee, which belong to asset impairment, shall berecognised in full.Where the Company obtains the power of joint control or significant influence, but notcontrol, over the investee, due to additional investment or other reason, the relevant long-termequity investment shall be accounted for by using the equity method, initial cost of whichshall be the fair value of the original investment plus the additional investment. Where theoriginal investment is classified as Other equity instrument investment, difference between itsfair value and the carrying value, in addition to the cumulative gain or loss previouslyrecorded in other comprehensive income, shall be recogised into current profit or loss at thetime when the equity method becomes applicable.If the Company loses the joint control or significant influence of the investee for some reasonssuch as disposal of equity investment, the retained interest shall be measured at fair value andthe difference between the carrying amount and the fair value at the date of loss the jointcontrol or significant influence shall be recognised in profit or loss. When the Companydiscontinues the use of the equity method, the Company shall account for all amountspreviously recognised in other comprehensive income under equity method in relation to thatinvestment on the same basis as would have been required if the investee had directlydisposed of the related assets or liabilities.
3.15.4 Held-for-sale equity investments
The remaining equity investment after partial disposal, which is not classified as held-for-sale,is accounted for by the equity method.
If a held-for-sale equity investment no longer satisfies the conditions for classifying asheld-for-sale, it is retrospectively adjusted from the date on which it was classified asheld-for-sale using the equity method. The financial statements for the period during whichthe investment was classified as held-for-sale are respectively restated.
3.15.5 Impairment of long-term equity investments
See Note 3.22 for details.
3.16 Investment properties
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
3.16.1 Classification
Investment properties are properties to earn rentals or for capital appreciation or both,including:
I. Land use right leased out;II. Land held for transfer upon appreciation;III. Buildings leased out.
3.16.2 Measurement
Investment properties are subsequently measured by the cost method. See Note 3.22 forimpairment of investment properties.The residual after deducting the scrap value and cumulative impairment from the historicalcost of an item of investment properties is depreciated or amortised using the straight-linemethod.
3.17 Fixed assets
Fixed assets refer to the tangible assets with higher unit price held for the purpose ofproducing commodities, rendering services, renting or business management with useful livesexceeding one year.
3.17.1 Recognition
Fixed assets will only be recognised at the actual cost paid when obtaining as all the followingcriteria are satisfied:
I. It is probable that the economic benefits relating to the fixed assets will flow into theCompany;II. The costs of the fixed assets can be measured reliably.
Subsequent expenditure for fixed assets shall be recorded in cost of fixed assets, if recognitioncriteria of fixed assets are satisfied, otherwise the expenditure shall be recorded in currentprofit or loss when incurred.
3.17.2 Depreciation
The Company begins to depreciate the fixed asset from the next month after it is available for
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
intended use using the straight-line-method. The estimated useful life and annual depreciationrates which are determined according to the categories. The estimated economic useful livesand estimated net residual rates of fixed assets are listed as followings:
| Category | Depreciation method | Useful life in years | Scrap value rate (%) | Annual depreciation rate (%) |
| Houses and buildings | Straight line | 8.00-35.00 | 3.00-5.00 | 2.70-12.10 |
| Machinery | Straight line | 8.00-10.00 | 3.00-5.00 | 9.50-12.10 |
| Transportation vehicles | Straight line | 4.00 | 3.00 | 24.25 |
| Administrative and other devices | Straight line | 3.00 | 3.00 | 32.33 |
For the fixed assets with impairment provided, the impairment provision should be excludedfrom the cost when calculating depreciation.At the end of reporting period, the Company shall review the useful life, estimated netresidual value and depreciation method of the fixed assets. Estimated useful life of the fixedassets shall be adjusted if it is changed compared to the original estimation.
3.17.3 Fixed assets acquired through financial lease
Where a leasing arrangement transfers substantially all risks and rewards associated with theleased item to the Group, the lease is regarded as a finance lease and the leased item isrecognised as an item of fixed assets. An item of fixed asset obtained from a finance lease ismeasured upon recognition at the lower of the fair value of the leased item and the presentvalue of the minimum lease payment as of the lease inception date. An item of fixed assetobtained through a finance lease is depreciated in accordance with the depreciation methodapplicable to the category of fixed assets to which the lease item belongs. If it is reasonablycertain that ownership of the lease item will transfer to the Group upon expiry of the lease, theleased item is depreciated over its useful life; if, however, transfer of ownership of the leaseditem upon expiry of the lease to the Group cannot be reasonably expected, the leased item isdepreciated over the shorter of its useful life and the lease term.
3.18 Construction in progress
3.18.1 Construction in progress is measured on an individual project basis.
3.18.2 Transfer to fixed assets
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
The initial book values of the fixed assets are stated at total expenditures incurred before theyare ready for their intended use, including construction costs, original price of machineryequipment, other necessary expenses incurred to bring the construction in progress to getready for its intended use and borrowing costs of the specific loan for the construction or theproportion of the general loan used for the constructions incurred before they are ready fortheir intended use. The construction in progress shall be transferred to fixed asset when theinstallation or construction is ready for the intended use. For construction in progress that hasbeen ready for their intended use but relevant budgets for the completion of projects have notbeen completed, the estimated values of project budgets, prices, or actual costs should beincluded in the costs of relevant fixed assets, and depreciation should be provided accordingto relevant policies of the Company when the fixed assets are ready for intended use. After thecompletion of budgets needed for the completion of projects, the estimated values should besubstituted by actual costs, but depreciation already provided is not adjusted.
3.19 Right-of-use assets
At the lease commencement date, a right-of-use asset is measured at cost. The cost of aright-of-use asset comprise:
I. the amount of the initial measurement of the lease liability;II. any lease payments made at or before the commencement date, less any lease incentivesreceived;III. any initial direct costs incurred by the Group; andIV. an estimate of costs to be incurred by the Group in dismantling and removing theunderlying asset, restoring the site on which it is located or restoring the underlying asset tothe condition required by the terms and conditions of the lease, unless those costs are incurredto produce inventories.
A right-of-use asset is subsequently measured at cost. If it is reasonably certain that ownershipof the lease item will transfer to the Group upon expiry of the lease, the leased item isdepreciated over its useful life; if, however, transfer of ownership of the leased item uponexpiry of the lease to the Group cannot be reasonably expected, the leased item is depreciatedover the shorter of its useful life and the lease term. Where a leased item has recordedimpairment, its residual value after deducting the impairment allowance is depreciated in
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
accordance the principle described in this paragraph.
3.20 Borrowing costs
3.20.1 Capitalisation
The Company shall capitalize the borrowing costs that are directly attributable to theacquisition, construction or production of qualifying assets when meet the followingconditions:
I. Expenditures for the asset are being incurred;II. Borrowing costs are being incurred, and;III. Acquisition, construction or production activities that are necessary to prepare the assetsfor their intended use or sale are in progress.Other borrowing cost, discounts or premiums on borrowings and exchange differences onforeign currency borrowings shall be recognized into current profit or loss when incurred.Capitalization of borrowing costs is suspended during periods in which the acquisition,construction or production of a qualifying asset is interrupted abnormally and the interruptionis for a continuous period of more than 3 months.Capitalization of such borrowing costs ceases when the qualifying assets being acquired,constructed or produced become ready for their intended use or sale. The expenditure incurredsubsequently shall be recognised as expenses when incurred.
3.20.2 Capitalisation rate and capitalised amount
When funds are borrowed specifically for purchase, construction or manufacturing of assetseligible for capitalization, the Company shall determine the amount of borrowing costseligible for capitalisation as the actual borrowing costs incurred on that borrowing during theperiod less any interest income on bank deposit or investment income on the temporaryinvestment of those borrowings.
Where funds allocated for purchase, construction or manufacturing of assets eligible forcapitalisation are part of a general borrowing, the eligible amounts are determined by theweighted-average of the cumulative capital expenditures in excess of the specific borrowingmultiplied by the general borrowing capitalization rate. The capitalization rate will be theweighted average of the borrowing costs applicable to the general borrowing.
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
3.21 Intangible assets
3.21.1 Initial measurement
An intangible assets is initial measured at the actual cost of acquisition
3.21.2 Useful lives
3.21.2.1 Intangible assets with define useful lives
| Category | Useful life in years | Basis for useful life determination |
| Land use rights | 40-50 | Legal right to use |
| Patents | 10 | Period that the asset can generate economic benefits |
| Software | 3-5 | Period that the asset can generate economic benefits |
| Trademarks | 10 | Period that the asset can generate economic benefits |
For intangible assets with finite useful life, the estimated useful life and amortisation methodare reviewed annually at the end of each reporting period and adjusted when necessary. Nochange incur in current year in the estimated useful life and amortisation method upon review.
3.21.2.2 Assets of which the period to bring economic benefits to the Company areunforeseeable are regarded as intangible assets with indefinite useful lives. The Companyreassesses the useful lives of those assets at every year end. If the useful lives of those assetsare still indefinite, impairment test should be performed on those assets at the balance sheetdate.
3.21.2.3 Amortisation
For intangible assets with finite useful lives, their useful lives should be determined upontheir acquisition and systematically amortised on a straight-line basis [units of productionmethod] over the useful life. The amortisation amount shall be recognized into current profitor loss according to the beneficial items. The amount to be amortised is cost deductingresidual value. For intangible assets which has impaired, the cumulative impairment provisionshall be deducted as well. The residual value of an intangible asset with a finite useful lifeshall be assumed to be zero unless: there is a commitment by a third party to purchase theasset at the end of its useful life; or there is an active market for the asset and residual valuecan be determined by reference to that market; and it is probable that such a market will existat the end of the asset’s useful life.Intangible assets with indefinite useful lives shall not be amortised. The Company reassesses
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
the useful lives of those assets at every year end. If there is evidence to indicate that the usefullives of those assets become finite, the useful lives shall be estimated and the intangible assetsshall be amortised systematically and reasonably within the estimated useful lives.
3.21.3 Research and development expenditure
3.21.3.1 Preparation activities related to materials and other relevant aspects undertaken bythe Company for the purpose of further development shall be treated as research phase.Expenditures incurred during the research phase of internal research and development projectsshall be recognised in profit or loss when incurred.
3.21.3.2 Development activities after the research phase of the Company shall be treated asdevelopment phase.
3.21.4 Capitalisation of research and development expenditure
Expenditures arising from development phase on internal research and development projectsshall be recognised as intangible assets only if all of the following conditions have been met:
I. Technical feasibility of completing the intangible assets so that they will be available foruse or sale;II. Its intention to complete the intangible asset and use or sell it;III. The method that the intangible assets generate economic benefits, including the Companycan demonstrate the existence of a market for the output of the intangible assets or theintangible assets themselves or, if it is to be used internally, the usefulness of the intangibleassets;IV. The availability of adequate technical, financial and other resources to complete thedevelopment and to use or sell the intangible asset; andV. Its ability to measure reliably the expenditure attributable to the intangible asset.
3.22 Impairment of long-term assets
Impairment loss of long-term equity investment in subsidiaries, associates and joint ventures,investment properties, fixed assets, constructions in progress, and intangible assetssubsequently measured at cost shall be determined according to following method:
The Company shall assess at the end of each reporting period whether there is any indicationthat an asset may be impaired. If any such indication exists, the Company shall estimate therecoverable amount of the asset and test for impairment. Irrespective of whether there is any
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
indication of impairment, the Company shall test for impairment of goodwill acquired in abusiness combination, intangible assets with an indefinite useful life or intangible assets notyet available for use annually.The recoverable amounts of the long-term assets are the higher of their fair values less coststo dispose and the present values of the estimated future cash flows of the long-term assets.The Company estimate the recoverable amounts on an individual basis. If it is difficult toestimate the recoverable amount of the individual asset, the Company estimates therecoverable amount of the groups of assets that the individual asset belongs to. Identificationof an group of asset is based on whether the cash inflows from it are largely independent ofthe cash inflows from other assets or groups of assets.If, and only if, the recoverable amount of an asset or a group of assets is less than its carryingamount, the carrying amount of the asset shall be reduced to its recoverable amount and theprovision for impairment loss shall be recognised accordingly.For the purpose of impairment testing, goodwill acquired in a business combination shall,from the acquisition date, be allocated to relevant group of assets based on reasonable method;if it is difficult to allocate to relevant group of assets, good will shall be allocated to relevantcombination of asset groups. The relevant group of assets or combination of asset groups is agroup of assets or combination of asset groups that is benefit from the synergies of thebusiness combination and is not larger than the reporting segment determined by theCompany.When test for impairment, if there is an indication that relevant group of assets orcombination of asset groups may be impaired, impairment testing for group of assets orcombination of asset groups excluding goodwill shall be conducted first, and calculate therecoverable amount and recognize the impairment loss. Then the group of assets orcombination of asset groups including goodwill shall be tested for impairment, by comparingthe carrying amount with its recoverable amount. If the recoverable amount is less than thecarrying amount, the Company shall recognise the impairment loss.The mentioned impairment loss will not be reversed in subsequent accounting period once ithad been recognised.
3.23 Long-term deferred expenses
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
Long-term deferred expenses are various expenses already incurred, which shall be amortisedover current and subsequent periods with the amortisation period exceeding one year.Long-term deferred expenses are evenly amortised over the beneficial period.
3.24 Employee benefits
Employee benefits refer to all forms of consideration or compensation given by the Companyin exchange for service rendered by employees or for the termination of employmentrelationship. Employee benefits include short-term employee benefits, post-employmentbenefits, termination benefits and other long-term employee benefits. Benefits provided to anemployee's spouse, children, dependents, family members of decreased employees, or otherbeneficiaries are also employee benefits.According to liquidity, employee benefits are presented in the statement of financial positionas “Employee benefits payable” and “Long-term employee benefits payable”.
3.24.1 Short-term employee benefits
3.24.1.1 Salaries, wages, allowances and subsidies
The Company recognises, in the accounting period in which an employee provides service,actually occurred short-term employee benefits as a liability, with a corresponding charge tocurrent profit except for those recognised as capital expenditure based on the requirement ofaccounting standards.
3.24.1.2 Welfare
The Company shall recognise the employee welfare based on actual amount when incurredinto current profit or loss or related capital expenditure. Employee welfare shall be measuredat fair value as it is a non-monetary benefits.
3.24.1.3 Social securities such as medical insurance and work-place injury insurance, housingfunds, labor union fund and employee education fundPayments made by the Company of social insurance for employees, such as medical insuranceand work-place injury insurance, payments of housing funds, and labor union fund andemployee education fund accrued in accordance with relevant requirements, in the accountingperiod in which employees provide services, is calculated according to required accrual basesand accrual ratio in determining the amount of employee benefits and the related liabilities,which shall be recognised in current profit or loss or the cost of relevant asset.
3.24.1.4 Short-term paid absences
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
The company shall recognise the related employee benefits arising from accumulating paidabsences when the employees render service that increases their entitlement to future paidabsences. The additional payable amounts shall be measured at the expected additionalpayments as a result of the unused entitlement that has accumulated. The Company shallrecognise relevant employee benefit of non-accumulating paid absences when the absencesactually occurred.
3.24.1.5 Short-term profit-sharing plan
The Company shall recognise the related employee benefits payable under a profit-sharingplan when all of the following conditions are satisfied:
I. The Company has a present legal or constructive obligation to make such payments as aresult of past events; andII. A reliable estimate of the amounts of employee benefits obligation arising from the profit-sharing plan can be made.
3.24.2 Post-employement benefits
3.24.2.1 Defined contribution plans
The Company shall recognise, in the accounting period in which an employee providesservice, the contribution payable to a defined contribution plan as a liability, with acorresponding charge to the current profit or loss or the cost of a relevant asset.When contributions to a defined contribution plan are not expected to be settled wholly beforetwelve months after the end of the annual reporting period in which the employees render therelated service, they shall be discounted using relevant discount rate (market yields at the endof the reporting period on high quality corporate bonds in active market or government bondswith the currency and term which shall be consistent with the currency and estimated term ofthe defined contribution obligations) to measure employee benefits payable.
3.24.2.2 Defined benefit plans
I. Present value of defined benefit obligation and current service costsBased on the expected accumulative welfare unit method, the Company shall make estimatesabout demographic variables and financial variables in adopting the unbiased and consistentactuarial assumptions and measure defined benefit obligation, and determine the obligationperiod. The Company shall discount the obligation arising from defined benefit plan using
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
relevant discount rate (market yields at the end of the reporting period on high qualitycorporate bonds in active market or government bonds with the currency and term which shallbe consistent with the currency and estimated term of the defined benefit obligations) in orderto determine the present value of the defined benefit obligation and the current service cost.II. Net assets or liabilities of a defined benefit planThe net defined benefit liability (asset) is the deficit or surplus recognised as the present valueof the defined benefit obligation less the fair value of plan assets (if any).When the Company has a surplus in a defined benefit plan, it shall measure the net definedbenefit asset at the lower of the surplus in the defined benefit plan and the asset ceiling.III. Amount recognised as plan assets or charged to the current profit or lossService cost comprises current service cost, past service cost and any gain or loss onsettlement. Other service cost shall be recognised in profit or loss unless accounting standardsrequire or allow the inclusion of current service cost within the cost of assets.Net interest on the net defined benefit liability (asset) comprising interest income on planassets, interest cost on the defined benefit obligation and interest on the effect of the assetceiling, shall be included in profit or loss.IV. Amount recognised in other comprehensive incomeChanges in the net liability or asset of the defined benefit plan resulting from theremeasurements including:
i. Actuarial gains and losses, the changes in the present value of the defined benefit obligationresulting from experience adjustments or the effects of changes in actuarial assumptions;ii. Return on plan assets, excluding amounts included in net interest on the net defined benefitliability or asset;iii. Any change in the effect of the asset ceiling, excluding amounts included in net interest onthe net defined benefit liability (asset).Remeasurements of the net defined benefit liability (asset) recognised in other comprehensiveincome shall not be reclassified to profit or loss in a subsequent period. However, theCompany may transfer those amounts recognised in other comprehensive income withinequity.
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
3.24.3 Termination benefits
The Company providing termination benefits to employees shall recognise an employeebenefits liability for termination benefits, with a corresponding charge to the profit or loss ofthe reporting period, at the earlier of the following dates:
I. When the Company cannot unilaterally withdraw the offer of termination benefits becauseof an employment termination plan or a curtailment proposal; orII. When the Company recognises costs or expenses related to a restructuring that involves thepayment of termination benefits.If the termination benefits are not expected to be settled wholly before twelve months after theend of the annual reporting period, the Company shall discount the termination benefits usingrelevant discount rate (market yields at the end of the reporting period on high qualitycorporate bonds in active market or government bonds with the currency and term which shallbe consistent with the currency and estimated term of the defined benefit obligations) tomeasure the employee benefits.
3.24.4 Other long-term employee benefits
3.24.4.1 Other long-term employee beneifts satisfying the recognition conditions applicable todefined contribution plansWhen other long-term employee benefits provided by the Company to the employees satisfiesthe conditions for classifying as a defined contribution plan, all those benefits payable shall beaccounted for as employee benefits payable at their discounted value.
3.24.4.2 Other long-term employee benefits satisfying the recognition conditions applicable todefined benefit plansAt the end of the reporting period, the Company recognised the cost of employee benefit fromother long-term employee benefits as the following components:
I. Service costs;II. Net interest cost for net liability or asset of other long-term employee benefits;III. Changes resulting from the remeasurements of the net liability or asset of other long-termemployee benefits.In order to simplify the accounting treatment, the net amount of above items shall berecognised in profit or loss or relevant cost of assets.
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
3.25 Lease liabilities
At the commencement date, the Group measures the lease liability at the present value of thelease payments that are not paid at that date. The lease payments comprise:
I. fixed payments, or in-substance fixed payments, less any lease incentives receivable;II. variable lease payments that depend on an index or a rate;III. the exercise price of a purchase option if the Group is reasonably certain to exercise thatoption;IV. payments of penalties for terminating the lease, if the lease term reflects the Groupexercising an option to terminate the lease; andV. amounts expected to be payable by the Group under residual value guarantees.The lease payments shall be discounted using the interest rate implicit in the lease, if that ratecan be readily determined. If that rate cannot be readily determined, the lessee shall use thelessee’s incremental borrowing rate. The excess of the lease payments over its present value isamortised over the lease term as interest expenses using the discount rate. A variable leasepayment which is not included in the initial measurement of the lease liability is recognised inprofit or loss when incurred.
3.26 Provisions
3.26.1 Recognition
A provision is recognised for an obligation associated with a contingent event when thefollowing conditions are satisfied:
I. The obligation is a present obligation assumed by the entity;II. It is probable that fulfillment of the obligation will result in outflows of economic benefitsfrom the entity;III. The amount of the obligation can be reliably measured.
3.26.2 Measurement
A provision is initially measured at the best estimate of expenses required for the performanceof relevant present obligations. The Company, when determining the best estimate, has had acomprehensive consideration of risks with respect to contingencies, uncertainties and the timevalue of money. The carrying amount of the provision shall be reviewed at the end of everyreporting period. If conclusive evidences indicate that the carrying amount fails to be the best
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
estimate of the provision, the carrying amount shall be adjusted based on the updated bestestimate.
3.27 Revenue
3.27.1 General policy
Revenue is total economic inflows arising from the Company’s daily operation which resultin increases in equity, other than those relating to contributions from holders of equity claims.The Company recognises revenue when (or as) the Company satisfies a performanceobligation by transferring a promised good or service (ie an asset) to a customer. An asset istransferred when (or as) the customer obtains control of that asset. A customer has control ofan asset when (or as) the customer has the ability to direct the use of, and obtain substantiallyall of the remaining benefits from, the asset.Where a contract include two or more performance obligations, the Company allocate thetransaction price, upon inception of the contract, to each performance obligation identified inthe contract on a relative stand-alone selling price basis, revenue associated with eachperformance obligation is measured at the allocated price.The transaction price is the amount of consideration to which the Company expects to beentitled in exchange for transferring promised goods or services to a customer, excludingamounts collected on behalf of third parties. If the consideration promised in a contractincludes a variable amount, the Company estimates the amount of consideration to which theCompany will be entitled in exchange for transferring the promised goods or services toa customer to the extent that it is highly probable that a significant reversal in the amount ofcumulative revenue recognised will not occur when the uncertainty associated with thevariable consideration is subsequently resolved. Where a contract contains a significantfinancing component, the Company recognizes revenue at an amount that reflects the pricethat a customer would have paid for the promised goods or services if the customer had paidcash for those goods or services when (or as) they transfer to the customer (ie the cash sellingprice); the difference between the amount of promised consideration and the cash selling priceof the promised goods or services is amortised over the life of the contract using the effectiveinterest rate method. The Company does not adjust the promised amount of consideration forthe effects of a significant financing component if the Comopany expects, at contractinception, that the period between when the Company transfers a promised good or service toa customer and when the customer pays for that good or service will be one year or less.
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
The Company transfers control of a good or service over time and, therefore, satisfies aperformance obligation and recognises revenue over time, if one of the following criteria ismet:
I. the customer simultaneously receives and consumes the benefits provided by theCompany’s performance as the entity performs;II. the Company’s performance creates or enhances an asset that the customer controls asthe asset is created or enhanced; orIII. the Company’s performance does not create an asset with an alternative use to theCompany and the Company has an enforceable right to payment for performancecompleted to date.For each performance obligation satisfied over time, the Company recognises revenue overtime by measuring the progress towards complete satisfaction of that performance obligation,unless the progress towards complete satisfaction cannot be reliably measured. The Companyuses either the input method or output method to measure the progress towards completesatisfaction of a performance obligation. When the progress towards complete satisfaction ofa performance obligation cannot be reliably measured, the Company recognises revenue onlyto the extent of the costs incurred until such time that it can reasonably measure the outcomeof the performance obligation.Where a performance obligation is satisfied at a point in time, the Company recognisesrevenue when (or as) the customer obtains control of the transferred asset (either goods orservice). To determine the point in time at which a customer obtains control of a promisedasset, the Company considers the following indicators:
I. The Company has a present right to payment for the asset, ie. the customer has thepresent obligation to pay for the asset.II. The legal title to the asset has been transferred to the customer, ie. the customer has thelegal title to the asset.III. The Company has transferred physical possession of the asset, ie. the customer hasphysical possession of the asset.IV. The significant risks and rewards of ownership of the asset has been transferred to thecustomer, ie. the customer has obtained the significant risks and rewards of ownership ofthe asset.
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
V. The customer has accepted the asset.VI. Other indication that the customer has obtained control over the asset.
3.27.2 Specific policies
Revenue recognition methods of the Company are as follows:
3.27.2.1 Revenue from sales of goods
According to the contract of sales of goods between the Company and the customer, theCompany satisfies a performance obligation by transferring goods to the customer, which is aperformance obligation satisfied at a point in time.Revenue from domestic sales of goods can only be recognised when the following conditionsare satisfied: the Company has transferred the promised goods to the customer according tothe contract and the customer has accepted the goods; the payment has been received or thereceipt voucher has been obtained and it is highly probable that the economic benefitsassociated will flow into the Company; the significant risks and rewards of ownership of theasset has been transferred; legal title of the asset has been transferred.
3.27.2.2 Revenue from rendering of services
The customer simultaneously receives and consumes the benefits provided by the Company’sperformance as the Company performs，Company satisfies a performance obligation byrendering of services to the customer, which is a performance obligation satisfied over time.For each performance obligation satisfied over time, the Company shall recognise revenueover time by measuring the progress towards complete satisfaction of that performanceobligation.The customer can’t simultaneously receives and consumes the benefits provided by theCompany’s performance as the Company performs, the Company’s performance does notcreate an asset with an alternative use and the Company has no enforceable right to paymentfor performance completed to date at all times throughout the duration of the contract,Revenue from rendering of services is a performance obligation satisfied at a point intime.The company recognizes revenue when the company completes technical services inaccordance with the contractual agreement
3.27.2.3 Revenue from usage of assets
Revenue from usage of the Group’s assets is recognised if the revenue can be reliably
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
measured and it is probable that the associated economic benefits will flow to the Group.Revenue from usage of assets mainly includes the income from the leasing of premises andhouses.Revenue measured in accordance with the method determined by the respectivecontracts.
3.28 Government grants
3.28.1 Recognition
A government grant shall not be recgonised until there is reasonable assurance that:
I. The Company will comply with the conditions attaching to them; andII. The grants will be received.
3.28.2 Measurement
Monetary grants from the government shall be measured at amount received or receivable,and non-monetary grants from the government shall be measured at their fair value or at anominal value of CNY 1.00 when reliable fair value is not available.
3.28.3 Accounting for government grant
3.28.3.1 Asset-related government grants
Government grants pertinent to assets mean the government grants that are obtained by theCompany used for purchase or construction, or forming the long-term assets by other ways.Government grants pertinent to assets shall be recognised as deferred income, and should berecognised in profit or loss on a systematic basis over the useful lives of the relevant assets.Grants measured at their nominal value shall be directly recognised in profit or loss of theperiod when the grants are received. When the relevant assets are sold, transferred, written offor damaged before the assets are terminated, the remaining deferred income shall betransferred into profit or loss of the period of disposing relevant assets.
3.28.3.2 Income-related government grants
Government grants other than related to assets are classified as government grants related toincome. Government grants related to income are accounted for in accordance with thefollowing principles:
If the government grants related to income are used to compensate the enterprise’s relevantexpenses or losses in future periods, such government grants shall be recognised as deferred
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
income and included into profit or loss in the same period as the relevant expenses or lossesare recognised;If the government grants related to income are used to compensate the enterprise’s relevantexpenses or losses incurred, such government grants are directly recognised into current profitor loss.For government grants comprised of part related to assets as well as part related to income,each part is accounted for separately; if it is difficult to identify different part, the governmentgrants are accounted for as government grants related to income as a whole.Government grants related to daily operation activities are recognised in other income inaccordance with the nature of the activities, and government grants irrelevant to dailyoperation activities are recognised in non-operating income.
3.28.3.3 Loan interest subsidies
When loan interest subsidy is allocated to the bank, and the bank provides a loan atlower-market rate of interest to the Company, the loan is recognised at the actual receivedamount, and the interest expense is calculated based on the principal of the loan and thelower-market rate of interest.When loan interest subsidy is directly allocated to the Company, the subsidy shall berecognised as offsetting the relevant borrowing cost.
3.28.3.4 Repayment of government grants
Repayment of the government grants shall be recorded by increasing the carrying amount ofthe asset if the book value of the asset has been written down, or reducing the balance ofrelevant deferred income if deferred income balance exists, any excess will be recognised intocurrent profit or loss; or directly recognised into current profit or loss for other circumstances.
3.29 Deferred tax assets and deferred tax liabilities
Temporary differences are differences between the carrying amount of an asset or liability inthe statement of financial position and its tax base at the balance sheet date. The Companyrecognises and measures the effect of taxable temporary differences and deductible temporarydifferences on income tax as deferred tax liabilities or deferred tax assets using liabilitymethod. Deferred tax assets and deferred tax liabilities shall not be discounted.
3.29.1 Recognition of deferred tax assets
Deferred tax assets should be recognised for deductible temporary differences, the
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
carryforward of unused tax losses and the carryforward of unused tax credits to the extent thatit is probable that taxable profit will be available against which the deductible temporarydifferences, the carryforward of unused tax losses and the carryforward of unused tax creditscan be utilised at the tax rates that are expected to apply to the period when the asset isrealised, unless the deferred tax asset arises from the initial recognition of an asset or liabilityin a transaction that:
I. is not a business combination; andII. at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).The Company shall recognise a deferred tax asset for all deductible temporary differencesarising from investments in subsidiaries, associates and joint ventures, only to the extent that,it is probable that:
I. the temporary difference will reverse in the foreseeable future; andII. taxable profit will be available against which the deductible temporary difference can beutilised.At the end of each reporting period, if there is sufficient evidence that it is probable thattaxable profit will be available against which the deductible temporary difference can beutilized, the Company recognises a previously unrecognised deferred tax asset.The carrying amount of a deferred tax asset shall be reviewed at the end of each reportingperiod. The Company shall reduce the carrying amount of a deferred tax asset to the extentthat it is no longer probable that sufficient taxable profit will be available to allow the benefitof part or all of that deferred tax asset to be utilised. Any such reduction shall be reversed tothe extent that it becomes probable that sufficient taxable profit will be available.
3.29.2 Recognition of deferred tax liabilities
A deferred tax liability shall be recognised for all taxable temporary differences at the tax ratethat are expected to apply to the period when the liability is settled.No deferred tax liability shall be recognised for taxable temporary differences arising from:
I. the initial recognition of goodwill; orII. the initial recognition of an asset or liability in a transaction which: is not a businesscombination; and at the time of the transaction, affects neither accounting profit nor taxableprofit (tax loss)
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
An entity shall recognise a deferred tax liability for all taxable temporary differencesassociated with investments in subsidiaries, associates, and joint ventures, except to the extentthat both of the following conditions are satisfied:
I. the Company is able to control the timing of the reversal of the temporary difference; andII. it is probable that the temporary difference will not reverse in the foreseeable future.
3.29.3 Recognition of deferred tax liabilities or assets involved in special transactions orevents
3.29.3.1 Deferred tax liabilities or assets related to business combinationFor the taxable temporary difference or deductible temporary difference arising from abusiness combination not under common control, a deferred tax liability or a deferred taxasset shall be recognised, and simultaneously, goodwill recognised in the businesscombination shall be adjusted based on relevant deferred tax expense (income).
3.29.3.2 Items directly recognised in equity
Current tax and deferred tax related to items that are recognised directly in equity shall berecognised in equity. Such items include: other comprehensive income generated from fairvalue fluctuation of other debt investments; an adjustment to the opening balance of retainedearnings resulting from either a change in accounting policy that is applied retrospectively orthe correction of a prior period (significant) error; amounts arising on initial recognition of theequity component of a compound financial instrument that contains both liability and equitycomponent.
3.29.3.3 Unused tax losses and unused tax credits
3.29.3.3.1 Unsused tax losses and unused tax credits generated from daily operation of theCompany itselfDeductible loss refers to the loss calculated and permitted according to the requirement of taxlaw that can be offset against taxable income in future periods. The criteria for recognisingdeferred tax assets arising from the carryforward of unused tax losses and tax credits are thesame as the criteria for recognising deferred tax assets arising from deductible temporarydifferences. The Company recognises a deferred tax asset arising from unused tax losses ortax credits only to the extent that there is convincing other evidence that sufficient taxableprofit will be available against which the unused tax losses or unused tax credits can beutilised by the Company. Income taxes in current profit or loss shall be deducted as well.
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
3.29.3.3.2 Unsused tax losses and unused tax credits arising from a business combinationUnder a business combination, the acquiree’s deductible temporary differences which do notsatisfy the criteria at the acquisition date for recognition of deferred tax asset shall not berecognised. Within 12 months after the acquisition date, if new information regarding thefacts and circumstances exists at the acquisition date and the economic benefit of theacquiree’s deductible temporary differences at the acquisition is expected to be realised, theCompany shall recognise acquired deferred tax benefits and reduce the carrying amount ofany goodwill related to this acquisition. If goodwill is reduced to zero, any remaining deferredtax benefits shall be recognised in profit or loss. All other acquired deferred tax benefitsrealised shall be recognised in profit or loss.
3.29.3.4 Temporary difference generated in consolidation eliminationWhen preparing consolidated financial statements, if temporary difference between carryingvalue of the assets and liabilities in the consolidated financial statements and their taxablebases is generated from elimination of inter-company unrealized profit or loss, deferred taxassets or deferred tax liabilities shall be recognised in the consolidated financial statements,and income taxes expense in current profit or loss shall be adjusted as well except for deferredtax related to transactions or events recognised directly in equity and business combination.
3.29.3.5 Share-based payment settled by equity
If tax authority permits tax deduction that relates to share-based payment, during the period inwhich the expenses are recognised according to the accounting standards, the Companyestimates the tax base in accordance with available information at the end of the accountingperiod and the temporary difference arising from it. Deferred tax shall be recognised whencriteria of recognition are satisfied. If the amount of estimated future tax deduction exceedsthe amount of the cumulative expenses related to share-based payment recognised accordingto the accounting standards, the tax effect of the excess amount shall be recognised directly inequity.
3.30 Leases
3.30.1 Identifying a lease
At inception of a contract, the Company shall assess whether the contract is, or contains,alease. A contract is, or contains, a lease if the contract conveys the right to control the use ofone or more identified assets for a period of time in exchange for consideration. To assess
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
whether a contract conveys the right to control the use of an identified asset for a period oftime, the Company shall assess whether, throughout the period of use, the customer has theright to obtain substantially all of the economic benefits from use of the identified asset and todirect the use of the identified asset.
3.30.2 Identifying a separate lease component
When a contract includes more than one separate lease components, the Company shallseparate components of the contract and account for each lease component separately. Theright to use an underlying asset is a separate lease component if both conditions have beensatisfied:
a. the lessee can benefit from use of the underlying asset either on its own or together withother resources that are readily available to the lessee;b. the underlying asset is neither highly dependent on, nor highly interrelated with, the otherunderlying assets in the contract.
3.30.3 The Company as a lessee
At the commencement date, the Company identifies the lease that has a lease term of 12months or less and does not contain a purchase option as a short-term lease. A lease qualifiesas a lease of a low-value asset if the nature of the asset is such that, when new, the asset istypically of low value. If the Company subleases an asset, or expects to sublease an asset, thehead lease does not qualify as a lease of a low-value asset.For all asset included in short-term leases or leases for which the underlying asset is of lowvalue/ all the short-term leases or leases for which the underlying asset is of low value, theCompany shall recognise the lease payments associated with those leases as cost of relevantasset or expenses in current profit or loss on a straight-line basis over the lease term.Except for the election of simple treatment as short-term lease or lease of a low-value asset asmentioned above, at the commencement date, the Company shall recognise a right-of-useasset and a lease liability.
3.30.3.1 Right-of-use assets
A right-of-use asset represents the right of the Company to use an asset over the life of alease.At the commencement date, the Company shall initially measure the right-of-use asset at cost.
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
The cost of the right-of-use asset shall comprise:
(a) the amount of the initial measurement of the lease liability；(b) any lease payments made at or before the commencement date, less any lease incentivesreceived;(c) any initial direct costs incurred by the lessee; and(d) an estimate of costs to be incurred by the lessee in dismantling and removing theunderlying asset, restoring the site on which it is located or restoring the underlying asset tothe condition required by the terms and conditions of the lease. The Company recognises andmeasures the cost in accordance with the recognition criteria and measurement method forestimated liabilities, details please refer to Notes 3.12. Those costs incurred to produceinventories shall be included in the cost of inventories.The right-of-use asset shall be depreciated according to the categories using straight‐ linemethod or units of production method. If it is reasonably certain that the ownership of theunderlying asset shall be transferred to the lessee by the end of the lease term, the depreciationrate shall be determined based on the classification of the right-of- use asset and estimatedresidual value rate from the commencement date to the end of the useful life of the underlyingasset. Otherwise, the depreciation rate shall be determined based on the classification of theright-of-use asset from the commencement date to the earlier of the end of the useful life ofthe right-of-use asset or the end of the lease term.
3.30.3.2 Lease liability
A lease liability shall be measured at the present value of the lease payments that are not paidat the commencement date. The lease payments include the followings:
(a) Fixed payments and in-substance fixed payments, less any lease incentives if exist; and(b) Variable lease payments that depend on an index or a rate; and(c) The exercise price of a purchase option if the Company is reasonably certain to exercisethat option; and(d) Payments of penalties for terminating the lease, if the lease term reflects the lesseeexercising an option to terminate the lease; and(e) Amounts expected to be payable by the lessee under residual value guarantees.
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
The Company uses the interest rate implicit in the lease to discount the lease ayments. If thatrate cannot be readily determined, the Company uses the lessee’s incremental borrowing rateas discount rate.The difference between the lease payment and its present value shall be recognized asunrecognised financial charges, calculated bases on the discount rate of the present value ofthe lease payments in each period within the lease term and recorded as interest expense incurrent profit or loss. Variable lease payments not included in the measurement of leaseliabilities shall be recognised in current profit or loss when incurred.After the commencement date, the Company shall remeasure the lease liability based on therevised present value of the lease payments and adjust the carrying amount of the right-of-useasset if there is a change in the in-substance fixed payments, or change in the amountsexpected to be payable under a residual value guarantee, or change in an index or a rate usedto determine lease payments, or change in the assessment or exercising of an option topurchase the underlying asset, or an option to extend or terminate the lease.
3.30.4 Lease modifications
Where there is a modification on operating lease, the Company considers it to be a new leasefrom the effective date of the modification, and the advances from customer and receivablesrelated to lease payments before the modification shall be considered as payments for newlease.
3.30.5 Sale and leaseback transactions
The Company shall determine whether the transfer of an asset under the sale and leasebacktransaction is a sale of that asset according to the policies in Note 3.27.
3.30.4.1 The Company as a seller (lessee)
If the transfer of the asset is not a sale, the Company shall continue to recognise thetransferred asset and shall recognise a financial liability equal to the transfer proceeds. It shallaccount for the financial liability according to Note 3.10. If the transfer of the asset is a sale,the Company shall measure the right-of-use asset arising from the leaseback at the proportionof the previous carrying amount of the asset that relates to the right of use retained by theCompany. Accordingly, the Company shall recognise only the amount of any gain or loss thatrelates to the rights transferred to the buyer-lessor.
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
3.30.4.2 The Company as a buyer (lessor)
If the transfer of the asset is not a sale, the Company shall not recognise the ransferred assetand shall recognise a financial asset equal to the transfer proceeds. It shall account for thefinancial asset according to Note 3.10. If the transfer of the asset is a sale, the Company shallaccount for the purchase of the asset applying applicable Accounting Standards of BusinessEnterprises, and for the lease applying the lessor accounting requirements.
3.31 Change of significant accounting policies and significant accounting estimates
3.31.1 Change of significant accounting policies
There is no Change of significant accounting policies in the current period.
3.31.2 Change of significant accounting estimates
There is no change of significant accounting estimates in the current period.
Note 4 Taxes
4.1 Major taxes and tax rates
| Tax | Tax base | Tax rate |
| Value added tax (VAT) | Valur added in the course of sales of goods and rendering of services | 13%, 9%, 6% |
| Consumption duty | Taxable revnue | Tax by quantity: CNY 1.00 per kilogram or litre of distrilled wine sold; Tax by revenue: 20% on taxable revenue from sale of distrilled wine |
| Urban maintenance and construction tax | Transaction tax payable | 7%, 5% |
| Education surcharge | Transaction tax payable | 3% |
| Local education surcharge | Transaction tax payable | 2% |
| Corporate income tax (CIT) | Taxable income | 25% |
The CIT rate applicable to the Company is 25%. The CIT rates applicable to certainsubsidiaries are presented below.
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Entity | CIT rate |
| Longrui Glass | 15.00% |
| Ruisi Weier | 15.00% |
| Runan Xinke | 15.00% |
| Yashibo | 2.50% |
| GJ Guest House | 2.50% |
| Junlou Culture | 2.50% |
| HHL Beverage | 2.50% |
| Xinjia Testing | Taxable income up to CNY 1 million: 2.50% Taxable income between CNY 1 million and CNY 3 million: 5.00% |
| Jiuan Electric | 2.50% |
| Jiudao Media | Taxable income up to CNY 1 million: 2.50% Taxable income between CNY 1 million and CNY 3 million: 5.00% |
| Anjie Technology | 2.50% |
| Theme Hotel | 2.50% |
| GJ Health Technology | 15.00% |
4.2 Preferential tax treatments
4.2.1 Ruisi Weier’s High-Tech Enterprise Status was jointly approved by the Anhui Scienceand Technology Department (Anhui STD), Anhui Finance Department (Anhui FiD) andAnhui Tax Office (Anhui PAT) through WanKeQiMi [2022] No. 482 and was issued theHigh-Tech Enterprise Certificate (GR202234000476) with the validity term of 3 years. Inaccordance with the Corporate Income Tax Law of the People’s Republic of China, the CITrate applicable to Ruisi Weier for the period from 1 January 2022 to 31 Decmeber 2024 is15%.
4.2.2 Longrui Glass’s High-Tech Enterprise Status was jointly approved by the Anhui STD,Anhui FiD and Anhui PAT through WanKeQiMi [2022] No. 482 and was issued theHigh-Tech Enterprise Certificate (GR202234004359) with the validity term of 3 years. Inaccordance with the Corporate Income Tax Law of the People’s Republic of China, the CITrate applicable to Longrui Glass for the period from 1 January 2022 to 31 Decemeber 2024 is15%.
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
4.2.3 Runan Xinke’s High-Tech Enterprise Status was jointly approved by the Anhui STD,Anhui FiD and Anhui PAT through WanKeGaoMi [2022] No. 49 and was issued theHigh-Tech Enterprise Certificate (GR202134004920) with the validity term of 3 years. Inaccordance with the Corporate Income Tax Law of the People’s Republic of China, the CITrate applicable to Runan Xinke for the period from 1 January 2021 to 31 Decmeber 2023 is15%.
4.2.4 GJ Health Technology’s High-Tech Enterprise Status was jointly approved by the AnhuiSTD, Anhui FiD and Anhui PAT through WanKeGaoMi and was issued the High-TechEnterprise Certificate (GR202134004641) with the validity term of 3 years. In accordancewith the Corporate Income Tax Law of the People’s Republic of China, the CIT rateapplicable to GJ Health Technology for the period from 1 January 2021 to 31 Decmeber 2023is 15%.
4.2.5 In accordance with MoF&SAT Announcement [2021] No. 12 and [2021] No. 8 jointlyissued by the Ministry for Finance and State Administration of Taxation, 87.5% of the firstCNY 1 million annual taxable income of a qualified small entreprise with small profit for theperiod from 1 January 2021 to 31 Decmeber 2022 is exempted from CIT and the CIT rateapplicable to the remaining 12.5% is 20%; In accordance with MoF&SAT Announcement[2022] No. 13 jointly issued,25% of the annual taxable income between CNY 1 million andCNY 3 million of a qualified small entreprise with small profit for the period from 1 January2022 to 31 December 2024 is exempted from CIT and the CIT rate applicable to theremaining 12.5% is 20%; GJ Guest House,Theme Hotel, Anjie Technology, Junlou Culture,HHL Beverage, Xinjia Testing, Jiuan Electric, Jiudao Media, and Yashibo are eligible to thispreferential tax treatment.
Note 5 Notes to the consolidated financial statements
5.1 Monetary funds
| 31/12/2022 | 31/12/2021 | |
| Cash on hand | 111,642.11 | 135,129.66 |
| Cash at bank | 13,698,187,278.75 | 11,891,283,646.58 |
| Other monetary funds | 74,262,220.44 | 33,503,995.52 |
| Total | 13,772,561,141.30 | 11,924,922,771.76 |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
Cash at bank as of the statement date included fixed term deposits Certificate of deposit forbank acceptance at CNY 600 million, other monetary funds as of the statement date includedmargin deposits not eligible for early redemption at CNY 67.19 million. Except for thepre-mentioned, monetary funds as of the statement date was not subject to limitation on usagesuch as pledging or freezing or risk on recovery.
5.2 Financial assets held for trading
| 31/12/2022 | 31/12/2021 | |
| FVTPL | 1,782,687,769.66 | 2,661,103,876.68 |
| T/o: Structural financial products | 1,580,352,899.17 | 2,457,565,232.32 |
| T/o: Fund investments | 202,334,870.49 | 203,538,644.36 |
| Total | 1,782,687,769.66 | 2,661,103,876.68 |
5.3 Accounts receivable
5.3.1 Disclosure by age group
| Age group | 31/12/2022 | 31/12/2021 |
| Within 1 year | 60,886,443.44 | 97,023,731.05 |
| T/o: Within 6 months | 57,829,416.75 | 92,114,086.85 |
| T/o: 7 months to 1 years | 3,057,026.69 | 4,909,644.20 |
| 1 to 2 years | 10,382,550.23 | 883,133.28 |
| 2 to 3 years | 405,162.30 | 137,464.27 |
| Over 3 years | 137,464.27 | 1,146,581.68 |
| Gross | 71,811,620.24 | 99,190,910.28 |
| Less: Impairment allowance | 9,122,951.30 | 10,185,106.11 |
| Net | 62,688,668.94 | 89,005,804.17 |
5.3.2 Dislcosure by method of impairment
| 31/12/2022 | |||||
| Gross | Impairment allowance | Net | |||
| Amount | % of total | Amount | Impairment % | ||
| Individual assessment | 7,792,783.72 | 10.85 | 7,792,783.72 | 100.00 | - |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| 31/12/2022 | |||||
| Gross | Impairment allowance | Net | |||
| Amount | % of total | Amount | Impairment % | ||
| Portfolio assessment | 64,018,836.52 | 89.15 | 1,330,167.58 | 2.08 | 62,688,668.94 |
| T/o: Group 1 | - | - | - | - | - |
| T/o: Group 2 | 64,018,836.52 | 89.15 | 1,330,167.58 | 2.08 | 62,688,668.94 |
| Total | 71,811,620.24 | 100.00 | 9,122,951.30 | 12.70 | 62,688,668.94 |
(Continued)
| 31/12/2021 | |||||
| Gross | Impairment allowance | Net | |||
| Amount | % of total | Amount | Impairment % | ||
| Individual assessment | 7,792,783.72 | 7.86 | 7,792,783.72 | 100.00 | - |
| Portfolio assessment | 91,398,126.56 | 92.14 | 2,392,322.39 | 2.62 | 89,005,804.17 |
| T/o: Group 1 | |||||
| T/o: Group 2 | 91,398,126.56 | 92.14 | 2,392,322.39 | 2.62 | 89,005,804.17 |
| Total | 99,190,910.28 | 100.00 | 10,185,106.11 | 10.27 | 89,005,804.17 |
Group 2 Receivables
| Age group | 31/12/2022 | ||
| Gross | Impairment allowance | Impairment % | |
| Within 1 year | 60,886,443.44 | 731,145.50 | 1.20 |
| T/o: Within 6 months | 57,829,416.75 | 578,294.17 | 1.00 |
| T/o: 7 months to 1 years | 3,057,026.69 | 152,851.33 | 5.00 |
| 1 to 2 years | 2,589,766.51 | 258,976.65 | 10.00 |
| 2 to 3 years | 405,162.30 | 202,581.16 | 50.00 |
| Over 3 years | 137,464.27 | 137,464.27 | 100.00 |
| Total | 64,018,836.52 | 1,330,167.58 | 2.08 |
(Continued)
| Age group | 31/12/2021 |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Gross | Impairment allowance | Impairment % | |
| Within 1 year | 89,230,947.33 | 1,088,695.25 | 1.22 |
| T/o: Within 6 months | 84,321,303.13 | 843,213.03 | 1.00 |
| T/o: 7 months to 1 years | 4,909,644.20 | 245,482.22 | 5.00 |
| 1 to 2 years | 883,133.28 | 88,313.32 | 10.00 |
| 2 to 3 years | 137,464.27 | 68,732.14 | 50.00 |
| Over 3 years | 1,146,581.68 | 1,146,581.68 | 100.00 |
| Total | 91,398,126.56 | 2,392,322.39 | 2.62 |
See Note 3.10 for recognition and measurement of impairment by portfolio.
5.3.3 Movement of impairment allowance
| 31/12/2021 | Movement | ||
| Provision | Business combination not under common control | ||
| Individually significant receivables subject to individual impairment assessment | 7,792,783.72 | - | - |
| Individually insignificant receivables subject to individual impairment assessment | |||
| Group 2 | 2,392,322.39 | 63,181.57 | 32,402.90 |
| Total | 10,185,106.11 | 63,181.57 | 32,402.90 |
(Continued)
| Movement | 31/12/2022 | ||
| Reversal or recovery | Release or write-off | ||
| Individually significant receivables subject to individual impairment assessment | - | - | 7,792,783.72 |
| Individually insignificant receivables subject to individual impairment assessment | |||
| Group 2 | 1,157,739.28 | - | 1,330,167.58 |
| Total | 1,157,739.28 | - | 9,122,951.30 |
5.3.4 Top-five accounts receivable as of the statement date
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Gross | % of gross accounts receivable | Impairment allowance | |
| Top 1 | 9,558,231.54 | 13.31 | 95,582.32 |
| Top 2 | 7,792,783.72 | 10.85 | 7,792,783.72 |
| Top 3 | 7,637,588.66 | 10.64 | 76,375.89 |
| Top 4 | 6,136,326.52 | 8.55 | 61,363.27 |
| Top 5 | 5,030,151.83 | 7.00 | 50,301.52 |
| Total | 36,155,082.27 | 50.35 | 8,076,406.72 |
5.4 Receivables held for factoring
5.4.1 General disclosure
| Type | 31/12/2022 | ||
| Gross | Impairment allowance | Net | |
| Bank acceptance | 217,419,441.32 | 217,419,441.32 | |
| Commercial acceptance | - | - | - |
| Total | 217,419,441.32 | 217,419,441.32 | |
(Continued)
| Type | 31/12/2021 | ||
| Gross | Impairment allowance | Net | |
| Bank acceptance | 545,204,103.42 | - | 545,204,103.42 |
| Commercial acceptance | - | - | - |
| Total | 545,204,103.42 | - | 545,204,103.42 |
5.4.2 Notes receivable transferred by endorsement or cashed by discount which are notmatured as of the statement date
| Type | Amount derecognised | Amount not derecognised |
| Bank acceptance | 3,001,370,176.42 |
Notes receivable cashed with discount or transferred with endorsement were originally issuedby banks with advanced credit rating. Due the credit rating of the issuing banks, credit risksand risks of delayed payment are relatively low and transferred from the Company uponcashing or transfer. These notes receivable were therefore derecognised upon cashing or
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
transfer.
5.4.3 No accounts receivable were resulted from reclassification of notes receivables due toissuers’ default.
5.4.4 Dislcosure by method of impairment
| 31/12/2022 | |||||
| Gross | Impairment allowance | Net | |||
| Amount | % of total | Amount | Impairment % | ||
| Individual assessment | - | - | - | - | - |
| Portfolio assessment | 217,419,441.32 | 100.00 | - | - | 217,419,441.32 |
| T/o: Group 1 | - | - | - | - | - |
| T/o: Group 2 | 217,419,441.32 | 100.00 | - | - | 217,419,441.32 |
| Total | 217,419,441.32 | 100.00 | - | - | 217,419,441.32 |
(Continued)
| 31/12/2021 | |||||
| Gross | Impairment allowance | Net | |||
| Amount | % of total | Amount | Impairment % | ||
| Individual assessment | - | - | - | - | - |
| Portfolio assessment | 545,204,103.42 | 100.00 | - | - | 545,204,103.42 |
| T/o: Group 1 | - | ||||
| T/o: Group 2 | 545,204,103.42 | 100.00 | - | - | 545,204,103.42 |
| Total | 545,204,103.42 | 100.00 | - | - | 545,204,103.42 |
Note 1: No Group 1 receivable was subject to impairment assessment.Note 2: The Company assessed impairment for Group 2 receivables as of the statement date.Upon the assessment, the Company believed that Group 2 receivables were unlikely subject toloss resulted from the default by issuing banks or other issuers and therefore not subject tosignificant credit risk.
5.4.5 Movement of impairment allowance
Not applicable.
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
5.5 Prepayments
5.5.1 Disclosure by age group
| Age group | 31/12/2022 | 31/12/2021 | ||
| Amount | % of total | Amount | % of total | |
| Within 1 year | 233,344,417.80 | 99.72 | 156,395,547.90 | 99.89 |
| 1 to 2 years | 631,243.89 | 0.27 | 173,426.53 | 0.11 |
| 2 to 3 years | 20,000.00 | 0.01 | 1,996.56 | - |
| Over 3 years | - | - | - | - |
| Total | 233,995,661.69 | 100.00 | 156,570,970.99 | 100.00 |
5.5.2 Top-five venders as of the statement date by prepayment balance
| 31/12/2022 | % of total | |
| Top 1 | 174,731,684.07 | 74.67 |
| Top 2 | 15,243,789.09 | 6.51 |
| Top 3 | 9,645,407.73 | 4.12 |
| Top 4 | 3,214,030.00 | 1.37 |
| Top 5 | 1,110,794.05 | 0.47 |
| Total | 203,945,704.94 | 87.14 |
5.6 Other receivables
5.6.1 General disclosure
| 31/12/2022 | 31/12/2021 | |
| Interests receivable | ||
| Dividends receivable | ||
| Other receivables | 73,337,415.74 | 71,753,212.24 |
| Total | 73,337,415.74 | 71,753,212.24 |
5.6.2 Other receivables
(1) Disclosure by age group
| Age group | 31/12/2022 | 31/12/2021 |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Age group | 31/12/2022 | 31/12/2021 |
| Within 1 year | 68,032,959.87 | 68,887,383.04 |
| T/o: Within 6 months | 66,026,552.80 | 62,942,239.54 |
| T/o: 7 months to 1 years | 2,006,407.07 | 5,945,143.50 |
| 1 to 2 years | 5,801,770.49 | 2,808,217.47 |
| 2 to 3 years | 1,686,854.49 | 2,530,226.11 |
| Over 3 years | 44,645,231.37 | 43,669,449.88 |
| Gross | 120,166,816.22 | 117,895,276.50 |
| Less: Impairment allowance | 46,829,400.48 | 46,142,064.26 |
| Net | 73,337,415.74 | 71,753,212.24 |
(2) Disclosure by nature
| 31/12/2022 | 31/12/2021 | |
| Security investments | 38,434,247.10 | 38,857,584.88 |
| Margin deposits | 9,840,126.80 | 8,788,917.25 |
| Advanced travel expenses | 1,172,804.12 | 1,219,958.15 |
| Rentals and utilities receivable | 5,206,927.45 | 7,910,881.41 |
| Others | 65,512,710.75 | 61,117,934.81 |
| Gross | 120,166,816.22 | 117,895,276.50 |
| Less: Impairment allowance | 46,829,400.48 | 46,142,064.26 |
| Net | 73,337,415.74 | 71,753,212.24 |
(3) Disclosure by method of impairment
A. Disclosure by the 3-stage m odel as of the statement date
| Gross | Impairment allowance | Net | |
| Stage 1 | 81,732,569.12 | 8,395,153.38 | 73,337,415.74 |
| Stage 2 | |||
| Stage 3 | 38,434,247.10 | 38,434,247.10 | - |
| Total | 120,166,816.22 | 46,829,400.48 | 73,337,415.74 |
Details of Stage 1 receivables as of the statement date
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Gross | Expected loss rate for the next 12 months in % | Impairment allowance | Net | |
| Individual assessment | ||||
| Portfolio assessment | 81,732,569.12 | 10.27 | 8,395,153.38 | 73,337,415.74 |
| T/o: Group 1 | ||||
| T/o: Group 2 | 81,732,569.12 | 10.27 | 8,395,153.38 | 73,337,415.74 |
| Total | 81,732,569.12 | 10.27 | 8,395,153.38 | 73,337,415.74 |
Details of Group 2 receivables as of the statement date
| Age group | 31/12/2022 | ||
| Gross | Impairment allowance | Impairment % | |
| Within 1 year | 68,032,959.87 | 760,564.80 | 1.12 |
| T/o: Within 6 months | 66,026,552.80 | 660,244.43 | 1.00 |
| T/o: 7 months to 1 years | 2,006,407.07 | 100,320.37 | 5.00 |
| 1 to 2 years | 5,801,770.49 | 580,177.04 | 10.00 |
| 2 to 3 years | 1,686,854.49 | 843,427.27 | 50.00 |
| Over 3 years | 6,210,984.27 | 6,210,984.27 | 100.00 |
| Total | 81,732,569.12 | 8,395,153.38 | 10.27 |
Details of Stage 3 receivables as of the statement date
| Gross | Expected loss rate for the next 12 months in % | Impairment allowance | Net | |
| Individual assessment | 38,434,247.10 | 100.00 | 38,434,247.10 | - |
| Portfolio assessment | ||||
| T/o: Group 1 | ||||
| T/o: Group 2 | ||||
| Total | 38,434,247.10 | 100.00 | 38,434,247.10 | - |
Details of receivables subject to individual assessment as of the statement date
| 31/12/2022 |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Gross | Impairment allowance | Impairment % | Reason for impairment | |
| Hengxin Securities Co., Ltd. | 28,733,899.24 | 28,733,899.24 | 100.00 | In bankruptcy |
| Jianqiao Securities Co., Ltd. | 9,700,347.86 | 9,700,347.86 | 100.00 | In bankruptcy |
| Total | 38,434,247.10 | 38,434,247.10 | 100.00 | - |
B. Disclosure by the 3-stage model as of 31 December 2021
| Gross | Impairment allowance | Net | |
| Stage 1 | 79,037,691.62 | 7,284,479.38 | 71,753,212.24 |
| Stage 2 | |||
| Stage 3 | 38,857,584.88 | 38,857,584.88 | - |
| Total | 117,895,276.50 | 46,142,064.26 | 71,753,212.24 |
Details of Stage 1 receivables as of 31 December 2021
| Gross | Expected loss rate for the next 12 months in % | Impairment allowance | Net | |
| Individual assessment | ||||
| Portfolio assessment | 79,037,691.62 | 9.22 | 7,284,479.38 | 71,753,212.24 |
| T/o: Group 1 | ||||
| T/o: Group 2 | 79,037,691.62 | 9.22 | 7,284,479.38 | 71,753,212.24 |
| Total | 79,037,691.62 | 9.22 | 7,284,479.38 | 71,753,212.24 |
Details of Group 2 receivables as of 31 December 2021
| Age group | 31/12/2021 | ||
| Gross | Impairment allowance | Impairment % | |
| Within 1 year | 68,887,383.04 | 926,679.58 | 1.35 |
| T/o: Within 6 months | 62,942,239.54 | 629,422.41 | 1.00 |
| T/o: 7 months to 1 years | 5,945,143.50 | 297,257.17 | 5.00 |
| 1 to 2 years | 2,808,217.47 | 280,821.74 | 10.00 |
| 2 to 3 years | 2,530,226.11 | 1,265,113.06 | 50.00 |
| Over 3 years | 4,811,865.00 | 4,811,865.00 | 100.00 |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Age group | 31/12/2021 | ||
| Gross | Impairment allowance | Impairment % | |
| Total | 79,037,691.62 | 7,284,479.38 | 9.22 |
Details of Stage 3 receivables as of 31 December 2021
| Gross | Expected loss rate for the next 12 months in % | Impairment allowance | Net | |
| Individual assessment | 38,857,584.88 | 100.00 | 38,857,584.88 | - |
| Portfolio assessment | - | |||
| T/o: Group 1 | - | |||
| T/o: Group 2 | - | |||
| Total | 38,857,584.88 | 100.00 | 38,857,584.88 | - |
Details of receivables subject to individual assessment as of 31 December 2021
| 31/12/2021 | ||||
| Gross | Impairment allowance | Impairment % | Reason for impairment | |
| Hengxin Securities Co., Ltd. | 28,966,894.41 | 28,966,894.41 | 100.00 | In bankruptcy |
| Jianqiao Securities Co., Ltd. | 9,890,690.47 | 9,890,690.47 | 100.00 | In bankruptcy |
| Total | 38,857,584.88 | 38,857,584.88 | 100.00 | - |
(4) Movement of impairment allowance
| 31/12/2021 | Movement | 31/12/2022 | ||||
| Provision | Business combination not under common control | Reversal or recovery | Release or write-off | |||
| Individual assessment | 38,857,584.88 | 423,337.78 | 38,434,247.10 | |||
| Portfolio assessment | 7,284,479.38 | 1,768,883.09 | 654,209.09 | 4,000.00 | 8,395,153.38 | |
| Total | 46,142,064.26 | 1,768,883.09 | 1,077,546.87 | 4,000.00 | 46,829,400.48 | |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
(5) Top-five other receivables as of the statement date
| Debtor | Nature | 31/12/2022 | Age group | % of total gross other receivables | Impairment allowance |
| Top 1 | Security investment | 28,733,899.24 | Over 3 years | 23.91 | 28,733,899.24 |
| Top 2 | Security investment | 9,700,347.86 | Over 3 yearss | 8.07 | 9,700,347.86 |
| Top 3 | Other | 8,750,550.67 | Within 6 months | 7.28 | 87,505.51 |
| Top 4 | Other | 5,351,832.85 | Within 6 months | 4.45 | 53,518.33 |
| Top 5 | Other | 4,446,992.00 | Within 6 months | 3.70 | 44,469.92 |
| Total | 56,983,622.62 | 47.41 | 38,619,740.86 |
5.7 Inventories
5.7.1 General disclosure
| 31/12/2022 | |||
| Gross | Impairment allowance | Net | |
| Raw materials and packaging | 384,626,636.25 | 16,449,308.79 | 368,177,327.46 |
| Semi-finished goods and work in progress | 4,263,603,307.09 | 0.00 | 4,263,603,307.09 |
| Merchandises | 1,431,913,213.36 | 5,587,757.03 | 1,426,325,456.33 |
| Total | 6,080,143,156.70 | 22,037,065.82 | 6,058,106,090.88 |
(Continued)
| 31/12/2021 | |||
| Gross | Impairment allowance | Net | |
| Raw materials and packaging | 236,485,211.32 | 22,919,192.93 | 213,566,018.39 |
| Semi-finished goods and work in progress | 3,680,675,328.83 | 0.00 | 3,680,675,328.83 |
| Merchandises | 776,158,681.46 | 6,943,356.38 | 769,215,325.08 |
| Total | 4,693,319,221.61 | 29,862,549.31 | 4,663,456,672.30 |
5.7.2 Movement of impairment allowance
| 31/12/2021 | Increase | Decrease | 31/12/2022 |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Provision | Business combination not under common control | Reversal and release | Other | |||
| Raw materials and packaging | 22,919,192.93 | 7,470,331.81 | - | 13,940,215.95 | - | 16,449,308.79 |
| Merchandises | 6,943,356.38 | 2,832,081.59 | 504,965.47 | 4,692,646.41 | - | 5,587,757.03 |
| Total | 29,862,549.31 | 10,302,413.40 | 504,965.47 | 18,632,862.36 | - | 22,037,065.82 |
5.8 Contract assets
| 31/12/2022 | 31/12/2021 | |
| Project has been completed and the accounts have not been settled | 1,855,188.15 | - |
| Total | 1,855,188.15 | - |
5.9 Other current assets
| 31/12/2022 | 31/12/2021 | |
| Loans securied by treasury bonds | 60,000,000.00 | 76,205,000.00 |
| Interests on deposits | 3,579,838.89 | 54,529,762.09 |
| Deductible taxes | 61,988,886.62 | 47,487,460.47 |
| Total | 125,568,725.51 | 178,222,222.56 |
5.10 Long-term equity investments
| Investee | 31/12/2021 | Movement | ||||
| Contribution | Investment withdrawal | Investment income at equity | OCI adjustment | Other equity movement | ||
| A. Associates | - | |||||
| Beijing Guge Trading Co., Ltd. (Guge Trading) | 5,312,600.78 | 171,924.95 | ||||
| Anhui Xunfeijiuzhi | 3,900,000.00 | 769,710.25 | ||||
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Investee | 31/12/2021 | Movement | ||||
| Contribution | Investment withdrawal | Investment income at equity | OCI adjustment | Other equity movement | ||
| Technology Co., Ltd ( Xunfeijiuzhi) | ||||||
| Total | 5,312,600.78 | 3,900,000.00 | 941,635.20 | - | - | |
(Continued)
| Investee | Movement | 31/12/2022 | Cumulative impairment allowance | ||
| Dividend or profit appropriation declared | Impairment allowance recognised | Others | |||
| A. Associates | - | ||||
| Guge Trading | - | - | - | 5,484,525.73 | - |
| Xunfeijiuzhi | 4,669,710.25 | ||||
| Total | - | - | - | 10,154,235.98 | - |
5.11 Other equity instrument investment
| 31/12/2022 | 31/12/2021 | |
| Anhui Mingguang Village Commercial Bank (Mingguang VCB) | 56,447,789.94 | 54,542,418.50 |
| Total | 56,447,789.94 | 54,542,418.50 |
Supplementary disclosure
| Dividend income recognised in the period | Cumulative gain | Cumulative loss | Reclassification from OCI to retained earnings | Reason for designation as FVTOCI | |
| Mingguang VCB | 957,949.08 | 2,599,092.14 | On the basis of purpose of investment |
5.12 Investment properties
| Houses and buildings | Land use rights | Total | |
| A. Costs |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Houses and buildings | Land use rights | Total | |
| 1. 31/12/2021 | 8,680,555.75 | 2,644,592.00 | 11,325,147.75 |
| 2. Increase | 11,793,433.36 | - | 11,793,433.36 |
| (1)Reclassification from Fixed assets | 11,793,433.36 | - | 11,793,433.36 |
| 3. Decrease | - | - | - |
| 4. 31/12/2022 | 20,473,989.11 | 2,644,592.00 | 23,118,581.11 |
| B. Cumulative depreciation | |||
| 1. 31/12/2021 | 6,437,593.71 | 811,752.98 | 7,249,346.69 |
| 2. Increase | 2,416,325.90 | 56,026.56 | 2,472,352.46 |
| (1) Recognition | 691,836.45 | 56,026.56 | 747,863.01 |
| (2)Reclassification from Fixed assets | 1,724,489.45 | 1,724,489.45 | |
| 3. Decrease | - | - | - |
| 4. 31/12/2022 | 8,853,919.61 | 867,779.54 | 9,721,699.15 |
| C. Impairment allowance | |||
| 1. 31/12/2021 | - | - | - |
| 2. Increase | - | - | - |
| 3. Decrease | - | - | - |
| 4. 31/12/2022 | - | - | - |
| D. Net value | |||
| 1. As of the statement date | 11,620,069.50 | 1,776,812.46 | 13,396,881.96 |
| 2. As of 31/12/2021 | 2,242,962.04 | 1,832,839.02 | 4,075,801.06 |
5.13 Fixed assets
5.13.1 Disclosure by category
| 31/12/2022 | 31/12/2021 | |
| Fixed assets | 2,741,844,586.30 | 1,984,063,975.87 |
| Fixed asset disposals | - | - |
| Total | 2,741,844,586.30 | 1,984,063,975.87 |
5.13.2 Fixed assets
5.13.2.1 General disclosure
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Houses and buildings | Machinery | Transportation vehicles | Administrative and other devices | Total | |
| A. Costs | |||||
| 1. 31/12/2021 | 2,227,823,579.11 | 1,330,919,645.23 | 71,233,228.12 | 268,969,064.53 | 3,898,945,516.99 |
| 2. Increase | 520,350,188.40 | 348,624,972.04 | 10,650,251.09 | 150,045,759.84 | 1,029,671,171.37 |
| (1) Purchase | 7,634,154.90 | 24,341,414.28 | 6,551,917.38 | 15,482,368.45 | 54,009,855.01 |
| (2) Reclassification from construction in progress | 378,715,708.14 | 313,693,118.04 | - | 125,814,278.36 | 818,223,104.54 |
| (3) Business combination | 134,000,325.36 | 10,590,439.72 | 4,098,333.71 | 8,749,113.03 | 157,438,211.82 |
| 3. Decrease | 21,351,411.88 | 14,098,783.83 | 2,274,159.21 | 10,572,001.91 | 48,296,356.83 |
| (1) Disposal or scrap | 9,557,978.52 | 14,098,783.83 | 2,274,159.21 | 10,572,001.91 | 36,502,923.47 |
| (2) Reclassification to Investment properties | 11,793,433.36 | - | - | - | 11,793,433.36 |
| 4. 31/12/2022 | 2,726,822,355.63 | 1,665,445,833.44 | 79,609,320.00 | 408,442,822.46 | 4,880,320,331.53 |
| B. Cumulative depreciation | |||||
| 1. 31/12/2021 | 939,955,700.88 | 756,251,767.51 | 61,387,409.53 | 152,316,243.68 | 1,909,911,121.60 |
| 2. Increase | 61,147,484.87 | 88,261,091.55 | 8,490,741.46 | 97,031,493.33 | 254,930,811.21 |
| (1) Recognition | 45,468,328.63 | 84,063,463.28 | 5,483,002.77 | 90,546,774.77 | 225,561,569.45 |
| (2) Business combination | 15,679,156.24 | 4,197,628.27 | 3,007,738.69 | 6,484,718.56 | 29,369,241.76 |
| 3. Decrease | 7,383,653.04 | 12,073,362.71 | 1,919,982.59 | 10,074,017.95 | 31,451,016.29 |
| (1) Disposal or scrap | 5,659,163.59 | 12,073,362.71 | 1,919,982.59 | 10,074,017.95 | 29,726,526.84 |
| (2) Reclassification to Investment properties | 1,724,489.45 | - | - | - | 1,724,489.45 |
| 4. 31/12/2022 | 993,719,532.71 | 832,439,496.35 | 67,958,168.40 | 239,273,719.06 | 2,133,390,916.52 |
| C. Impairment allowance | |||||
| 1. 31/12/2021 | 3,116,594.39 | 1,271,091.35 | - | 582,733.78 | 4,970,419.52 |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Houses and buildings | Machinery | Transportation vehicles | Administrative and other devices | Total | |
| 2. Increase | - | 674,947.51 | - | - | 674,947.51 |
| (1) Recognition | - | 674,947.51 | - | - | 674,947.51 |
| 3. Decrease | 520,384.49 | 38,818.94 | - | 1,334.89 | 560,538.32 |
| (1) Disposal or scrap | 520,384.49 | 38,818.94 | - | 1,334.89 | 560,538.32 |
| 4. 31/12/2022 | 2,596,209.90 | 1,907,219.92 | - | 581,398.89 | 5,084,828.71 |
| D. Net value | |||||
| 1. As of the statement date | 1,730,506,613.02 | 831,099,117.17 | 11,651,151.60 | 168,587,704.51 | 2,741,844,586.30 |
| 2. As of 31/12/2021 | 1,284,751,283.84 | 573,396,786.37 | 9,845,818.59 | 116,070,087.07 | 1,984,063,975.87 |
5.13.2.2 Temporarily idle fixed assets
| Cost | Cumulative depreciation | Cumulative impairment allowance | Net value | Note | |
| Houses and buildings | 7,453,258.02 | 4,767,039.34 | 2,596,209.90 | 90,008.78 | |
| Machinery | 9,898,442.87 | 7,843,337.12 | 1,907,219.92 | 147,885.83 | |
| Administrative and other devices | 867,531.26 | 260,172.43 | 581,398.89 | 25,959.94 | |
| Total | 18,219,232.15 | 12,870,548.89 | 5,084,828.71 | 263,854.55 |
5.13.2.3 Fixed assets with uncompleted ownership registration
| Net value | Remark | |
| Houses and buildings | 860,697,282.10 | Registration in progress |
| Total | 860,697,282.10 | —— |
5.13.2.4 Fixed assets with restriction as of the statement date
| Cost | Cumulative depreciation | Cumulative impairment allowance | Net value | Note | |
| Houses and buildings | 129,817,900.00 | 15,138,636.48 | - | 114,679,263.52 |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Cost | Cumulative depreciation | Cumulative impairment allowance | Net value | Note | |
| Total | 129,817,900.00 | 15,138,636.48 | - | 114,679,263.52 |
5.14 Construction in progress
5.14.1 Disclosure by category
| 31/12/2022 | 31/12/2021 | |
| Construction in progress | 2,454,703,251.44 | 1,064,134,904.21 |
| Materials held for construction | - | - |
| Total | 2,454,703,251.44 | 1,064,134,904.21 |
5.14.2 Construction in progress
5.14.2.1 General disclosure
| 31/12/2022 | 31/12/2021 | |||||
| Gross | Impairment allowance | Net | Gross | Impairment allowance | Net | |
| Smart Zone | 2,043,434,953.17 | - | 2,043,434,953.17 | 700,794,613.29 | - | 700,794,613.29 |
| Theme Hotel | 252,169,603.40 | - | 252,169,603.40 | 61,431,126.99 | - | 61,431,126.99 |
| GJ Plant #12 Wine Cellar | 48,337,480.17 | - | 48,337,480.17 | 10,666,666.95 | - | 10,666,666.95 |
| Glass bottle production line automation technical reform project | 23,558,436.29 | - | 23,558,436.29 | - | - | - |
| Suizhou Plant | 57,312,769.08 | - | 57,312,769.08 | 266,102,852.17 | - | 266,102,852.17 |
| Other projects | 29,890,009.33 | - | 29,890,009.33 | 25,139,644.81 | - | 25,139,644.81 |
| Total | 2,454,703,251.44 | - | 2,454,703,251.44 | 1,064,134,904.21 | - | 1,064,134,904.21 |
5.14.2.2 Detailed disclosure
| Budget CNY million | 31/12/2021 | Increase | |
| Smart Zone | 8,289.66 | 700,794,613.29 | 1,777,481,852.91 |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Budget CNY million | 31/12/2021 | Increase | |
| Theme Hotel | 499.00 | 61,431,126.99 | 190,738,476.41 |
| GJ Plant #12 Wine Cellar | 162.50 | 10,666,666.95 | 80,640,382.85 |
| Glass bottle production line automation technical reform project | 59.40 | - | 23,558,436.29 |
| Suizhou Plant | 600.00 | 266,102,852.17 | 128,196,537.42 |
| Other projects | 159.11 | 25,139,644.81 | 33,097,425.53 |
| Total | 9,769.67 | 1,064,134,904.21 | 2,233,713,111.41 |
(Continued)
| Reclassification to fixed assets | Other decrease | 31/12/2022 | |
| Smart Zone | 434,841,513.03 | - | 2,043,434,953.17 |
| Theme Hotel | - | - | 252,169,603.40 |
| GJ Plant #12 Wine Cellar | 42,969,569.63 | - | 48,337,480.17 |
| Glass bottle production line automation technical reform project | - | - | 23,558,436.29 |
| Suizhou Plant | 316,931,541.11 | 20,055,079.40 | 57,312,769.08 |
| Other projects | 23,480,480.77 | 4,866,580.24 | 29,890,009.33 |
| Total | 818,223,104.54 | 24,921,659.64 | 2,454,703,251.44 |
(Continued)
| % of budget | % of completion | Cumulative capitalisation of borrowing costs | T/o: Borrowing costs capitalised in the period | |
| Smart Zone | 29.92 | 33.73 | - | - |
| Theme Hotel | 50.53 | 51.44 | - | - |
| GJ Plant #12 Wine Cellar | 56.19 | 56.19 | - | - |
| Glass bottle production line automation technical reform project | 39.66 | 95.00 |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| % of budget | % of completion | Cumulative capitalisation of borrowing costs | T/o: Borrowing costs capitalised in the period | |
| Suizhou Plant | 65.74 | 85.00 | 4,652,390.38 | 2,124,407.65 |
| Other projects | 36.60 | 36.60 | - | - |
| Total | 4,652,390.38 | 2,124,407.65 |
(Continued)
| Current period capitalisation rate | Source of funding | |
| Smart Zone | - | Self-funded, public financing |
| Theme Hotel | - | Self-funded |
| GJ Plant #12 Wine Cellar | - | Self-funded |
| Glass bottle production line automation technical reform project | - | Self-funded |
| Suizhou Plant | 3.8 | Self-funded, loans |
| Other projects | - | Self-funded |
| Total | - |
Increase of construction in progress for 130.68% year over year was mainly resulted frominvestment in Smart Zone and Theme Hotel in the period.
5.15 Right-of-use assets
| Houses and buildings | Machinery | Total | |
| A. Costs | - | ||
| 1. 31/12/2021 | 57,050,481.74 | 1,330,929.57 | 58,381,411.31 |
| 2. Increase | 3,203,024.87 | - | 3,203,024.87 |
| 3. Decrease | 1,843,425.94 | - | 1,843,425.94 |
| 4. 31/12/2022 | 58,410,080.67 | 1,330,929.57 | 59,741,010.24 |
| B. Cumulative depreciation | |||
| 1. 31/12/2021 | 14,010,539.12 | 443,643.22 | 14,454,182.34 |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Houses and buildings | Machinery | Total | |
| 2. Increase | 14,124,439.52 | 443,643.22 | 14,568,082.74 |
| 3. Decrease | 1,843,425.94 | - | 1,843,425.94 |
| 4. 31/12/2022 | 26,291,552.70 | 887,286.44 | 27,178,839.14 |
| C. Impairment allowance | |||
| 1. 31/12/2021 | - | - | - |
| 2. Increase | - | - | - |
| 3. Decrease | - | - | - |
| 4. 31/12/2022 | - | - | - |
| D. Net value | |||
| 1. As of the statement date | 32,118,527.97 | 443,643.13 | 32,562,171.10 |
| 2. As of 01/01/2022 | 43,039,942.62 | 887,286.35 | 43,927,228.97 |
5.16 Intangible assets
5.16.1 General disclosure
| Land use rights | Software | Patents and trademarks | Total | |
| A. Costs | ||||
| 1. 31/12/2021 | 1,001,763,740.75 | 129,251,165.21 | 253,045,146.19 | 1,384,060,052.15 |
| 2. Increase | 86,716,980.02 | 1,320,890.29 | 1,950,130.93 | 89,988,001.24 |
| (1) Purchase | 74,716,419.02 | 772,851.32 | - | 75,489,270.34 |
| (2) Reclassification from construction in progress | - | 343,362.80 | - | 343,362.80 |
| (3) Business combination | 12,000,561.00 | 204,676.17 | 1,950,130.93 | 14,155,368.10 |
| 3. Decrease | - | 8,308,231.78 | - | 8,308,231.78 |
| (1) Disposal | - | 8,308,231.78 | - | 8,308,231.78 |
| 4. 31/12/2022 | 1,088,480,720.77 | 122,263,823.72 | 254,995,277.12 | 1,465,739,821.61 |
| B. Cumulative amortisation | ||||
| 1. 31/12/2021 | 181,669,781.87 | 69,365,956.76 | 69,555,470.91 | 320,591,209.54 |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Land use rights | Software | Patents and trademarks | Total | |
| 2. Increase | 23,081,637.49 | 19,350,453.03 | 2,319,201.89 | 44,751,292.41 |
| (1) Recognition | 22,099,398.58 | 19,259,687.73 | 1,344,130.55 | 42,703,216.86 |
| (2) Business combination | 982,238.91 | 90,765.30 | 975,071.34 | 2,048,075.55 |
| 3. Decrease | - | 7,894,709.78 | - | 7,894,709.78 |
| (1) Disposal | - | 7,894,709.78 | - | 7,894,709.78 |
| 4. 31/12/2022 | 204,751,419.36 | 80,821,700.01 | 71,874,672.80 | 357,447,792.17 |
| C. Impairment allowance | - | - | ||
| 1. 31/12/2021 | - | - | - | - |
| 2. Increase | - | 166,872.39 | - | 166,872.39 |
| (1) Recognition | 166,872.39 | - | 166,872.39 | |
| 3. Decrease | - | - | - | - |
| (1) Disposal | - | - | - | - |
| 4. 31/12/2022 | - | 166,872.39 | - | 166,872.39 |
| D. Net value | - | - | - | - |
| 1. As of the statement date | 883,729,301.41 | 41,275,251.32 | 183,120,604.32 | 1,108,125,157.05 |
| 2. As of 31/12/2021 | 820,093,958.88 | 59,885,208.45 | 183,489,675.28 | 1,063,468,842.61 |
5.16.2 Intangible assets pledged as of the statement date
| Cost | Cumulative amortisation | Impairment allowance | Net value | Note | |
| Land use rights | 11,124,000.00 | 1,004,669.68 | - | 10,119,330.32 | |
| Trademark rights | 176,630,692.63 | 7,514,092.63 | - | 169,116,600.00 | |
| Total | 187,754,692.63 | 8,518,762.31 | - | 179,235,930.32 |
5.16.3 No intangible assets as of the statement date was with pending ownership registration.
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
5.17 Goodwill
5.17.1 General disclosure
| Investee | 31/12/2021 | Increase | Decrease | 31/12/2022 | ||
| Business combination | Other | Disposal | Other | |||
| HHL Distillery | 478,283,495.29 | 478,283,495.29 | ||||
| Mingguang Distillery | 60,686,182.07 | 60,686,182.07 | ||||
| Treasure Distillery | 22,394,707.65 | 22,394,707.65 | ||||
| Total | 561,364,385.01 | 561,364,385.01 | ||||
5.17.2 Asset groups associated with goodwill
| Investee | Composition of asset group | Asset group CNY million | Determination | Change in the period | |||
| Book value | Allocated goodwill | Unrecognised goodwill attributable to non-controlling interest | Total | ||||
| HHL Distillery | Operating assets of HHL Distillery | 1,115.42 | 478.28 | 459.53 | 2,053.23 | Active markets are available for the products of the asset group to which goodwill is allocated and hence the asset group is capable of generating identifiable separate cash flows. | No |
| Mingguang Distillery | Operating assets of Mingguang Distillery | 207.41 | 60.69 | 40.46 | 308.55 | Active markets are available for the products of the asset group to which goodwill is allocated and hence the asset group is capable of generating identifiable separate cash flows. | No |
| Treasure | Operating assets of | 84.81 | 22.39 | 14.93 | 122.13 | Active markets are available for the products of the asset group to | No |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Investee | Composition of asset group | Asset group CNY million | Determination | Change in the period | |||
| Book value | Allocated goodwill | Unrecognised goodwill attributable to non-controlling interest | Total | ||||
| Distillery | Treasure Distillery | which goodwill is allocated and hence the asset group is capable of generating identifiable separate cash flows. | |||||
Note: The book value of HHL Distillery, Treasure Distillery,Mingguang Distillery asset group did not include surplus assets and non-operating liabilities of HHL Distillery.
5.17.3 Impairment assessment
The recoverable amounts of the asset groups were determined by the present value of their respective future cash flows. Detailed forecasted cashflows for the next 5 years and further forecasted cash flows for periods starting from the 6
thyear from the statement date applicable to each assetgroup was approved by the management of the Company. The discount rates adopted reflect the current time value of money and the specificrisks of the asset groups. Key assumptions such revenue, cost of sales, growth rate and expenses were used in the forecast. These keyassumptions had been developed by taking into consideration factors such as historical profitability, growth trend, sector conditions andmanagement expection for future market development.Following the impairment test and with reference to the Appraisal Reports (HuayaZhengxinPingBaoZi [2023] No. A07-0006 andHuayaZhengxinPingBaoZi [2023] No. A07-0005) issued by Beijing Huaya Zhengxin Assets Appraisal Co., Ltd., the recoverable amounts of theasset groups were not lower than their respective value inclusive of goodwill as of the statement date. No impairment was identified upon theimpairment test.
5.17.4 Impact of impairment assessment
See Note 11.1 for further details.
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
5.18 Long-term deferred expenses
| 31/12/2021 | Capitalisation | Amortisation | Other decrease | 31/12/2022 | |
| Experience Centre | 30,453,147.53 | 1,226,458.31 | 13,624,219.52 | - | 18,055,386.32 |
| Waste Water Plant | 1,922,131.15 | - | 922,622.95 | - | 999,508.20 |
| HHL Winery and Museum | 4,470,296.69 | - | 3,700,243.10 | - | 770,053.59 |
| GJCCP Culture Centre | 2,363,636.37 | - | 1,181,818.19 | - | 1,181,818.18 |
| Yantai Distilled Wine Culture Project | 448,182.86 | - | 448,182.86 | - | - |
| Outdoor Plant | - | 17,459,514.76 | 872,975.76 | - | 16,586,539.00 |
| Miscellaneous | 16,250,943.43 | 7,172,373.69 | 10,003,645.10 | - | 13,419,672.02 |
| Total | 55,908,338.03 | 25,858,346.76 | 30,753,707.48 | - | 51,012,977.31 |
5.19 Deferred tax assets (DTAs) and deferred tax liabilities (DTLs)
5.19.1 DTAs before offset
| 31/12/2022 | 31/12/2021 | |||
| Deductible temporary difference | DTA | Deductible temporary difference | DTA | |
| Asset impairment allowance | 27,288,766.92 | 6,642,674.57 | 34,832,968.83 | 8,597,940.21 |
| Credit impairment allowance | 55,952,351.78 | 13,967,271.03 | 56,327,170.37 | 14,078,521.69 |
| Unrealised profit | 100,142,928.48 | 25,035,732.12 | 89,880,690.08 | 22,470,172.52 |
| Deferred income | 103,714,978.95 | 25,483,351.68 | 91,101,512.05 | 22,355,416.63 |
| Recoverable loss | 337,681,202.44 | 77,041,463.86 | 3,275,424.29 | 235,799.84 |
| Accrued employee benefits | 6,380,952.10 | 957,142.82 | 14,728,894.07 | 3,682,223.52 |
| Accrued expenses and rebates | 1,104,571,137.01 | 275,740,361.64 | 845,357,525.22 | 211,333,743.87 |
| Fair value change or | 1,024,977.31 | 252,229.65 | 4,296,727.84 | 1,074,181.96 |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| 31/12/2022 | 31/12/2021 | |||
| Deductible temporary difference | DTA | Deductible temporary difference | DTA | |
| receivables held for factoring | ||||
| Total | 1,736,757,294.99 | 425,120,227.37 | 1,139,800,912.75 | 283,828,000.24 |
5.19.2 DTLs before offset
| 31/12/2022 | 31/12/2021 | |||
| Taxable temporary difference | DTL | Taxable temporary difference | DTL | |
| Fixed asset depreciation | 157,708,682.09 | 39,427,170.52 | 74,959,073.18 | 18,739,768.30 |
| Purchase price allocation | 697,149,707.15 | 168,589,543.40 | 689,376,361.16 | 172,344,090.29 |
| Fair value change of financial asset held for trading | 32,687,769.66 | 8,171,942.42 | 11,103,876.68 | 2,775,969.16 |
| Unrealised profit | 257,338,901.32 | 64,334,725.33 | - | - |
| Fair value change of Other equity instrument investments | 2,599,092.14 | 649,773.03 | 693,720.70 | 173,430.18 |
| Total | 1,147,484,152.36 | 281,173,154.70 | 776,133,031.72 | 194,033,257.93 |
5.20 Other non-current assets
| 31/12/2022 | 31/12/2021 | |
| Prepayment for machinery | 6,870,532.00 | 7,220,318.40 |
| Total | 6,870,532.00 | 7,220,318.40 |
5.21 Short-term borrowings
| 31/12/2022 | 31/12/2021 | |
| Loans with securities by physical assets | 34,267,952.97 | 10,008,555.55 |
| Loans with securities by intangible assets | 48,964,223.34 | 20,026,583.34 |
| Total | 83,232,176.31 | 30,035,138.89 |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
5.22 Notes payable
5.22.1 Disclosure by type
| Type | 31/12/2022 | 31/12/2021 |
| Bank acceptance | 695,740,000.00 | 127,114,336.16 |
| Commercial acceptance | - | - |
| Total | 695,740,000.00 | 127,114,336.16 |
5.22.2 No overdue note payable as of the statement date.
5.23 Accounts payable
5.23.1 Disclosure by nature
| 31/12/2022 | 31/12/2021 | |
| Payable for goods | 1,123,707,643.38 | 605,774,178.94 |
| Payable for construction and machinery | 539,292,035.62 | 253,893,258.27 |
| Others | 391,063,880.15 | 160,769,884.68 |
| Total | 2,054,063,559.15 | 1,020,437,321.89 |
5.23.2 Top-five venders as of the statement date by account payable balance
| 31/12/2022 | Reason for remaining unsettled | |
| Top 1 | 1,483,462.21 | Tail payment for construction |
| Top 2 | 923,262.66 | Payable for goods |
| Top 3 | 696,587.78 | Tail payment for construction |
| Top 4 | 490,485.32 | Tail payment for construction |
| Top 5 | 393,392.70 | Tail payment for construction |
| Total | 3,987,190.67 |
5.24 Contract liabilities
| 31/12/2022 | 31/12/2021 | |
| Advanced receipts for goods | 826,636,478.35 | 1,825,447,705.85 |
| Total | 826,636,478.35 | 1,825,447,705.85 |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
5.25 Employee benefits payable
5.25.1 General disclosure
| 31/12/2021 | Accrual | Decrease | 31/12/2022 | |
| A. Short-term benefits | 709,463,139.46 | 3,123,294,844.82 | 3,039,166,444.73 | 793,591,539.55 |
| B. Post-employment benefits –Defined comtribution plans | 208,648.28 | 156,313,983.15 | 154,975,865.35 | 1,546,766.08 |
| C. Termination benefits | - | 715,584.90 | 715,584.90 | - |
| D. Other long-term benefits due within 1 year | - | - | - | - |
| Total | 709,671,787.74 | 3,280,324,412.87 | 3,194,857,894.98 | 795,138,305.63 |
5.25.2 Short-term benefits
| 31/12/2021 | Accrual | Decrease | 31/12/2022 | |
| A. Salaries, wages allowances and subsidies | 630,779,825.28 | 2,739,300,272.79 | 2,658,708,352.38 | 711,371,745.69 |
| B. Welfare | - | 97,032,343.74 | 97,032,343.74 | - |
| C. Social securities | 445,462.22 | 69,648,018.60 | 69,673,296.39 | 420,184.43 |
| T/o: Medical insurance | 445,427.72 | 65,441,829.58 | 65,467,976.27 | 419,281.03 |
| T/o: Work-place injury insurance | 34.50 | 4,206,189.02 | 4,205,320.12 | 903.40 |
| D. Housing funds | 5,653,470.40 | 101,299,672.06 | 100,179,172.05 | 6,773,970.41 |
| E. Union fund and education fund | 69,520,657.48 | 32,664,012.65 | 30,370,415.99 | 71,814,254.14 |
| F. Annuity | 3,063,724.08 | 83,350,524.98 | 83,202,864.18 | 3,211,384.88 |
| Total | 709,463,139.46 | 3,123,294,844.82 | 3,039,166,444.73 | 793,591,539.55 |
5.25.3 Post-employement benefits – Defined contribution plans
| 31/12/2021 | Accrual | Decrease | 31/12/2022 | |
| A. Basic pension | 208,648.28 | 151,413,486.57 | 150,076,781.97 | 1,545,352.88 |
| B. Job-loss insurance | - | 4,900,496.58 | 4,899,083.38 | 1,413.20 |
| Total | 208,648.28 | 156,313,983.15 | 154,975,865.35 | 1,546,766.08 |
5.26 Taxes and fees payable
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| 31/12/2022 | 31/12/2021 | |
| VAT | 256,705,264.84 | 154,597,583.14 |
| Consumption duty | 502,091,276.19 | 406,331,487.38 |
| CIT | 335,723,169.21 | 255,882,481.65 |
| Individual income tax | 12,550,946.18 | 2,674,057.91 |
| Urban maintenance and construction tax | 40,572,819.42 | 20,431,543.35 |
| Stamp duty | 4,553,890.84 | 2,882,861.65 |
| Education surcharge | 37,594,377.10 | 18,506,770.12 |
| Others | 15,236,386.24 | 11,964,201.51 |
| Total | 1,205,028,130.02 | 873,270,986.71 |
5.27 Other payables
5.27.1 General disclosure
| 31/12/2022 | 31/12/2021 | |
| Interests payable | ||
| Dividends payable | ||
| Other payables | 3,261,763,838.80 | 2,280,937,078.12 |
| Total | 3,261,763,838.80 | 2,280,937,078.12 |
5.27.2 Other payables
| 31/12/2022 | 31/12/2021 | |
| Margin deposits | 2,752,404,989.26 | 1,845,795,843.02 |
| Quality warranty | 58,897,431.31 | 48,556,830.53 |
| Withheld housing fund payable | 5,465,938.41 | 4,722,066.45 |
| Others | 444,995,479.82 | 381,862,338.12 |
| Total | 3,261,763,838.80 | 2,280,937,078.12 |
Other payables aged over 1 year as of the statement date mainly comprised pre-mature margindeposits and quality warranty.
5.28 Non-current liabilities due within 1 year
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| 31/12/2022 | 31/12/2021 | |
| Lease liabilities due within 1 year | 12,204,345.11 | 13,190,399.32 |
| Long-term borrowings | 30,033,000.00 | - |
| Total | 42,237,345.11 | 13,190,399.32 |
5.29 Other current liabilities
| 31/12/2022 | 31/12/2021 | |
| Accruals | 942,387,734.28 | 562,547,100.62 |
| Pre-mature output VAT | 102,276,707.30 | 236,975,461.98 |
| Total | 1,044,664,441.58 | 799,522,562.60 |
5.30 Long-term borrowings
| 31/12/2022 | 31/12/2021 | |
| Credit loans | 20,000,000.00 | 60,000,000.00 |
| Guaranteed loans | 24,900,000.00 | 112,180,000.00 |
| Interests | 44,737.91 | 176,255.83 |
| Total | 44,944,737.91 | 172,356,255.83 |
5.31 Lease liabilities
| 31/12/2022 | 31/12/2021 | |
| Gross lease payments | 33,494,997.76 | 45,436,263.46 |
| Less: Unrecognised financing costs | 2,659,256.72 | 4,138,640.96 |
| Net | 30,835,741.04 | 41,297,622.50 |
| T/o: Due within 1 year | 12,204,345.11 | 13,190,399.32 |
| T/o: Due after 1 year | 18,631,395.93 | 28,107,223.18 |
5.32 Deferred income
5.32.1 General disclosure
| 31/12/2021 | Increase | Decrease | 31/12/2022 | Reason for recognition | |
| Government grants | 91,101,512.05 | 18,530,000.00 | 5,916,533.10 | 103,714,978.95 | Receipt of asset-related |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| 31/12/2021 | Increase | Decrease | 31/12/2022 | Reason for recognition | |
| government grants | |||||
| Total | 91,101,512.05 | 18,530,000.00 | 5,916,533.10 | 103,714,978.95 |
5.32.2 Government grants
| 31/12/2021 | Receipt | Reclassified to other income | Other movement | 31/12/2022 | Nature | |
| Subsidy on Construction of Suizhou Plant | 35,338,000.00 | 747,894.12 | - | 34,590,105.88 | Asset-related | |
| Refund of Land Fee | 42,700,310.29 | 978,918.24 | - | 41,721,392.05 | Asset-related | |
| Fund for Clustered Development Base for Strategic Innovative Sectors | 1,752,640.06 | 622,719.96 | - | 1,129,920.10 | Asset-related | |
| Subsidy Fund for Air Pollution Prevention | 2,085,104.67 | 294,364.80 | - | 1,790,739.87 | Asset-related | |
| Subsidy on Devices | 1,279,705.79 | 320,267.88 | - | 959,437.91 | Asset-related | |
| Subsidy of 2019 Leading Manufacturing Province and Non-state-owned Economy Development | 1,250,183.41 | 308,654.28 | - | 941,529.13 | Asset-related | |
| Anhui Innovation Subsidy for Development of Owned Innovation Capacity | 487,030.00 | 487,030.00 | - | 0.00 | Asset-related | |
| Subsidy on Renovation of #2 Furnace | 759,259.24 | 222,222.24 | - | 537,037.00 | Asset-related | |
| Subsidy on Equipments | 668,907.24 | 208,209.12 | - | 460,698.12 | Asset-related | |
| Renovation of GJ Zhangji Cellar | 740,208.51 | 47,499.96 | - | 692,708.55 | Asset-related | |
| Subsidy for Improvement of Food Safety | 413,793.25 | 137,931.00 | - | 275,862.25 | Asset-related |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| 31/12/2021 | Receipt | Reclassified to other income | Other movement | 31/12/2022 | Nature | |
| Anhui Leading Capital for Service Sector | 209,756.36 | 209,756.36 | - | 0.00 | Asset-related | |
| Subsidy for Electricity Demand-side Adminsitration | 228,000.00 | 144,000.00 | - | 84,000.00 | Asset-related | |
| Full-time Online Supervision on Automated Blending Storage and Product Quality | 78,125.32 | 78,125.32 | - | 0.00 | Asset-related | |
| Technological Renovation for Distilling System | 2,180,720.63 | 291,572.16 | - | 1,889,148.47 | Asset-related | |
| Smart Fermentation Innovation | 57,291.45 | 31,250.04 | - | 26,041.41 | Asset-related | |
| Designated Fund for Furnace Renovation | 197,500.00 | 30,000.00 | - | 167,500.00 | Asset-related | |
| Bonus for Technological Improvement Investment | 552,622.31 | 69,643.70 | - | 482,978.61 | Asset-related | |
| Subsidy to the Technical and Quality Department | 122,353.52 | 20,548.54 | - | 101,804.98 | Asset-related | |
| distilled wine Industrial Internet platform | 7,000,000.00 | - | 7,000,000.00 | Asset-related | ||
| Distillation shop VOCs Emission control | 6,180,000.00 | 51,932.77 | - | 6,128,067.23 | Asset-related | |
| Provincial special fund for high quality development of manufacturing industry | 2,850,000.00 | 142,500.00 | - | 2,707,500.00 | Asset-related | |
| distilled wine production intelligent, automatic upgrading | 1,000,000.00 | 99,999.96 | - | 900,000.04 | Asset-related |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| 31/12/2021 | Receipt | Reclassified to other income | Other movement | 31/12/2022 | Nature | |
| VOCs Deep Governance | 1,050,000.00 | 333,608.55 | - | 716,391.45 | Asset-related | |
| Robot project | 450,000.00 | 37,884.10 | - | 412,115.90 | Asset-related | |
| Total | 91,101,512.05 | 18,530,000.00 | 5,916,533.10 | - | 103,714,978.95 |
5.33 Share capital
| 31/12/2021 Qty | Movement | 31/12/2022 | |||||
| Issue Qty. | Bonus issue Qty. | Reserve conversion Qty | Others Qty. | Total Qty. | |||
| Shares | 528,600,000.00 | - | - | - | - | 528,600,000.00 | |
5.34 Capital reserves
| 31/12/2021 | Increase | Decrease | 31/12/2022 | |
| Share premium | 6,191,894,530.90 | 6,191,894,530.90 | ||
| Other capital reserves | 32,853,136.20 | 32,853,136.20 | ||
| Total | 6,224,747,667.10 | 6,224,747,667.10 |
5.35 Other comprehensive income (OCI)
| 31/12/2021 | Movement | |||
| Before tax | Less: Amount recognised in the income statement | Less: Income tax | ||
| A. Not reclassifiable to profit or loss | 312,174.31 | 1,905,371.44 | - | 476,342.86 |
| Change in the fair value of Other equity instrument investments | 312,174.31 | 1,905,371.44 | - | 476,342.86 |
| B. Reclassifiable to profit or loss | -3,047,232.50 | -1,030,330.20 | -4,296,727.84 | 816,599.41 |
| Gain from reclassification of financial assets | -3,047,232.50 | -1,030,330.20 | -4,296,727.84 | 816,599.41 |
| Total | -2,735,058.19 | 875,041.24 | -4,296,727.84 | 1,292,942.27 |
(Continued)
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Movement | 31/12/2022 | ||
| After tax attributable to shareholders of the Company | After tax attributable to non-controlling interests | ||
| A. Not reclassifiable to profit or loss | 857,417.15 | 571,611.43 | 1,169,591.46 |
| Change in the fair value of Other equity instrument investments | 857,417.15 | 571,611.43 | 1,169,591.46 |
| B. Reclassifiable to profit or loss | 2,286,380.65 | 163,417.58 | -760,851.85 |
| Gain from reclassification of financial assets | 2,286,380.65 | 163,417.58 | -760,851.85 |
| Total | 3,143,797.80 | 735,029.01 | 408,739.61 |
5.36 Surplus reserves
| 31/12/2021 | Increase | Decrease | 31/12/2022 | |
| Statutory reserve | 269,402,260.27 | 269,402,260.27 | ||
| Total | 269,402,260.27 | 269,402,260.27 |
10% of the current year’s net profit was transferred to surplus reserves in accordance with theCompany Law and the Company’s Article of Association.
5.37 Retained earnings
| Y/e 31/12/2022 | Y/e 31/12/2021 | |
| As of 31/12/2021 | 9,517,374,574.46 | 7,987,380,161.21 |
| Total adjustment of retained earnings brought forward | - | |
| As of 1/1/2021 | 9,517,374,574.46 | 7,987,380,161.21 |
| Add: Net profit attributable to shareholders of the Company | 3,143,144,732.08 | 2,297,894,413.25 |
| Less: Transfer to statutory reserve | 12,500,000.00 | |
| Less: Dividends on ordinary shares payable | 1,162,920,000.00 | 755,400,000.00 |
| As of 31/12/2022 | 11,497,599,306.54 | 9,517,374,574.46 |
5.38 Revenue and cost of sales
| Y/e 31/12/2022 | Y/e 31/12/2021 |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Revenue | Cost of sales | Revenue | Cost of sales | |
| Primary operation | 16,624,493,486.59 | 3,786,375,257.60 | 13,180,706,416.64 | 3,271,880,424.79 |
| Other operation | 88,740,666.93 | 29,946,787.41 | 89,119,849.40 | 32,196,587.13 |
| Total | 16,713,234,153.52 | 3,816,322,045.01 | 13,269,826,266.04 | 3,304,077,011.92 |
5.39 Taxes and surcharges
| Y/e 31/12/2022 | Y/e 31/12/2021 | |
| Consumption duty | 2,355,515,748.99 | 1,669,063,914.39 |
| Urban construction and maintenance tax and education surcharges | 391,108,828.32 | 300,643,974.00 |
| Urban land use tax | 21,958,265.05 | 15,985,317.49 |
| Property tax | 20,010,214.84 | 18,286,057.72 |
| Stamp duty | 18,045,620.24 | 11,749,843.93 |
| Others | 17,420,644.59 | 16,086,098.14 |
| Total | 2,824,059,322.03 | 2,031,815,205.67 |
5.40 Selling expenses
| Y/e 31/12/2022 | Y/e 31/12/2021 | |
| Personnel costs | 938,740,215.88 | 863,583,183.40 |
| Travel | 169,521,676.66 | 161,091,812.25 |
| Advertisement | 995,196,089.71 | 900,546,437.33 |
| Comprehensive promotion | 1,814,692,295.39 | 1,268,396,513.56 |
| Services | 638,147,336.90 | 705,368,563.00 |
| Others | 111,887,440.59 | 109,088,973.54 |
| Total | 4,668,185,055.13 | 4,008,075,483.08 |
5.41 Administrative expenses
| Y/e 31/12/2022 | Y/e 31/12/2021 | |
| Personnel costs | 790,082,663.30 | 647,493,344.01 |
| Office costs | 61,689,592.52 | 61,116,360.31 |
| Repairs | 55,445,533.41 | 59,205,451.47 |
| Depreciation | 69,203,388.39 | 76,054,616.50 |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Y/e 31/12/2022 | Y/e 31/12/2021 | |
| Amortisation | 34,133,133.16 | 34,799,459.54 |
| Sewage | 23,964,858.50 | 27,191,838.92 |
| Travel | 9,914,637.44 | 11,420,677.10 |
| Utilities | 11,311,612.00 | 11,157,257.56 |
| Others | 111,034,970.51 | 93,742,414.33 |
| Total | 1,166,780,389.23 | 1,022,181,419.74 |
5.42 R&D expenses
| Y/e 31/12/2022 | Y/e 31/12/2021 | |
| Personnel costs | 36,510,926.32 | 32,495,950.89 |
| Direct costs | 9,047,992.47 | 9,389,089.92 |
| Depreciation | 2,747,013.50 | 3,230,977.28 |
| Overheads | 8,361,270.72 | 6,333,457.27 |
| Total | 56,667,203.01 | 51,449,475.36 |
5.43 Financial costs
| Y/e 31/12/2022 | Y/e 31/12/2021 | |
| Interest expenses | 5,679,645.21 | 7,036,575.14 |
| Less: Interest income | 221,450,532.78 | 210,634,326.57 |
| Net interest expenses | -215,770,887.57 | -203,597,751.43 |
| Net exchange loss | -417,719.35 | -168,340.77 |
| Bank charges and others | -110,446.15 | -289,564.86 |
| Total | -216,299,053.07 | -204,055,657.06 |
5.44 Other income
| Y/e 31/12/2022 | Y/e 31/12/2021 | Nature | |
| Government grants | |||
| T/o: Transfer from deferred income | 5,916,533.10 | 7,204,388.92 | Asset-related |
| T/o: Government grants directly recognised in P&L | 40,804,726.42 | 48,065,239.56 | Revenue-related |
| Total | 46,721,259.52 | 55,269,628.48 |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
5.45 Investment income
| Y/e 31/12/2022 | Y/e 31/12/2021 | |
| Investment income from long-term equity investments at equity | 941,635.20 | 397,024.95 |
| Gain from disposal of FVTPLs | 13,667,018.06 | 11,855,405.29 |
| Gain from holding of debt instruments | - | - |
| Gain from holding of Other equity instrument investments | 957,949.08 | 809,860.62 |
| Gain from disposal of FVTOCIs | -26,471,694.99 | -23,271,118.08 |
| Gain from holding of financial assets held for trading | - | 14,393,316.21 |
| Others | 100,708.20 | 507,890.16 |
| Total | -10,804,384.45 | 4,692,379.15 |
5.46 Gain from fair value changes
| Y/e 31/12/2022 | Y/e 31/12/2021 | |
| Financial assets held for trading | 29,149,125.30 | 7,225,961.17 |
| T/o: Derivative financial assets | - | - |
| Total | 29,149,125.30 | 7,225,961.17 |
5.47 Credit impairment loss
| Y/e 31/12/2022 | Y/e 31/12/2021 | |
| Notes receivable | - | - |
| Accounts receivable | 1,094,557.71 | -7,698,458.43 |
| Other receivables | -691,336.22 | 1,205,616.99 |
| Total | 403,221.49 | -6,492,841.44 |
5.48 Asset impairment loss
| Y/e 31/12/2022 | Y/e 31/12/2021 | |
| Inventories | -10,302,413.40 | -16,126,347.91 |
| Fixed assets | -674,947.51 | -611,808.94 |
| Intangible assets | -166,872.39 | |
| Total | -11,144,233.30 | -16,738,156.85 |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
5.49 Gain from asset disposals
| Y/e 31/12/2022 | Y/e 31/12/2021 | |
| Gain or loss from disposal of fixed assets, construction in progress and intangible assets not classified as held for sale | 886,286.45 | 1,368,763.13 |
| T/o: Fixed assets | 886,286.45 | 1,368,763.13 |
| Total | 886,286.45 | 1,368,763.13 |
5.50 Non-operating income
5.50.1 General disclosure
| Y/e 31/12/2022 | Y/e 31/12/2021 | Current period non-recurring | |
| Damage and scrapping of non-current assets | 370,956.18 | 12,541.54 | 370,956.18 |
| Government grants not related to ordinary operating activities | 0.00 | 4,873.94 | 0.00 |
| Fine and compensation | 39,854,588.12 | 43,776,517.37 | 39,854,588.12 |
| Wastes | 4,163,898.52 | 4,549,768.93 | 4,163,898.52 |
| Release of payables | 4,207,463.06 | 30,649,702.32 | 4,207,463.06 |
| Others | 2,171,039.50 | 1,364,754.10 | 2,171,039.50 |
| Total | 50,767,945.38 | 80,358,158.20 | 50,767,945.38 |
5.50.2 Government grants not related to ordinary operating activities
| Y/e 31/12/2022 | Y/e 31/12/2021 | Nature | |
| Other bonuses | - | 4,873.94 | Revenue related |
| Total | - | 4,873.94 | - |
5.51 Non-operating expenses
| Y/e 31/12/2022 | Y/e 31/12/2021 | Current period non-recurring | |
| Damage and scrapping of non-current assets | 5,923,667.72 | 7,358,161.65 | 5,923,667.72 |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Y/e 31/12/2022 | Y/e 31/12/2021 | Current period non-recurring | |
| Donations | 22,359,038.92 | 22,359,038.92 | |
| Others | 4,723,657.20 | 3,315,122.96 | 4,723,657.20 |
| Total | 33,006,363.84 | 10,673,284.61 | 33,006,363.84 |
5.52 Income tax expenses
5.52.1 General disclosure
| Y/e 31/12/2022 | Y/e 31/12/2021 | |
| Current income tax | 1,273,456,377.00 | 903,705,314.91 |
| Deferred income tax | -54,798,492.76 | -106,743,019.82 |
| Total | 1,218,657,884.24 | 796,962,295.09 |
5.52.2 Reconciliation of profit before tax and income tax expenses
| Y/e 31/12/2022 | |
| Profit before tax | 4,470,492,048.73 |
| Income tax calcuated by the applicable tax rate | 1,117,623,012.18 |
| Impact of different tax rates applicable to subsidiaries | -11,428,857.41 |
| Adjustment for prior period | 40,187,610.28 |
| Non-taxable income | -474,896.07 |
| Non-deductible costs, expenses and loss | 85,719,626.34 |
| Utilisation of prior period recoverable tax loss with no DTA recognised | |
| Impact of current period recoverable tax loss and temporary differences with no DTA recognised | |
| Progressive deduction for R&D expenses | -12,968,611.08 |
| Impact of tax rate changes | |
| Exemption | |
| Income tax expenses | 1,218,657,884.24 |
5.53 Notes to the consolidated cash flow statements
5.53.1 Other cash receipts in relation to operating activities
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Y/e 31/12/2022 | Y/e 31/12/2021 | |
| Margin deposits and quality warranty | 916,949,747.02 | 573,099,096.03 |
| Government grants received | 48,435,078.81 | 59,512,598.91 |
| Bank interests received | 80,375,152.64 | 175,668,500.91 |
| Release of restricted cash | 133,372,593.16 | 334,308,875.92 |
| Others | 56,190,183.46 | 11,742,422.18 |
| Total | 1,235,322,755.09 | 1,154,331,493.95 |
5.53.2 Other cash payments for operating activities
| Y/e 31/12/2022 | Y/e 31/12/2021 | |
| Paid expenses | 3,117,448,326.00 | 2,252,989,080.36 |
| Margin deposits and quality warranty | 5,855,826.64 | 7,522,439.34 |
| Cash restricted for bank acceptance and guarantee letters | 667,187,706.08 | 133,372,593.16 |
| Others | 130,000,657.32 | 63,271,489.74 |
| Total | 3,920,492,516.04 | 2,457,155,602.60 |
5.53.3 Other cash receipts in relation to financing activities
| Y/e 31/12/2022 | Y/e 31/12/2021 | |
| Financing costs paid | - | 4,587,264.16 |
| Rentals paid | 16,242,902.55 | 15,430,214.16 |
| Total | 16,242,902.55 | 20,017,478.32 |
5.54 Supplemenatry information to the consolidated cash flow statement
5.54.1 Suppplementary information to the consolidated cash flow statement
| Y/e 31/12/2022 | Y/e 31/12/2021 | |
| A. Reconciliation between net profit and net cash flows from operating activities | ||
| Net profit | 3,251,834,164.49 | 2,374,331,639.47 |
| Add: Asset impairment loss | 11,144,233.30 | 16,738,156.85 |
| Add: Credit impairment loss | -403,221.49 | 6,492,841.44 |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Y/e 31/12/2022 | Y/e 31/12/2021 | |
| Add: Fixed asset depreciation and investment property depreciation | 226,309,432.46 | 224,815,642.73 |
| Add: Right-of-use asset depreciation | 14,568,082.74 | 14,454,182.34 |
| Add: Intangible asset amortisation | 42,703,216.86 | 42,153,384.37 |
| Add: Long-term deferred expense amortisation | 30,753,707.48 | 33,723,640.28 |
| Add: Loss from disposal of fixed assets, intangible assets and other long-term assets (gain with “–”) | -886,286.45 | -1,368,763.13 |
| Add: Loss from scrapping of fixed assets (gain with “–”) | 5,552,711.54 | 7,345,620.11 |
| Add: Loss from fair value changes (gain with “–”) | -29,149,125.30 | -7,225,961.17 |
| Add: Financial costs (income with “–”) | -135,923,900.43 | -47,493,186.95 |
| Add: Investment loss (gain with “–”) | 10,804,384.45 | -4,692,379.15 |
| Add: DTA decrease (increase with “–”) | -141,292,227.13 | -186,855,578.29 |
| Add: DTL increase (decrease with “–”) | 87,139,896.77 | 79,211,806.69 |
| Add: Inventory decrease (increase with “–”) | -1,386,823,935.09 | -1,252,595,844.79 |
| Add: Operating receivable decrease (increase with “–”) | -2,104,507,814.27 | 868,490,814.49 |
| Add: Operating payable increase (decrease with “–”) | 3,092,718,666.39 | 2,752,473,236.58 |
| Add: Others (Note) | 133,372,593.16 | 334,308,875.92 |
| Net cash flows from operating activities | 3,107,914,579.48 | 5,254,308,127.79 |
| B. Significant investing and financing activities not involving cash | ||
| Debt-to-equity conversion | ||
| Corporate bonds convertible within 1 year | ||
| Fixed asset acquired through financial leasing | ||
| C. Movement of cash and cash equivalents | ||
| Cash as of 31/12/2022 | 13,105,373,435.22 | 6,057,550,178.60 |
| Less: Cash as of 31/12/2021 | 6,057,550,178.60 | 5,636,903,693.74 |
| Add: Cash equivalents as of 31/12/2022 | ||
| Less: Cash equivalents as of 31/12/2021 | ||
| Net increase of cash and cash equivalents | 7,047,823,256.62 | 420,646,484.86 |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
Note: Others represented impact of withdraw restricted cash on the net cash flows fromoperating activities for the period.
5.54.2 Composition of cash and cash equivalents
| 31/12/2022 | 31/12/2021 | |
| A. Cash | 13,105,373,435.22 | 6,057,550,178.60 |
| T/o: Cash in hand | 111,642.11 | 135,129.66 |
| T/o: Cash at bank usable on demand | 13,098,187,278.75 | 6,057,283,646.58 |
| T/o: Other monetary funds usable on demand | 7,074,514.36 | 131,402.36 |
| B. Cash equivalents | - | |
| T/o: Investment in debt instruments mature in 3 months | - | |
| C. Cash and cash equivalents as of 31 December | 13,105,373,435.22 | 6,057,550,178.60 |
| T/o: Cash and cash equivalents held by group companies with restriction on use |
5.55 Assets with restriction on ownership or disposal
| Book value as of 31/12/2022 | Restriction | |
| Notes receivable | 667,187,706.08 | Fixed term deposits and margin deposits for bank acceptance |
| Fixed assets | 114,679,263.52 | Securities for loans |
| Intangible assets | 179,235,930.32 | Securities for loans |
| Total | 961,102,899.92 | —— |
5.56 Government grants
5.56.1 Asset related government grants
| Grant amount | Balance sheet item | Amount recognised in the income statement | Income statement item | ||
| Y/e 31/12/2022 | Y/e 31/12/2021 | ||||
| Subsidy on Construction of Suizhou Plant | 34,590,105.88 | Deferred income | 747,894.12 | - | Other income |
| Refund of Land Fee | 41,721,392.05 | Deferred | 978,918.24 | 1,539,876.31 | Other income |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Grant amount | Balance sheet item | Amount recognised in the income statement | Income statement item | ||
| Y/e 31/12/2022 | Y/e 31/12/2021 | ||||
| income | |||||
| Fund for Clustered Development Base for Strategic Innovative Sectors | 1,129,920.10 | Deferred income | 622,719.96 | 622,719.96 | Other income |
| Subsidy Fund for Air Pollution Prevention | 1,790,739.87 | Deferred income | 294,364.80 | 294,364.80 | Other income |
| Subsidy on Devices | 959,437.91 | Deferred income | 320,267.88 | 401,472.41 | Other income |
| Subsidy of 2019 Leading Manufacturing Province and Non-state-owned Economy Development | 941,529.13 | Deferred income | 308,654.28 | 308,654.28 | Other income |
| Anhui Innovation Subsidy for Development of Owned Innovation Capacity | - | Deferred income | 487,030.00 | 730,545.00 | Other income |
| R&D Fund for Smart Distilling Yeast Fabrication | - | Deferred income | - | 1,130,000.00 | Other income |
| Subsidy on Renovation of #2 Furnace | 537,037.00 | Deferred income | 222,222.24 | 222,222.24 | Other income |
| Subsidy on Equipments | 460,698.12 | Deferred income | 208,209.12 | 127,004.59 | Other income |
| Renovation of GJ Zhangji Cellar | 692,708.55 | Deferred income | 47,499.96 | 47,499.96 | Other income |
| Subsidy for Corporation on Key Technology of Key Food Isotope Authenticity | - | Deferred income | - | 600,000.00 | Other income |
| Subsidy for Improvement of Food Safety | 275,862.25 | Deferred income | 137,931.00 | 137,931.00 | Other income |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Grant amount | Balance sheet item | Amount recognised in the income statement | Income statement item | ||
| Y/e 31/12/2022 | Y/e 31/12/2021 | ||||
| Anhui Leading Capital for Service Sector | - | Deferred income | 209,756.36 | 292,682.88 | Other income |
| Subsidy for Electricity Demand-side Adminsitration | 84,000.00 | Deferred income | 144,000.00 | 144,000.00 | Other income |
| Full-time Online Supervision on Automated Blending Storage and Product Quality | - | Deferred income | 78,125.32 | 93,749.68 | Other income |
| Energy Saving Renovation for Electric Motors and Furnaces | - | Deferred income | - | 137,500.28 | Other income |
| Technological Renovation for Distilling System | 1,889,148.47 | Deferred income | 291,572.16 | 229,487.88 | Other income |
| Smart Fermentation Innovation | 26,041.41 | Deferred income | 31,250.04 | 31,250.04 | Other income |
| Designated Fund for Furnace Renovation | 167,500.00 | Deferred income | 30,000.00 | 35,000.00 | Other income |
| Bonus for Technological Improvement Investment | 482,978.61 | Deferred income | 69,643.70 | 78,427.61 | Other income |
| Subsidy to the Technical and Quality Department | 101,804.98 | Deferred income | 20,548.54 | - | Other income |
| distilled wine Industrial Internet platform | 7,000,000.00 | Deferred income | - | - | Other income |
| Distillation shop VOCs Emission control | 6,128,067.23 | Deferred income | 51,932.77 | - | Other income |
| Provincial special fund for high quality development of manufacturing industry | 2,707,500.00 | Deferred income | 142,500.00 | - | Other income |
| distilled wine production intelligent, automatic | 900,000.04 | Deferred income | 99,999.96 | - | Other income |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Grant amount | Balance sheet item | Amount recognised in the income statement | Income statement item | ||
| Y/e 31/12/2022 | Y/e 31/12/2021 | ||||
| upgrading | |||||
| VOCs Deep Governance | 716,391.45 | Deferred income | 333,608.55 | - | Other income |
| Robot project | 412,115.90 | Deferred income | 37,884.10 | - | Other income |
| Total | 103,714,978.95 | - | 5,916,533.10 | 7,204,388.92 | —— |
5.56.2 Revenue related government grants
| Grant amount | Income statement item | Amount recognised in the income statement | Income statement item | ||
| Y/e 31/12/2022 | Y/e 31/12/2021 | ||||
| Tax Refund | 10,899,647.61 | Other income | 10,899,647.61 | 10,939,461.17 | Other income |
| Grants related to industry | 7,437,183.00 | Other income | 7,437,183.00 | - | Other income |
| Grants related to Transformation and diffusion of scientific and technological achievements | 4,387,700.00 | Other income | 4,387,700.00 | - | Other income |
| Job-loss Insurance Refund | 3,993,126.71 | Other income | 3,993,126.71 | 1,504,366.43 | Other income |
| Provincial Manufacturing Development-distilled wine production intelligent Fund | 1,140,000.00 | Other income | 1,140,000.00 | - | Other income |
| Scientific and technological innovation Fund | 800,000.00 | Other income | 800,000.00 | - | Other income |
| Grants related to Intellectual property rights Development with High Quality | 720,000.00 | Other income | 720,000.00 | - | Other income |
| Training Subsidy for Workplace Skill | 702,000.00 | Other income | 702,000.00 | 1,226,000.00 | Other income |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Grant amount | Income statement item | Amount recognised in the income statement | Income statement item | ||
| Y/e 31/12/2022 | Y/e 31/12/2021 | ||||
| Improvement | |||||
| Hubei University of Science and Technology Industrialisation Fund | - | Other income | - | 9,541,000.00 | Other income |
| Subsidy for Suizhou Relocation and Renovation Project | - | Other income | - | 6,946,300.00 | Other income |
| Xianning Fiscal Incentive for 0 Fiscal Account Balance | - | Other income | - | 2,300,000.00 | Other income |
| 2021 Substantial Fund for Innovative Province | - | Other income | - | 1,200,000.00 | Other income |
| 2020 Designated Fund for Provincial Manufacturing Development with High Quality | - | Other income | - | 1,000,000.00 | Other income |
| Fiscal Bonus for Digital Economy Development offered by Construction Fund of Leading Manufacturing Province | - | Other income | - | 1,000,000.00 | Other income |
| Subsidies by Local Finance Supervision Authorities | - | Other income | - | 1,000,000.00 | Other income |
| Bonus for Strategic Innovative Base | - | Other income | - | 1,000,000.00 | Other income |
| Other grants related to ordinary operating activities | 10,725,069.10 | Other income | 10,725,069.10 | 10,408,111.96 | Other income |
| Grants related to ordinary operating activities | - | Non-operating income | - | 4,873.94 | Non-operating income |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
| Grant amount | Income statement item | Amount recognised in the income statement | Income statement item | ||
| Y/e 31/12/2022 | Y/e 31/12/2021 | ||||
| Interest subsidies | 9,666.66 | Financial costs | 9,666.66 | 874,116.13 | Financial costs |
| Total | 40,814,393.08 | —— | 40,814,393.08 | 48,944,229.63 | —— |
Anhui Gujing Distillery Company Limited Notes to the Financial Statements
Note 6 Change in the scope of consolidation
6.1 Business combination not under common control
6.1.1 General disclosure
| Subsidiary | Date of acquisition | Purchase price | Shareholding acquired | Type of transaction | Combination date | Determination of combination date | Revenue for the period from the combination date to the statement date | Net profit for the period from the combination date to the statement date |
| Anhui Gujing Health Technology Co., Ltd | 2022.11.30 | 34,664,262.05 | 60% | Purchase | 2022.11.30 | Completion of regulatory registration | 536,743.91 | -1,430,014.64 |
Anhui Gujing Distillery Company Limited
Notes to the Financial Statements
6.1.2 Cost of acquisition and goodwill
| Anhui Gujing Health Technology Co., Ltd | |
| Cost of acquisition | |
| Cash | 34,664,262.05 |
| Total cost of acquisition | 34,664,262.05 |
| Less: Fair value of net identifiable assets acquired | 34,664,262.05 |
| Goodwill | - |
6.1.3 Net identifiable assets of the acquirees as of the combination datesAnhui Gujing Health Technology Co., Ltd
| Fair value | Book value | |
| Monetary funds | 226,410.81 | 226,410.81 |
| Accounts receivable | 1,448,230.49 | 1,448,230.49 |
| Prepayments | 961,420.96 | 961,420.96 |
| Other receivables | 2,213,743.05 | 2,213,743.05 |
| Inventories | 51,780,108.60 | 37,063,622.63 |
| Other current assets | 13,715.14 | 13,715.14 |
| Fixed assets | 128,068,970.06 | 93,337,821.30 |
| Intangible assets | 12,107,292.55 | 3,934,385.91 |
| Long-term deferred expenses | 1,070,457.84 | 1,070,457.84 |
| Deferred tax assets | 9,295,213.97 | 9,295,213.97 |
| Short-term borrowings | 63,000,000.00 | 63,000,000.00 |
| Accounts payable | 3,754,436.80 | 3,754,436.80 |
| Contract liabilities | 1,041,498.33 | 1,041,498.33 |
| Employee benefits payable | 655,065.66 | 655,065.66 |
| Taxes and fees payable | 987,287.74 | 987,287.74 |
| Other payables | 70,487,671.31 | 70,487,671.31 |
| Other current liabilities | 842,752.34 | 842,752.34 |
| Deferred tax liabilities | 8,643,081.21 | - |
Anhui Gujing Distillery Company Limited
Notes to the Financial Statements
| Fair value | Book value | |
| Net Assets | 57,773,770.08 | 8,796,309.92 |
| Less: Non-controlling interests | 23,109,508.03 | 3,518,523.97 |
| Net assets acquired | 34,664,262.05 | 5,277,785.95 |
6.2 Other changes
Theme Hotel, Anjie Technology, Huanggang Junya were included in the Company’s scope ofconsolidation for the first time in the period as a result of incorporation.Note 7 Interests in other entities
7.1 Interests in subsidiaries
7.1.1 General disclosure
| Subsidiary | Place of primary operation | Place of registration | Nature of operation | Shareholding in % | Means of control acquisition | |
| Direct | Indirect | |||||
| GJ Sales | Bozhou, Anhui | Bozhou, Anhui | Trading | 100 | - | Incorporation |
| Longrui Glass | Bozhou, Anhui | Bozhou, Anhui | Production | 100 | - | Incorporation |
| Jiuan Electric | Bozhou, Anhui | Bozhou, Anhui | Machinery production | 100 | - | Incorporation |
| Jinyunlai | Hefei, Anhui | Hefei, Anhui | Advertising | 100 | - | Incorporation |
| Ruisi Weier | Bozhou, Anhui | Bozhou, Anhui | R&D | 100 | - | Incorporation |
| Jinhao Hotel | Shanghai | Shanghai | Hotel management | 100 | - | Business combination under common control |
| GJ Guest House | Bozhou, Anhui | Bozhou, Anhui | Hotel management | 100 | - | Business combination under common control |
| YQ Environment Protection | Bozhou, Anhui | Bozhou, Anhui | Sewage processing | 100 | - | Incorporation |
| GJ E-Commerce | Hefei, Anhui | Hefei, Anhui | E-commerce | 100 | - | Incorporation |
Anhui Gujing Distillery Company LimitedNotes to the Financial Statements
| Subsidiary | Place of primary operation | Place of registration | Nature of operation | Shareholding in % | Means of control acquisition | |
| Direct | Indirect | |||||
| Runan Xinke | Bozhou, Anhui | Bozhou, Anhui | Food testing | 100 | - | Incorporation |
| Jiudao Media | Hefei, Anhui | Hefei, Anhui | Advertising | 100 | - | Incorporation |
| Theme Hotel | Bozhou, Anhui | Bozhou, Anhui | Hotel management | 100 | Incorporation | |
| Anjie Technology | Bozhou, Anhui | Bozhou, Anhui | Food testing | - | 70 | Incorporation |
| HHL Distillery | Wuhan, Hubei | Wuhan, Hubei | Production | 51 | - | Business combination not under common control |
| HHL Xianning | Xianning, Hubei | Xianning, Hubei | Production | - | 51 | Business combination not under common control |
| HHL Suizhou | Suizhou, Hubei | Suizhou, Hubei | Production | - | 51 | Business combination not under common control |
| Junlou Culture | Wuhan, Hubei | Wuhan, Hubei | Advertising | - | 51 | Business combination not under common control |
| HHL Beverage | Xianning, Hubei | Xianning, Hubei | Production | - | 51 | Incorporation |
| Yashibo | Wuhan, Hubei | Wuhan, Hubei | R&D | - | 51 | Incorporation |
| Xinjia Testing | Xianning, Hubei | Xianning, Hubei | Food testing | - | 51 | Incorporation |
| Tianlong Jindi | Wuhan, Hubei | Wuhan, Hubei | Trading | - | 51 | Business combination not under common control |
| Xianning Junhe | Xianning, Hubei | Xianning, Hubei | Trading | - | 51 | Business combination not under common |
Anhui Gujing Distillery Company Limited
Notes to the Financial Statements
| Subsidiary | Place of primary operation | Place of registration | Nature of operation | Shareholding in % | Means of control acquisition | |
| Direct | Indirect | |||||
| control | ||||||
| Junya Sales | Wuhan, Hubei | Wuhan, Hubei | Trading | - | 51 | Incorporation |
| Suizhou Junhe | Suizhou, Hubei | Suizhou, Hubei | Trading | - | 51 | Incorporation |
| Huanggang Junya | Huanggang, Hubei | Huanggang, Hubei | Trading | - | 51 | Incorporation |
| Mingguang Distillery | Chuzhou, Anhui | Chuzhou, Anhui | Production | 60 | - | Business combination not under common control |
| Tiancheng Sales | Chuzhou, Anhui | Chuzhou, Anhui | Trading | - | 60 | Business combination not under common control |
| FY Xiaogangcun | Chuzhou, Anhui | Chuzhou, Anhui | Production | - | 42 | Business combination not under common control |
| Jiuhao ChinaRail | Bozhou, Anhui | Bozhou, Anhui | Construction | 52 | - | Incorporation |
| Zhenrui Construction | Bozhou, Anhui | Bozhou, Anhui | Construction | - | 52 | Incorporation |
| Treasure Distillery | Guizhou Renhuai | Guizhou Renhuai | Production | 60 | - | Business combination not under common control |
| GJ Health Technology | Bozhou, Anhui | Bozhou, Anhui | Production | 60 | - | Business combination not under common control |
| Maiqi Biotechnology | Bozhou, Anhui | Bozhou, Anhui | R&D | - | 60 | Business combination not under common |
Anhui Gujing Distillery Company Limited
Notes to the Financial Statements
| Subsidiary | Place of primary operation | Place of registration | Nature of operation | Shareholding in % | Means of control acquisition | |
| Direct | Indirect | |||||
| control | ||||||
| Brand Operation | Hefei, Anhui | Hefei, Anhui | Advertising | - | 60 | Business combination not under common control |
| Biotechnology | Lingshui, Hainan | Lingshui, Hainan | Trading | - | 60 | Business combination not under common control |
7.1.2 Significant partially owned subsidiaries
| Subsidiary | Non-controlling shareholding % | Profit or loss attributable to minority shareholders for the period | Dividends declared for minority shareholders | Minority interest as of the statement date |
| HHL Distillery | 49.00 | 104,120,337.59 | 41,909,624.65 | 549,100,453.28 |
7.1.3 Key Significant partially owned subsidiaries
| Subsidiary | 31/12/2022 | |||||
| Current assets | Non-current assets | Total | Current liabilities | Non-current liabilities | Total liabilities | |
| HHL Distillery | 1,174,784,972.79 | 1,095,159,397.17 | 2,269,944,369.96 | 952,593,793.76 | 195,313,952.86 | 1,147,907,746.62 |
(Continue)
| Subsidiary | 31/12/2021 | |||||
| Current assets | Non-current assets | Total | Current liabilities | Non-current liabilities | Total liabilities | |
| HHL Distillery | 1,106,087,761.34 | 1,004,277,608.57 | 2,110,365,369.91 | 792,402,887.81 | 324,643,456.05 | 1,117,046,343.86 |
Anhui Gujing Distillery Company Limited
Notes to the Financial Statements
(Continue)
| Subsidiary | Y/e 31/12/2022 | |||
| Revenue | Net profit | Total comprehensive income | Cash flows from operating activities | |
| HHL Distillery | 1,753,497,722.05 | 213,913,938.26 | 214,247,443.52 | 136,032,287.63 |
(Continue)
| Subsidiary | Y/e 31/12/2021 | |||
| Revenue | Net profit | Total comprehensive income | Cash flows from operating activities | |
| HHL Distillery | 1,458,982,962.92 | 165,997,680.58 | 165,639,898.18 | 386,107,248.19 |
7.2 Significant joint ventures and associates
The Company had no significant joint venture or associate.Note 8 Risks associated with financial instrumentsRisks related to the financial instruments of the Company arise from the recognition of variousfinancial assets and financial liabilities during its operation, including credit risk, liquidity risk andmarket risk.Management of the Company is responsible for determining risk management objectives andpolicies related to financial instruments. Operational management is responsible for the daily riskmanagement through functional departments (e.g. credit management department of the Companyreviews each credit sale). Internal audit department is responsible for the daily supervision ofimplementation of the risk management policies and procedures, and report their findings to theaudit committee in a timely manner.Overall risk management objective of the Company is to establish risk management policies tominimize the risks without unduly affecting the competitiveness and resilience of the Company.
8.1 Credit risk
Credit risk is the risk of one party of the financial instrument face to a financial loss because theother party of the financial instrument fails to fulfill its obligation. The credit risk of the Company is
Anhui Gujing Distillery Company LimitedNotes to the Financial Statements
related to monetary funds, notes receivable, accounts receivables, other receivables and long-termreceivables. Credit risk of these financial assets is derived from the counterparty’s breach ofcontract. The maximum risk exposure is equal to the carrying amount of these financial instruments.Monetary funds of the Company has lower credit risk, as they are mainly deposited in financialinstitutions such as commercial banks, of which the Company believes with higher reputation andfinancial position.Notes receivable held by the Company mainly comprise bank acceptance which have relativelyhigh liquidity. The Company has established necessary internal control policies that can ensure thesafety of the maintenance and usage of notes and such policies have been implemented effectively.The Company believes that notes receivable have low credit risk.Accounts receivable mainly arising from sales. The Company makes sales only to customers withadvanced credit worthiness and monitors accounts receivable on a continuous basis to ensure theoccurrence of significant bad debts. The maximum risk exposure brought by financial instruments istheir book value. The Company believes that the credit risk is relatively low.
8.2 Liquidity risk
Liquidity risk is the risk of shortage of funds when fulfilling the obligation of settlement bydelivering cash or other financial assets. The Company is responsible for the capital management ofall of its subsidiaries, including short-term investment of cash surplus and dealing with forecastedcash demand by raising loans. The Company’s policy is to monitor the demand for short-term andlong-term floating capital and whether the requirement of loan contracts is satisfied so as to ensureto maintain adequate cash and cash equivalents.
8.3 Market risk
The market risk of a financial instrument refers to the risk on the fair value or future cash flows ofthe financial instrument brought by market factors. Market risk mainly comprises foreign exchangerisk and interest risk.
8.3.1 Foreign currency risk
Foreign currency risk of the Company mainly arise from foreign currency assets and liabilities
Anhui Gujing Distillery Company LimitedNotes to the Financial Statements
denominated in currency other than the Company’s functional currency. As the Company mainlyoperate in Mainland China with transactions mostly settled in CNY and very limited exportactivities, foreign currency risk is insignificant.
8.3.2 Interest risk
Interest risk refers to the risk on the fair value or future cash flows of a financial instrument broughtby the change of market interest rate. Interest risk mainly arises from bank loans. As of thestatement date, the Company had no bank loan with a floating interest rate.
8.3.3 Other price risk
Investments held for trading were measured at fair value. As such, these investments are subject tothe risk brought by the change of security prices. The Company controls this risk to the acceptablelevel by utilising multiple investment mix.Note 9 Fair value disclosureThe inputs used in the fair value measurement in its entirety are to be classified in the level of thehierarchy in which the lowest level input that is significant to the measurement is classified.Level 1: Inputs consist of unadjusted quoted prices in active markets for identical assets orliabilitiesLevel 2: Inputs for the assets or liabilities (other than those included in Level 1) that are eitherdirectly or indirectly observable.Level 3: Inputs are unobservable inputs for the assets or liabilities
9.1 Fair value of assets and liabilities measured by fair value as of the statement date
| Fair value as of the statement date | ||||
| Level 1 | Level 2 | Level 3 | Total | |
| Continously measured by fair value | ||||
| A. Financial assets held for trading | 1,782,687,769.66 | 1,782,687,769.66 | ||
| a. FATPLs | 1,782,687,769.66 | 1,782,687,769.66 | ||
| 1. Debt instruments | ||||
Anhui Gujing Distillery Company LimitedNotes to the Financial Statements
| Fair value as of the statement date | ||||
| Level 1 | Level 2 | Level 3 | Total | |
| 2. Structural financial products | 1,580,352,899.17 | 1,580,352,899.17 | ||
| 3. Investment in funds | - | 202,334,870.49 | 202,334,870.49 | |
| B. FATOCIs | 56,447,789.94 | 217,419,441.32 | 273,867,231.26 | |
| a. Receivables held for factoring | - | 217,419,441.32 | 217,419,441.32 | |
| b. Other equity instrument investments | 56,447,789.94 | 56,447,789.94 | ||
| Total | 1,839,135,559.60 | 217,419,441.32 | 2,056,555,000.92 | |
The fair value of financial instruments traded in an active market was based on quoted marketprices at the reporting date. The fair value of financial instruments not traded in an active marketwas determined by using valuation techniques. Specific valuation techniques used to value theabove financial instruments include discounted cash flow and market approach to comparablecompany model. Inputs in the valuation technique include risk-free interest rates, benchmarkinterest rates, exchange rates, credit spreads, liquidity premiums, discount for lack of liquidity.
9.2 Qualitative and quantitative information of key inputs and valuation methods applicableto Level 2 financial instruments continuously measured by fair valueAs of the statement date, the Company’s Level 3 financial instruments comprised mainlyinvestment in funds and structural financial products. The fair value of investment in funds wasdetermined by the valuation offered by the asset management companies. The fair value ofstructural financial products were computed in accordance with the terms of the respectivecontracts.
9.3 Qualitative and quantitative information of key inputs and valuation methods applicableto Level 3 financial instruments continuously measured by fair valueAs of the statement date, the Company’s Level 3 financial instruments comprised solely pre-maturenotes receivable. Issuers of the notes had healthy credit worthiness. The fair value of thesereceivables as of the statement date was measured at the recoverable amount of these receivables asof the statement date, which was computed using the respective discount rates offered by banks for
Anhui Gujing Distillery Company LimitedNotes to the Financial Statements
cashing.Note 10 Related partiesAn entity or individual is a related party to the Company if the entity or individual:
a. is controlled or jointly controlled by the Company;b. over which the Company has significant influence;c. controls or jointly controls the Company; ord. is subject to the same control or joint control over the Company.
10.1 Controlling shareholder of the Company
| Place of registration | Nature of business | Registered capital | Shareholding in the Company in % | Voting right in the Company in % | |
| GJ Group | Bozhou, Anhui | Production of beverage, construction materials, plastic products. | 1,000 million | 51.34 | 51.34 |
The Company’s ultimate controller is the State-owned Asset Management Commission of thePeople's Government of Baozhou, Anhui
10.2 Subsidiaries
See Note 7 for details.
10.3 Joint ventures and associates
See Note 7 for details.
10.4 Other related parties of the Company
| Relationship to the Company | |
| Nanjing Suning Property Development Co., Ltd.(Suning Property Development) | Controlled by ZHANG Guiping, the non-executive director of the Company |
| Anhui Ruijing Shanglv (Group) Co., Ltd. (RJSL Group) | Controlled by the Company's controlling shareholder or ultimate controller |
Anhui Gujing Distillery Company LimitedNotes to the Financial Statements
| Relationship to the Company | |
| Anhui Ruijing Shanglv (Group) Co., Ltd. Hefei Gujing Holiday Inn (RJSL Holiday Inn) | Controlled by the Company's controlling shareholder or ultimate controller |
| Bozhou Gujing Huishenglou Catering Co., Ltd.(GJ Huishenglou Catering) | Controlled by the Company's controlling shareholder or ultimate controller |
| Anhui Haochidian Catering Co., Ltd. (Haochidian Catering) | Controlled by the Company's controlling shareholder or ultimate controller |
| Anhui Ruijing Catering Co., Ltd. (Ruijing Catering) | Controlled by the Company's controlling shareholder or ultimate controller |
| Shanghai Beihai Hotel Co., Ltd. (Beihai Hotel) | Controlled by the Company's controlling shareholder or ultimate controller |
| Anhui Gujing Hotel Development Co., Ltd.(GJ Hotel Development) | Controlled by the Company's controlling shareholder or ultimate controller |
| Anhui Huixin Financial Investment Group Co., Ltd.(Huixin Financial Investment) | Controlled by the Company's controlling shareholder or ultimate controller |
| Bozhou Anxin Small Loan Co., Ltd. (Anxin Small Loan) | Controlled by the Company's controlling shareholder or ultimate controller |
| Anhui Hengxin Pawnshop Co., Ltd. (Hengxin Pawnshop) | Controlled by the Company's controlling shareholder or ultimate controller |
| Anhui Ruixin Pawnshop Co., Ltd. (Ruixin Pawnshop) | Controlled by the Company's controlling shareholder or ultimate controller |
| Anhui Zhongxin Financial Leasing Co., Ltd.(Zhongxin Financial Leasing) | Controlled by the Company's controlling shareholder or ultimate controller |
| Anhui Lixin E-Commerce Co., Ltd. (Lixin E-Commerce) | Controlled by the Company's controlling shareholder or ultimate controller |
| Anhui Youxin Financing Guarantee Co, Ltd. (Youxin Guarantee) | Controlled by the Company's controlling shareholder or ultimate controller |
| Hefei Longxin Corporate Management Advisory Co., Ltd. (Longxin Advisory) | Controlled by the Company's controlling shareholder or ultimate controller |
| Anhui Chuangxin Equity Investment Co. Ltd.(Chuangxin Equity Investment) | Controlled by the Company's controlling shareholder or ultimate controller |
Anhui Gujing Distillery Company LimitedNotes to the Financial Statements
| Relationship to the Company | |
| Anhui Lejiu Jiayuan Travel Management Co., Ltd. (Lejiu Jiayuan) | Controlled by the Company's controlling shareholder or ultimate controller |
| Anhui Shenglong Trading Co., Ltd. (Shenglong Trading) | Controlled by the Company's controlling shareholder or ultimate controller |
| Anhui Gujing Health Industry Co., Ltd. (Health Industry) | Controlled by the Company's controlling shareholder or ultimate controller |
| Bozhou Guest House Co., Ltd. (Bozhou Guest House) | Controlled by the Company's controlling shareholder or ultimate controller |
| Dongfang Ruijing Enterprise Investment Co., Ltd.(Dongfang Ruijing) | Controlled by the Company's controlling shareholder or ultimate controller |
| Anhui Gujing International Development Co., Ltd.(GJ International) | Controlled by the Company's controlling shareholder or ultimate controller |
| Anhui Jiuan Construction Management Advisory Co., Ltd.(Jiuan Advisory) | Controlled by the Company's controlling shareholder or ultimate controller |
10.5 Related party transactions
10.5.1 Goods and services
Purchase of goods and services
| Related party | Transaction | Y/e 31/12/2022 | Y/e 31/12/2021 |
| Haochidian Catering | Purchase of materials and services | - | 16,752,135.81 |
| Bozhou Guest House | Receiving catering and accommodation | 2,380,785.35 | 5,276,946.76 |
| GJ Huishenglou Catering | Receiving catering and accommodation | 1,081,439.85 | 1,697,688.00 |
| Haochidian Catering | Receiving catering and accommodation | 2,478,493.67 | 2,800,831.40 |
| GJ Hotel Development | Receiving catering and accommodation | 456,528.55 | 1,195,369.24 |
| RJSL Group | Purchase of materials and services | 101,061.95 | 96,890.00 |
| RJSL Group | Receiving catering and accommodation | 176,813.91 | 658,611.03 |
| RJSL Holiday Inn | Receiving catering and accommodation | 35,418.95 | 113,524.00 |
| RJSL Holiday Inn | Purchase of materials and services | 582,276.00 | 871,614.88 |
| Youxin Guarantee | Receiving services | 53,543.69 | 49,504.95 |
Anhui Gujing Distillery Company LimitedNotes to the Financial Statements
| Related party | Transaction | Y/e 31/12/2022 | Y/e 31/12/2021 |
| GJ Hotel Development | Purchase of materials and services | - | 2,735.85 |
| Haochidian Catering | Purchase of assets | - | 135,398.23 |
| Jiuan Advisory | Advisory and assurance | 5,064,377.44 | 3,427,517.43 |
| Total | —— | 12,410,739.36 | 33,078,767.58 |
Sales of goods and rendering of services
| Related party | Transaction | Y/e 31/12/2022 | Y/e 31/12/2021 |
| Shenglong Trading | Sales of distilled wine | 1,712,094.67 | 1,506,569.89 |
| RJSL Group | Sales of distilled wine | - | 1,125,056.17 |
| GJ Hotel Development | Provision of utilities | 175,655.64 | 290,336.98 |
| GJ Group | Provision of catering and accommodation | 120,731.75 | 279,597.00 |
| GJ Group | Sales of small materials | 47,227.48 | 223,523.11 |
| GJ Hotel Development | Sales of distilled wine | 539,469.03 | 146,484.95 |
| RJSL Group | Provision of catering and accommodation | 10,823.97 | 121,295.14 |
| RJSL Holiday Inn | Sales of distilled wine | - | 81,451.34 |
| Bozhou Guest House | Sales of distilled wine | - | 55,274.34 |
| Huixin Financial Investment | Sales of distilled wine | 59,146.02 | 38,500.88 |
| GJ Huishenglou Catering | Sales of distilled wine | - | 30,106.20 |
| Anxin Small Loan | Sales of distilled wine | 65,572.57 | 19,656.64 |
| Haochidian Catering | Sales of distilled wine | - | 19,115.04 |
| Zhongxin Financial Leasing | Sales of distilled wine | 15,358.41 | 11,572.57 |
| Hengxin Pawnshop | Sales of distilled wine | 24,573.45 | 11,405.32 |
| Jiuan Advisory | Sales of distilled wine | 101,317.70 | 8,968.14 |
| Beihai Hotel | Sales of distilled wine | - | 8,601.77 |
| Lejiu Jiayuan | Sales of distilled wine | 11,155.76 | 8,235.39 |
| Shenglong Trading | Provision of catering and accommodation | 3,140.00 | 7,084.00 |
Anhui Gujing Distillery Company LimitedNotes to the Financial Statements
| Related party | Transaction | Y/e 31/12/2022 | Y/e 31/12/2021 |
| Lejiu Jiayuan | Provision of utilities | 4,962.36 | 6,545.75 |
| Ruixin Pawnshop | Sales of distilled wine | 12,286.72 | 6,443.36 |
| Youxin Guarantee | Sales of distilled wine | 8,718.59 | 3,082.30 |
| Haochidian Catering | Provision of services | - | 2,547.17 |
| Bozhou Guest House | Provision of construction services | 14,758,223.32 | 707.55 |
| Jiuan Advisory | Provision of catering and accommodation | 8,600.00 | 2,230.00 |
| Longxin Advisory | Sales of distilled wine | 3,071.68 | 1,194.69 |
| Jiuan Advisory | Sales of small materials | 3,412.25 | 778.68 |
| Health Industry | Sales of distilled wine | - | -797,129.56 |
| RJSL Group | Sales of small materials | 128.32 | - |
| Dongfang Ruijing | Provision of catering and accommodation | 82,528.93 | - |
| GJ Hotel Development | Provision of catering and accommodation | 14,266.98 | - |
| GJ Hotel Development | Sales of distilled wine | 113.27 | - |
| Total | —— | 17,782,578.87 | 3,219,234.81 |
10.5.2 Leases
The Company as the Lessor
| Lessee | Leased item | Rental income Y/e 31/12/2022 | Rental income Y/e 31/12/2021 |
| GJ Hotel Development | Houses and buildings | 1,166,083.56 | 1,379,517.44 |
| Total | —— | 1,166,083.56 | 1,379,517.44 |
The Company as the Lessee
| Lessor | Leased item | Rental cost Y/e 31/12/2022 | Rental cost Y/e 31/12/2021 |
| GJ Group | Houses and buildings | 1,090,629.08 | 1,197,761.12 |
Anhui Gujing Distillery Company LimitedNotes to the Financial Statements
| Suning Property Development | Houses and buildings | 2,100,000.00 | 2,050,000.00 |
| Total | 3,190,629.08 | 3,247,761.12 |
10.5.3 Key management remuneration
| Y/e 31/12/2022 | Y/e 31/12/2021 | |
| Key management remuneration | 21.00million | 18.53 million |
10.6 Related party balances
| Related party | 31/12/2022 | 31/12/2021 | |
| Contract assets | Bozhou Guest House | 1,855,188.15 | |
| Contract liabilities | Health Industry | 617,959.73 | |
| Contract liabilities | RJSL Group | 221.12 | 92.04 |
| Contract liabilities | GJ International | 58,849.56 | 164,675.75 |
| Contract liabilities | GJ Hotel Development | 148.67 | |
| Accounts payable | Jiuan Advisory | 2,151,065.65 | |
| Other payables | RJSL Group | 115,533.60 | 115,533.60 |
| Other payables | GJ Hotel Development | 50,000.00 | 50,000.00 |
Note 11 Commitments and contingencies
11.1 Significant commitments
In accordance with the agreement entered into by the Company, Wuhan Tianlong Investment GroupCo., Ltd, and YAN Hongye on the transfer of the shareholding in HHL Distillery, the Companymade a commitment for the tax inclusive revenue performance of HHL Distillery as follow:
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Committed tax inclusive revenue | 805.00 million | 1,006.25 million | 1,308.13 million | 1,700.56 million | 2,040.68 million |
The Company also committed that in the five consecutive years following the year in which theownership transaction is completed, the net profit ratio of HHL Distillery for each year shall not beless than 11.00%. If in any of the 5 consecutive year, the audited net profit ratio of HHL Distillery is
Anhui Gujing Distillery Company LimitedNotes to the Financial Statements
less than 11.00%, the Company shall compensate the sellers the difference between the committednet profit and the actual net profit. If the audited net profit ratio for any 2 consecutive years with the5-year period is lower than 11.00%, the sellers are entitled to repurchase all shareholding sold to theCompany at the repurchase price of CNY 816.00 million.The operating performance of HHL Distillery for 2020, as reported by its financial statements forthat period, is presented as below:
| Actual | Commited | Difference | % of Committed performance | |
| Revenue (tax inclusive) | 583.13 million | 1,700.56 million | -1,117.43 million | 34.29% |
| Net profit | -11.72 million | 165.54 million | -177.26 million | Loss |
| Net profit ratio | -2.27% | 11.00% | -13.27% | Loss |
The operation of HHL Distillery was significant impacted by the Force majeure. Upon mutualnegotiation, the performance commitment was altered with 2020 excluded from the performanceassessment period.
1) Committed before tax revenue for the assessment period
| 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | |
| Committed tax inclusive revenue | 805.00 million | 1,006.25 million | 1,308.13 million | Excluded | 1,700.56 million | 2,040.68 million |
2) The committed net profit ratio, net profit and estimated profit available for distribution as agreedby the orginal agreement for 2020 and 2021 become applicable for 2021 and 2022 respectively.
3) No party to the agreement shall have the right to demand reimbursement, compensation or otherliabilities to any other party to the agreement on the basis of the performance of HHL Distillery for2020.The operating performance of HHL Distillery for 2022, as reported by its financial statements forthat period, is presented as below:
| Actual | Commited | Difference | % of Committed performance | |
| Revenue (tax inclusive) | 2,051.59 million | 2,040.68million | 10.92 million | 100.53% |
Anhui Gujing Distillery Company LimitedNotes to the Financial Statements
| Actual | Commited | Difference | % of Committed performance | |
| Net profit | 218.78 million | 198.65 million | 20.13 million | 110.13% |
| Net profit ratio | 12.05% | 11.00% | 1.05% | 109.55% |
11.2 Contingencies
No contingency as of the statement date was required for disclosure.Note 12 Subsequent eventsExcept for the matters described in Note 11, as of the date of these financial statements, nosubsequent event is required for disclosure.Note 13 Other significant matters – Segment reportingIn accordance with the Company’s internal management and reporting structure, segment reportingis not applicable.Note 14 Notes to the separate financial statements of the Company
14.1 Accounts receivable
14.1.1 No account receivable as of 31 December 2022.
14.1.2 No account receivable as of 31 December 2021.
14.1.3 Impairment movement for the period was not applicable for accounts receivable.
14.2 Other receivables
14.2.1 General disclosure
| 31/12/2022 | 31/12/2021 | |
| Interests receivable | - | |
| Dividends receivable | - | |
| Other receivables | 202,279,154.63 | 290,480,736.49 |
| Total | 202,279,154.63 | 290,480,736.49 |
14.2.2 Other receivables
Anhui Gujing Distillery Company LimitedNotes to the Financial Statements
(1) Disclosure by age group
| Age group | 31/12/2022 | 31/12/2021 |
| Within 1 year | 200,863,691.53 | 289,632,069.08 |
| T/o: Within 6 months | 200,851,698.40 | 289,213,314.37 |
| T/o: 7 months to 1 years | 11,993.13 | 418,754.71 |
| 1 to 2 years | 1,303,136.00 | 763,921.03 |
| 2 to 3 years | 710,291.70 | 797,227.20 |
| Over 3 years | 39,757,474.30 | 39,383,584.88 |
| Gross | 242,634,593.53 | 330,576,802.19 |
| Less: Impairment allowance | 40,355,438.90 | 40,096,065.70 |
| Net | 202,279,154.63 | 290,480,736.49 |
(2) Disclosure by nature
| 31/12/2022 | 31/12/2021 | |
| Due from related party within the scope of consolidation | 189,661,149.05 | 267,559,576.83 |
| Security investments | 38,434,247.10 | 38,857,584.88 |
| Margin deposits | 3,351,294.09 | 3,330,794.09 |
| Rentals and utilities receivable | 741,495.49 | 472,547.89 |
| Others | 10,446,407.80 | 20,356,298.50 |
| Total | 242,634,593.53 | 330,576,802.19 |
(3) Disclosure by method of impairment
A. Disclosure by the 3-stage m odel as of the statement date
| Gross | Impairment allowance | Net | |
| Stage 1 | 204,200,346.43 | 1,921,191.80 | 202,279,154.63 |
| Stage 2 | - | ||
| Stage 3 | 38,434,247.10 | 38,434,247.10 | - |
| Total | 242,634,593.53 | 40,355,438.90 | 202,279,154.63 |
Anhui Gujing Distillery Company LimitedNotes to the Financial Statements
Details of Stage 1 receivables as of the statement date
| Gross | Expected loss rate for the next 12 months in % | Impairment allowance | Net | |
| Individual assessment | ||||
| Portfolio assessment | 204,200,346.43 | 0.94 | 1,921,191.80 | 202,279,154.63 |
| T/o: Group 1 | 189,661,149.05 | - | - | 189,661,149.05 |
| T/o: Group 2 | 14,539,197.38 | 13.21 | 1,921,191.80 | 12,618,005.58 |
| Total | 204,200,346.43 | 0.94 | 1,921,191.80 | 202,279,154.63 |
Details of Group 2 receivables as of the statement date
| Age group | 31/12/2022 | ||
| Gross | Impairment allowance | Impairment % | |
| Within 1 year | 11,202,542.48 | 112,505.14 | 1.00 |
| T/o: Within 6 months | 11,190,549.35 | 111,905.48 | 1.00 |
| T/o: 7 months to 1 years | 11,993.13 | 599.66 | 5.00 |
| 1 to 2 years | 1,303,136.00 | 130,313.60 | 10.00 |
| 2 to 3 years | 710,291.70 | 355,145.86 | 50.00 |
| Over 3 years | 1,323,227.20 | 1,323,227.20 | 100.00 |
| Total | 14,539,197.38 | 1,921,191.80 | 13.21 |
Details of Stage 3 receivables as of the statement date
| Gross | Expected loss rate for the next 12 months in % | Impairment allowance | Net | |
| Individual assessment | 38,434,247.10 | 100.00 | 38,434,247.10 | - |
| Portfolio assessment | ||||
| T/o: Group 1 | ||||
| T/o: Group 2 | ||||
| Total | 38,434,247.10 | 100.00 | 38,434,247.10 | - |
Details of receivables subject to individual assessment as of the statement date
Anhui Gujing Distillery Company Limited
Notes to the Financial Statements
| 31/12/2022 | ||||
| Gross | Impairment allowance | Impairment % | Reason for impairment | |
| Hengxin Securities Co., Ltd. | 28,733,899.24 | 28,733,899.24 | 100.00 | In bankruptcy |
| Jianqiao Securities Co., Ltd. | 9,700,347.86 | 9,700,347.86 | 100.00 | In bankruptcy |
| Total | 38,434,247.10 | 38,434,247.10 | 100.00 | |
B. Disclosure by the 3-stage model as of 31 December 2021
| Gross | Impairment allowance | Net | |
| Stage 1 | 291,719,217.31 | 1,238,480.82 | 290,480,736.49 |
| Stage 2 | - | ||
| Stage 3 | 38,857,584.88 | 38,857,584.88 | - |
| Total | 330,576,802.19 | 40,096,065.70 | 290,480,736.49 |
Details of Stage 1 receivables as of 31 December 2021
| Gross | Expected loss rate for the next 12 months in % | Impairment allowance | Net | |
| Individual assessment | ||||
| Portfolio assessment | 291,719,217.31 | 0.42 | 1,238,480.82 | 290,480,736.49 |
| T/o: Group 1 | 267,559,576.83 | - | 267,559,576.83 | |
| T/o: Group 2 | 24,159,640.48 | 5.13 | 1,238,480.82 | 22,921,159.66 |
| Total | 291,719,217.31 | 0.42 | 1,238,480.82 | 290,480,736.49 |
Details of Group 2 receivables as of 31 December 2021
| Age group | 31/12/2021 | ||
| Gross | Impairment allowance | Impairment % | |
| Within 1 year | 22,072,492.25 | 237,475.12 | 1.08 |
| T/o: Within 6 months | 21,653,737.54 | 216,537.38 | 1.00 |
| T/o: 7 months to 1 years | 418,754.71 | 20,937.74 | 5.00 |
| 1 to 2 years | 763,921.03 | 76,392.10 | 10.00 |
Anhui Gujing Distillery Company Limited
Notes to the Financial Statements
| Age group | 31/12/2021 | ||
| Gross | Impairment allowance | Impairment % | |
| 2 to 3 years | 797,227.20 | 398,613.60 | 50.00 |
| Over 3 years | 526,000.00 | 526,000.00 | 100.00 |
| Total | 24,159,640.48 | 1,238,480.82 | 5.13 |
Details of Stage 3 receivables as of 31 December 2021
| Gross | Expected loss rate for the next 12 months in % | Impairment allowance | Net | |
| Individual assessment | 38,857,584.88 | 100.00 | 38,857,584.88 | 0.00 |
| Portfolio assessment | - | |||
| T/o: Group 1 | - | |||
| T/o: Group 2 | - | |||
| Total | 38,857,584.88 | 100.00 | 38,857,584.88 | 0.00 |
Details of receivables subject to individual assessment as of 31 December 2021
| 31/12/2021 | ||||
| Gross | Impairment allowance | Impairment % | Reason for impairment | |
| Hengxin Securities Co., Ltd. | 28,966,894.41 | 28,966,894.41 | 100.00 | In bankruptcy |
| Jianqiao Securities Co., Ltd. | 9,890,690.47 | 9,890,690.47 | 100.00 | In bankruptcy |
| Total | 38,857,584.88 | 38,857,584.88 | 100.00 | - |
(4) Movement of impairment allowance
| 31/12/2021 | Movement | 31/12/2022 | |||
| Provision | Reversal or recovery | Release or write-off | |||
| Individual assessment | 38,857,584.88 | 423,337.78 | 38,434,247.10 | ||
| Portfolio assessment | 1,238,480.82 | 682,710.98 | 1,921,191.80 | ||
| Total | 40,096,065.70 | 682,710.98 | 423,337.78 | 40,355,438.90 | |
Anhui Gujing Distillery Company Limited
Notes to the Financial Statements
(5) Top-five other receivables as of the statement date
| Debtor | Nature | 31/12/2022 | Age group | % of total gross other receivables | Impairment allowance |
| Top 1 | Due from related party within the scope of consolidation | 80,207,352.12 | Within 6 months | 33.06 | 0.00 |
| Top 2 | Due from related party within the scope of consolidation | 68,211,561.36 | Within 6 months | 28.11 | 0.00 |
| Top 3 | Due from related party within the scope of consolidation | 40,000,000.00 | Within 6 months | 16.49 | 0.00 |
| Top 4 | Security investment | 28,733,899.24 | Over 3 years | 11.84 | 28,733,899.24 |
| Top 5 | Security investment | 9,700,347.86 | Over 3 years | 4.00 | 9,700,347.86 |
| Total | 226,853,160.58 | 93.50 | 38,434,247.10 |
14.3 Long-term equity investments
14.3.1 General disclosure
| 31/12/2022 | 31/12/2021 | |||||
| Gross | Impairment allowance | Impairment % | Gross | Impairment allowance | Impairment % | |
| Investment in subsidiaries | 1,582,079,903.43 | - | 1,582,079,903.43 | 1,547,415,641.38 | - | 1,547,415,641.38 |
| Investment in Associates | 4,669,710.25 | - | 4,669,710.25 | - | - | - |
| Total | 1,586,749,613.68 | - | 1,586,749,613.68 | 1,547,415,641.38 | - | 1,547,415,641.38 |
14.3.2 Investment in subsidiaries
| Subsidiary | 31/12/2021 | Increase | Decrease | 31/12/2022 | Impairment recognised in the period | Cumulative impairment as of 31/12/2022 |
| GJ Sales | 68,949,286.89 | - | - | 68,949,286.89 | - | - |
| Longrui Glass | 85,267,453.06 | - | 85,267,453.06 | - | - | |
| Jinhao Hotel | 49,906,854.63 | - | - | 49,906,854.63 | - | - |
Anhui Gujing Distillery Company Limited
Notes to the Financial Statements
| Subsidiary | 31/12/2021 | Increase | Decrease | 31/12/2022 | Impairment recognised in the period | Cumulative impairment as of 31/12/2022 |
| GJ Guest House | 648,646.80 | - | - | 648,646.80 | - | - |
| Ruisi Weier | 40,000,000.00 | - | - | 40,000,000.00 | ||
| YQ Environment Protection | 16,000,000.00 | - | - | 16,000,000.00 | - | - |
| GJ E-Commerce | 5,000,000.00 | - | - | 5,000,000.00 | - | - |
| HHL Distillery | 816,000,000.00 | - | - | 816,000,000.00 | - | - |
| Jinyunlai | 15,000,000.00 | - | - | 15,000,000.00 | - | - |
| Runan Xinke | 10,000,000.00 | - | - | 10,000,000.00 | - | - |
| Jiuan Electric | 10,000,000.00 | 10,000,000.00 | - | - | ||
| Mingguang Distillery | 200,200,000.00 | 200,200,000.00 | ||||
| Treasure Distillery | 224,723,400.00 | 224,723,400.00 | ||||
| Jiuhao ChinaRail | 5,720,000.00 | 5,720,000.00 | ||||
| GJ Health Technology | 34,664,262.05 | 34,664,262.05 | ||||
| Total | 1,547,415,641.38 | 34,664,262.05 | 1,582,079,903.43 | - | - |
14.3.3 Investment in Associates
| Investee | 31/12/2021 | Movement | ||||
| Contribution | Investment withdrawal | Investment income at equity | OCI adjustment | Other equity movement | ||
| A. Associates | - | |||||
| Anhui Xunfeijiuzhi Technology Co., Ltd ( Xunfeijiuzhi) | 3,900,000.00 | - | 769,710.25 | |||
| Total | 3,900,000.00 | - | 769,710.25 | - | - | |
Anhui Gujing Distillery Company Limited
Notes to the Financial Statements
(Continued)
| Investee | Movement | 31/12/2022 | Cumulative impairment allowance | ||
| Dividend or profit appropriation declared | Impairment allowance recognised | Others | |||
| A. Associates | - | ||||
| Xunfeijiuzhi | 4,669,710.25 | ||||
| Total | - | - | - | 4,669,710.25 | - |
14.4 Revenue and cost of sales
| Y/e 31/12/2022 | Y/e 31/12/2021 | |||
| Revenue | Cost of sales | Revenue | Cost of sales | |
| Primary operation | 8,321,302,489.78 | 3,081,601,776.18 | 6,756,444,863.19 | 2,623,827,961.16 |
| Other operation | 115,551,935.55 | 68,470,471.26 | 105,482,310.37 | 61,315,130.77 |
| Total | 8,436,854,425.33 | 3,150,072,247.44 | 6,861,927,173.56 | 2,685,143,091.93 |
14.5 Investment income
| Y/e 31/12/2022 | Y/e 31/12/2021 | |
| Investment income from long-term equity investments at cost method | 531,783,095.55 | 737,875,260.92 |
| Investment income from long-term equity investments at Equity method | 769,710.25 | |
| Gain from disposal of long-term equity investments | 2,670,112.66 | |
| Gain from disposal of FVTPLs | 8,539,026.86 | 8,072,295.21 |
| Gain from holding of debt instruments | ||
| Gain from holding of other debt like investments | ||
| Gain from disposal of FVTOCIs | -24,743,235.48 | -22,496,045.46 |
| Gain from holding of financial assets held for trading | 14,393,316.21 | |
| Others | 102,958.20 | 410,450.22 |
| Total | 516,451,555.38 | 740,925,389.76 |
Note 15 Supplementary information
15.1 Non-recurring gain or loss
Anhui Gujing Distillery Company LimitedNotes to the Financial Statements
| Y/e 31/12/2022 | Y/e 31/12/2021 | Note | |
| Gain or loss from disposal of non-current assets | -4,666,425.09 | -5,976,856.98 | |
| Government grants included in current profit or loss (excluding government grants closely associated with the Company’s operation and granted in accordance with national standard quota or quantity | 46,721,259.52 | 55,274,502.42 | |
| Gain or loss from changes in fair value of financial assets held for trading, derivative financial assets, financial liabilities held for trading and derivative financial liabilities and gain from disposal of financial assets held for trading, derivative financial assets, financial liabilities held for trading, derivative financial liabilities and other debt-like investments, excluding instruments held for effective hedging associated with the Company’s operation | 43,874,800.64 | 34,792,433.45 | |
| Reversal of impairment allowance for accounts receivable previously recognised upon individual assessment | 423,337.78 | 1,949,809.53 | |
| Non-operating income and non-operating expenses not included in above categories | 23,314,293.08 | 77,025,619.76 | |
| Other items falling into the definition of non-recurring gain or loss | |||
| Total non-recurring gain or loss | 109,667,265.93 | 163,065,508.18 | |
| Less: Impact on income tax | 27,082,435.88 | 40,243,159.73 | |
| Total non-recurring gain or loss (net of income tax) | 5,984,091.32 | 11,167,403.88 | |
| T/o: Attributable to non-controlling interests | 76,600,738.73 | 111,654,944.57 |
15.2 Return on net assets (RONA) and earnings per share (EPS)
15.2.1 Year ened 31 December 2022
| Net profit | Weighted average RONA in % | EPS | |
| Basic EPS | Diluted EPS | ||
| Net profit attributable to shareholders of the Company | 17.93 | 5.95 | 5.95 |
| Net profit post adjustment for non-recurring gain or loss attributable to shareholders of the Company | 17.50 | 5.80 | 5.80 |
Anhui Gujing Distillery Company LimitedNotes to the Financial Statements
15.2.2 Year ened 31 December 2021
| Net profit | Weighted average RONA in % | EPS | |
| Basic EPS | Diluted EPS | ||
| Net profit attributable to shareholders of the Company | 21.25 | 4.45 | 4.45 |
| Net profit post adjustment for non-recurring gain or loss attributable to shareholders of the Company | 20.22 | 4.24 | 4.24 |
Chairman of the Board:
Anhui Gujing Distillery Company Limited
28 April 2023