ANHUI GUJING DISTILLERY COMPANY LIMITED
ANNUAL REPORT 2017
April 2018
Gujing Aged Original Spirits Annual Report 2017
Part I Important Notes
The Board of Directors (or the “Board”), the Supervisory Board as well as the
Directors, Supervisors and senior management of Anhui Gujing Distillery Company
Limited (the “Company”) hereby guarantee the factuality, accuracy and completeness
of the contents of this Report, and shall be jointly and severally liable for any
misrepresentations, misleading statements or material omissions in this Report.
Liang Jinhui, the Company’s legal representative, Ye Changqing, the Company’s
Chief Accountant, and Zhu Jiafeng, head of the Company’s financial department
(equivalent to financial manager) hereby guarantee that the Financial Statements
carried in this Report are factual, accurate and complete.
All the Company’s Directors have attended the Board meeting for the review of this
Report.
Any plans for the future and other forward-looking statements mentioned in this
Report shall NOT be considered as absolute promises of the Company to investors.
Investors, among others, shall be sufficiently aware of the risk and shall differentiate
between plans/forecasts and promises. Again, investors are kindly reminded to pay
attention to possible investment risks.
The Board has considered and approved the following dividend payout proposal for
common shareholders for the Reporting Period: based on the Company’s total shares
on December 31, 2017, a cash dividend of RMB10.00 (tax inclusive) per 10 shares
should be distributed to all the common shareholders, with no share dividend
converted either from retained earnings or from capital reserves.
This Report has been prepared in both Chinese and English. Should there be any
discrepancies or misunderstandings between the two versions, the Chinese version
shall prevail.
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Gujing Aged Original Spirits Annual Report 2017
Contents
Part I Important Notes, Contents and Definitions
Part II Company Profile and Key Financial Information 5
Part III Business Summary
Part IV Company Performance Discussion and Analysis
Part V Significant Events
Part VI Share Changes and Shareholder Information
Part VII Preferred Shares
Part VIII Directors, Supervisors, Senior Management and Staff 51
Part IX Corporate Governance
Part X Corporate Bonds
Part XI Financial Statements
Part XII Documents Available for Reference
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Gujing Aged Original Spirits Annual Report 2017
Definitions
Term Definition
Anhui Gujing Distillery Company Limited inclusive of its consolidated
The “Company”, “ Gu Jing” or “we”
subsidiaries, except where the context otherwise requires
Anhui Gujing Distillery Company Limited exclusive of subsidiaries, except
Parent, Parent Company
where the context otherwise requires
Gujing Group Anhui Gujing Group Co., Ltd.
Yellow Crane Tower Wuhan Pride Yellow Crane Tower Distillery Co., Ltd.
The “Reporting Period” or “Current Period” The period from January 1, 2017 to December 31, 2017
RMB, RMB’0,000 In RMB yuan, in RMB ten thousand yuan
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Gujing Aged Original Spirits Annual Report 2017
Part II Company Profile and Key Financial Information
I Corporate Information
Stock name Gujing Distillery, Gujing Distillery B
Stock symbol 000596, 200596
Stock exchange 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
Office address Gujing Town, Bozhou City, Anhui Province, P.R.China
Zip code
Company website http://www.gujing.com
Email address gjzqb@gujing.com.cn
II Contact Information
Board Secretary Securities Representative
Name Ye Changqing Mei Jia
Gujing Town, Bozhou City, Anhui Gujing Town, Bozhou City, Anhui
Address
Province, P.R.China Province, P.R.China
Tel. （0558）5712231 （0558）5710057
Fax （0558）5710099 （0558）5710099
Email address gjzqb@gujing.com.cn gjzqb@gujing.com.cn
III Media for Information Disclosure and Place where this Report Is Kept
Newspapers designated by the Company for
China Securities Journal, Shanghai Securities News, Ta Kung Pao (HK)
information disclosure
Website designated by CSRC for publication of this http://www.cninfo.com.cn
Report
Place where this Report is kept The Board Secretary’s Office
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Gujing Aged Original Spirits Annual Report 2017
IV Company Registered Information and Alterations
Unified social credit code
Alterations to main business scope of the
No alterations
Company since going public (if any)
Alterations to controlling shareholder (if any) No alterations
V Other Information
The independent certified public accounting (or “CPA”) firm hired by the Company:
Name Ruihua Certified Public Accountants LLP
5-11 F, West Tower, China Overseas Property Plaza, Building No. 7, Courtyard No. 8, Xi
Office address
Binhe Road, Yong Ding Men, Dong Cheng District, Beijing, China
Accountants writing signatures Zhang Liping, Zhang Xianfa
The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable √ Not applicable
The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable √ Not applicable
VI Key Financial Information
Indicate by tick mark whether the Company retrospectively restated any of its accounting data due to changes of accounting policies
or correction of accounting errors.
□ Yes √ No
2017-over-2016
2017 2016
change
Sales revenue (RMB) 6,968,325,048.55 6,017,143,660.56 15.81% 5,253,411,479.40
Net income attributable to
shareholders of the listed company 1,148,740,644.93 829,630,063.38 38.46% 715,578,369.68
(RMB)
Net income attributable to
shareholders of the listed company
1,069,457,368.70 792,534,098.54 34.94% 682,760,794.86
before nonrecurring gains and
losses (RMB)
Net cash flows from operating
930,914,712.78 1,183,231,808.06 -21.32% 790,109,535.01
activities (RMB)
Basic earnings per share
2.28 1.65 38.18% 1.42
(RMB/share)
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Gujing Aged Original Spirits Annual Report 2017
Diluted earnings per share
2.28 1.65 38.18% 1.42
(RMB/share)
Weighted average return on equity
19.09% 15.88% 3.21% 15.91%
(%)
Change of December
December 31, 2017 December 31, 2016 31, 2017 over December 31, 2015
December 31, 2016
Total assets (RMB) 10,152,862,119.05 8,736,205,153.86 16.22% 7,183,147,641.13
Equity attributable to shareholders
6,459,078,378.38 5,595,121,383.96 15.44% 4,833,721,630.08
of the listed company (RMB)
VII Accounting Data Differences under Chinese Accounting Standards (CAS) and
International Financial Reporting Standards (IFRS) and Foreign Accounting Standards
1. Net Income and Equity Differences under CAS and IFRS
□ Applicable √ Not applicable
No such differences for the Reporting Period.
2. Net Income and Equity Differences under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
No such differences for the Reporting Period.
VIII Key Financial Information by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Sales revenue 2,173,056,581.04 1,497,071,183.55 1,673,566,893.29 1,624,630,390.67
Net income attributable to
407,764,742.43 141,125,149.22 248,593,418.78 351,257,334.50
shareholders of the listed company
Net income attributable to
shareholders of the listed company
356,588,955.68 127,366,058.44 245,301,628.24 340,200,726.34
before nonrecurring gains and
losses
Net cash flows from operating
648,773,393.57 -223,408,169.49 746,820,198.07 -241,270,709.37
activities
Indicate by tick mark whether any of the financial data in the table above or their summations differs materially from what have been
disclosed in the Company’s quarterly or semi-annual reports.
□ Yes √ No
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Gujing Aged Original Spirits Annual Report 2017
IX Nonrecurring Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
Item 2017 2016 2015 Note
Gains and losses on disposal of non-current
assets (inclusive of offset allowance for asset -10,659,063.45 -6,319,619.72 -990,695.19
impairments)
Government subsidies charged to current
profit and loss (exclusive of government
subsidies given in the Company’s ordinary 34,257,968.39 25,336,275.56 19,931,320.03
course of business at fixed quotas or amounts
as per government’s uniform standards )
Gains and losses on changes in fair value of
trading financial assets and liabilities &
investment income from disposal of trading
financial assets and liabilities and 54,544,637.44 16,263,956.97 7,842,274.38
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 accounts receivable which are tested 491,989.18 0.00 0.00
individually for impairment
Non-operating revenue and expense other
27,140,455.30 14,343,655.95 16,973,709.12
than above
Less: Income tax effects 25,366,619.70 12,229,198.63 10,939,033.52
Non-controlling interests effects (net
1,126,090.93 299,105.29 0.00
of tax)
Total 79,283,276.23 37,095,964.84 32,817,574.82 --
Explanation of why the Company classifies an item as a nonrecurring gain/loss according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Nonrecurring Gains and
Losses, or reclassifies any nonrecurring gain/loss item listed in the said explanatory announcement as a recurring gain/loss:
□ Applicable √ Not applicable
No such cases for the Reporting Period.
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Gujing Aged Original Spirits Annual Report 2017
Part III Business Summary
I Main Business Scope of the Company in Reporting Period
Is the Company subject to any disclosure requirements for special industries?
No.
The Company primarily produces and markets distilled spirits.
As one of China’s traditional top eight liquor brands, the Company is the first distilled spirit listed company with both A and B
stocks. It is located in Bozhou City, Anhui Province in China, the hometown of historic figures Cao Cao and Hua Tuo, as well as one
of the world’s top 10 liquor-producing areas. No changes have occurred to the main business of the Company in the Reporting Period.
As the main product of the Company, the Gujing spirit originated as a “JiuYunChun Spirit”, together with its making secrets, being
presented as a hometown specialty by Cao Cao, a famous warlord in China’s history, to Emperor Han Xiandi (name: Liu Xie) in A.D.
196, and was continually presented to the royal house since then. With crystalline liquid, rich aroma, a fine flavor and a lingering
aftertaste, the Gujing spirit has helped the Company win four national distilled spirit golden awards, a golden award at the 13th SIAL
Paris, the title of China’s “Geographical Indication Product”, the recognition as a “Key Cultural Relics Site under the State
Protection”, the recognition with a “National Intangible Cultural Heritage Protection Project”, a Quality Award from the Anhui
provincial government, a title of “National Quality Benchmark”, among other honors.
In recent years, China’s top liquor companies have basically finished adjusting their teams, strategies, products, etc., and are
experiencing a continuous, strong recovery relying on their superior brand influence and product quality. The big picture for the
liquor industry has taken shape. Regional small and medium liquor producers are in face of a reshuffle, while regionally famous
liquor brands are busy dealing with competition from both larger and smaller fellow companies. As such, the liquor industry has
entered a new normal.
II Significant Changes in Major Assets
1. Significant Changes in Major Assets
Not applicable.
2. Major Assets Overseas
□ Applicable √ Not applicable
III Core Competitiveness Analysis
No significant changes occurred to the core competitiveness of the Company in the Reporting Period.
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Gujing Aged Original Spirits Annual Report 2017
Part IV Company Performance Discussion and Analysis
I Overview
In 2017, upholding the values of “Be Honest, Offer Quality Spirits, Be Stronger and Be Helpful to the Society”, the Company
effectively implemented its “Distilled Spirits 5.0” strategy and “Five-Star Operational Capability” strategy to improve its corporate
governance. As a result, its various operating objectives have been successfully fulfilled and its operational capability is improving.
For 2017, the Company recorded sales revenue of RMB6.968 billion, up 15.81% compared to 2016; pretax income of RMB1.612
billion, a 40.10% year-over-year increase; net income attributable to the Parent Company of RMB1.149 billion, rising 38.46% from
the year earlier; earnings per share of RMB2.28, 38.18% higher than 2016; and net operating cash flows of RMB931 million, going
down 21.32% on a year-over-year basis.
1. Put forward market construction steadily and improved brand influence continuously
(1) Focused on the development of main distilled spirits business and the operation of \"dual brands\", and plotted nationalized layout.
Continued to consolidate the advantages of Anhui market; continuously expanded Henan market, focused on the market potential of
the area; plotted strategic node market layout.
(2) Focused on consumption market, continuously deepened \"Three-Connection Project\", put priority on consumption cultivating,
ensured benign market development; continuously optimized sales organization structure, implemented decentralization to activate
development vitality, defined distinct responsibility and rights, conducted delayering, executed flat management, raised market
reaction rate.
(3) Further optimized the product system. Launched aged original spirits exploit pool, traditional 7 & 8 Chinese aged original spirits,
Gujing Distillery 1979/1963, 37℃ Bo JU (minus) etc.
(4) Continuously improved brand influence. Focused on various national media such as CCTV, established the brand resonance circle
of Hubei, Henan and Anhui. Continued to cooperate with CCTV Spring Festival Evening Gala, made an appointment at the World
Expo, and participated in international brand activities. The brand \"Yellow Crane Tower\" is awarded \"China Famous Brand\". The
brand value of Gujing Distillery reaches RMB 63.85 billion.
2. Adopted innovation management tool and method to improve scientific and technological innovation level
(1) Explored internal marketization, generated endogenous power. Brought forth new ideas in purchase, logistics and production
mode. Optimized organization structure and talent allocation, boosted the work shift among talented people at every level; focused on
\"developing the enterprise via masters and experts\", strengthened the cooperation with universities, research institutes and
professional training organizations, and built a multi-layer, multi-channel, multi-system and multi-mode employee studying and
training platform.
(2) Increased scientific and technological innovation, achieved striking scientific research achievements. The National Distilled
Spirits Health Research Institute, being the first professional Distilled Spirits health research institution in China, was established.
The whole life cycle quality control system was put into operation and thus a whole life cycle quality tracing chain is formed. 1
scientific research achievement was identified by China National Light Industry Council. 2 local standards of Anhui Province were
approved and released successfully. The place of origin of Gujing Spirits is Bozhou, one of the World's Top Ten Spirits Producing
Areas named by China Alcoholic Drinks Association. The Company won the title of \"2017 National Intellectual Property
Demonstration Enterprise\".
3. With the users as the center, enhanced informatization construction and application
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Gujing Aged Original Spirits Annual Report 2017
The Company has completed the informationalized basic architecture of the call center +CRM system, operation network, online
Gujing and business process management (BPM), built the unified guidance platform, connected online and offline system, guided
one-stop experiential consumption; built personalized experience center and experience service platform, and provided the users with
experience and service of one-stop application and consumption.
4. Strengthening the Party's leadership of ideology and deeply carrying out the institutionalization and normalization of “Two learn
one to do learning education”
(1) The Company has established the work aim of \"establishing, revitalizing and stabilizing the enterprise through Party building\",
the work policy of \"undertaking Party building by centering around operation and promoting the development by undertaking Party
building\" and the Party building strategy of \"integration of Party governance\", intensified the decision making about \"three important
matters and one large matter\", insisted on the principle of the Party assuming the responsibility for cadres' affairs, strengthened the
Party's management and supervision of cadres, stuck to the employment standard of \"good character, good ability, diligence and
honesty\", continuously deepened the reform of cadres selection and appointment system and carried forward the normalization of
strict management of cadres.
(2) The Company has steadily carried out the Party's mass line education practice activity, the educational activities themed with
“three-strict and three-honest”, the learning and education activities themed with \"Two learn one to do learning education\", the
educational activities themed with \"stressing politics, emphasizing rules and setting an example\" and thus greatly improved the work
style and mental outlook of all Party members and management personnel.
5. Pressure and weaknesses in the Company during the Reporting Period
(1) Pressure of the obviously intensified concentration ratio of the industry, increased development speed of leading distilled spirits
enterprises, aggravated competition situation, more significant differentiation.
(2) Insufficient brand pull-power and resources-driven pressure-fed growth.
(3) Insufficient endogenous power and poor talent structure of the enterprise.
II Analysis of Main Business
1. Summary
See relevant contents of “I Overview” in “Management Discussion and Analysis”, herein.
2. Revenue and Cost
(1) Breakdown of Sales Revenue
Unit: RMB
2017
Percentage of total Percentage of total Change
Sales revenue Sales revenue
sales revenue (%) sales revenue (%)
Total 6,968,325,048.55 100% 6,017,143,660.56 100% 15.81%
By operating division
Manufacturing 6,968,325,048.55 100.00% 6,017,143,660.56 100.00% 15.81%
By product category
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Gujing Aged Original Spirits Annual Report 2017
Distilled spirits 6,822,053,599.85 97.90% 5,876,233,721.58 97.66% 16.10%
Hotel services 84,238,705.54 1.21% 83,773,044.79 1.39% 0.56%
Other 62,032,743.16 0.89% 57,136,894.19 0.95% 8.57%
By operating segment
North China 330,003,884.22 4.74% 345,881,952.52 5.75% -4.59%
Central China 6,270,100,660.83 89.98% 5,285,863,801.21 87.84% 18.62%
South China 363,895,263.98 5.22% 383,674,353.55 6.38% -5.16%
Overseas 4,325,239.52 0.06% 1,723,553.28 0.03% 150.95%
(2) Operating Division, Product Category or Operating Segment Contributing over 10% of Sales Revenue
or Income
√ Applicable □ Not applicable
Unit: RMB
YoY change in
Gross margin YoY change in YoY change in
Sales revenue Cost of sales gross margin
percentage sales revenue cost of sales
percentage
By operating division
Manufacturing 6,968,325,048.55 1,642,588,056.43 76.43% 15.81% 7.81% 1.75%
By product category
Distilled spirits 6,822,053,599.85 1,585,856,065.56 76.75% 16.10% 9.26% 1.45%
Hotel services 84,238,705.54 35,725,602.03 57.59% 0.56% 0.56% 0.00%
Other 62,032,743.16 21,006,388.84 66.14% 8.57% -42.60% 30.18%
By operating segment
North China 330,003,884.22 127,739,068.90 61.29% -4.59% 0.30% -1.89%
Central China 6,270,100,660.83 1,379,229,267.57 78.00% 18.62% 9.07% 1.93%
South China 363,895,263.98 134,692,490.55 62.99% -5.16% 2.61% -2.80%
Overseas 4,325,239.52 927,229.41 78.56% 150.95% 117.43% 3.31%
Main 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 2017 2016 Change
Distilled spirits Unit sales Ton 84,034.04 81,634.15 2.94%
brewage Output Ton 81,512.19 83,766.51 -2.69%
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Gujing Aged Original Spirits Annual Report 2017
Inventory Ton 10,072.26 12,594.11 -20.02%
Reason for any over 30% YoY movements in the data above:
□ Applicable √ Not applicable
(4) Execution Progress of Major Signed Sales Contracts in Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Cost of Sales
By operating division
Unit: RMB
2017
Operating Percentage of Percentage of
Item Change
division Cost of sales total cost of sales Cost of sales total cost of sales
(%) (%)
Food
Direct materials 1,206,208,660.68 73.43% 1,079,095,302.80 70.83% 11.78%
manufacturing
Food
Direct labor cost 168,690,378.21 10.27% 164,611,344.55 10.80% 2.48%
manufacturing
Food Manufacturing
128,448,515.45 7.82% 127,651,145.25 8.38% 0.62%
manufacturing expenses
Food
Fuels 82,508,511.22 5.02% 80,108,080.65 5.26% 3.00%
manufacturing
By product category
Unit: RMB
2017
Operating division Percentage of total Percentage of total Change
Cost of sales Cost of sales
cost of sales (%) cost of sales (%)
Distilled spirits 1,585,856,065.56 96.50% 1,451,465,873.25 95.27% 9.26%
Hotel services 35,725,602.03 2.20% 35,526,066.93 2.33% 0.56%
Other 21,006,388.84 1.30% 36,593,839.33 2.40% -42.60%
(6) Change in Scope of Consolidated Financial Statements for Reporting Period
√ Yes □ No
The Company newly established subsuaiaries Anhui RunAnXinKe Testing Technology Co., Ltd, Suizhou Junhe Commercial and
Trading Co., Ltd, and Hubei Hechuyuan Commercial and Trading Co., Ltd; The Company liquidated its subsidiary Bozhou Gujing
Distillery Marketing Co., Ltd in the current year.
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Gujing Aged Original Spirits Annual Report 2017
(7) Major Change in Business Scope or Product or Service Range in Reporting Period
□ Applicable √ Not applicable
(8) Main Customers and Suppliers
Main customers:
Total sales to top five customers (RMB) 1,279,318,920.38
Total sales to top five customers as a percentage of the total
18.36%
sales for the Reporting Period (%)
The related-party sales from sales to top five customers as a
0.00%
percentage of the total sales for the Reporting Period (%)
Information about top five customers
As a percentage of the total sales for the
No. Customer Sales amount (RMB)
Reporting Period (%)
1 Distributor A 717,839,066.07 10.30%
2 Distributor B 224,804,814.64 3.23%
3 Distributor C 160,664,446.50 2.31%
4 Distributor D 92,747,944.62 1.33%
5 Distributor E 83,262,648.55 1.19%
Total -- 1,279,318,920.38 18.36%
Other information about the main customers
□ Applicable √ Not applicable
Main suppliers
Total purchases from top five suppliers (RMB) 506,177,199.79
Total purchases from top five suppliers as a percentage of the
33.36%
total purchases for the Reporting Period (%)
The related-party purchase of purchases from top five suppliers
as a percentage of the total purchases for the Reporting Period 0.00%
(%)
Information about top five suppliers
As a percentage of the total purchases for
No. Supplier Purchase amount (RMB)
the Reporting Period (%)
1 Supplier A 234,449,457.90 15.45%
2 Supplier B 93,364,050.14 6.15%
3 Supplier C 89,157,945.21 5.88%
4 Supplier D 56,118,568.95 3.70%
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Gujing Aged Original Spirits Annual Report 2017
5 Supplier E 33,087,177.59 2.18%
Total -- 506,177,199.79 33.36%
Other information about the main suppliers
□ Applicable √ Not applicable
3. Expense
Unit: RMB
2017 2016 Change Reason for material change
Selling expenses 2,170,081,383.54 1,980,127,377.89 9.59%
Administrative expenses 603,552,959.10 556,513,607.99 8.45%
Finance costs -25,927,285.82 -30,253,967.33 14.30%
4. Research and Development Expense
√ Applicable □ Not applicable
We carried out R&D projects in the current year to study and develop new products, improve the quality of our products, study the
intelligent brewage technique and new brewage technique.
Our achievements in R&D: The National Distilled Spirits Health Research Institute, being the first professionaldistilled spirits health
research institution in China, was established. The whole life cycle quality control system was put into operation and thus a whole
life cycle quality tracing chain was formed. 1 scientific research achievement was identified by China National Light Industry
Council. 2 local standards of Anhui Province were approved and released successfully. The place of origin of Gujing Spirits is
Bozhou, one of the World's Top Ten Spirits Producing Areas named by China Alcoholic Drinks Association. The Company won the
title of \"2017 National Intellectual Property Demonstration Enterprise\".
Information about R&D input
2017 2016 Change
Number of R&D personnel 620 586 5.80%
R&D personnel as a percentage
7.76% 10.14% -2.38%
in the total employees
R&D input (RMB) 220,278,527.92 189,540,000.00 16.22%
R&D input as a percentage in
3.16% 3.15% 0.01%
operating revenues
Capitalized R&D input (RMB) 0.00 0.00 0.00%
Capitalized R&D input as a
percentage in the total R&D 0.00% 0.00% 0.00%
input
Reasons for any significant YoY change in the percentage of the R&D input in the operating revenues
□ Applicable √ Not applicable
Reason for any sharp variation in the percentage of the capitalized R&D input and rationale
□ Applicable √ Not applicable
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Gujing Aged Original Spirits Annual Report 2017
5. Cash Flows
Unit: RMB
Item 2017 2016 Change
Subtotal of cash generated by
7,472,916,271.43 7,393,896,952.67 1.07%
operating activities
Subtotal of cash used in
6,542,001,558.65 6,210,665,144.61 5.33%
operating activities
Net cash flows from operating
930,914,712.78 1,183,231,808.06 -21.32%
activities
Subtotal of cash generated by
5,637,814,765.40 3,411,470,839.90 65.26%
investing activities
Subtotal of cash used in
5,770,329,877.85 4,952,490,817.51 16.51%
investing activities
Net cash flows from investing
-132,515,112.45 -1,541,019,977.61 91.40%
activities
Subtotal of cash generated by
0.00 1,000,000.00 -100.00%
financing activities
Subtotal of cash used in
302,160,000.00 155,736,537.45 94.02%
financing activities
Net cash flows from financing
-302,160,000.00 -154,736,537.45 -95.27%
activities
Net increase in cash and cash
496,239,600.33 -512,524,707.00 196.82%
equivalents
Explanation of why the data above varied significantly
√ Applicable □ Not applicable
(1) Net cash flows from investing activities in the Reporting Period was RMB-132,515,112.45, up by 91.40% as compared with last
year, mainly due to the increase of financial products due.
(2) Net cash flows from financing activities in the Reporting Period was RMB-302,160,000.00, down by 95.27% as compared with
last year, mainly due to the increase of dividend distribution.
Reason for any big difference between the net operating cash flow and the net profit for the Reporting Period
□ Applicable √ Not applicable
III Non-Core Business Analysis
□ Applicable √ Not applicable
IV Analysis of Assets and Liabilities
1. Material Change in Asset Composition
Unit: RMB
~ 16 ~
Gujing Aged Original Spirits Annual Report 2017
December 31, 2017 December 31, 2016
Change in
Percentage of Percentage of
percentage Reason for material change
Value total assets Value total assets
(%)
(%) (%)
Monetary funds 1,484,088,626.40 14.62% 532,909,026.07 6.10% 8.52%
Accounts
22,466,143.06 0.22% 12,287,262.88 0.14% 0.08%
receivable
Inventories 2,064,130,297.51 20.33% 1,786,433,036.50 20.45% -0.12%
Investment
5,343,777.33 0.05% 8,402,944.74 0.10% -0.05%
property
Fixed assets 1,792,254,178.56 17.65% 1,865,691,585.06 21.36% -3.71%
Construction in
54,496,798.56 0.54% 71,771,324.26 0.82% -0.28%
progress
2. Assets and Liabilities Measured at Fair Value
√ Applicable □ Not applicable
Unit: RMB
Gains/losses on
Cumulative fair Provisions for
fair value Purchased in Sold in the
Opening value changes impairment for Closing
Item changes in the the Reporting Reporting
balance charged to the Reporting balance
Reporting Period Period
equity Period
Period
Financial assets
1. Financial
assets measured
at fair value with
fair value
changes included
in the profit and 429,190.68 -113,260.71 0.00 0.00 1,715,322.51 5,714,103.00 99,800.76
loss for the
Reporting Period
(excluding
derivative
financial assets)
2.
Available-for-sale 404,029,552.27 0.00 23,168,465.99 0.00 227,763,351.49 188,750,268.72 517,086,347.91
financial assets
Subtotal of
404,458,742.95 -113,260.71 23,168,465.99 0.00 229,478,674.00 194,464,371.72 517,186,148.67
financial assets
Total of the 404,458,742.95 -113,260.71 23,168,465.99 0.00 229,478,674.00 194,464,371.72 517,186,148.67
~ 17 ~
Gujing Aged Original Spirits Annual Report 2017
above
Financial
0.00 0.00 0.00 0.00 0.00 0.00 0.00
liabilities
Material change in the measurement attributes of the main assets in the Reporting Period:
□ Yes √ No
3. Restricted Asset Rights as of End of Reporting Period
Item Closing book value (RMB) Reason
Structured deposits which cannot be taken
bank deposit 450,000,000.00
in advance will expire in 3 months.
Drawing a note as a pledge of bank deposit
Monetary funds 10,000,000.00
receipt
Bill receivable 3,000,000.00 Bill pledge
Total 463,000,000.00
~ 18 ~
Gujing Aged Original Spirits Annual Report 2017
V Investments Made
1. Total Investment Amount
√ Applicable □ Not applicable
Total investment amount of Reporting Period (RMB) Total investment amount of last year (RMB) Change
2,413,963,351.49 1,032,262,513.42 133.85%
2. Material Equity Investments Made in Reporting Period
□ Applicable √ Not applicable
3. Material Non-Equity Investments Ongoing in Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
√ Applicable □ Not applicable
Unit: RMB
Gain/los
s on fair Cumulative
Code of Initial Gain/loss in
Variety of Name of Accounting value fair value Purchased in Sold in the Source of
Opening the Closing book
securitie investment measureme changes changes the Reporting Reporting Accounting title
securities securities book value Reporting value funds
nt model in the charged to Period Period
s cost Period
Reportin equity
g Period
~ 19 ~
Gujing Aged Original Spirits Annual Report 2017
Available-for-sa
Domestic/overse 70,317,243.9 Fair value 73,172,089.9 33,771,733.8 106,943,823. Self-owne
000001 PAYH 0.00 0.00 0.00 le financial
as stock 8 method 0 0 70 d funds
asset
Available-for-sa
Domestic/overse 44,385,674.2 Fair value 51,177,224.0 27,763,351.4 17,075,291.0 71,313,507.0 Self-owne
601988 ZGYH 9,113,956.55 334,266.03 le financial
as stock 0 method 0 9 7 0 d funds
asset
Available-for-sa
Domestic/overse 91,133,996.8 Fair value 130,191,424. -39,057,427. 138,873,090. 47,739,094. Self-owne
600373 ZWCM 0.00 0.00 le financial
as stock 0 method 00 20 87 07 d funds
asset
Guangfa
Nest Low
Risk No. Available-for-sa
150,000,000. Fair value 149,488,814. 32,801,886.7 2,801,886.7 127,154,958. Self-owne
Funds 1E 7,666,143.71 0.00 le financial
00 method 37 8 8 08 d funds
Security asset
Investmen
t Funds
CITIC
Wings
Available-for-sa
Dapu No. 1 200,000,000. Fair value 11,674,059.1 200,000,000. 211,674,059. Self-owne
Funds 0.00 0.00 0.00 le financial
Asset 00 method 3 00 13 d funds
asset
Manageme
nt Plan
555,836,914. 404,029,552. 23,168,465.9 227,763,351. 188,750,268. 50,875,246. 517,086,347.
Total -- -- --
98 27 9 49 72 88
Disclosure date of the announcement
about the board’s consent for the N/A
securities investment
~ 20 ~
Gujing Aged Original Spirits Annual Report 2017
Disclosure date of the announcement
about the general meeting’s consent N/A
for the securities investment (if any)
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable
Unit: RMB’0,000
Proportion
of closing
Actual
Purchased in investment
Relationship Initial Opening Sold in the Impairment Closing gain/loss in
Related Type of the amount in
Operator with the investment Starting date Ending date investment Reporting provision (if investment the
transaction derivative Reporting the
Company amount amount Period any) amount Reporting
Period Company’s
Period
closing net
assets
Reverse
Reverse
repurchase
Naught No repurchase of 0.00 01/18/2017 01/09/2018 0.00 218,620 213,620 0.00 5,000 0.77% 343.09
of national
national debt
debt
Total 0.00 -- -- 0.00 218,620 213,620 0.00 5,000 0.77% 343.09
Capital source for derivative investment Company’s own funds
Lawsuits involved (if applicable) Not applicable
Disclosure date of board announcement approving
08/30/2013
derivative investment (if any)
Disclosure date of shareholders’ meeting
Not applicable
announcement approving derivative investment (if
~ 21 ~
Gujing Aged Original Spirits Annual Report 2017
any)
Analysis of risks and control measures associated with
derivative investments held in the Reporting Period
The Company had controlled the relevant risks strictly according to the Derivatives Investment Management System.
(including but not limited to market risk, liquidity risk,
credit risk, operational risk, legal risk, etc.)
Changes in market prices or fair value of derivative
investments during the Reporting Period (fair value
Naught
analysis should include measurement method and
related assumptions and parameters)
Significant changes in accounting policies and specific
accounting principles adopted for derivative
Naught
investments in the Reporting Period compared to
previous reporting period
Based on the sustainable development of the main business and the sufficient free idle money, the Company increased the profits through
investing in the reasonable financial derivative instruments, which was in favor of improving the service efficiency of the idle funds. In
order to reduce the investment risks of the financial derivative instruments, the Company had set up corresponding supervision
Opinion of independent directors on derivative mechanism for the financial derivative instrument business and formulated reasonable accounting policy as well as specific principles of
investments and risk control 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
~ 22 ~
Gujing Aged Original Spirits Annual Report 2017
(1) Overview of the Use of Raised Funds
√ Applicable □ Not applicable
Unit: RMB’0,000
Proportion of
Total amount of Total amount of
Total amount of the total amount Usage and Amount of the
Total amount of the raise funds the Total amount of
the used raise of the whereabouts of raise funds
Total amount of the which changed accumulative the raise funds
Raised years Raised methods funds of the accumulative the raise funds which left
the raise funds accumulative the usage during raise funds had not been
Reporting raise funds had not been unused over 2
used raise funds the Reporting which changed used
Period which changed used years
Period the usage
the usage
Supplying
2011 Private offering 122,749.95 620.98 109,369.10 0.00 0.00 0.00% 4,704.04 working capital 0.00
permanently
Total -- 122,749.95 620.98 109,369.10 0.00 0.00 0.00% 4,704.04 -- 0.00
Overview of the use of raised funds
The project of raised funds of the Company had been completed, and the surplus raised funds have been supplied to working capital of the Company permanently. (for details, see the
Announcement on the Completion of the Raised Funds Project of the Company and Usage of Surplus Raised Funds to Supply Working Capital Permanently disclosed on www.cninfo.com.cn on
October 28, 2017)
(2) Projects Invested with Raised Funds as Promised
√ Applicable □ Not applicable
Unit: RMB’0,000
Projects invested with raised Project Raised capital Input in the Accumulative Investment Date when the Profit Reach the Material
Investment after
capital as promised and changed or input as Reporting input up to the progress up to project generated in expected change in the
adjustment (1)
investments with over-raised not (including promised Period period-end (2) the period-end reaches the the Reporting profit or not project
~ 23 ~
Gujing Aged Original Spirits Annual Report 2017
capital partially (%) (3)＝ expected Period feasibility or
changed) (2)/(1) usable not
condition
Commitment investment projects
Couldn’t be
Technological Transform on the
Brewage of High-quality Base No 13,500 12,194.42 0.00 12,247.90 100.44% 04/30/2014 individually N/A No
Wine
measured
Couldn’t be
Construction of Base Wine
Blending & Filling Centre and No 68,600 65,921.06 454.39 61,596.84 93.44% 04/30/2014 individually N/A No
Ancillary Facilities
measured
Couldn’t be
Construction of Marketing
No 27,500 27,500 166.59 18,499.3 67.27% 04/30/2014 individually N/A No
Network
measured
Couldn’t be
Construction of Brand Promotion No 17,000 17,000 0.00 17,025.06 100.15% 12/31/2012 individually N/A No
measured
Subtotal of promised investment
-- 126,600 122,615.48 620.98 109,369.1 -- -- -- --
projects
Investments of over-raised capital
N/A
Total -- 126,600 122,615.48 620.98 109,369.1 -- -- -- --
Reason for failing to reach
scheduled progress or projected
Naught
income (explain one project by
one project)
~ 24 ~
Gujing Aged Original Spirits Annual Report 2017
Explanation on significant
Naught
changes in feasibility of projects
Amount, usage and usage progress
Not applicable
of over-raised capital
Change of the implementation
location of any raised funds Not applicable
investment project
Adjustment of the implementation
method of any raised funds Not applicable
investment project
Applicable
In accordance with the explanation of the Particulars on the Private Issuance of A-share of Anhui Gujing Distillery Co., Ltd. and the Listing Announcement,
“Before the raised proceeds being in place, the Company can use the self-raised proceeds to input preliminarily in accordance with the actual progress of
Advanced input and exchange of
raised proceeds investment projects; after the raised proceeds being in place, the Company can use the raised proceeds to replace the self-raised proceeds
any raised funds investment
preliminarily input”. And the Proposal on Using the Raised Proceeds to Replace the Self-raised Proceeds Preliminarily Input to the Raised Proceeds
project
Investment Projects was reviewed and approved at the 7th Session of the 6th Board of Directors, which agreed to use the raised proceeds to replace the
self-raised proceeds of RMB27,058,143.42 preliminarily input to the raised proceeds investment projects. The above funds replacement was completed on
January 6, 2012.
Idle raised capital for temporarily
Not applicable
supplementing working capital
Applicable
Outstanding raised funds in 1. The Company strictly carried out the purchase system and the project bidding way, which better controlled the project construction and purchase cost and
project implementation and under the premise of guaranteeing the project quality with the principles of practicing strict economy, the Company further strengthened the project expenses
reasons control, supervisor and management in the process of the execution which reduced the total cost of the investment project of the raised funds. 2. The surplus
reason of the marketing network construction project was due to the rather big changes of the liquor market environment and the third party logistics system
~ 25 ~
Gujing Aged Original Spirits Annual Report 2017
gradually becoming more and more mature and at the same time, the Company would no more execute the center project of Hefei Logistics for reducing the
fixed operating cost of the Company, which caused the capital surplus of the project.
Usage and whereabouts of unused
Supplying working capital permanently
raise capital
Problems found in the usage and
disclosure affairs of raised capital N/A
and other situations
(3) Change of Projects Invested with Raised Funds
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VI Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Interests
□ Applicable √ Not applicable
VII Main Controlled and Joint Stock Companies
√ Applicable □ Not applicable
Main subsidiaries and joint stock companies with an over 10% influence on the Company’s net profit
~ 26 ~
Gujing Aged Original Spirits Annual Report 2017
Unit: RMB
Relationship Main
Company business
with the Registered capital Total assets Net assets Sales revenue Operating income Net income
name scope
Company
Wholesales
of distilled
spirit,
Bozhou
construction
Gujing Sales Subsidiary 84,864,497.89 2,140,703,978.72 137,636,029.17 6,107,301,015.37 533,807,314.25 385,552,253.52
materials,
Co., Ltd
feeds and
assistant
materials
Anhui Manufacture
Longrui and sale of
Subsidiary 86,660,268.98 270,560,984.78 205,838,756.22 185,282,209.22 23,345,864.92 20,194,802.65
Glass Co., glass
Ltd products
Wuhan
Tianlong
Production
Yellow
and sales of
Crane Tower Subsidiary 400,000,000.00 720,328,676.42 479,895,292.81 689,103,629.96 107,179,064.59 81,445,925.49
distilled
Wine
spirit
Industry Co.,
Ltd
Shanghai Hotel
Gujing management
Subsidiary 54,000,000.00 208,645,223.85 78,269,013.39 76,853,167.81 8,538,909.33 5,255,738.45
Jinhao Hotel and house
Management lease
~ 27 ~
Gujing Aged Original Spirits Annual Report 2017
Co., Ltd.
Subsidiaries obtained or disposed in the Reporting Period
√ Applicable □ Not applicable
How subsidiary was obtained or disposed in the
Subsidiary name Impact on overall operation and results
Reporting Period
Optimizing the internal business structure and enhancing the endogenous
Anhui RunAnXinKe Testing Technology Co., Ltd. Invest and set up
power
Strengthening the development of the Company’s main business distilled
Suizhou Junhe Commercial and Trading Co., Ltd Invest and set up spirit, speeding the national layout of products market, and improving the
Company’s brand influence and business scale.
Strengthening the development of the Company’s main business distilled
Hubei Hechuyuan Commercial and Trading Co., Ltd Invest and set up spirit, speeding the national layout of products market, and improving the
Company’s brand influence and business scale.
Bozhou Gujing Distillery Marketing Co., Ltd Cancellation of the liquidation
VIII Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
IX Outlook for the Future Development of the Company
1. Development strategy of the Company
(1) Firmly boost \"Strategy 5.0, Five-Star Operation” Strategy
Comprehensively fulfill Strategy 5.0 and have the \"User-Centered\" thought fully and deeply implemented in the Company. Solidly create the \"Five-Star Operation\", enhance competitive force,
improve quality and efficiency, optimize services and promote healthy and efficient operation of the enterprise.
(2) Firmly boost reform and innovation strategy
~ 28 ~
Gujing Aged Original Spirits Annual Report 2017
Deeply boost marketing innovation, technological innovation and mechanism innovation and generate endogenous power of the enterprise.
(3) Firmly create \"Talent Highland\" strategy
Intensify talent recruitment and attraction and establish flexible talent attraction and wisdom experience borrowing mechanism. Innovate talent training mode and promote independent
cultivation & development and absorption & attraction simultaneously.
(4) Firmly boost the strategy of integration of Party governance
Comprehensively strengthen Party discipline, continuously strengthen\"four-consciousness\", and strengthen political leadership. Need to take firm political stand, strengthen political orientation,
practicallystrengthen\"four-consciousness\". Thoroughly study and implement the spirit of the 19th National Congress of the Communist Party of China and Xi Jinping Thought on Socialism
with Chinese Characteristics for a New Era, and guide all the Party members to enhance their thought and action consciousness to maintain the core.
2. Operating revenue plan of the Company in 2018
For 2018, the Company expects to reach sales revenue of RMB7.965 billion (a 14.31% year-over-year increase) and pretax income of RMB1.939 billion (a 20.30% rise from 2017).
3. Operating risk of the Company
(1) The adverse effect of the systematic risk in macro-economic environment on the development of the industry and the Company.
(2) Impact of industrial policy adjustment and change on the sustainable development of the Company.
(3) Impact of the change of consumption behaviors and habits on the consumption crowds and trend replacement of distilled spirits.
4. Operating measures
(1) Marketing
Build Anhui market and accelerate Henan's market construction. Intensify strategic node market promotion, establish the commanding point of the brand and radiate across the country.
Accelerate the upward movement of the product structure and take efforts to develop secondary high-end and high-end products. Continue to follow a strategy of “setting a higher market
positioning and meanwhile maintaining a higher quality, from the international market to the domestic market, and focusing on both international and domestic market”.
(2) Product management
Continuously boost intelligent and green brewing process, implement quality upgrading action plan, enhance information, scientific and systematic management of product quality, lay a solid
foundation for quality management. Make full use of the platform of National Distilled Spirits Health Research Institute and continuously strengthen the research on heath factors in distilled
spirits. Continue to deeply boost product, technology and operation standardization and lay a solid foundation for the Company to implement automation and intellectualization.
(3) Management innovation
Focus on the users, accelerate the implementation of Strategy 5.0, achieve business process evolution, introduce the \"User-Centered\" thought in the design and construction of Strategy 5.0, and
continuously promote the transformation of business model of the enterprise. Deeply drive internal marketization and independent legal person system. Facilitate budget management
informatization. Build data standardization, strengthen statistical analysis and application and comprehensively deepen the budget management system.
~ 29 ~
Gujing Aged Original Spirits Annual Report 2017
(4) Human resource
Build the development channel and improve the incentive mechanism. Advocate a \"united, tense, serious and lively\" office atmosphere, establish a sound multi-level talent cultivation system,
and further improve the various talent assessment system and incentive and constraint mechanism. Establish talent \"craftsman pool\" and \"elite pool\",get through the \"Management Channel\"
and \"Technology Channel\", and build the \"Innovation Platform\" and \"Entrepreneurship Platform\".
(5) Corporate cultural construction
Thoroughly study and implement the spirit of the 19th National Congress of the Communist Party of China and Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era,
and guide all the Party members to enhance their thought and action consciousness to maintain the core. Focus on the general keynote of \"establishing, revitalizing and stabilizing the enterprise
through Party building\", tighten the politics string, build the organization wall, main a strict standard in probity and ensure co-frequency resonance of Party governance. Continuously
strengthen \"four-consciousness\", and strengthen political leadership. Deepen the implementation of Gujing’s core values and consolidate Gujing new thought guidance.
In 2018, under the guidance of the spirit of the 19th National Congress of the Communist Party of China, the Board of Directors of the Company stay true to the original intention, keep firmly
in mind the mission goal, vigorously promote contribution culture and NieGuangrong's spirit; Focus on \"Strategy 5.0, Five-Star Operation” Strategy, take the user as the center, take process
reengineering as the key, strengthen the marketing first policy, bring forth new ideas in system and mechanism, promote development power, build the Gujing invincible army that integrates
Party governance, and strive to realize the various operating indexes.
~ 30 ~
Gujing Aged Original Spirits Annual Report 2017
X Visits Paid to the Company for Purposes of Research, Communication, Interview, etc.
1. In this Reporting Period
□ Applicable √ Not applicable
~ 31 ~
Gujing Aged Original Spirits Annual Report 2017
Part V Significant Events
I Profit Distribution and Converting Capital Reserve into Share Capital for Common
Shareholders
Formulation, execution or adjustments of profit distribution policy, especially cash dividend policy, for common shareholders in this
Reporting Period
√ Applicable □ Not applicable
The 2016 Annual Meeting of Shareholders held on June 20, 2017 considered and approved the Company’s Interest Distribution
Scheme in 2016 that based on the total shares 503,600,000 of the Company on December 31, 2016, cash dividend was distributed at
RMB 6.00 per 10 shares(including tax), and the total distributed cash dividend was RMB302,160,000.00 (including tax).
Special explanation of cash dividend policy
Whether conformed with the regulations of the Articles of
association or the requirements of the resolutions of the Yes
shareholders’ meeting:
Whether the dividend standard and the proportion were definite
Yes
and clear:
Whether the relevant decision-making process and the system
Yes
were complete:
Whether the independent director acted dutifully and exerted the
Yes
proper function:
Whether the medium and small shareholders had the chances to
fully express their suggestions and appeals, of which their legal Yes
interest had gained fully protection:
Whether the conditions and the process met the regulations and
The cash dividend policy of the Company was not adjusted or
was transparent of the adjustment or altered of the cash dividend
altered
policy:
The Company’s plans (preplans) for distributing common stock dividend and turning capital reserve into share capital for the recent
three years (including the reporting year)
1. 2015 profits distribution plan of the Company: distributed the cash of RMB1.00 (tax included) for every 10 shares without any
converting capital reserve into share capital;
2. 2016 profits distribution plan of the Company: distributed the cash of RMB6.00 (tax included) for every 10 shares without any
converting capital reserve into share capital;
3. 2017 profits distribution proposal of the Company: distributed the cash of RMB10.00 (tax included) for every 10 shares without
converting capital reserve into share capital
Unit: RMB
Net profits Proportion in net Ratio of cash
Cash dividends Cash dividends in
Year attributable to profits attributable dividends in other
(tax included) other forms
forms
common to common
~ 32 ~
Gujing Aged Original Spirits Annual Report 2017
shareholders of the shareholders of the
Company in the Company in the
consolidated consolidated
statements for the statements for the
year year (%)
2017 503,600,000.00 1,148,740,644.93 43.84% 0.00 0.00%
2016 302,160,000.00 829,630,063.38 36.42% 0.00 0.00%
2015 50,360,000.00 715,578,369.68 7.04% 0.00 0.00%
The Company made profits in the Reporting Period and the profits distributable to common shareholders of the Company was
positive, but it did not put forward a preliminary plan for cash dividend distribution to its common shareholders
□ Applicable √ Not applicable
II Proposal for Profit Distribution and Converting Capital Reserve into Share Capital for this
Reporting Period
√ Applicable □ Not applicable
Bonus shares for every 10 shares (share)
Dividend for every 10 shares (RMB) (tax included) 10.00
Additional shares converted from capital reserves
for every 10 shares (share)
Total shares as the basis for the preliminary plan for 503,600,000
profit distribution (share)
Total cash dividends (RMB) (tax included) 503,600,000.00
Distributable profits (RMB) 4,103,151,843.38
Percentage of cash dividends in the total distributed 100%
profits
Cash dividend policy
The minimum proportion of cash dividend from profit distribution this time should be 40% when the Company distributed the profits
under the condition that the Company was in mature stage with large capital cost.
Details about the preliminary plan for profit distribution and converting capital reserves into share capital
The Company planned to based on the total shares at the year-end of 503,600,000 shares to distribute the dividends with a cash of
RMB10.00 (tax included) for each 10 shares with the total amount of RMB503,600,000.00 and the retained unallocated profits of
RMB3,599,551,843.38 would all transfer to the next year.
III Fulfillment of commitments
1. Commitments that the Company, the Company’s Shareholders, Actual Controller, Acquirers, Directors,
Supervisors, Executive Officers as well as Other Related Parties Fulfilled and Fai1ed to Fulfill on Time
during the Reporting Period
~ 33 ~
Gujing Aged Original Spirits Annual Report 2017
√ Applicable □ Not applicable
Commitment
Commitment Type Content Time Term Performance
party
Realize the tax
inclusive
income of
RMB805
million in
2017 and the
Anhui Gujing Complete the
Commitment net profit
Commitments in acquisition report or Distillery commitment
on operating margin of April 29, 2016 Y2017-Y2021
report on changes in equity Company on operating
result Wuhan Pride
Limited result in 2017
Yellow Crane
Tower
Distillery Co.,
Ltd. of the
year not less
than 11.00%
Whether the commitment was
Yes
performed on time or not
When the commitment failed to be
fulfilled on time, the specific reason
N/A
and the following work plan should be
given
In accordance with the equity transfer agreement signed by the Company with Wuhan Pride Investment Group Co., Ltd., and the
natural person Yan Hongye on the acquisition of Wuhan Pride Yellow Crane Tower Distillery Co., Ltd. (hereinafter referred to as
“Yellow Crane Tower”), the Company made a commitment on the sales revenue (tax inclusive) of Yellow Crane Tower as follows:
Unit: RMB’0,000
Time Y2017 Y2018 Y2019 Y2020 Y2021
Promised sales revenue (tax inclusive) 80,500.00 100,625.00 130,812.50 170,056.25 204,067.50
At the same time, within five years after the settlement day (excluding the year in which the settlement day of the targeted equity is
located), the annual net profit margin of Yellow Crane Tower (the actual net profit/sales revenue of Yellow Crane Tower in that year)
is no less than 11.00%. . If the audited net profit margin of Yellow Crane Tower is less than 11.00%, the Company shall compensate
for the difference in accordance with the agreement; if the net profit margin of Yellow Crane Tower is less than 11.00% for two
consecutive years, then The transferor has the right to repurchase all of the shares held by the Company in the Yellow Crane Tower,
and the repurchase price is RMB816 million.
The performance of the commitment on operating result of Yellow Crane Tower for 2017 in its separate financial statement was as
follows:
Unit: RMB’0,000
Item Actual amount Promised amount Difference Completion rate
~ 34 ~
Gujing Aged Original Spirits Annual Report 2017
Sales revenue (tax
80,625.12 80,500.00 125.12 100.16%
inclusive)
Net profit 8,144.95 7,568.38 576.57 107.62%
Net profit margin 11.82% 11.00% 0.82% 107.45%
2. Where there had been an Earnings Forecast for an Asset or Project and this Reporting Period was still
within the Forecast Period, Explain why the Forecast has been Reached for this Reporting Period.
□Applicable √ Not applicable
IV Occupation of the Company’s Funds by the Controlling Shareholder or its Related Parties
for Non-operating Purposes
□ Applicable √ Not applicable
No such cases in this Reporting Period.
V Explanations Given by the Board of Directors, the Supervisory Board and the Independent
Directors (if any) regarding the “Modified Auditor’s Report” Issued by the CPAs Firm for
this Reporting Period
□ Applicable √ Not applicable
VI YoY changes in accounting policies, estimations and methods
√ Applicable □ Not applicable
In 2017, the Ministry of Finance issued the Accounting Standards for Business Enterprises No. 42 - Non-current Assets and Disposal
Groups Held for Sale and Termination of Operations, the revised Accounting Standards for Business Enterprises No. 16 -
Government Subsidies, and the Notice on Revision and Issuance of Format of General Financial Statements of Enterprise (CaiKuai
[2017] No. 30). The Company has adopted the above-mentioned standards and notice to parepare the Financial Statements of 2017,
and the influences on financial statements of the Company are presented as follows:
No. Contents and reasons Name of the statement’s items and amounts
The Company would calculate the government subsidies
The non-operating income in 2017 decreased RMB
related to routine operating activities in 2017 into the
1 32,720,116.60, and those reclassified into other income was
item of other income. The comparative financial
RMB32,720,116.60.
statement in 2016 was not rearranged.
1. In 2017, the non-operating income decreased
RMB425,934.44, and the non-operating expenses decreased
The Company would calculate the profits or losses from
RMB171,171.17, and those reclassified into assets disposal
assets disposal in 2017 into the item of assets disposal
2 income was RMB254,763.27.
income. The comparative financial statement in 2016
2. The non-operating income in 2016 decreased
has been adjusted accordingly.
RMB345,705.61, and those reclassified into assets diaposal
income was RMB345,705.61.
~ 35 ~
Gujing Aged Original Spirits Annual Report 2017
VII Retroactive Restatement due to Correction of Material Accounting Errors in this
Reporting Period
□ Applicable √ Not applicable
No such cases in this Reporting Period.
VIII YoY Changes in the Scope of the Consolidated Financial Statements
√ Applicable □ Not applicable
The Company newly established subsuaiaries Anhui RunAnXinKe Testing Technology Co., Ltd, Suizhou Junhe Commercial and
Trading Co., Ltd, and Hubei Hechuyuan Commercial and Trading Co., Ltd; and liquidated its subsidiary Bozhou Gujing Distillery
Marketing Co., Ltd in the current year.
IX Engagement and Disengagement of CPAs Firm
Current CPAs firm
Name of the domestic CPAs firm Ruihua CPAs (LLP)
The Company’s payment for the domestic CPAs firm
(RMB’0,000)
Consecutive years of the audit service provided by
the domestic CPAs firm
Names of the certified public accountants from the
Zhang Liping, Zhang Xianfa
domestic CPAs firm
Reengage the CPAs firm at current period or not?
□ Yes √ No
CPAs firm, financial advisor or sponsor engaged for internal control audit
√ Applicable □ Not applicable
In 2017, the Company engaged the Ruihua CPAs (LLP) as the internal control audit CPAs of the Company.
X Possibility of Listing Suspension or Termination after Disclosure of this Report
□ Applicable √ Not applicable
XI Bankruptcy and Restructuring
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XII Significant Litigations and Arbitrations
□ Applicable √ Not applicable
~ 36 ~
Gujing Aged Original Spirits Annual Report 2017
No such cases in this Reporting Period.
XIII Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XIV Credit Conditions of the Company as well as its Controlling Shareholder and Actual
Controller
□ Applicable √ Not applicable
XV Implementation of any Equity Incentive Plan, Employee Stock Ownership Plan or other
Incentive Measures for Employees
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XVI Significant Related-party Transactions
1. Related-party Transactions Relevant to Routine Operation
□ Applicable √ Not applicable
No such cases in this Reporting Period.
2. Related Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Credits and Liabilities with Related Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Other Significant Related Transactions
□ Applicable √ Not applicable
~ 37 ~
Gujing Aged Original Spirits Annual Report 2017
No such cases in the Reporting Period.
XVII Significant Contracts and Execution
1. Entrustment, Contracting and Leasing
(1) Entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leasing
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Significant Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Entrusted Cash Management
(1) Entrusted Cash Management
√ Applicable □ Not applicable
Overviews of entrusted cash management during the Reporting Period
Unit: RMB'0,000
Overdue unrecovered
Specific type Capital resources Amount incurred Undue Balance
amount
Trust financial products Self-owned funds 124,100 119,100.00
Broker financial
Self-owned funds 38,000 38,000.00
products
Others Self-owned funds 49,748.87 49,572.52
Bank financial products Self-owned funds 155,000 12,000.00
Total 366,848.87 218,672.52
~ 38 ~
Gujing Aged Original Spirits Annual Report 2017
Particulars of entrusted cash management with single significant amount or low security, bad liquidity, and no capital preservation
Unit: RMB'0,000
Wheth Overv
er iew of
Amou Actual
Amou there the
nt of recove
nt Wheth is item
Metho actual ry of
Annua Estima withdr er go wealth and
d of profits profits
Name Type Type Resou l yield te awn throug manag the
Financ Initial Ended Use of payme or or
of the of the of the rce of for profit impair h ement relate
e date Date fund nt losses losses
trustee trustee product funds refere (if ment stator entrust d
determ in in
nce any) provis proced ment index
ination Report Report
ion (if ures plan for
ing ing
any) in inquiri
Period Period
future ng (if
or not any)
Nation
al
debt,
financi
al
bond,
short-t
erm
financi
al
Nest
Limite bond, 5.0%
Invest
d mediu of
ment Self-o
Liabilit m base Realiz
Manag Funds 12,000 wned 7.00% 280.19 Yes Yes
y term earnin ed
ement funds
Compa note, gs
Co.,
ny and ratio
Ltd
credit
debt
with
AA
credit
rating
or
above,
and
etc.
CITIC Limite Self-o Purcha 1.2%
Funds 20,000 8.00% 0 N/A Yes Yes
Wings d wned sing of
~ 39 ~
Gujing Aged Original Spirits Annual Report 2017
Asset Liabilit funds new produc
Manag y shares ts’ net
ement Compa offline value
Comp ny , and
any produc 20%
Limite ts with of
d fixed excess
earnin earnin
gs, gs
revers
e
repurc
hase
of
nation
al
debt,
and
etc.
Total 32,000 -- -- -- -- -- -- 280.19 -- -- -- --
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment for
entrusted asset management
□ Applicable √ Not applicable
(2) Entrusted Loans
□ Applicable √ Not applicable
No such cases in this Reporting Period.
4. Other Significant Contracts
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XVIII Social Responsibilities
1. Social Responsibilities Taken
The Company disclosed Social Responsibilities Report of Enterprises for 2017 on April 28, 2018. (for details,
seehttp://www.cninfo.com.cn)
~ 40 ~
Gujing Aged Original Spirits Annual Report 2017
2. Targeted Measures Taken to Help People Lift themselves out of Poverty
(1) Plan for Targeted Measures
In accordance with the \"organizations are responsible for villages and individuals are responsible for families” poverty alleviation
work arrangement of BozhouMunicipal Party Committee, the Company has established targeted support towards 176 poor families in
Bali village, Yanglou village and Wuma village, Wuma town, Qiaocheng District, Bozhou. The Company performs poverty
alleviation responsibility, sends relevant personnel to the poverty villages regularly or irregularly for investigation, organizes and
holds forum regularly, gathers advices from the villagers and comes up with specific solutions to the practical difficulties and
problems in the poor villages and poor families.
(2) Outline of Targeted Measures in the Reporting Period
① Providing poverty alleviation employment post. In accordance with the actual production situation of the Company, the Company
provides employment posts with relaxed conditions for children of poor families in three targeted poor administrative villages in
Wuma town. At present, 6 children of poor families have been employed by Gujing group and realized their aspirations for stable
economic income.
② Establishing financial poverty alleviation mechanism. To earnestly implement the financial poverty alleviation policy, the
Company discussed about relevant poverty alleviation policies and distributed a poverty alleviation fund of RMB 2,500/family/year
and RMB 30,000/family/year to 1,000 poor families and rural collective economic organizations respectively in 1,000 poor villages
designated by the municipal government in the \"Bank + Enterprise + Poor Family\" financial poverty alleviation separate-loan and
unified-repayment mode; moreover, the company also signed a three-year micro-credit poverty alleviation agreement with the third
party which provides another guaranteed income to the poor villages and families.
③ Helping the poor families sell \"native products\". First, the Company advised the employees to buy anti-season grapes from the
poor families. After the purchasing & selling information is sent out, the employees dedicated their love one after another to buying
the products actively which expressed their supports for poverty alleviation and showed their love. Via the activity, total 1,529 boxes
of grapes were purchased and the sales reached RMB 38,225. Second, the Company advised the employees to buy caring native
products. In order to promote the sales of the hand-made green \"native products\" in poor families in Sanyi town and Lumiao town,
the Company advised the employees to buy sweet potato noodles, dry red pepper, lotus root, sweet potato starch, potato and other
native products via the Company's WeChat platform so that the \"native products\" sales problem in poor families was solved.
④Conveying true care and love. In June, the Company held the \"Conveying True Care and Love\" poverty alleviation condolence
activity in Liuyuan Village Primary School, Mengcheng County. The Company sent extracurricular books, student desks & chairs,
school bags, air conditioners and other gifts to Liuyuan Village Primary School, Mengcheng County. This activity thoroughly
implements the \"Targeted Poverty Alleviation\" idea put forward by the Company and further cares for the growth of poor children
and passes on social love.
(3) Results of Targeted Measures
Connecting bali village, Wuma town to help 27 poor households, achieving all out of poverty.
(4) Subsequent Targeted Measure Plans
① Earnestly enforcing relevant provisions of the Municipal Party Committee and municipal government, and stick to the leading role,
set an example for the subordinates, fulfill poverty alleviation duty and lead all persons in charge of poverty alleviation in the
~ 41 ~
Gujing Aged Original Spirits Annual Report 2017
Company to comprehensively complete the poverty alleviation mission according to the \"organizations are responsible for villages
and individuals are responsible for families\" commitment.
② Fulfilling the targeted poverty alleviation and residency poverty alleviation duty. All persons in charge of poverty alleviation shall
continue to make efforts, visit poor families once a month at least; hold 4 \"Two Committees\" memberforums in administrative
villages each year at least, and understand and address the needs.
③ Establishing poverty alleviation incentive mechanism. In order to bring the poor families out of poverty, the Company must
highlight thought, ability and industry support, comprehensively stimulate the endogenous power of poor families in poor villages,
establish self-reliance awareness, and increase the confidence for overcoming poverty striving for relatively comfortable life.
④ Carrying out employment poverty alleviation. The Company actively works with the primary residency secretaries of three
administrative villages to attract ambitious underprivileged youngsters to the Company and thus expand the income channel of poor
families.
⑤ Continue to improve the financial poverty alleviation mechanism, faithfully implement the poverty alleviation credit agreement,
stick to distributing poverty alleviation fund to poor villages and poor families every quarter.
3. Particulars Relevant to Environmental Protection
Is the Company or any of its subsidiaries a heavily polluting business identified by the environmental protection authorities of China?
Yes
Name of Pollutant
Name of
major Quantity of Distribution Discharge discharge
company or Way of Total Permitted Excess
pollutant discharge of discharge concentratio standard
subsidiary discharge discharge discharge discharge
and typical outlet outlet n implemente
company
pollutant d
Anbui
Main
Gujing Directly
COD 1 discharge 60.2 ≤100 154.93 155.05 N/A
Distillery discharge
outlet
Co., Ltd.
Anbui
Main
Gujing Directly
NH3-N 1 discharge 5.89 ≤10 15.15 15.53 N/A
Distillery discharge
outlet
Co., Ltd.
Construction and operation of pollution prevention and management
Existing pollution facilities are running well and meet the discharge standard. The wastewater discharge meets the direct discharge
requirements in Table 2 of GB27631-2011 Discharge standard of Water Pollutants for Fermentation Alcohol and Distilled Spirits
Industry and the gas emission meets coal-fired boiler standard requirements in Table 1 of GB13271-2014 Emission Standard of Air
Pollutants for Boiler.
Environmental impact assessment of construction project and other administrative license situation in respect of environmental
protection
(1) The Gujing No. 9 Semi-Open Spirit Storehouse Renovation Project has carried out environmental impact assessment and
prepared the environmental impact assessment report, which has been approved by Bozhou Environmental Protection Bureau on
May 21, 2017. Please refer to BHB [2017] No. 62 document for details. The project is currently under construction;
(2) The Gujing No. 10 Open Spirit Storehouse and Spirit Recycling Workshop Renovation Project has carried out environmental
~ 42 ~
Gujing Aged Original Spirits Annual Report 2017
impact assessment and prepared the environmental impact assessment report, which has been approved by Bozhou Environmental
Protection Bureau on September 8, 2017. Please refer to BHB [2017] No. 139 document for details. The project is currently under
construction;
Emergency plan for sudden environment affairs
The Company has formulated the Emergency Plan of Anhui Gujing Distillery Company Limited for Sudden Environmental Pollution
Accident, which has been filed with municipal environmental protection bureau. Emergency plan drill has been carried out according
to relevant requirements.
Environmental self-monitoring scheme
The Company has formulated the Self-Monitoring Scheme of Key Pollution Source Enterprises under the National Monitoring and
published it on the website of Bozhou Environmental Protection Bureau.
Other environment information that should be disclosed
Anhui Longrui Glass Products Co., Ltd., a subsidiary of Anhui Gujing Distillery Company Limited (hereinafter referred to as the
Company), shares a set of treatment system for industrial and sanitary wastewater with the Company. The wastewater will be
discharged after processed by the sewage treatment station of the Company, which meets GB27631-2011 Discharge Standard of
Water Pollutants for Fermentation Alcohol and Distilled Spirits Industry. While the exhaust gas from glass furnaces will be
discharged through dust extraction, desulfurization and denitration, which meets GB9078-1996 Discharge Standard of Air Pollutants
for Industrial Furnaces.
Other related environment protection information
No
XIX Other Significant Events
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XX Significant Events of Subsidiaries
□ Applicable √ Not applicable
~ 43 ~
Gujing Aged Original Spirits Annual Report 2017
Part VI Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
Before Increase/decrease (+/-) After
Increase
Percentage New Bonus from Percentage
Number Other Subtotal Number
(%) issues shares capital (%)
reserve
1. Restricted shares 1,200 0.00% -1,200 -1,200 0 0.00%
1.1 Shares held by other
1,200 0.00% -1,200 -1,200 0 0.00%
domestic investors
Among which: Shares held
1,200 0.00% -1,200 -1,200 0 0.00%
by domestic juridical persons
2. Non-restricted shares 503,598,800 100.00% 1,200 1,200 503,600,000 100.00%
2.1 RMB common shares 383,598,800 76.17% 1,200 1,200 383,600,000 76.17%
2.2 Domestically listed
120,000,000 23.83% 0 0 120,000,000 23.83%
shares for foreign investors
3. Total shares 503,600,000 100.00% 0 0 503,600,000 100.00%
Reasons for the share changes
√Applicable □ Not applicable
During this Reporting Period, the shareholdings of outgoing senior management personnel in the Company were unlocked.
Approval of share changes
□ Applicable √ Not applicable
Transfer of share ownership
□ Applicable √ Not applicable
Effects of share changes on the basic EPS, diluted EPS, net assets per share attributable to common shareholders of the Company and
other financial indexes over the prior year and the prior period
□ Applicable √ Not applicable
Other contents that the Company considers necessary or is required by the securities regulatory authorities to disclose
□ Applicable √ Not applicable
2. Changes in Restricted Shares
√ Applicable □ Not applicable
~ 44 ~
Gujing Aged Original Spirits Annual Report 2017
Unit: share
Name of Opening Unlocked in Increased in Closing restricted Reason for
Date of unlocking
shareholder restricted shares Reporting Period Reporting Period shares lock-up/unlocking
Leaving of senior
Zhai Liangdong 1,200 1,200 0 0 02/23/2017
executive
Total 1,200 1,200 0 0 -- --
II Issuance and Listing of Securities
1. Securities (Excluding Preference Shares) Issued in this Reporting Period
□ Applicable √ Not applicable
2. Changes in Total Shares of the Company and the Shareholder Structure, as well as the Asset and
Liability Structures
□ Applicable √ Not applicable
3. Existing Employee-held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Total Number of Shareholders and their Shareholdings
Unit: share
Total number
of preference
shareholders
Total number of
with resumed
common Total number of
Total number of voting rights
shareholders at the preference shareholders
common at the prior
25,431 prior month-end 21,943 with resumed voting 0
shareholders at month-end
before the rights at the period-end
the period-end before the
disclosure of this (if any) (see note 8)
disclosure of
Report
this Report (if
any) (see note
8)
5% or greater shareholders or the top 10 shareholders
Name of Nature of Shareholding Total shares Increase/decrease Number Number of Pledged or frozen shares
shareholder shareholder percentage held at the during this of non-restricted Status Number
~ 45 ~
Gujing Aged Original Spirits Annual Report 2017
(%) period-end Reporting Period restricted shares held
shares
held
ANHUI GUJING
GROUP State-owned
53.89% 271,404,022 271,404,022 Pledged 114,000,000
COMPANY corporation
LIMITED
Foreign
NORGES BANK 2.92% 14,712,309 14,712,309
corporation
GAOLING Foreign
2.47% 12,446,408 12,446,408
FUND,L.P. corporation
CHINA
CONSTRUCTION
BANK-YINHUA
RICH THEME
Other 1.47% 7,423,899 7,423,899
HYBRID
SECURITIES
INVESTMENT
FUND
UBS (LUX)
EQUITY FUND -
Foreign
CHINA 1.41% 7,096,361 7,096,361
corporation
OPPORTUNITY
(USD)
CENTRAL
HUIJIN ASSET State-owned
1.30% 6,543,600 6,543,600
MANAGEMENT corporation
CO., LTD.
CHINA INT'L
CAPITAL CORP
Foreign
HONG KONG 1.25% 6,280,886 6,280,886
corporation
SECURITIES
LTD
UBS (LUX)
EQUITY FUND - Foreign
0.98% 4,949,038 4,949,038
GREATER corporation
CHINA (USD)
GREENWOODS
Foreign
CHINA ALPHA 0.98% 4,939,963 4,939,963
corporation
MASTER FUND
3W GREATER Foreign 0.70% 3,529,479 3,529,479
~ 46 ~
Gujing Aged Original Spirits Annual Report 2017
CHINA FOCUS corporation
FUND
Strategic investors or general
corporations becoming top-ten
N/A
shareholders due to placing of new
shares (if any) (see Note 3)
Among the above shareholders, the Company's controlling shareholder, Anhui Gujing Group Co.,
Ltd., has no relationship with other shareholders and does not belong to the acting-in-concert
Related or acting-in-concert
stipulated in the Administrative Measures on Information Disclosure of Changes in Shareholding
parties among the shareholders
of Listed Companies. In addition, the relationship between other shareholders is unknown, and it
above
is unknown whether it belongs to the acting-in-concert stipulated in the Administrative Measures
on Information Disclosure of Changes in Shareholding of Listed Companies.
Shareholdings of the top ten non-restricted shareholders
Type of shares
Name of shareholder Number of non-restricted shares held at the period-end
Type Number
RMB
ANHUI GUJING GROUP
271,404,022 common 271,404,022
COMPANY LIMITED
share
Domestically
NORGES BANK 14,712,309 listed foreign 14,712,309
share
Domestically
GAOLING FUND,L.P. 12,446,408 listed foreign 12,446,408
share
CHINA CONSTRUCTION
RMB
BANK-YINHUA RICH THEME
7,423,899 common 7,423,899
HYBRID SECURITIES
share
INVESTMENT FUND
Domestically
UBS (LUX) EQUITY FUND -
7,096,361 listed foreign 7,096,361
CHINA OPPORTUNITY (USD)
share
RMB
CENTRAL HUIJIN ASSET
6,543,600 common 6,543,600
MANAGEMENT CO., LTD.
share
CHINA INT'L CAPITAL CORP Domestically
HONG KONG SECURITIES 6,280,886 listed foreign 6,280,886
LTD share
Domestically
UBS (LUX) EQUITY FUND -
4,949,038 listed foreign 4,949,038
GREATER CHINA (USD)
share
~ 47 ~
Gujing Aged Original Spirits Annual Report 2017
Domestically
GREENWOODS CHINA ALPHA
4,939,963 listed foreign 4,939,963
MASTER FUND
share
Domestically
3W GREATER CHINA FOCUS
3,529,479 listed foreign 3,529,479
FUND
share
Explanation on associated
relationship among the top ten
Among the above shareholders, the Company's controlling shareholder, Anhui Gujing Group Co.,
shareholders of tradable share not
Ltd., has no relationship with other shareholders and does not belong to the acting-in-concert
subject to trading moratorium, as
stipulated in the Administrative Measures on Information Disclosure of Changes in Shareholding
well as among the top ten
of Listed Companies. In addition, the relationship between other shareholders is unknown, and it
shareholders of tradable share not
is unknown whether it belongs to the acting-in-concert stipulated in the Administrative Measures
subject to trading moratorium and
on Information Disclosure of Changes in Shareholding of Listed Companies.
top ten shareholders, or
explanation on acting-in-concert
Explanation on the top 10
shareholders participating in the
N/A
margin trading business (if any)
(see note 4)
Indicate by tick mark whether any of the top ten common shareholders or the top ten non-restricted common shareholders of the
Company conducted any promissory repo during this Reporting Period.
□ Yea √ No
No such cases in this Reporting Period.
2. Information about the Controlling Shareholder
Nature of the controlling shareholder: Controlled by the local government
Type of the controlling shareholder: Corporation
Legal
Name of controlling
representative/person Date of establishment Credibility code Main business scope
shareholder
in charge
Making beverage,
ANHUI GUJING GROUP
Liang Jinhui 01/16/1995 91341600151947437P construction materials and
COMPANY LIMITED
plastic products, etc.
Shares held by the controlling
shareholder in other listed
The controlling shareholder ANHUI GUJING GROUP COMPANY LIMITED directly
companies by holding or
holds100,000,000 shares of Huaan Securities Co., Ltd. owning the proportion of shares2.76%
shareholding during the
reporting period
Change of the controlling shareholder during this Reporting Period
□ Applicable √ Not applicable
~ 48 ~
Gujing Aged Original Spirits Annual Report 2017
No such cases in this Reporting Period.
3. Information about the Actual Controller
Nature of the actual controller: Local administrator for state-owned assets
Type of the actual controller: Corporation
Legal
Date of
Name of actual controller representative/per Credibility code Main business scope
establishment
son in charge
The People’s Government of
N/A N/A N/A
Bozhou
Shareholdings of the actual
controller in other listed
N/A
companies at home or abroad in
this Reporting Period
Change of the actual controller during this Reporting Period
□ Applicable √ Not applicable
No such cases in this Reporting Period.
Ownership and control relations between the actual controller and the Company
The People’s Government of Bozhou
60%
Anhui Gujing Group Company Limited
53.89%
Anhui Gujing Distillery Company Limited
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset management.
□ Applicable √ Not applicable
4. Other corporate shareholders with a shareholding percentage above 10%
□ Applicable √ Not applicable
5. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,
Reorganizer and Other Commitment Makers
□ Applicable √ Not applicable
~ 49 ~
Gujing Aged Original Spirits Annual Report 2017
Part VII Preferred Shares
□ Applicable √ Not applicable
No preferred shares in the Reporting Period.
~ 50 ~
Gujing Aged Original Spirits Annual Report 2017
Part VIII Directors, Supervisors, Senior Management and Staff
I Changes in Shareholdings of Directors, Supervisors and Executive Officers
Increase Decreas
Opening in this e in this Other Closing
Incumbent/form Gende Ag Starting Ending
Name Office title date of date of shareholdi Reportin Reportin increase/decrea shareholdi
er r e tenure tenure
ng (share) g Period g Period se (share) ng (share)
(share) (share)
Chairman
Liang 06/20/201 06/19/202
of the Incumbent Male 52
Jinhui 7 0
Board
06/20/201 06/19/202
Li Peihui Director Incumbent Male 45
7 0
Zhou Director, 06/20/201 06/19/202
Incumbent Male 44
Qingwu GM 7 0
Director,
Executive 06/20/201 06/19/202
Yan Lijun Incumbent Male 45
Deputy 7 0
GM
Director,
06/20/201 06/19/202
Xu Peng Deputy Incumbent Male 48
7 0
GM
Director,
Deputy
GM,
Ye Secretary
06/20/201 06/19/202
Changqin of the Incumbent Male 44
7 0
g Board,
Chief
Accountan
t
Wang Independe 06/20/201 06/19/202
Incumbent Male 53
Gao nt director 7 0
Song Independe 06/20/201 06/19/202
Incumbent Male 56
Shuyu nt director 7 0
Independe 06/20/201 06/19/202
Du Jie Incumbent Male 48
nt director 7 0
Wang Chairman Incumbent Male 53 06/20/201 06/19/202
~ 51 ~
Gujing Aged Original Spirits Annual Report 2017
Feng of the 7 0
Supervisor
y
Committee
Yang 06/20/201 06/19/202
Supervisor Incumbent Male 51
Xiaofan 7 0
Fu 06/20/201 06/19/202
Supervisor Incumbent Male 49
Qiangxin 7 0
Employee 06/20/201 06/19/202
Zhang Bo Incumbent Male 53
supervisor 7 0
Wang Employee 06/20/201 06/19/202
Incumbent Male 48
Zibin supervisor 7 0
Zhang Deputy 06/20/201 06/19/202
Incumbent Male 50
Lihong GM 7 0
Zhu
GM 06/20/201 06/19/202
Xianghon Incumbent Male 44
assistant 7 0
g
Gao GM 06/20/201 06/19/202
Incumbent Male 48
Jiakun assistant 7 0
Total -- -- -- -- -- --
II Changes in Directors, Supervisors and Executive Officers
√Applicable □Not applicable
Name Office title Type Date Reason
Chairman of the
Liang Jinhui Appointed 06/20/2017 Regular election
Board
Li Peihui Director Appointed 06/20/2017 Regular election
Zhou Qingwu Director, GM Appointed 06/20/2017 Regular election
Director,
Yan Lijun Executive Appointed 06/20/2017 Regular election
Deputy GM
Director, Deputy
Xu Peng Appointed 06/20/2017 Regular election
GM
Director, Deputy
GM, Secretary of
Ye Changqing Appointed 06/20/2017 Regular election
the Board, Chief
Accountant
Wang Gao Independent Appointed 06/20/2017 Regular election
~ 52 ~
Gujing Aged Original Spirits Annual Report 2017
director
Independent
Song Shuyu Appointed 06/20/2017 Regular election
director
Independent
Du Jie Appointed 06/20/2017 Regular election
director
Chairman of the
Wang Feng Supervisory Appointed 06/20/2017 Regular election
Committee
Yang Xiaofan Supervisor Appointed 06/20/2017 Regular election
Fu Qiangxin Supervisor Appointed 06/20/2017 Regular election
Employee
Zhang Bo Appointed 06/20/2017 Regular election
supervisor
Employee
Wang Zibin Appointed 06/20/2017 Regular election
supervisor
Zhang Lihong Deputy GM Appointed 06/20/2017 Regular election
Zhu Xianghong GM assistant Appointed 06/20/2017 Regular election
Gao Jiakun GM assistant Appointed 06/20/2017 Regular election
Independent
Wang Ruihua Leave office 06/19/2017 Regular election
director
III Brief Biographies
Professional backgrounds, main working experience and current responsibilities in the Company of the incumbent directors,
supervisors and executive officers
1. Mr. Liang Jinhui, male, born in October 1966, is Political Engineer and a deputy to the 13th National People’s Congress who has
educational experience of graduate student, incumbent president of the Company and president and Secretary of CPC of Gujing
Group. He ever took the post of MD, GM, Deputy GM, GM of Bozhou Gujing Sales Co., Ltd., Supervisor of Third Supervisory
Committee, Director of the 4th, 5th and 6th Board of Directors and Chairman of the 7th Board of Directors of the Company.
2. Mr. Li Peihui, male, born in July 1973, is a holder of master degree. He is a senior accountant, CPA and member of national
leading accounting talents. At present, he acts as the Company’s Vice Secretary of CPC and president of Gujing Group. He had ever
served as deputy GM and GM of Financial Department, deputy chief accountant, chief accountant, Secretary of Board of Directors
and Director of the Company; Chairman of the Board of Anhui Ruijing Business Travel Group Co. and Anhui Huixin Financial
Investment Group; executive vice president and CFO of Gujing Group; and director of the 7 th Board of Directors.
3. Mr. Zhou Qingwu, male, born in February 1974, is a senior accountant and national chief sommelier with educational experience
of graduate student. At present, he is Director and General Manager of the Company, Vice Secretary of CPC of Gujing Group. He
had ever acted as Chairman and General Manager of Bozhou Gujing Packing Material Co., Ltd., Deputy GM and deputy executive
GM of the Company and Director of the 5th , 6th and 7th Board of Directors of the Company.
4. Mr. Yan Lijun, male, June 1973, is a holder of master degree with Senior Taster. Now he is Director, Executive Deputy GM of the
Company, member of CPC Committee of Gujing Group, Chairman of the Board and GM of Bozhou Gujing Sales Co., Ltd. He once
worked as a salesman of Sale Company, District Manager, Director of Market Research, Vice Manager of Planning Department,
~ 53 ~
Gujing Aged Original Spirits Annual Report 2017
Director of Hefei Strategic Operations Center, Vice GM and director of the 7th Board of Directors of the Company.
5. Mr. Xu Peng, male, born in September 1970, has educational experience of undergraduate college. He is incumbent Director and
Deputy GM of the Company, member of CPC Committee of Gujing Group, Chairman of the Board of Wuhan Tianlong Yellow Crane
Tower Liquor Industry Co., Ltd. And he had ever acted as Deputy Director and Director of Finance Second Office of Finance
Department of the Company, Manager of Finance Department of Anhui Laobada Co., Ltd., and Vice Manager and Manager of
Finance Department of the Company, Deputy General Manager and Chief Supervisor of Market Supervision Department of Bozhou
Gujing Sales Company, Chairman of the Supervisory Committee of the Company and Chairman of the 7th Board of Directors.
6. Mr. Ye Changqing, male, born in October 1974, is a member of national leading accounting talents (back up) with master degree
and International Certified Internal Auditor. He is the incumbent Director, Deputy GM, Chief Accountant and Secretary of Board of
Directors of the Company. He had ever acted as Chief Auditor of Audit Department, Vice Manager of Audit Department and Vice
Supervisor and Supervisor of Auditing& Supervision Department; and Supervisor of the 4th Supervisory Committee of the Company;
Director and Secretary of the 5th, 6th, and 7th Board of Directors, and Chief Accountant of the Company.
7. Wang Gao, Male, born in April 1965, Doctor of Sociology，Professor of Marketing and vice dean in China Europe International
Business School., Academic Director of Chief Marketing Officer (CMO) Project, Co-Director of Chinese Enterprise Globalization
Research Center and independent director of GOME Holdings Co., Ltd.. He once worked as Associate Professor, Deputy Dean of
Department of Marketing in School of Economics and Management, Tsinghua University, deputy director of China's Retail Research
Center Academic Director of Harvard - central Europe - Tsinghai university senior managers (SEPC) project. Strategic Analysis
Manager of Minute Maid Branch of Coca-Cola Company and senior counselor of The Information Resources Co., Ltd. (IRI).
8. Song Shuyu, male, born in November 1962, is Senior Engineer and Master of Chinese Wine with educational experience of
graduate student. Now, he is Deputy President and Secretary General of China Alcoholic Drinks Association, Secretary-general of
Liquor Branch Association, Secretary General of Market Professional Committee, Secretary General of White Wine Club Technical
Committee, specialist who enjoy the special allowance of the state council. He also is member of Chinese liquor standardization
technical committee, Deputy Secretary General of strong-flavor, Feng-flavour, soybean-flavor and rice flavour Liquor Technical
Committee of Chinese Liquor Standardization Technical Committee, Chairman of Committee of Te-flavour Chinese spirits and
Laobaigan-flavour Chinese spirits standardization technical committee.
9. Mr. Du Jie, male, born in December 1970 is a senior accountant with postgraduate degree, CPA and CTA. Now he is a advisory
service leading partner of Huapu Tianjian Certified Public Accountants (LLP), internal control advisory expert specially hired by
Anhui Provincial Department of Finance, managing accounting advisory expert specially hired by Beijing Municipal Bureau of
Finance, expert talent in Beijing CPA, master tutor specially hired by Business School of Anhui University, independent director of
Shaanxi Bicon Pharmaceutical Company Limited, Beijing NAV Technology Co., Ltd. and Tianjin Lishen Battery Joint-stock Co., Ltd.
He once acted as senior manager in Business Risk Service Division of Deloitte & Touche and advisory expert in business internal
control specially hired by the Ministry of Finance.
10. Mr. Wang Feng, male, born in October 1965, is Senior Economic Engineer who is postgraduate degree holder, incumbent
Chairman of the Supervisor committee, Deputy Secretary of CPC of Gujing Group and Secretary of Discipline Inspection
Commission. He had ever acted as Director and Secretary of the Second Board of Directors of the Company, Vice General Manager
and General Manager of the Company, Director and Chairman of the 3rd and 4th Board of Directors of the Company, Director of the
5th, 6th, and 7th Board of Directors, and Chairman of the 7th Supervisory Committee of the Company.
11. Mr. Yang Xiaofan, male, born in April 1967, is a holder of master degree. At present, he is Supervisor of the Company and Vice
President and member of CPC Committee of Gujing Group. He once acted as Vice President and General Manager of Anhui Gujing
Real Estates Group Co., Ltd., Assistant to President of Gujing Group; Director of the 5 th, 6th and 7th Board of Directors of the
Company and Supervisor of the 7th Supervisory Committee.
12. Mr. Fu Qiangxin, male, born in October 1969, is a senior accountant with bachelor degree. Now he serves as Supervisor of the
Company and GM of Anhui Huixin Finance Investment Group Co., Ltd. He ever took posts of accountant of Bozhou Gujing Hotel,
~ 54 ~
Gujing Aged Original Spirits Annual Report 2017
Manager of Finance of Bozhou Gujing Integrated Services Company and Bozhou Gujing Import and Export Trade Company, clerk of
Planning and Finance Department, Chief Inspector of Internal Audit Center and Director of Financial Management Center of Gujng
Group and Supervisor of the 7th Supervisory Committee of the Company.
13. Mr. Zhang Bo, male, born in July 1965, is an economist with bachelor degree. Now, he serves as Employee Supervisor of the
Company and Chairman of the Labor Union of Gujing Group. He once worked as Chairman of the board and GM of Bozhou Gujing
Printing Co., Ltd. and Bozhou Gujing Glassware Manufacturing Co., Ltd. as well as Chairman of the Board of Bozhou Ruineng Heat
and Power Co., Ltd. and Supervisor of the 7th Supervisory Committee of the Company.
14. Mr. Wang Zibin, was born in August 1970 with college degree, CIA and CPA. Now he is Employee Supervisor of the Company,
Deputy Secretary of Commission for Discipline and Inspection and Director of Audit and Supervisory Centre of Gujing Group. He
once served as GM of Auditing Department of Gujing Group, vice director of Hefei marketing centre of Bozhou Gujing Sales
Company and Supervisor of the 7th Supervisory Committee of the Company.
15. Mr. Zhang Lihong, male, born in October 1968, is an economist with bachelor degree. He is incumbent Deputy GM of the
Company and member of CPC Committee and deputy secretary of Commission for Discipline and Inspection of Gujing Group. He
once acted as clerk, Secretary of Operation Department and Market Development Department, Deputy GM, Director of General
Office, Director of Service Centre of Bozhou Gujing Sales Co., Ltd., Director of HR Department and Administrative Service Center
of the Company.
16. Mr. Zhu Xianghong, male, born in September 1974, is a senior Wine Taster with bachelor degree. He is incumbent assistant to
GM of the Company, and GM of Wuhan Tianlong Yellow Crane Tower Liquor Industry Co., Ltd. He once acted as GM of Product
Department of Bozhou Gujing Sales Co., Ltd., GM of Hefei Office, regional GM of Northern Anhui Province, GM of Anhui
Operating Centre and standing Deputy GM of Sales Company.
17. Mr. Gao Jiakun, male, born in November 1970, is a holder of bachelor degree. He is incumbent assistant to GM of the Company.
He once served as GM of Production Management Department, Vice Director of Production Management Centre, Chairman of the
Board and GM of Bozhou Pairuite Packing Products Co., Ltd., Director of Finished Products Filling Centre and Production
Management Centre of the Company.
Post-holding in shareholder units
√Applicable □Not applicable
Allowance from
Starting date of Ending date of
Name Shareholding entity Post the shareholding
tenure tenure
entity (yes/no)
Chairman of
the Board of
Directors,
Liang Jinhui Anhui Gujing Group Co., Ltd. 05/01/2014 Yes
Chairman of
Party
Committee
Deputy
Chairman of
Li Peihui Anhui Gujing Group Co., Ltd. Party 10/31/2017 Yes
Committee,，
President
Deputy
Wang Feng Anhui Gujing Group Co., Ltd. Chairman of 08/01/2010 Yes
Party
~ 55 ~
Gujing Aged Original Spirits Annual Report 2017
Committee,
Chairman of
Discipline
Inspection
Committee
Vice
Yang Xiaofan Anhui Gujing Group Co., Ltd. 11/01/2009 Yes
President
Chairman of
Zhang Bo Anhui Gujing Group Co., Ltd. the Labor 10/16/2015 Yes
Union
Deputy
Chairman of
Discipline
Inspection
Wang Zibin Anhui Gujing Group Co., Ltd. Committee, 04/27/2015 Yes
Director of
Auditing &
Supervision
Center
Notes to
The above-mentioned personnel, though they take posts in shareholders’ entities, comply with the relevant
post-holding in
employment requirements of Company Law, Securities Law and never disciplined by CSRC, other relevant
shareholder
departments and the Stock Exchange.
units
Posts held concurrently in other entities
√Applicable □Not applicable
Starting date of Ending date of Allowance from
Name Other entity Post
tenure tenure the entity (yes/no)
Anhui Huixin Finance Investment Group
Fu Qiangxin GM 11/27/2017 Yes
Co., Ltd.
Notes to
post-holding in Anhui Huixin Finance Investment Group Co., Ltd. is a wholly-owned subsidiary of Anhui Gujing Group Co., Ltd.
other entities
Punishments imposed in the recent three years by the securities regulators on the incumbent directors, supervisors and executive
officers as well as those who left in this Reporting Period
□ Applicable √ Not applicable
IV Remuneration of Directors, Supervisors and Executive Officers
Decision-making procedure, determination basis and actual remuneration payment of directors, supervisors and executive officers
(I) Decision-making procedure of remuneration for Directors, Supervisors and Executive Officers
The Remuneration & Appraisal Committee under the Board of Directors is in charge of drafting appraisal index of senior
management and checking accomplishment of annual index.
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Gujing Aged Original Spirits Annual Report 2017
(II) Determination basis of remuneration for Directors, Supervisors and Executive Officers
The remuneration is determined based on the annual performance of the Company and the appraisal result and determined in
accordance with the spirits in the Implementation Opinion on Deepening the System Reform of Remuneration of Chargers in
Provincial Enterprises (WF[2015]No.28) issued by the CPC Anhui Provincial Committee and the People’s Government of Anhui as
well as the Implementing Scheme of Deepening the System Reform of Remuneration of Chargers in Municipal Enterprises
(Discussion Paper) issued by the Municipal Party Committee of Bozhou.
(III) Actual Payment of remuneration for Directors, Supervisors and Executive Officers
Payment of the remuneration of Directors, Supervisors and Executive Officers is with certain amount in advance monthly and
distributed annually according to check.
Remuneration of Directors, Supervisors and Executive Officers of the Company during the Reporting Period is listed as follows:
Unit: RMB'0,000
Remuneration
Total
from related
remuneration
Name Office title Gender Age Incumbent/former parties of the
from the
Company
Company
(yes/no)
Chairman of the
Liang Jinhui Male 52 Incumbent Yes
Board
Li Peihui Director Male 45 Incumbent Yes
Zhou Qingwu Director, GM Male 44 Incumbent 51.78 No
Director,
Yan Lijun Executive Deputy Male 45 Incumbent 159.11 No
GM
Director, Deputy
Xu Peng Male 48 Incumbent 86.72 No
GM
Director, Deputy
GM, Secretary of
Ye Changqing Male 44 Incumbent 85.29 No
the Board, Chief
Accountant
Independent
Wang Gao Male 53 Incumbent 7.5 No
director
Independent
Song Shuyu Male 56 Incumbent 7.5 No
director
Independent
Du Jie Male 48 Incumbent No
director
Chairman of the
Wang Feng Supervisory Male 53 Incumbent Yes
Committee
Yang Xiaofan Supervisor Male 51 Incumbent Yes
Fu Qiangxin Supervisor Male 49 Incumbent Yes
~ 57 ~
Gujing Aged Original Spirits Annual Report 2017
Employee
Zhang Bo Male 53 Incumbent Yes
supervisor
Employee
Wang Zibin Male 48 Incumbent Yes
supervisor
Zhang Lihong Deputy GM Male 50 Incumbent 85.96 No
Zhu Xianghong GM assistant Male 44 Incumbent 139.59 No
Gao Jiakun GM assistant Male 48 Incumbent 69.82 No
Independent
Wang Ruihua Male 56 Leaving office 7.5 No
director
Total -- -- -- -- 700.77 --
Equity incentives for directors, supervisors and executive officers in this Reporting Period
□ Applicable √ Not applicable
V Employees
1. Number, Functions and Educational Backgrounds of Employees
Number of in-service employees of the Parent Company 5,451
Number of in-service employees of main subsidiaries 2,540
Total number of in-service employees 7,991
Total number of employees with remuneration in this Reporting
7,991
Period
Number of retirees to whom the Parent Company or its main
subsidiaries need to pay retirement pension
Functions
Function Number of employees
Production 5,194
Sales 1,500
Technical
Financial
Administrative
Total 7,991
Education
Category Number
High school or below 4,727
Junior college 1,482
~ 58 ~
Gujing Aged Original Spirits Annual Report 2017
Bachelor 1,722
Master or above
Total 7,991
2. Employee Remuneration Policy
The remuneration policy was conducted strictly in line with the related law and regulations of the state, and the plan of operation
performance and profits of the Company and the relevant remuneration policy management.
3. Employee Training Plans
Employee training is significant in the Human resource management. The Company always pay high attention to the employee
training and development, the Company sets up effective training plan combining with the current situation of the Company, annual
plan, nature of the post and the demand of employee learning, which includes new employee induction training, on-job training,
front-line employee operating skills training, management improvement training and part-time study. Continuously improve the
whole quality of the employees, realized a win-win situation and progress between the Company and the employees.
4. Labor Outsourcing
□ Applicable √ Not applicable
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Gujing Aged Original Spirits Annual Report 2017
Part IX Corporate Governance
I Basic Situation of Corporate Governance
Since foundation, the Company constantly perfects corporate governance structure and standardize its management strictly in
accordance with the Company Law, Securities Law, Standard for Governance of Listed Companies, Guide Opinion on Setting up
Independent Directors Systems for Listed Companies as well as principles and requirements of other relevant laws, regulations and
normative documents.
In the reporting period, the Company developed internal control activity, implemented Rules on Management of Assets Provision for
Impairment, The Policy on the Liability of Disclosing Materially Inaccurate Information in Annual Report, Rules for Management of
External Information User and Rules for Management of Insider of Inner Information, perfected internal control system step by step,
promoted normative operation and healthy development. The Board of Directors, the Supervisory Committee and the management of
the Company make decisions, perform rights and assume obligation strictly according to the standard operation rules and inner
control system so as to make sure the standard operation of the Company in the frame of rules and systems.
In the reporting period, according to requirements of China Securities Regulatory Commission and Rules for Listing of Shares in
Shenzhen Stock Exchange and with the “open, fair and just” principle, the Company seriously and timely performed information
disclosure obligation and guaranteed that the information disclosed is true, accurate and complete, free from fictitious presentation,
misleading statements or important omissions, so that all the shareholders will equally acquaint themselves with all the notices of the
Company.
After the reporting period, the Company will continuously optimize and perfect the corporate governance of listed companies, further
improve the standard operation of the Company.
Any significant incompliance with the regulatory documents issued by the CSRC governing the governance of listed companies
□ Yes √ No
There is no difference between the corporate governance and the Company Law and relevant rules of CSRC.
II Independence of Businesses, Personnel, Asset, Organizations and Finance which are
Separate from the Controlling Shareholder
The company and the controlling shareholder, Anhui Gujing Group Co., Ltd., realized five independences in terms of business,
personnel, assets, organizations and financial affairs, with separate independent calculation, independent and complete business,
independent operation ability, and independent responsibilities and risks. Majority shareholders cannot surpass the shareholders’
general meeting to directly or indirectly interfere with the Company’s decisions and legal production as well as operation activities,
and there is no same trade competition state of the same products between the company and majority shareholders.
III Horizontal Competition
□ Applicable √ Not applicable
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Gujing Aged Original Spirits Annual Report 2017
IV Annual and Special Meetings of Shareholders Convened during this Reporting Period
1. Meetings of Shareholders Convened during this Reporting Period
Index to the
Investor
Meeting Type Convened date Disclosure date disclosed
participation ratio
information
Announcement on
Resolutions of
The 2016 Annual 2016 Annual
Meeting of Annual 63.60% 06/20/2017 06/21/2017 Meeting of
Shareholders Shareholders
disclosed on
www.cninfo.com.cn
2. Special Meetings of Shareholders Convened at the Request of Preference Shareholders with Resumed
Voting Rights
□ Applicable √ Not applicable
V Performance of Independent Directors in this Reporting Period
1. Attendance of Independent Directors in Board Meetings and Meetings of Shareholders
Attendance of independent directors in board meetings and meetings of shareholders
Due presence
Presence by Presence
in this Presence on Absent for two Presence for
telecommunica through a Absence for
Independent Reporting site for board consecutive meetings of
tion for board proxy for board meetings
director Period for meetings times for board shareholders
meetings board meetings (times)
board meetings (times) meetings (times)
(times) (times)
(times)
Wang Ruihua 2 0 2 No
Wang Gao 6 0 6 No
Song Shuyu 6 1 5 No
Du Jie 4 1 3 No
Note to non-attendance in person for two consecutive times
2. Objections Raised by Independent Directors on Issues of the Company
Whether independent directors propose objection on relevant events or not
□ Yes √ No
No such cases in this Reporting Period.
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Gujing Aged Original Spirits Annual Report 2017
3. Other Details about the Performance of Duties by Independent Directors
Whether advices to the Company from independent directors were adopted or not
√ Yes □ No
Explanation on the advices of independent directors for the Company being adopted or not adopted
During Reporting Period, the independent directors of the Company made professional opinion or suggestions on the Company's
business decision in strict accordance with the relevant laws, regulations and the Articles of Association of the Company, and
provided independent opinion on issues needing independent directors’ opinion in the independent exercise of their duties, playing a
due role in safeguarding the legitimate rights and interests of the Company's shareholders.
VI Performance of Duties by Specialized Committees under the Board during this Reporting
Period
1. Duty performance of the Strategy Committee
The Strategy Committee is under the leadership of the Board of Directors. In the Reporting Period, in strict compliance with the
Specific Implementation Rules for the Strategy Committee, the Strategy Committee conscientiously performed its duties, making a
lot of constructive suggestions for the efficient execution of the Company’s strategy.
2. Duty performance of the Audit Committee
In the reporting period, five members of the Audit Committee diligently and responsibly performed their duties as stipulated in the
relevant rules of the Company:
(1) It reviewed the periodical reports of the Company in 2017.
(2) Upon discussion with Ruihua Certified Public Accountants for the 2017 annual audit, it determined the schedule for the financial
report and internal control audit for 2017.
(3) It communicated in advance with the CPAs firm and independent directors before the CPAs firm came to the Company and
started the 2017 annual audit.
(3) It reviewed the short form of the preliminary financial statements prepared by the financial department of the Company for the
first time before the annual auditor came to the Company and made some helpful suggestions.
(5) After the annual auditor came to the Company and started the audit, it communicated with the registered accountants on the
problems found in the audit and the submission time of the audit report.
(6) After the annual auditor issued the preliminary audit opinion, it reviewed the 2017 annual financial statements again and made the
final resolution.
3. Duty performance of the Nomination Committee
In the reporting period, in strict compliance with the Specific Implementation Rules of the Nomination Committee, the Nomination
Committee vigorously worked on various tasks, which ensured that the senior management staffs of the Company were hired in
compliance with laws and regulations.
(1) In the Reporting Period, the senior management staff hired by the Company satisfied the requirements of the Company Law and
other relevant laws and regulations. They were qualified as senior management staff. They were not in such a case where the
Company Law should forbid them from being senior management staff. Nor they were forbidden by CSRC from entering the
securities market.
(2) In the Reporting Period, the senior management staff of the Company were nominated and hired in line with the Company Law
and the Company’s Articles of Association. The hired personnel have never been punished by CSRC, other relevant authorities or
stock exchanges.
4. Duty performance of Remuneration and Appraisal Committee
(1) The Remuneration and Appraisal Committee affiliated to the Board of Directors, according to relevant regulations of
~ 62 ~
Gujing Aged Original Spirits Annual Report 2017
Implementation Rules of Remuneration and Appraisal Committee successfully completed the annual performance appraisal to
directors, supervisors and senior executives in line with standards and procedures of performance appraisal during the reporting
period.
(2) Through the deliberation and assessment of the committee, the consistent opinion was that the general remuneration level
complied with development of the Company; the remuneration level of directors, supervisors and senior executives accurately
reflected the overall performance situation of the Company and individual work performance, which complied with the remuneration
management system; the remuneration plan and procedure of issuing remuneration were in accordance with the laws and did not
violate relevant national laws and regulations.
VII Performance of Duties by the Supervisory Committee
Did the Supervisory Committee find any risks to the Company during its supervision in this Reporting Period?
□ Yes √ No
The Supervisory Committee raised no objections in this Reporting Period.
VIII Appraisal and Incentive for Executive Officers
The Company has set up a Performance Appraisal and Incentive Mechanism for Senior Executives, which links remuneration of
senior executives with the Company’ performance, the decision-making management adopts the assessment and incentive measures
by linking the annual remuneration with the Company’ economic indexes & management achievement. To promote the standard,
healthy and orderly development of the Company and keep the stability of the Executive Officers, the Company annually sets up the
assessment index for them and signs a written responsibility of business target at the year-begin, then decides their remuneration and
the rewards & punishment at the year-end according to their personal work performance and completion of the Company’s operating
target.
IX Internal Control
1. Serious Internal Control Defects Found in this Reporting Period
□ Yes √ No
2. Internal Control Self-evaluation Report
Disclosure date of the Self-appraisal
04/28/2018
Report on Internal Control
Disclosure index of the Self-appraisal See www.cninfo.com.cn for the Anhui Gujing Distillery Company Limited
Report on Internal Control Self-assessment Report of Internal Control
The proportion of total assets included in
evaluation scope entities in the
98.43%
Company's total assets of the consolidated
financial statements
The proportion of operation revenue
97.69%
included in evaluation scope entities in
~ 63 ~
Gujing Aged Original Spirits Annual Report 2017
the Company's operation revenue of the
consolidated financial statements
Defect identification standards
Type Financial-report related Non-financial-report related
Critical defect: Separate defect or other
defects that result in failure in preventing,
finding out and correcting major wrong
reporting in financial report in time. The
following circumstances are deemed as
critical defects: (1) Ineffective in controlling
Any of the following circumstances shall
the environment; (2) Malpractice of
be deemed as a critical defect, and other
directors, supervisors and senior
circumstances shall be deemed as major
management officers; (3) According to
or minor defects according to their
external auditing, there’s major wrong
degree of impact.
reporting in current financial report, which
fails to be found by the company in its (1) Violate national laws, regulations or
operating process; (4) Major defects found standardized documents;
and reported to the top management fail to (2) Major decision making procedure is
Qualitative criteria
be corrected within a reasonable period of not scientific;
time; (5) The supervision of audit committee (3) Lack of systems results in systematic
of the company and its internal audit failure;
department for internal control is ineffective; (4) Critical or major defects fail to be
(6) Other defects that may affect correct rectified;
judgment of users of statements. Major (5) Other circumstances that have major
defect: Separate defect or other defects that impact on the company.
result in failure in preventing, finding out
and correcting wrong reporting in financial
report in time, which shall be noted by the
top management despite of not attaining or
exceeding critical level. Minor defect: Other
internal control defects not constituting
critical or major defects.
Critical defect:
Critical defect: The defect with direct
(1) Wrong reporting ≥0.5% of total operating property loss amounting to over RMB10
revenue; million, has great negative impact on the
(2) Wrong reporting ≥5% of total profit; company and is disclosed in public in the
(3) Wrong reporting ≥0.5% of total assets; form of announcement.
Quantitative criteria
(4) Wrong reporting ≥0.5% of total owner’s Major defect: The defect with direct
equity. property loss amounting to RMB1
Major defect: million to RMB10 million (included), or
(1) Wrong reporting ≥0.2% but ＜0.5% of is penalized by governmental authority
total operating revenue; of the country but has not resulted in
~ 64 ~
Gujing Aged Original Spirits Annual Report 2017
(2) Wrong reporting ≥2% but ＜5% of total negative impact on the company.
profit; Minor defect: The defect with direct
(3) Wrong reporting ≥0.2% but ＜0.5% of property loss no more than RMB1
total assets; million (included), or is penalized by
(4) Wrong reporting ≥0.2% but ＜0.5% of governmental authority of the
total owner’s equity. provincial-level or below but has not
Minor defect: resulted in negative impact on the
company.
(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
equity.
Number of serious financial-report-related
defects
Number of serious
non-financial-report-related defects
Number of important
financial-report-related defects
Number of important
non-financial-report-related defects
X Auditor’s Report on Internal Control
√Applicable □Not applicable
Opinion paragraph in the 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 December 31, 2017.
Particulars about Audit Report on
Disclosed
Internal Control
Disclosure date of the Audit Report
04/28/2018
on Internal Control
Disclosure index of the Audit
See www.cninfo.com.cn for Audit Report of Internal Control
Report on Internal Control
Type of Audit Report on Internal
Standard unqualified opinion
Control
Whether there is significant defect
No
in non-financial report
Whether an Audit Report on Internal Control was issued by the CPAs firm with non-standard opinion or not?
□ Yes √ No
~ 65 ~
Gujing Aged Original Spirits Annual Report 2017
Whether the Audit Report on Internal Control from the CPAs firm is in consistent with the Self-appraisal Report from the Board or
not?
√ Yes □ No
~ 66 ~
Gujing Aged Original Spirits Annual Report 2017
Part X Corporate Bonds
Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue before the approval date of this
Report or were due but could not be redeemed in full?
No
~ 67 ~
Gujing Aged Original Spirits Annual Report 2017
Part XI Financial Report
I Auditor’s Report
Type of auditor’s opinion Standard unqualified opinion
Date of signing the auditor’s report 04/26/2018
Name of the auditor Ruihua Certified Public Accountants (LLP)
No. of the auditor’s report Ruihua Audit Report
Name of CPA Zhang Liping and Zhang Xianfa
Text of the Auditor’s Report
To the Shareholders of Anhui Gujing Distillery Co., Ltd.,
I. Audit Opinion
We have audited the accompanying financial statements of Anhui Gujing Distillery Co., Ltd. (hereafter, the Company), which include
the Consolidated and Separate Statements of Financial Position as of 31 December 2017, the Consolidated and Separate Statements
of Comprehensive Income, the Consolidated and Separate Statements of Cash Flows, and the Consolidated and Separate Statements
of Changes in Shareholders' equity for the year then ended, and the notes to the financial statements.
In our opinion, the Financial Statements of the Company have been prepared in accordance with the Enterprise Accounting Standards
of China and present fairly, in all material respects, the consolidated and separate financial position of Anhui Gujing Distillery Co.,
Ltd. as at 31 December 2017 and its consolidated and separate results of operations and consolidated and separate cash flows for the
year then ended.
II. The basis for Forming the Audit Opinion
We conducted our audit in accordance with the Chinese Certified Public Accountants' Auditing Standards (hereafter, the Standards).
Section VI of this Report further illustrate our responsibilities in accordance with the Standards. In accordance with the Chinese
Certified Public Accountants Ethical Requirements, we are independent of the Company and fulfill our ethical responsibilities. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide an adequate basis for our audit opinion.
III. Key Audit Items
Key audit items are the items which we believe, based on our professional judgment, to be significant in the audit of financial
statements for the current period. Audit response to these items has been designed and implemented in the context of auditing the
financial statements as a whole for the purpose of expressing an audit opinion on the financial statements, and we do not express an
opinion on each of these items individually. We believe that the following items are the key audit items which warrant disclosure in
the audit report.
Revenue recognition
1.1 Description
The revenue of distilled spirit amounted to CNY 6.822 billion for the year 2017, accounting for 97.90% of the total operating revenue,
increasing 16.10% than last year. As revenue is one of the key performance indicators of the Company, and there is inherent risk of
material misstatement in the revenue recognition, we identify revenue recognition as a key audit item.
1.2 Audit response
~ 68 ~
Gujing Aged Original Spirits Annual Report 2017
In response to this key audit item, we have implemented the following audit procedures:
1.2.1 We obtained an understanding and evaluated the design of internal control from the sales order authorization to the booking of
revenue, examined the effectiveness of the implementation of the key control points. We also examined the general control over the
information system of the Company and automatic control related to sales cycle.
1.2.2 We selected samples to test sales contracts, interviewed with the management, analyzed the timing when significant risks and
rewards related to the recognition of revenue transferred, in order to evaluate the rationality of revenue recognition policies.
1.2.3 We performed analytical review procedure on operating revenue, including analyzing the changes of the main dealer customers,
and the changes of revenue and gross profit margin between the current period and previous periods as well as other companies in the
same industry, in order to evaluate the rationality of revenue recognition.
1.2.4 We selected samples to trace to the source documents for the recognized revenue in order to verify the occurrence of operating
revenue. Meanwhile, we selected certain original documents to examine the book record in order to verify the completeness of
operating revenue.
1.2.5 We sent confirmations to major customers of the Company, conducted field visits to customers with large sales volume, visited
their business premises and warehouses, selected samples to examine their original documents of sales to the end customers, and
assessed the authenticity of their terminal sales in order to verify the occurrence of operating revenue.
1.2.6 We performed cutoff test on revenue to evaluate whether operating revenue had been recorded in the correct fiscal period.
The existence, valuation and allocation of inventory
Description
The inventory of the Company amounted to CNY 2.064 billion as of 31 December 2017, accounting for 20.33% of the total asset, of
which the self-made semi-finished products and the finished products amounted to CNY 1.705 billion approximately, accounting for
82.62% of the total inventory at the year end. As inventory is the most important asset for liquor companies, and the balance of
inventory at the year end was relatively high and accounted for a large proportion of the total assets, we identify the existence,
valuation and allocation of inventory as a key audit item.
Audit response
In response to this key audit item, we have implemented the following audit procedures:
1.2.1 We obtained an understanding and evaluated the design of internal control related to cost accounting, inventory stock in and
stock out, and stocktaking, examined the effectiveness of the implementation of the key control points. We also examined the general
control over the information system of the Company and automatic control related to inventory cycle.
1.2.2 We obtained an understanding of the accounting policy related with inventory, and evaluated whether it was in consistent with
the applicable accounting standards and the policy in the previous years.
1.2.3 We performed analytical review procedures: a) we calculated inventory turnover rate and compared it with previous period and
other companies in the same industry; b) we compared the inventory ending balance and the composition of inventory between
different months and different accounting periods to determine the overall rationality of the year-end balance and its compositions.
1.2.4 We performed stocktaking observation procedure, selected samples to examine the quantities and conditions of the inventories.
1.2.5 We selected samples to examine the cost calculation table and related documents, tested the pricing of inventory, and evaluated
the accuracy of the ending balance of inventory.
1.2.6 We obtained the inventory aging list at the end of the year, analyzed the aged inventory by considering the market condition of
the product, evaluated the rationality of the provision for inventory impairment; We obtained the calculation table of the inventory
impairment, reviewed the inventory impairment testing process, selected samples to examine whether the procedures are performed
in accordance with relative accounting policies of the Company, reviewed the current-period change of the provision of inventory
impairment in the previous period, and verified whether the provision of inventory impairment is sufficient.
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Gujing Aged Original Spirits Annual Report 2017
IV. Other Information
The management of the Company is responsible for other information. Other information includes information included in the
Company’s 2017 annual report; however, other information does not include the financial statements or our audit report.
The audit opinion expressed by us on the financial statements does not apply to other information. We do not express assurance
opinion in any form on the other information.
In parallel to our audit of the financial statements, our responsibilities include reading other information and assessing if the
information included in other information is significantly inconsistent with the financial statements or information obtained during
the audit and if there is possible material misstatement in other information.
Where we identify material misstatement in other information based on our works, we shall report such fact. Based on our work, we
have no such matter to be reported.
V. Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management of the Company (hereafter, the management) is responsible for preparing and presenting the financial statements in
accordance with Enterprise Accounting Standards of China and for the purpose of fair presentation and designing, implementing and
maintaining internal control necessary to the preparation of financial statements that are free from material misstatements, whether
due to fraud or error.
During the preparation of the financial statements, the management is responsible for assessing the Company’s going-concern
capability; disclosing, where applicable, matters in relation to the going-concern status; and applying the going-concern assumption
for preparation of the financial statements, unless the management plans to liquidate the Company, discontinue operation of the
Company or has no other practical alternative.
Those charged with governance are responsible for monitoring the Company’s financial reporting process.
VI. Auditors’ Responsibility for the Financial Statements
Our objective is to obtain reasonable assurance as to whether the financial statements are free from material misstatements, whether
due to fraud or error; and issue an audit report which includes an audit opinion. Reasonable assurance is a high-level assurance;
however, a high-level assurance does not guarantee a material misstatement is always detected by an audit performed in accordance
with the Standards. A misstatement can result from either frauds or errors. Misstatements are material if individually or in aggregate
the misstatements may influence the economic decision of the users of the financial statements by using the financial statements.
During the performance of our audit in accordance with the Standards, we involve professional judgments and maintain professional
skepticism; also, we perform the following procedures:
A. We identify and assess risks of material misstatements resulted from fraud or error; design and implement audit procedures to
mitigate those risks, and obtain sufficient and appropriate audit evidence as a basis for forming the audit opinion. As fraud may
involve collusion, forgery, willful omission, false statement or override over internal controls, the risk of not detecting material
misstatements resulted from fraud if higher than the risk of not detecting material misstatements resulted from the error.
B. We obtain an understanding of internal controls relevant to the audit and design audit procedures accordingly.
C. We assess the appropriateness of accounting policies adopted by the management and the reasonableness of accounting estimates
adopted by and related disclosure presented by the management.
D. We conclude on the appropriateness of the management’s going-concern assumption; we also conclude on the existence of
significant uncertainty in relation to matters or events which may trigger significant doubt on the Company’s going-concern status.
Where we conclude that significant uncertainty exists, we disclose in our audit report, in accordance with the Standards, a paragraph
that the users of the financial statements shall pay attention to the relevant disclosure in the financial statements. Where disclosure is
insufficient, we express a qualify opinion. Our conclusion is formed on the basis of information available up to the date our audit
report; however, future matters and events may still affect the Company’s going-concern status.
E. We evaluate the overall presentation, structure, and contents (including disclosure) of the financial statements; we also evaluate the
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Gujing Aged Original Spirits Annual Report 2017
fairness of transactions and balances presented by in the financial statements.
F. We obtain sufficient and appropriate audit evidence regarding the Company’s financial information of the entities or business
activities to express an opinion on the financial statements. We are responsible for the guidance, supervision, and execution of the
group audit. We take full responsibility for the audit opinion.
We communicate with those charged with governance on the planned audit scope, timing arrangement, and significant audit findings;
we also communicate with those charged with governance internal control weakness, which warrants attention, identified during our
audit.
We also provide a statement to those charged with governance regarding the fact that we comply with the requirements of
professional ethics relating to independence, and also communicate with them about all relationships and other matters that may be
reasonably deemed to affect our independence，as well as, where applicable, the relevant precautions.
Through the matters we communicate with those charged with governance, we identify matters that are significant in the audit of the
financial statements for the current period, which therefore become the key audit items. We disclose these items in the audit report,
unless public disclosure of such items is prohibited by laws and regulations; in exceptional circumstances, where the benefit arising
from public disclosure of certain matters is outweighed by the negative consequence brought by such disclosure in consideration of
public interest, we do not disclosure such items in the audit report.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in
the audit of the financial statements of the Current Period and are therefore the key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Ruihua Certified Public Accountants (LLP) CPA:
Beijing China CPA:
April 26, 2018
~ 71 ~
Gujing Aged Original Spirits Annual Report 2017
II Financial Statements
Currency unit for the statements in the notes to the financial statements: RMB
1. Consolidated Balance Sheet
Prepared by Anhui Gujing Distillery Company Limited
December 31, 2017
Unit: RMB
Item December 31, 2017 December 31, 2016
Current assets:
Monetary assets 1,484,088,626.40 532,909,026.07
Settlement reserve
Interbank loans granted
Financial assets at fair value through
99,800.76 429,190.68
profit or loss
Derivative financial assets
Notes receivable 720,611,126.78 534,386,586.59
Accounts receivable 22,466,143.06 12,287,262.88
Prepayments 41,729,637.34 74,784,221.59
Premiums receivable
Reinsurance receivables
Receivable reinsurance contract
reserve
Interest receivable 13,883,178.08 2,843,178.08
Dividends receivable
Other receivables 15,390,106.14 10,765,397.03
Financial assets purchased under
resale agreements
Inventories 2,064,130,297.51 1,786,433,036.50
Assets classified as held for sale
Current portion of non-current assets
Other current assets 1,772,310,946.58 1,750,278,829.24
Total current assets 6,134,709,862.65 4,705,116,728.66
Non-current assets:
Loans and advances to customers
Available-for-sale financial assets 517,086,347.91 404,029,552.27
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Gujing Aged Original Spirits Annual Report 2017
Held-to-maturity investments
Long-term receivables
Long-term equity investments
Investment property 5,343,777.33 8,402,944.74
Property, plant and equipment 1,792,254,178.56 1,865,691,585.06
Construction in progress 54,496,798.56 71,771,324.26
Construction materials
Proceeds from disposal of property,
plant and equipment
Productive living assets
Oil and gas assets
Intangible assets 691,381,442.67 700,684,529.08
R&D expense
Goodwill 478,283,495.29 478,283,495.29
Long-term prepaid expense 69,238,523.78 93,588,397.35
Deferred income tax assets 92,157,477.74 107,654,597.15
Other non-current assets 317,910,214.56 300,982,000.00
Total non-current assets 4,018,152,256.40 4,031,088,425.20
Total assets 10,152,862,119.05 8,736,205,153.86
Current liabilities:
Short-term borrowings
Borrowings from central bank
Customer deposits and deposits from
banks and other financial institutions
Interbank loans obtained
Financial liabilities at fair value
through profit or loss
Derivative financial liabilities
Notes payable 200,750,000.00 11,298,583.00
Accounts payable 435,615,039.83 340,972,366.21
Advances from customers 503,083,108.13 623,990,614.91
Financial assets sold under
repurchase agreements
Handling charges and commissions
payable
Payroll payable 372,374,014.37 288,027,136.09
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Gujing Aged Original Spirits Annual Report 2017
Taxes payable 420,984,845.45 486,959,651.85
Interest payable
Dividends payable
Other payables 1,032,543,553.34 641,472,271.53
Reinsurance payables
Insurance contract reserve
Payables for acting trading of
securities
Payables for acting underwriting of
securities
Liabilities directly associated with
assets classified as held for sale
Current portion of non-current
liabilities
Other current liabilities 182,846,942.10 241,487,812.54
Total current liabilities 3,148,197,503.22 2,634,208,436.13
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payable
Specific payables
Provisions
Deferred income 43,706,503.22 43,978,795.45
Deferred income tax liabilities 119,779,105.90 117,287,002.52
Other non-current liabilities
Total non-current liabilities 163,485,609.12 161,265,797.97
Total liabilities 3,311,683,112.34 2,795,474,234.10
Owners’ equity:
Share capital 503,600,000.00 503,600,000.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 1,295,405,592.25 1,295,405,592.25
~ 74 ~
Gujing Aged Original Spirits Annual Report 2017
Less: Treasury shares
Other comprehensive income 53,520,827.44 36,144,477.95
Specific reserve
Surplus reserves 256,902,260.27 256,902,260.27
General reserve
Retained earnings 4,349,649,698.42 3,503,069,053.49
Total equity attributable to owners of
6,459,078,378.38 5,595,121,383.96
Parent Company
Non-controlling interests 382,100,628.33 345,609,535.80
Total owners’ equity 6,841,179,006.71 5,940,730,919.76
Total liabilities and owners’ equity 10,152,862,119.05 8,736,205,153.86
Legal representative: Liang Jinhui The Company’s chief accountant: Ye Changqing
Head of the Company’s financial department: Zhu Jiafeng
2. Parent Company Balance Sheet
Unit: RMB
Item December 31, 2017 December 31, 2016
Current assets:
Monetary assets 1,276,262,109.02 225,792,686.26
Financial assets at fair value through
99,800.76 429,190.68
profit or loss
Derivative financial assets
Notes receivable 674,521,654.40 449,016,169.03
Accounts receivable 8,509,918.03 6,377,346.00
Prepayments 8,534,600.82 11,815,064.19
Interest receivable
Dividends receivable
Other receivables 130,357,778.75 105,514,906.34
Inventories 1,818,358,884.18 1,549,397,565.11
Assets classified as held for sale
Current portion of non-current assets
Other current assets 1,554,870,774.98 1,750,000,000.00
Total current assets 5,471,515,520.94 4,098,342,927.61
Non-current assets:
~ 75 ~
Gujing Aged Original Spirits Annual Report 2017
Available-for-sale financial assets 516,530,547.91 403,547,952.27
Held-to-maturity investments
Long-term receivables
Long-term equity investments 1,155,089,408.32 1,155,089,408.32
Investment property 26,409,050.95 30,846,736.84
Property, plant and equipment 1,303,119,011.66 1,375,089,823.91
Construction in progress 44,673,219.38 68,022,146.66
Construction materials
Proceeds from disposal of property,
plant and equipment
Productive living assets
Oil and gas assets
Intangible assets 185,868,178.71 186,370,081.28
R&D expense
Goodwill
Long-term prepaid expense 58,563,409.89 92,695,064.02
Deferred income tax assets 37,996,747.93 36,366,330.90
Other non-current assets 12,474,026.00 982,000.00
Total non-current assets 3,340,723,600.75 3,349,009,544.20
Total assets 8,812,239,121.69 7,447,352,471.81
Current liabilities:
Short-term borrowings
Financial liabilities at fair value
through profit or loss
Derivative financial liabilities
Notes payable 0.00 28,583.00
Accounts payable 347,757,180.53 307,649,868.02
Advances from customers 1,680,678,175.37 1,003,521,896.65
Payroll payable 110,435,403.45 90,742,908.53
Taxes payable 262,884,211.13 320,037,309.94
Interest payable
Dividends payable
Other payables 173,250,790.29 282,570,379.80
Liabilities directly associated with
assets classified as held for sale
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Gujing Aged Original Spirits Annual Report 2017
Current portion of non-current
liabilities
Other current liabilities 18,296,415.85 37,589,367.67
Total current liabilities 2,593,302,176.62 2,042,140,313.61
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payable
Specific payables
Provisions
Deferred income 39,976,048.28 42,745,851.74
Deferred income tax liabilities 19,792,209.68 15,385,289.84
Other non-current liabilities
Total non-current liabilities 59,768,257.96 58,131,141.58
Total liabilities 2,653,070,434.58 2,100,271,455.19
Owners’ equity:
Share capital 503,600,000.00 503,600,000.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 1,247,162,107.35 1,247,162,107.35
Less: Treasury shares
Other comprehensive income 53,454,736.38 37,315,555.64
Specific reserve
Surplus reserves 251,800,000.00 251,800,000.00
Retained earnings 4,103,151,843.38 3,307,203,353.63
Total owners’ equity 6,159,168,687.11 5,347,081,016.62
Total liabilities and owners’ equity 8,812,239,121.69 7,447,352,471.81
3. Consolidated Income Statement
Unit: RMB
~ 77 ~
Gujing Aged Original Spirits Annual Report 2017
Item 2017
1. Operating revenue 6,968,325,048.55 6,017,143,660.56
Including: Sales revenue 6,968,325,048.55 6,017,143,660.56
Interest revenue
Premium revenue
Handling charge and commission
revenue
2. Cost of operating revenue 5,560,167,242.54 4,997,581,551.14
Including: Cost of sales 1,642,588,056.43 1,523,585,779.51
Interest expense
Handling charge and commission
expense
Surrenders
Net claims paid
Net amount provided as insurance
contract reserve
Expenditure on policy dividends
Reinsurance premium expense
Taxes and surtaxes 1,136,317,983.99 955,988,399.10
Selling expense 2,170,081,383.54 1,980,127,377.89
Administrative expense 603,552,959.10 556,513,607.99
Finance costs -25,927,285.82 -30,253,967.33
Asset impairment losses 33,554,145.30 11,620,353.98
Add: Gains on changes in fair value (“-”
-113,260.71 -5,598.43
for losses)
Investment income (“-” for loss) 153,433,358.26 97,837,461.25
Including: Share of profit or loss of
joint ventures and associates
Foreign exchange gains (“-” for losses)
Asset disposal income (“-” for loss) 254,763.27 345,705.61
Other income 32,720,116.60
3. Operating income (“-” for loss) 1,594,452,783.43 1,117,739,677.85
Add: Non-operating income 30,141,298.15 41,569,240.85
Less: Non-operating expense 12,376,817.78 8,554,634.67
4. Pretax income (“-” for loss) 1,612,217,263.80 1,150,754,284.03
Less: Income tax expense 426,985,526.34 300,436,186.51
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Gujing Aged Original Spirits Annual Report 2017
5. Net income (“-” for net loss) 1,185,231,737.46 850,318,097.52
5.1 Net income from continuing
1,185,231,737.46 850,318,097.52
operations (“-” for net loss)
5.2 Net income from discontinued
operations (“-” for net loss)
Attributable to owners of Parent
1,148,740,644.93 829,630,063.38
Company
Attributable to non-controlling
36,491,092.53 20,688,034.14
interests
6. Other comprehensive income, net of
17,376,349.49 -18,337,408.56
tax
Attributable to owners of Parent
17,376,349.49 -18,337,408.56
Company
6.1 Items that will not be
reclassified to profit or loss
6.1.1 Changes in net liabilities or
assets caused by re-measurements on
defined benefit pension schemes
6.1.2 Share of other
comprehensive income of investees that
will not be reclassified to profit or loss
under equity method
6.2 Items that may subsequently be
17,376,349.49 -18,337,408.56
reclassified to profit or loss
6.2.1 Share of other
comprehensive income of investees that
will be reclassified to profit or loss under
equity method
6.2.2 Gains/Losses on changes in
fair value of available-for-sale financial 17,376,349.49 -18,337,408.56
assets
6.2.3 Gains/Losses arising from
reclassification of held-to-maturity
investments to available-for-sale financial
assets
6.2.4 Effective gains/losses on
cash flow hedges
6.2.5 Differences arising from
translation of foreign
currency-denominated financial
statements
6.2.6 Other
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Gujing Aged Original Spirits Annual Report 2017
Attributable to non-controlling
interests
7. Total comprehensive income 1,202,608,086.95 831,980,688.96
Attributable to owners of Parent
1,166,116,994.42 811,292,654.82
Company
Attributable to non-controlling
36,491,092.53 20,688,034.14
interests
8. Earnings per share
8.1 Basic earnings per share 2.28 1.65
8.2 Diluted earnings per share 2.28 1.65
Legal representative: Liang Jinhui The Company’s chief accountant: Ye Changqing
Head of the Company’s financial department: Zhu Jiafeng
4. Parent Company Income Statement
Unit: RMB
Item 2017
1. Sales revenue 3,789,547,842.84 3,308,399,250.03
Less: Cost of sales 1,481,030,950.69 1,436,794,457.51
Taxes and surtaxes 974,280,790.69 857,620,971.74
Selling expense 172,260,238.41 271,599,513.92
Administrative expense 423,030,438.54 390,774,681.63
Finance costs -15,108,236.44 -12,139,559.51
Asset impairment losses 31,237,595.99 13,749,391.73
Add: Gains on changes in fair value
-113,260.71 -5,598.43
(“-” for losses)
Investment income (“-” for loss) 578,847,735.30 507,037,614.00
Including: Share of profit or loss
of joint ventures and associates
Asset disposal income (“-” for
23,533.98 0.00
loss)
Other income 20,408,700.71 0.00
2. Operating income (“-” for loss) 1,321,982,774.24 857,031,808.58
Add: Non-operating income 17,009,324.56 35,019,767.09
Less: Non-operating expense 9,222,061.73 6,151,343.05
3. Pretax income (“-” for loss) 1,329,770,037.07 885,900,232.62
~ 80 ~
Gujing Aged Original Spirits Annual Report 2017
Less: Income tax expense 231,661,547.32 115,388,301.28
4. Net income (“-” for net loss) 1,098,108,489.75 770,511,931.34
4.1 Net income from continuing
1,098,108,489.75 770,511,931.34
operations (“-” for net loss)
4.2 Net income from discontinued
operations (“-” for net loss)
5. Other comprehensive income, net of
16,139,180.74 -17,166,330.87
tax
5.1 Items that will not be reclassified
to profit or loss
5.1.1 Changes in net liabilities or
assets caused by re-measurements on
defined benefit pension schemes
5.1.2 Share of other
comprehensive income of investees that
will not be reclassified into profit or
loss under equity method
5.2 Items that may subsequently be
16,139,180.74 -17,166,330.87
reclassified to profit or loss
5.2.1 Share of other
comprehensive income of investees that
will be reclassified into profit or loss
under equity method
5.2.2 Gains/Losses on changes in
fair value of available-for-sale financial 16,139,180.74 -17,166,330.87
assets
5.2.3 Gains/Losses arising from
reclassification of held-to-maturity
investments to available-for-sale
financial assets
5.2.4 Effective gains/losses on
cash flow hedges
5.2.5 Differences arising from
translation of foreign
currency-denominated financial
statements
5.2.6 Other
6. Total comprehensive income 1,114,247,670.49 753,345,600.47
7. Earnings per share
7.1 Basic earnings per share 2.18 1.53
7.2 Diluted earnings per share 2.18 1.53
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Gujing Aged Original Spirits Annual Report 2017
5. Consolidated Cash Flow Statement
Unit: RMB
Item 2017
1. Cash generated by or used in
operating activities:
Proceeds from sale of commodities
7,041,950,513.29 7,031,888,740.85
and rendering of services
Net increase in customer deposits and
deposits from banks and other financial
institutions
Net increase in loans from central
bank
Net increase in loans from other
financial institutions
Premiums received on original
insurance contracts
Net proceeds from reinsurance
Net increase in deposits and
investments of policy holders
Net increase in proceeds from
disposal of financial assets at fair value
through profit or loss
Interest, handling charges and
commissions received
Net increase in interbank loans
obtained
Net increase in proceeds from
repurchase transactions
Tax rebates received 20,901,711.56 16,218,721.25
Cash generated by other operating
410,064,046.58 345,789,490.57
activities
Subtotal of cash generated by operating
7,472,916,271.43 7,393,896,952.67
activities
Payments for goods and services 685,079,409.14 1,761,253,852.47
Net increase in loans and advances to
customers
Net increase in deposits in central
bank and in interbank loans granted
Payments for claims on original
insurance contracts
Interest, handling charges and
~ 82 ~
Gujing Aged Original Spirits Annual Report 2017
commissions paid
Policy dividends paid
Cash paid to and for employees 1,379,482,541.55 1,130,548,519.54
Taxes paid 2,588,903,933.28 2,041,224,545.61
Cash used in other operating
1,888,535,674.68 1,277,638,226.99
activities
Subtotal of cash used in operating
6,542,001,558.65 6,210,665,144.61
activities
Net cash flows from operating activities 930,914,712.78 1,183,231,808.06
2. Cash generated by or used in
investing activities:
Proceeds from disinvestments 5,542,089,013.38 3,325,502,933.15
Investment income received 87,735,460.11 78,724,727.77
Net proceeds from disposal of
property, plant and equipment,
2,275,291.91 4,761,778.98
intangible assets and other long-lived
assets
Net proceeds from disposal of
subsidiaries or other business units
Cash generated by other investing
5,715,000.00 2,481,400.00
activities
Subtotal of cash generated by investing
5,637,814,765.40 3,411,470,839.90
activities
Payments for acquisition of property,
plant and equipment, intangible assets 200,093,340.76 172,716,601.62
and other long-lived assets
Payments for investments 5,570,236,537.09 3,973,944,183.44
Net increase in pledged loans granted
Net payments for acquisition of
805,830,032.45
subsidiaries and other business units
Cash used in other investing
activities
Subtotal of cash used in investing
5,770,329,877.85 4,952,490,817.51
activities
Net cash flows from investing activities -132,515,112.45 -1,541,019,977.61
3. Cash generated by or used in
financing activities:
Capital contributions received
Including: Capital contributions by
non-controlling interests to subsidiaries
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Gujing Aged Original Spirits Annual Report 2017
Increase in borrowings 0.00 1,000,000.00
Net proceeds from issuance of bonds
Cash generated by other financing
activities
Subtotal of cash generated by financing
0.00 1,000,000.00
activities
Repayment of borrowings 0.00 1,000,000.00
Payments for interest and dividends 302,160,000.00 50,360,000.00
Including: Dividends paid by
subsidiaries to non-controlling interests
Cash used in other financing
0.00 104,376,537.45
activities
Subtotal of cash used in financing
302,160,000.00 155,736,537.45
activities
Net cash flows from financing activities -302,160,000.00 -154,736,537.45
4. Effect of foreign exchange rate
changes on cash and cash equivalents
5. Net increase in cash and cash
496,239,600.33 -512,524,707.00
equivalents
Add: Cash and cash equivalents,
527,849,026.07 1,040,373,733.07
beginning of the period
6. Cash and cash equivalents, end of the
1,024,088,626.40 527,849,026.07
period
6. Parent Company Cash Flow Statement
Unit: RMB
Item 2017
1. Cash generated by or used in
operating activities:
Proceeds from sale of commodities
4,173,273,698.71 4,048,263,462.34
and rendering of services
Tax rebates received 13,013,817.25 15,009,167.60
Cash generated by other operating
34,644,114.33 44,493,823.06
activities
Subtotal of cash generated by operating
4,220,931,630.29 4,107,766,453.00
activities
Payments for goods and services 899,290,002.74 1,629,164,465.68
Cash paid to and for employees 509,129,615.74 491,016,401.44
Taxes paid 1,745,217,861.34 1,345,928,486.58
~ 84 ~
Gujing Aged Original Spirits Annual Report 2017
Cash used in other operating
711,716,384.50 89,125,570.51
activities
Subtotal of cash used in operating
3,865,353,864.32 3,555,234,924.21
activities
Net cash flows from operating activities 355,577,765.97 552,531,528.79
2. Cash generated by or used in
investing activities:
Proceeds from disinvestments 5,331,270,532.13 3,271,955,614.05
Investment income received 523,008,318.40 492,653,360.82
Net proceeds from disposal of
property, plant and equipment,
501,088.26 3,995,766.04
intangible assets and other long-lived
assets
Net proceeds from disposal of
subsidiaries or other business units
Cash generated by other investing
1,826,000.00 1,167,400.00
activities
Subtotal of cash generated by investing
5,856,605,938.79 3,769,772,140.91
activities
Payments for acquisition of property,
plant and equipment, intangible assets 141,317,744.91 157,553,414.54
and other long-lived assets
Payments for investments 5,168,236,537.09 3,621,248,401.74
Net payments for acquisition of
0.00 816,000,000.00
subsidiaries and other business units
Cash used in other investing
activities
Subtotal of cash used in investing
5,309,554,282.00 4,594,801,816.28
activities
Net cash flows from investing activities 547,051,656.79 -825,029,675.37
3. Cash generated by or used in
financing activities:
Capital contributions received
Increase in borrowings
Net proceeds from issuance of bonds
Cash generated by other financing
activities
Subtotal of cash generated by financing
activities
Repayment of borrowings
Payments for interest and dividends 302,160,000.00 50,360,000.00
~ 85 ~
Gujing Aged Original Spirits Annual Report 2017
Cash used in other financing
activities
Sub-total of cash used in financing
302,160,000.00 50,360,000.00
activities
Net cash flows from financing activities -302,160,000.00 -50,360,000.00
4. Effect of foreign exchange rate
changes on cash and cash equivalents
5. Net increase in cash and cash
600,469,422.76 -322,858,146.58
equivalents
Add: Cash and cash equivalents,
225,792,686.26 548,650,832.84
beginning of the period
6. Cash and cash equivalents, end of the
826,262,109.02 225,792,686.26
period
~ 86 ~
Gujing Aged Original Spirits Annual Report 2017
7. Consolidated Statements of Changes in Owners’ Equity
2017
Unit: RMB
Equity attributable to owners of Parent Company
Item Other equity instruments Non-controlling Total owners’
Less: Other
Specific Surplus General Retained
Share capital Preferred Perpetual Capital reserves Treasury comprehensive interests equity
Other reserve reserves reserve earnings
shares bonds shares income
1. Balances as of
503,600,000.00 1,295,405,592.25 36,144,477.95 256,902,260.27 3,503,069,053.49 345,609,535.80 5,940,730,919.76
end of prior year
Add: Adjustments
for changed
accounting policies
Adjustments for
corrections of
previous errors
Adjustments for
business mergers
under same control
Other
adjustments
2. Balances as of
beginning of the 503,600,000.00 1,295,405,592.25 36,144,477.95 256,902,260.27 3,503,069,053.49 345,609,535.80 5,940,730,919.76
year
3. Increase/
17,376,349.49 846,580,644.93 36,491,092.53 900,448,086.95
decrease in the
~ 87 ~
Gujing Aged Original Spirits Annual Report 2017
period (“-” for
decrease)
3.1 Total
comprehensive 17,376,349.49 1,148,740,644.93 36,491,092.53 1,202,608,086.95
income
3.2 Capital
increased and
reduced by owners
3.2.1 Common
shares increased by
shareholders
3.2.2 Capital
increased by
holders of other
equity instruments
3.2.3
Share-based
payments included
in owners’ equity
3.2.4 Other
3.3 Profit
-302,160,000.00 -302,160,000.00
distribution
3.3.1
Appropriation to
surplus reserves
3.3.2
Appropriation to
general reserve
~ 88 ~
Gujing Aged Original Spirits Annual Report 2017
3.3.3
Appropriation to
-302,160,000.00 -302,160,000.00
owners (or
shareholders)
3.3.4 Other
3.4
Carry-forwards
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 Surplus
reserves used to
make up losses
3.4.4 Other
3.5 Specific reserve
3.5.1
Withdrawn for the
period
3.5.2 Used
during the period
3.6 Other
~ 89 ~
Gujing Aged Original Spirits Annual Report 2017
4. Balances as of
503,600,000.00 1,295,405,592.25 53,520,827.44 256,902,260.27 4,349,649,698.42 382,100,628.33 6,841,179,006.71
end of the period
2016
Unit: RMB
Equity attributable to owners of Parent Company
Item Other equity instruments Non-controlling Total owners’
Less: Other
Specific Surplus General Retained
Share capital Preferred Perpetual Capital reserves Treasury comprehensive interests equity
Other reserve reserves reserve earnings
shares bonds shares income
1. Balances as of
503,600,000.00 1,294,938,493.19 54,481,886.51 256,902,260.27 2,723,798,990.11 4,833,721,630.08
end of prior year
Add: Adjustments
for changed
accounting
policies
Adjustments for
corrections of
previous errors
Adjustments for
business mergers
under same control
Other
adjustments
2. Balances as of
beginning of the 503,600,000.00 1,294,938,493.19 54,481,886.51 256,902,260.27 2,723,798,990.11 4,833,721,630.08
year
3. Increase/ 467,099.06 -18,337,408.56 779,270,063.38 345,609,535.80 1,107,009,289.68
~ 90 ~
Gujing Aged Original Spirits Annual Report 2017
decrease in the
period (“-” for
decrease)
3.1 Total
comprehensive -18,337,408.56 829,630,063.38 20,688,034.14 831,980,688.96
income
3.2 Capital
increased and
reduced by owners
3.2.1
Common shares
increased by
shareholders
3.2.2 Capital
increased by
holders of other
equity instruments
3.2.3
Share-based
payments included
in owners’ equity
3.2.4 Other
3.3 Profit
-50,360,000.00 -50,360,000.00
distribution
3.3.1
Appropriation to
surplus reserves
3.3.2
~ 91 ~
Gujing Aged Original Spirits Annual Report 2017
Appropriation to
general reserve
3.3.3
Appropriation to
-50,360,000.00 -50,360,000.00
owners (or
shareholders)
3.3.4 Other
3.4
Carry-forwards
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 Surplus
reserves used to
make up losses
3.4.4 Other
3.5 Specific
reserve
3.5.1
Withdrawn for the
period
~ 92 ~
Gujing Aged Original Spirits Annual Report 2017
3.5.2 Used
during the period
3.6 Other 467,099.06 324,921,501.66 325,388,600.72
4. Balances as of
503,600,000.00 1,295,405,592.25 36,144,477.95 256,902,260.27 3,503,069,053.49 345,609,535.80 5,940,730,919.76
end of the period
8. Parent Company Statements of Changes in Owners’ Equity
2017
Unit: RMB
Other equity instruments Less: Other
Item Specific Surplus Retained Total owners’
Share capital Preferred Perpetual Capital reserves Treasury comprehensive
Other reserve reserves earnings equity
shares bonds shares income
1. Balances as of end of
503,600,000.00 1,247,162,107.35 37,315,555.64 251,800,000.00 3,307,203,353.63 5,347,081,016.62
prior year
Add: Adjustments for
changed accounting
policies
Adjustments for
corrections of previous
errors
Other adjustments
2. Balances as of
503,600,000.00 1,247,162,107.35 37,315,555.64 251,800,000.00 3,307,203,353.63 5,347,081,016.62
beginning of the year
3. Increase/ decrease in
16,139,180.74 795,948,489.75 812,087,670.49
the period (“-” for
~ 93 ~
Gujing Aged Original Spirits Annual Report 2017
decrease)
3.1 Total
16,139,180.74 1,098,108,489.75 1,114,247,670.49
comprehensive income
3.2 Capital increased
and reduced by owners
3.2.1 Common shares
increased by shareholders
3.2.2 Capital
increased by holders of
other equity instruments
3.2.3 Share-based
payments included in
owners’ equity
3.2.4 Other
3.3 Profit distribution -302,160,000.00 -302,160,000.00
3.3.1 Appropriation
to surplus reserves
3.3.2 Appropriation
to owners (or -302,160,000.00 -302,160,000.00
shareholders)
3.3.3 Other
3.4 Carry-forwards
within owners’ equity
3.4.1 Increase in
capital (or share capital)
from capital reserves
3.4.2 Increase in
capital (or share capital)
~ 94 ~
Gujing Aged Original Spirits Annual Report 2017
from surplus reserves
3.4.3 Surplus
reserves used to make up
losses
3.4.4 Other
3.5 Specific reserve
3.5.1 Withdrawn for
the period
3.5.2 Used during the
period
3.6 Other
4. Balances as of end of
503,600,000.00 1,247,162,107.35 53,454,736.38 251,800,000.00 4,103,151,843.38 6,159,168,687.11
the period
2016
Unit: RMB
Other equity instruments Less: Other
Item Specific Surplus Retained Total owners’
Share capital Preferred Perpetual Capital reserves Treasury comprehensive
Other reserve reserves earnings equity
shares bonds shares income
1. Balances as of end of
503,600,000.00 1,247,162,107.35 54,481,886.51 251,800,000.00 2,587,051,422.29 4,644,095,416.15
prior year
Add: Adjustments for
changed accounting
policies
Adjustments for
corrections of previous
errors
~ 95 ~
Gujing Aged Original Spirits Annual Report 2017
Other adjustments
2. Balances as of
503,600,000.00 1,247,162,107.35 54,481,886.51 251,800,000.00 2,587,051,422.29 4,644,095,416.15
beginning of the year
3. Increase/ decrease in the
-17,166,330.87 720,151,931.34 702,985,600.47
period (“-” for decrease)
3.1 Total comprehensive
-17,166,330.87 770,511,931.34 753,345,600.47
income
3.2 Capital increased
and reduced by owners
3.2.1 Common shares
increased by shareholders
3.2.2 Capital
increased by holders of
other equity instruments
3.2.3 Share-based
payments included in
owners’ equity
3.2.4 Other
3.3 Profit distribution -50,360,000.00 -50,360,000.00
3.3.1 Appropriation
to surplus reserves
3.3.2 Appropriation
to owners (or -50,360,000.00 -50,360,000.00
shareholders)
3.3.3 Other
3.4 Carry-forwards
within owners’ equity
~ 96 ~
Gujing Aged Original Spirits Annual Report 2017
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 Surplus reserves
used to make up losses
3.4.4 Other
3.5 Specific reserve
3.5.1 Withdrawn for
the period
3.5.2 Used during the
period
3.6 Other
4. Balances as of end of
503,600,000.00 1,247,162,107.35 37,315,555.64 251,800,000.00 3,307,203,353.63 5,347,081,016.62
the period
~ 97 ~
Gujing Aged Original Spirits Annual Report 2017
Anhui Gujing Distillery Co., Ltd.
Notes to the Financial Statements
for the Year Ended 31 December 2017
(All amounts are expressed, unless otherwise stated, in CNY.)
Note 1 Company Profile
Anhui Gujing Distillery Co., Ltd. (hereafter “the Company” or \"Company\") was the company
limited by shares approved by Administration Bureau of State-owned Property of Anhui
province following the approval WanGuoZiGongZi (1996) NO. 053 (皖国资工字(1996)第
053号文), Anhui Gujing Group Co., Ltd. as the sole sponsors, established net assets in the
assessment of main production operating assets of its core company Anhui Bozhou Gujing
distillery 377.1677 million transferred into the 155,000,000 state-owned shares, and the
registered location was the Bozhou City of People's Republic of China. The company was
registered in The People's Republic of China on 5 March 1996 and was approved by
People’s Government of Anhui province following the approval WanZhengMin (1996)
NO.42 (皖政秘(1996)42 号文). The company convoked the founding meeting on 28 May
1996 and registered on 30 May 1996 by Administration for Industry and Commerce of
Anhui province.
The Company issued 60,000,000 domestic listed foreign shares (hereafter “B” shares) in
June 1996 and 20,000,000 domestic listed CNY ordinary shares (hereafter “A” shares) in
September 1996, the par value of ordinary shares is CNY1.00 per share. Both A share and
B share are listed on Shenzhen Stock exchange.
The headquarters of the company is located in Gujing town, Bozhou city, Anhui province.
The company and the subsidiaries (collectively called “Group”) is mainly engaged in liquor
production and sales; it belongs to the food manufacturing industry.
The original registered capital was CNY 235 million, the total amount of shares was 235
million, including state-owned shares 155 million and domestic listed foreign shares 60
million, the par value is CNY 1 per share.
On 29 May 2006, the shareholder meeting for the Company’s shareholdings reform of
A-share market has discussed and approved the proposal of the shareholdings reform,
and the reform was implemented in June 2006. After the Company’s shareholdings
reform implemented, all shares of the Company became floating shares, which included
147,000,000 shares with restricted condition on disposal, representing 62.55% of total
~ 98 ~
Gujing Aged Original Spirits Annual Report 2017
share capital, and 88,000,000 shares without restricted condition on disposal, representing
37.45% of total share capital.
On 27 June 2007, the Company issued the , the 11,750,000 restricted outstanding shares with the
restricted condition on disposal became non-restricted in the stock market, and the
conversion date is on 29 June 2007. Hence, outstanding shares with the restrict condition
on disposal are 135,250,000 shares, representing 57.55% of total share capital, the share
without restricting condition on disposal are 99,750,000 shares, representing 42.45% of
total share capital.
On 17 July 2008, the Company issued the , the 11,750,000 restricted outstanding shares with the
restricted condition on disposal became non-restricted in the stock market, and the
conversion date is on 18 July 2008. Hence, outstanding shares with the restricted
condition on disposal were 123,500,000 shares, representing 52.55% of total share
capital, the share without restricting condition on disposal are 111,500,000 shares,
representing 47.45% of total share capital.
On 24 July 2009, the Company issued the , the 123,500,000 restricted outstanding shares with
the restricted condition on disposal became non-restricted in the stock market, and the
conversion date was on 29 July 2009. Hence, all shares of the Company became
outstanding shares without restricted condition on disposal.
According to the approval by China Securities Regulatory Commission (the authorization
file No. zhengjianxuke[2011]943), on 15 July 2011, the Company privately issued
16,800,000 shares of ordinary share (A shares) to specific investors, the par value was
CNY 1 per share, and the offering price was CNY 75 per share, the funds raised amounted
to CNY 1,260 million. After deducting the sundry issuing charges amounting to CNY
32,500,549.73, the actual funds raised amounted to CNY 1,227,499,450.27. The position
of the above raised funds has been verified by Reanda Certified Public Accountants Co.,
Ltd. with a Capital Verification Report (REANDA YAN ZI[2011]No.1065). After the
non-public issuance, the share capital of the Company increased to CNY 251.80 million.
According to the resolution of 2011 annual general meeting of stockholders, the company
converted 10 shares for each10 shares from capital reserves based on the 251.80 million
shares on 31 December 2011, the total number of converted shares was 251.80 million,
and the transfer was implemented in 2012. After the conversion, the registered capital
increased to CNY 503.60 million.
~ 99 ~
Gujing Aged Original Spirits Annual Report 2017
As of 31 December 2017, the accumulated number of issued capital was 503.60 million
shares. See Note 6.28 for details.
The company registered in Gujing town, Bozhou city, Anhui province.
The approved business scope of the Company: grain procurement (operation by license),
production of distilled spirits, brewing equipment, packaging materials, glass bottles,
alcohol, grease (limited to the by-products from alcohol production), high-tech
development, biotechnology development, deep processing of agricultural and sideline
products, sales of self-produced products.
The parent company of the Company and ultimate parent company is Anhui Gujing Group
Co., Ltd. incorporated in China.
The financial statement is approved by the resolution of the board of directors on 26 April
2018. According to the articles of association, the financial statements will be submitted to
the shareholders meeting for consideration.
The consolidation scope includes 24 subsidiaries in total in 2017, and please see Note 8
“Interest in other entities” for details. The consolidation scope was increased by 3
subsidiaries than prior year and please see Note 7 “Changes of the scope of consolidated
financial statements” for details.
Note 2 Basis for preparation of the financial statements
The Financial Statements of the Company are prepared on the basis of going concern and
with reference to the actual occurrence of transactions and events; in accordance with the
Enterprise Accounting Standard - Basic Standard (issued by the Ministry of Finance Order
No.33, revised by the Ministry of Finance Order No.76), the 42 specific accounting
standards, the Enterprise Accounting Standards Application Guidance, the Enterprise
Accounting Standards Interpretation and other relevant provisions issued and revised on
15 February 2006 and subsequently by the Ministry of Finance (hereafter, collectively the
CAS); and in accordance with the Preparation Directive for Company Information
Disclosure of Publicly Listed Companies 15 - General Financial Report Directive revised in
2014 by China Securities Regulatory Commission.
In accordance with relevant provisions the CAS, the Group adopts the accrual basis for
daily book-keeping. Elements of the Financial Statements, except for certain financial
instruments and investment properties, are measured using the historical convention.
Held-for-sale non-current assets are measured at the lower of fair value less predictable
costs and the original book value at the recognition date. Allowance is recognized for any
~ 100 ~
Gujing Aged Original Spirits Annual Report 2017
asset that is impaired in accordance with relevant regulatory provisions.
Note 3 Declaration of compliance with the CAS
The Company's Financial Statements has been prepared in accordance with the CAS and
present truly and completely the financial position of the Company as at 31 December 2017
and its operation results, cash flows and relevant information for the year then ended. And,
the Financial Statements of the Company has been prepared, in all material respects, in
accordance with the disclosure provisions relevant to financial statements and the
accompanying notes provided by the Preparation Directive for Company Information
Disclosure of Publicly Listed Companies 15 - General Financial Report Directive revised in
2014 by China Securities Regulatory Commission.
Note 4 Significant accounting policies and accounting estimates
The company and subsidiaries are mainly engaged in liquor production and sales. The
company formulates the specific accounting policies and accounting estimates for revenue
recognition and other transactions and events in accordance with the actual business
operation characteristics of the company and subsidiaries, and provisions of the relevant
accounting standard for business enterprises, please see Note 4.23 “Revenue” for details.
The description of significant account judgment and estimates made by management,
please see Note 4.28 “Significant accounting judgment and estimates.”
4.1 Accounting period
The accounting period of the Company is classified as interim period and annual period.
Interim period refers to the reporting period shorter than a complete annual period. The
accounting period of the Company is the calendar year from 1 January to 31 December.
4.2 Operating cycle
Normal business cycle is realized by the Company in cash or cash equivalents from the
purchase of assets for processing until. The company has a 12 -month operating cycle, and
its assets and liabilities as liquidity criteria for the classification.
4.3 Monetary Unit
Yuan (CNY) is the currency of the primary economic environment in which the Company
and its domestic subsidiaries operate. Therefore, the Company and its domestic
subsidiaries choose CNY as their functional currency. The Company adopts CNY to
prepare its functional statements.
~ 101 ~
Gujing Aged Original Spirits Annual Report 2017
4.4 Accounting for business combinations under common control and under
different control
A business combination is a transaction or event that brings together two or more separate
entities into one reporting entity. Business combinations are classified into business
combinations involving enterprises under common control and business combinations not
involving enterprises under common control.
4.4.1 Business combination involving entities under common control
A business combination involving enterprises under common control is a business
combination in which all of the combining enterprises are ultimately controlled by the same
party or parties both before and after the combination, and that control is not transitory.
For a business combination involving enterprises under common control, the party that, on
the combination date, obtains control of another enterprise participating in the combination
is the absorbing party, while that other enterprise participating in the combination is a party
being absorbed. Combination date is the date on which the absorbing party effectively
obtains control of the party being absorbed.
The assets and liabilities obtained are measured at the carrying amounts as recorded by
the enterprise being combined at the combination date. The difference between the
carrying amount of the net assets obtained and the carrying amount of consideration paid
for the combination (or the total face value of shares issued) is adjusted to the capital
premium (or share premium) in the capital reserve. If the balance of the capital premium (or
share premium) is insufficient, any excess is adjusted to retained earnings.
The cost of a combination incurred by the absorbing party includes any costs directly
attributable to the combination shall be recognized as an expense through profit or loss for
the current period when incurred.
4.4.2 Business combination involving entities not under common control
A business combination involving enterprises not under common control is a business
combination in which all of the combining enterprises are not ultimately controlled by the
same party or parties both before and after the business combination.
For a business combination not involving enterprises under common control, the party that,
on the acquisition date, obtains control of another enterprise participating in the
combination is the acquirer, while that other enterprise participating in the combination is
the acquiree. Acquisition date is the date on which the acquirer effectively obtains control of
the acquiree.
~ 102 ~
Gujing Aged Original Spirits Annual Report 2017
For a business combination not involving enterprise under common control, the combined
cost including the sum of fair value, at the acquisition date, of the assets given, liabilities
incurred or assumed, and equity securities issued by the acquirer. The intermediary
expenses incurred by the acquirer in respect of auditing, legal services, valuation and
consultancy services, etc. and other associated administrative expenses attributable to the
business combination are recognized in profit or loss when they are incurred.
The transaction cost arose from issuing of equity securities, or liability securities shall be
initially recognized as equity securities or liability securities.
The contingent consideration related to the combination shall be booked as combination
cost at the fair value at the acquisition date. If within the 12 months after the acquisition,
additional information can prove the existence of related information at the acquisition date
and the contingent consideration need to be adjusted, goodwill can be adjusted.
Combination cost of the acquirer’s interest and identifiable net assets of the acquirer
acquired through the business combination shall be measured by the fair value at the
acquisition date. Where the cost of combination exceeds the acquirer’s interest in the fair
value of the acquiree’s identifiable net assets, the difference shall be recognized as
goodwill. Where the cost of combination is less than the acquirer’s interest in the fair value
of the acquiree’s identifiable net assets, the difference shall be accounted for according to
the following requirements: (i) the acquirer shall reassess the measurement of the fair
values of the acquiree’s identifiable assets, liabilities and contingent liabilities and
measurement of the cost of combination; (ii) if after that reassessment, the cost of
combination is still less than the acquirer’s interest in the fair values of the acquiree’s
identifiable net assets, the acquirer shall recognize the remaining difference immediately in
profit or loss for the current period.
Where the temporary difference obtained by the acquirer was not recognized due to
conformity with the conditions applied for recognition of deferred income tax, if, within the
12 months after acquisition, additional information can prove the existence of related
information at acquisition date and the expected economic benefits on the acquisition date
arose from temporary deductible difference by the acquiree can be achieved, relevant
income tax assets can be recognized, and goodwill offset. If the goodwill is not sufficient,
the difference shall be recognized as the profit of the current period.
Apart from above, the differences shall be taken into profit or loss of the current period if the
recognition of deferred income tax assets is related to the combination.
For a business combination not involving enterprise under common control, which achieved
~ 103 ~
Gujing Aged Original Spirits Annual Report 2017
in stages that involves multiple exchange transactions, according to “The notice of the
Ministry of Finance on the issuance of Accounting Standards Interpretation No. 5” (CaiKuai
[2012] No. 19) and Article 51 of “Accounting Standards for Business Enterprises No.33 -
Consolidated Financial Statements” on the “package deal” criterion (see Note 4.5.2), to
judge the multiple exchange transactions whether they are the \"package deal\". If it belongs
to the “package deal” in reference to the preceding paragraphs of this section and the
Notes described in 4.13 “long-term investment” accounting treatment, if it does not belong
to the “package deal” to distinguish the individual financial statements and the consolidated
financial statements related to the accounting treatment:
In the individual financial statements, the total value of the book value of the acquiree's
equity investment before the acquisition date and the cost of new investment at the
acquisition date, as the initial cost of the investment, the acquiree's equity investment
before the acquisition date involved in other comprehensive income, in the disposal of the
investment will be in other comprehensive income associated with the use of infrastructure
and the acquiree directly related to the disposal of assets or liabilities of the same
accounting treatment (that is, except in accordance with the equity method of accounting in
the defined benefit plan acquiree is remeasured net changes in net assets or liabilities other
than in the corresponding share of the lead, and the rest into the current investment
income).
In the combination financial statements, the equity interest in the acquiree previously held
before the acquisition date re-assessed at the fair value at the acquisition date, with any
difference between its fair value and its carrying amount is recorded as investment income.
The previously-held equity interest in the acquiree involved in other comprehensive income
and other comprehensive income associated with the purchase of the foundation should be
used party directly related to the disposal of assets or liabilities of the same accounting
treatment (that is, except in accordance with the equity method of accounting in the
acquiree is remeasured defined benefit plans other than changes in net liabilities or net
assets due to a corresponding share of the rest of the acquisition date into current
investment income).
4.5 Preparation of the consolidated financial statements
4.5.1 The scope of consolidation
The scope of consolidation for the consolidated financial statements is determined on the
basis of control. Control is the power to govern the financial and operating policies of an
enterprise so as to obtain benefits from its operating activities. The scope of consolidation
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includes the Company and all of the subsidiaries. The subsidiary is an enterprise or entity
under the control of the Company.
Once the change in the relevant facts and circumstances leading to the definition of the
relevant elements involved in the control of the change, the company will be re-evaluated.
4.5.2 Preparation of the consolidated financial statements
The subsidiary of the Company is included in the consolidated financial statements from
the date when the control over the net assets and business decisions of the subsidiary is
effectively obtained and excluded from the date when the control ceases.
For a subsidiary disposed of by the Company, the operating results and cash flows before
the date of disposal (the date when control is lost) are included in the consolidated income
statement and consolidated statement of cash flows, as appropriate. For a subsidiary
disposed of during the period, no adjustment is made to the opening balance of the
consolidated financial statements.
For a subsidiary acquired through a business combination not under common control, the
operating results and cash flows from the acquisition (the date when the control is obtained)
are included in the consolidated income statement and consolidated statement of cash
flows, as appropriate; no adjustment is made to the opening balance and comparative
figures in the consolidated financial statements.
Where a subsidiary was acquired during the reporting period, through a business
combination involving enterprises under common control, the financial statements of the
subsidiary are included in the consolidated financial statements. The results of operations
and cash flow are included in the consolidated balance sheet and the consolidated income
statement, respectively, based on their carrying amounts, from the date that common
control was established, and the opening balances and the comparative figures of the
consolidated financial statements are restated.
When the accounting period or accounting policies of a subsidiary are different from those
of the Company, the Company makes necessary adjustments to the financial statements of
the subsidiary based on the Company’s own accounting period or accounting policies.
Where a subsidiary was acquired during the reporting period through a business
combination not under common control, the financial statements were reconciled on the
basis of the fair value of identifiable net assets at the date of acquisition. Intra-Group
balances and transactions and any unrealized profit or loss arising from intra-Group
transactions are eliminated in preparing the consolidated financial statements.
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Minority interest and the portion of the net profit or loss not attributable to the Company are
presented separately in the consolidated balance sheet within shareholders’/ owners’
equity and net profit. Net profit or loss attributable to minority shareholders in the
subsidiaries is presented separately as minority interest in the consolidated income
statement below the net profit line item.
When the amount of loss for the current period attributable to the minority shareholders of a
subsidiary exceeds the minority shareholders’ portion of the opening balance of
shareholders’/equity of the subsidiary, the excess is allocated against the minority interests.
When the Company loses control of a subsidiary due to the disposal of a portion of an
equity investment or other reasons, the remaining equity investment is re-measured at its
fair value at the date when control is lost. The difference between 1) the total amount of
consideration received from the transaction that resulted in the loss of control and the fair
value of the remaining equity investment and 2) the carrying amounts of the interest in the
former subsidiary’s net assets immediately before the loss of the control is recognized as
investment income for the current period when control is lost. Other comprehensive income
related to the former subsidiary's equity investment, using the foundation and the acquiree
directly related to the disposal of the same assets or liabilities are accounted when the
control is lost (i.e., in addition to the former subsidiary, which is remeasured at the net
defined benefit plan or changes in net assets and liabilities resulting from, the rest
subsidiaries are transferred to the current investment income). The retained interest is
subsequently measured according to the rules stipulated in the - “Chinese Accounting
Standards for Business Enterprises No.2 - Long-term equity investment” or “Chinese
Accounting Standards for Business Enterprises No.22 - Determination and measurement of
financial instruments”. See Note 4.13 Long-term equity investments and Note 4.9 Financial
instruments for details.
Where loss of control over a subsidiary result from multiple transactions (agreements), the
assessment shall be made as to whether the multiple agreements shall be viewed as a
whole as a single transaction. Multiple agreements giving rise to loss of control over a
subsidiary is generally viewed as a whole as a single transaction if the terms, conditions
and economic implications of the multiple agreements satisfy one or more of the following
conditions: 1) the agreements are entered into simultaneously or taking into account the
implication of each other; 2) the business objective cannot be achieved without successful
completion of all the agreements; 3)the occurrence of one agreement is dependent on the
result of at least another one agreement; and/or 4) any one single agreement is not
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recognized as economic, and the agreements as a whole is economic. Where multiple
agreements do not satisfy the conditions of being viewed as a single transaction, each
agreement shall be treated and accounted for in accordance with the provisions of disposal
of long-term equity investments not resulting loss of control (see Note 4.13.2.4) or loss of
control due to disposal of shares or other events (see the previous paragraph). Where
multiple agreements satisfy the conditions of being viewed as a single transaction, each
agreement shall be treated and accounted for as a transaction which results in loss of
control; differences between the consideration for disposals prior to loss of control and the
net assets proportionate to the shares disposed prior to loss of control are recognized as
other comprehensive income in the consolidated financial statements and transferred to
profit or loss at the time of loss of control.
4.6 Joint arrangement and accounting for joint operations
A joint arrangement is an arrangement of which two or more parties have joint control. A
joint arrangement is either a joint operation or a joint venture, depending on the rights and
obligation of the Company in the joint arrangement. A joint operation is a joint arrangement
whereby the Company has rights to the assets, and obligations for the liabilities, relating to
the arrangement. A joint venture is a joint arrangement whereby the Company has rights to
the net assets of the arrangement.
The Company accounts for joint ventures using the equity method, see Note 4.13.2.2 for
details.
The company, a joint operator, recognizes in relation to its interest in a joint operation: (a)
its assets, including its share of any assets held jointly; (b) its liabilities, including its share
of any liabilities incurred jointly; (c) its revenue from the sale of its share of the output
arising from the joint operation;(d)its share of the revenue from the sale of the output by the
joint operation; and (e)its expenses, including its share of any expenses incurred jointly.
When the Company enters into a transaction with a joint operation in which it is a joint
operator, such as a sale or contribution of assets, the Company, prior to disposal of the
assets to a third party by the joint operation, recognizes gains and losses resulting from
such a transaction only to the extent of the other parties' interests in the joint operation.
When there is evidence of a reduction in the net realizable value of the assets to be sold or
contributed to the joint operation, or of an impairment loss of those assets which is in line
with provision stipulated by CAS 8, those losses are recognized fully by the Company.
When there is evidence of a reduction in the net realizable value of the assets to be
purchased or of an impairment loss of those assets, the Company shall recognize its share
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of those losses.
4.7 Cash equivalent
Cash and cash equivalents of the Company include cash on hand, ready usable deposits
and investments having short holding term (normally will be due within three months from
the day of purchase), with strong liquidity and easy to be exchanged into certain amount of
cash that can be measured reliably and have low risks of change.
4.8 Foreign exchange
4.8.1 Translation in foreign exchange transactions
Transactions denominated in foreign currencies are translated into the functional currency
using the transaction-date spot exchange rates. Where a transaction is conducted purely
for the purpose of exchange one currency into another currency, the exchange rate used to
translate the foreign currency into the functional currency is the exchange rate that is
actually used for the currency exchange.
4.8.2 Translation of foreign monetary currency and non-monetary foreign currency
At the balance sheet date, foreign currency monetary items are translated using the spot
exchange rate at the balance sheet date. All the exchange differences thus resulted are
taken to profit or loss, except for ① those relating to foreign currency borrowings
specifically for construction and acquisition of qualifying assets, which are capitalized in
accordance with the principle of capitalization of borrowing costs, ②hedging accounting,
the exchange difference related to hedging instruments for the purpose of net oversea
operating investment is recorded in the comprehensive income till the date of disposal and
recognized in profit or loss of the period; exchange difference from changes of other
account balance of foreign currency monetary items, ③available-for-trade is recorded into
profit or loss except for amortized cost.
Non-monetary foreign currency items measured at historical cost shall still be translated at
the spot exchange rate prevailing on the transaction date, and the amount denominated in
the functional currency is not changed. Non-monetary foreign currency items measured at
fair value are translated at the spot exchange rate prevailing at the date when the fair
values are determined. The exchange difference thus resulted are recognized in profit or
loss for the current period or as capital reserve.
4.9 Financial instruments
The company recognizes the financial assets or liabilities when involved in financial
instruments’ agreements. The financial assets or liabilities are measured at fair value when
initially recognized. For financial instruments whose value is measured at fair value, the
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related trading fees of whom are recorded into gains or loss; For other financial instruments,
the related fees are recognized as part of initial value.
4.9.1 Recognition of financial assets and liabilities’ fair value
Fair value is the amount for which an asset could be exchanged, or a liability settled,
between knowledgeable, willing parties in an arm’s length transaction. For a financial
instrument which has an active market, the Company uses quoted price in the active
market to establish its fair value. The quoted price in the active market refers to the price
that can be regularly obtained from exchange market, agencies, industry associations,
pricing authorities; it represents the fair market trading price in the actual transaction.
For a financial instrument which does not have an active market, the Company establishes
fair value by using a valuation technique. Valuation techniques include using recent arm’s
length market transactions between knowledgeable, willing parties, reference to the current
fair value of another instrument that is substantially the same, discounted cash flow
analysis and option pricing models.
The Company measures initially and subsequently the fair value of an interest rate swap at
the value of a competitor’s interest rate swap quoted by a recognized financial institution as
at the Company’s balance sheet date in accordance with the principle of consistency.
4.9.2 Classification, recognition and measurement of financial assets
All regular way purchases or sales of financial assets are recognized and derecognized on
a trade date basis. On initial recognition, the Company’s financial assets are classified into
one of the four categories, including financial assets at fair value through profit or loss,
held-to-maturity investments, loans and receivables and available-for-trade financial assets.
A financial asset is recognized initially at fair value. In the case of financial assets at fair
value through profit or loss, relevant transaction costs are immediately charged to the profit
and loss of the current period; transaction costs relating to financial assets of other
categories are included in the amount initially recognized.
4.9.2.1 Financial assets at fair value through profit or loss:
Including financial assets held-for-trade and financial assets designated at fair value
through profit or loss.
Financial asset held-for-trade is the financial asset that meets one of the following
conditions:
A. the financial asset is acquired for the purpose of selling it in the short term;
B. the financial asset is a part of a portfolio of identifiable financial instruments that are
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collectively managed, and there is objective evidence indicating that the enterprise recently
manages this portfolio for the purpose of short-term profits;
C. the financial asset is a derivative, except for a derivative that is designated and effective
hedging instrument, or a financial guarantee contract, or a derivative that is linked to and
must be settled by delivery of an unquoted equity instrument (without a quoted price from
an active market) whose fair value cannot be reliably measured. For such kind of financial
assets, fair values are adopted for subsequent measurement.
A financial asset is designated on initial recognition as at fair value through profit or loss
only when it meets one of the following conditions:
A. the designation eliminates or significantly reduces the inconsistency in the measurement
or recognition of relevant gains or losses that would otherwise arise from measuring the
financial instruments on different bases.
B. a Group of financial instruments is managed, and its performance is evaluated on a fair
value basis and is reported to the enterprise’s key management personnel. Formal
documentation regarding risk management or investment strategy has prepared.
Financial assets at fair value through profit or loss are subsequently measured at the fair
value. Any gains or losses arising from changes in the fair value and any dividends or
interest income earned on the financial assets are recognized in the profit or loss.
4.9.2.2 Investment held-to-maturity
Held-to-maturity investments are non-derivative financial assets with fixed or determinable
payments and fixed maturity that an entity has a positive intention and ability to hold to
maturity. Such kind of financial assets is subsequently measured at amortized cost using
the effective interest method. Gains or losses arising from derecognition, impairment or
amortization are recognized in profit or loss for the current period.
The effective interest rate is the rate that exactly discounted estimated future cash flows
through the expected life of the financial asset or financial liability or, where appropriate, a
shorter period to the net carrying amount of the financial asset or financial liability.
When calculating the effective interest rate, the Company shall estimate future cash flow
considering all contractual terms of the financial asset or financial liability without
considering future credit losses, and also consider all fees paid or received by the parties to
the contract giving rise to the financial asset and financial liability that are an integral part of
the effective interest rate, transaction costs, and premiums or discounts, etc.
4.9.2.3 Loans and receivables
Loans and receivables are non-derivative financial assets with a fixed, determinable
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payment that are not quoted in an active market. Financial assets classified as loans and
receivables by the Company include note receivables, account receivables, interest
receivable dividends receivable and other receivables.
Loans and receivables are subsequently measured at amortized cost using the effective
interest method. Gain or loss arising from derecognition, impairment or amortization is
recognized in profit or loss.
4.9.2.4 Financial assets available-for-trade
Financial assets available-for-trade include non-derivative financial assets that are
designated on initial recognition as available for trade, and financial assets that are not
classified as financial assets at fair value through profit or loss, loans and receivables or
investment held-to-maturity.
Financial assets available-for-trade are subsequently measured at fair value, and gains or
losses arising from changes in the fair value are recognized as other comprehensive
income and included in the capital reserve, except that impairment losses and exchange
differences related to amortized cost of monetary financial assets denominated in foreign
currencies are recognized in profit or loss, until the financial assets are derecognized, at
which time the gains or losses are released and recognized in profit or loss.
Interests obtained and dividends declared by the investee during the period in which the
financial assets available-for-trade are held, are recognized as investment gains.
4.9.3 Impairment of financial assets
The Group assesses at the balance sheet date the carrying amount of every financial asset
except for the financial assets that measured by the fair value. If there is objective evidence
indicating a financial asset may be impaired, a provision is provided for the impairment.
4.9.3.1 Impairment on held-to-maturity investment, loans, and receivables
The financial assets measured by cost or amortized cost write down their carrying value by
the estimated present value of future cash flow. The difference is recorded as an
impairment loss. If there is objective evidence to indicate the recovery of the value of
financial assets after impairment, and it is related to the subsequent event after recognition
of loss, the impairment loss recorded originally can be reversed. The carrying value of
financial assets after impairment loss reversed shall not exceed the amortized cost of the
financial assets without provisions of impairment loss on the reserving date.
4.9.3.2 Impairment loss on available-for-trade financial assets
Where the fair value of the equity instrument investment drops significantly or not
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contemporarily according to the integrated relevant factors, an available-for-trade financial
asset is impaired.
When an available-for-trade financial asset is impaired, the cumulative loss arising from
declining in fair value that had been recognized in the capital reserve shall be removed and
recognized in profit or loss. The amount of the cumulative loss that is removed shall be the
difference between the acquisition cost with a deduction of a recoverable amount less
amortized cost, current fair value and any impairment loss on that financial asset previously
recognized in profit or loss.
If, after an impairment loss has been recognized, there is objective evidence that the value
of the financial asset is recovered, and it is objectively related to an event occurring after
the impairment loss was recognized, the initial impairment loss can be reversed and the
reserved impairment loss on available-for-trade equity instrument is recorded in the profit or
loss, the reserved impairment loss on available-for-trade debt instrument is recorded in the
current profit or loss.
The equity instrument where there is no quoted price in an active market, and whose fair
value cannot be reliably measured, or impairment loss on a derivative asset that is linked to
and must be settled by delivery of such an unquoted equity instrument shall not be
reversed.
4.9.4 Recognition and measurement of financial assets transfer
The Group derecognizes a financial asset when one of the following conditions is met:
a. the rights to receive cash flows from the asset have expired;
b. the enterprise has transferred its rights to receive cash flows from the asset to a third
party under a pass-through arrangement; or
c. the enterprise has transferred its rights to receive cash flows from the asset and either (a)
has transferred substantially all the risks and rewards of the asset, or (b) has neither
transferred nor retained substantially all the risks and rewards of the asset but has
transferred control of the asset.
If the enterprise has neither retained all the risks and rewards from the financial asset nor
control over the asset, the asset is recognized according to the extent it exists as a financial
asset, and correspondent liability is recognized. The extent of existence refers the level of
risk by the financial asset changes the enterprise is facing.
For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, (a).
the carrying amount of the financial asset transferred; and (b) the sum of the consideration
received from the transfer and any cumulative gain or loss that had been recognized in
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other comprehensive income, is recognized in profit or loss.
If a part of the transferred financial asset qualifies for derecognition, the carrying amount of
the transferred financial asset is allocated between the part that continues to be recognized
and the part that is derecognized, based on the relative fair value of those parts. The
difference between (a) the carrying amount allocated to the part derecognized; and (b) the
sum of the consideration received for the part derecognized and any cumulative gain or
loss allocated to the part derecognized which has been previously recognized in other
comprehensive income, is recognized in profit or loss.
4.9.5 Classification and measurement of financial liabilities
The Group’s financial liabilities are, on initial recognition, classified into financial liabilities at
fair value through profit or loss and other financial liabilities. For financial liabilities at fair
value through profit or loss, relevant transaction costs are immediately recognized in profit
or loss for the current period, and transaction costs relating to other financial liabilities are
included in the initial recognition amounts.
4.9.5.1 Financial liabilities measured by the fair value and the changes recorded in profit or
loss
The classification by which financial liabilities held-for-trade and financial liabilities designed
at the initial recognition to be measured by the fair value follows the same criteria as the
classification by which financial assets held-for-trade and financial assets designed at the
initial recognition to be measured by the fair value and their changes are recorded in the
current profit or loss.
For the financial liabilities measured by the fair value and changes recorded in the profit or
loss, fair values are adopted for subsequent measurement. All the gains or losses on the
change of fair value and the expenses on dividends or interests related to these financial
liabilities are recognized in profit or loss for the current period.
4.9.5.2 Other financial liabilities
Derivative financial liabilities that linked with equity instruments, which do not have a
quoted price in an active market and their fair value cannot be measured reliably, is
subsequently measured by cost Other financial liabilities are subsequently measured at
amortized cost using the effective interest method. Gains or losses arising from
derecognition or amortization is recognized in profit or loss for the current period.
4.9.6 Derecognition of financial liabilities
The Group derecognizes a financial liability (or part of it) when the present underlying
obligation (or part of it) is discharged or canceled or has expired. An agreement between
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the Company (an existing borrower) and existing lender to replace original financial liability
with a new financial liability with substantially different terms is accounted for as an
extinguishment of the original financial liability and the recognition of a new liability.
When the Company derecognizes a financial liability or a part of it, it recognizes the
difference between the carrying amount of the financial liability (or part of the financial
liability) derecognized the consideration paid (including any non-cash assets transferred or
new financial liabilities assumed) in profit or loss.
4.9.7 Derivatives and embedded derivatives
Derivative financial instruments include derivatives are initially measured at fair value at the
date when the derivative contracts are entered into and are substantially re-measured at
fair value. The gain or loss caused by the fair value change of the hedging instrument which
the hedging is high efficiency will be recorded into a specific period in accordance with the
hedging accounting according to the hedging relationship. Except for the hedging above,
the resulting gain and loss of other derivatives is recognized in profit or loss.
An embedded derivative is separated from the hybrid instrument, where the hybrid
instrument is not designated as a financial asset or financial liability at fair value through
profit or loss, and the treated as a standalone derivative if (a) the economic characteristics
and risks of the embedded derivative are not closely related to the economic characteristics
and risks of the host contract; and (b) a separate instrument with the same terms as the
embedded derivative would meet the definition of a derivative. If the Company is unable to
measure the embedded derivative separately either at acquisition date or at a subsequent
balance sheet date, it designates the entire hybrid instrument as a financial asset or
financial liability at fair value through profit or loss.
4.9.8 Offsetting financial assets and financial liabilities
When the Company has a legal right that is currently enforceable to set off the recognized
financial assets and financial liabilities, and intends either to settle on a net basis, or to
realize the financial asset and settle the financial liability simultaneously, a financial asset
and a financial liability shall be offset and the net amount is presented in the balance sheet.
Except for the above circumstances, financial assets and financial liabilities shall be
presented separately in the balance sheet and shall not be offset.
4.9.9 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the
Company after deducting all of its liabilities. The consideration received from issuing equity
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instruments, net of transaction costs, are added to shareholders’ equity. All types of
distribution (excluding stock dividends) made by the Company to holders of equity
instruments are deducted from shareholders’ equity. The Company does not recognize any
changes in the fair value of equity instruments.
4.10 Receivables
The receivables by the Company include account receivables and other receivables.
4.10.1 Impairment of receivables
Receivables are assessed for impairment on balance sheet dates. An impairment
allowance for receivables is recognized if any of the following is present in assessment:
a. significant financial difficulty of the issuer or obligor; or
b. a breach of contract, such as a default or delinquency in interest or principal payments;
or
c. it is probable that the borrower will enter bankruptcy or other financial reorganization; or
d. other objective evidence is indicating impairment.
4.10.2 Impairment allowance for receivables
4.10.2.1 Receivables of individual significance subject to individual assessment and the
relevant impairment allowance
Individual receivables equal to or over CNY 2,000,000.00 are classified as receivables of
individual significance.
Receivables of individual significance are individually assessed for impairment.
Receivables of individual significance assessed as non-impaired upon individual
assessment are incorporated into portfolios of financial assets of similar credit risk
characteristics for assessment for impairment by portfolio. Receivables of individual
significance assessed as impaired upon individual assessment are no longer subject to
assessment for impairment by portfolio.
4.10.2.2 Portfolios of receivables of similar credit risk characteristics and the relevant
impairment allowance
A. Classification of portfolios
Receivables of individual insignificance and non-impaired receivables of individual
significance upon individual assessment are classified into portfolios of financial assets on
the basis of similarity and relevance of credit risk characteristics. Credit risk characteristics
represent the ability of the issuers or obligors to make payments in accordance with
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contracts and future cash flows of the relevant assets. Evidence of portfolios：
Portfolio Criteria
Portfolio by age Age of receivables
Related party portfolios Entities within the scope of the consolidation.
B. Impairment allowance for portfolios
Impairment allowance for portfolios is measured with reference to portfolio structure, credit
risk characteristics (the ability of the issuers or obligors to make payments in accordance
with contracts) of each portfolio, historical experience, current market economic conditions,
and recognized impairment in each portfolio.
Measurement method for impairment allowance for portfolios
Portfolio Measurement method
Portfolio by age Age analysis method
Related party portfolios No allowance for bad debt
a. Impairment allowance measured by age analysis
Proportion to other receivables
Age group Proportion to accounts receivable (%)
(%)
Less than 1 year (inclusive, same applies to
the following)
Including: 1 to 6 months 1.00 1.00
7 to 12 months 5.00 5.00
1 to 2 years 10.00 10.00
2 to 3 years 50.00 50.00
Over 3 years 100.00 100.00
4.10.2.3 Receivables of individual insignificance subject to individual assessment
Receivables of individual insignificance are individually assessed for impairment is any of
the following is present:
there is disagreement with the issuer or obligor, or are subject to litigation; or it is clearly
evidential that the issuer or obligor is very likely not capable of fulfilling its commitments.
When a receivable of individual insignificance is impaired upon individual assessment for
impairment, an impairment loss is recognized as the excess of its carrying amount over the
present value of its future cash flows and an impairment allowance of the same amount is
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recognized.
4.10.3 Reversal of impairment allowance for receivables
After the impairment is recognized, if events subsequent to the recognition of the
impairment are objectively evidential that the impairment no longer exists, the impairment
allowance and impairment loss are reversed; however, the reversal shall not cause the
carrying amount of the receivable exceeds its carrying amount as at the reversal date as if
no impairment allowance was recognized.
4.11 Inventories
4.11.1 Classification of inventory
The Company’s inventory mainly includes raw materials, semi-finished product,
work-in-progress and finished products.
4.11.2 Costing of inventories
Inventories are initially carried at the actual cost. Cost of inventories includes purchase
cost, conversion cost, and other costs. Cost of the issue is measured using the weighted
average method.
4.11.3 Determination of net realizable value of inventories and impairment allowance for
inventories
Net realizable value is the estimated selling price in the ordinary course of business less
the estimated costs of completion, the estimated costs necessary to make the sale and
relevant taxes. Net realizable value is determined on the basis of clear evidence obtained
and takes into consideration the purpose of holding inventories and effect of post balance
sheet events.
At the balance sheet date, inventories are measured at the lower of the cost and net
realizable value. If the net realizable value is below the cost of inventories, a provision for
decline in value of inventories is made. The provision for inventories decline in value is
normally determined by the difference of the cost of the individual item less its realizable
value. For large quantity and low-value items of inventories,
provision for decline in value is made based on categories of inventories. For items of
inventories relating to a product line that are produced and marketed in the same
geographical area, have the same or similar end users or purposes, and cannot be
practicably evaluated separately from other items in that product line provision for decline
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in value is determined on an aggregate basis.
After the provision for decline in value of inventories is made, if the circumstances that
previously caused inventories to be written down below cost no longer exist so that the net
realizable value of inventories is higher than their cost, the original provision for decline in
value is reversed and the reversal is included in profit or loss for the period.
4.11.4 Physical inventories are managed by the perpetual inventory taking system.
4.11.5 Amortisation of low-value consumables and packaging materials
Low-value consumables and packaging materials are fully amortized at the time of
issuance.
4.12 Held-for-sale assets and disposal group
The company classify a non-current asset or disposal group as held for sale if its carrying
amount will be recovered principally through a sale transaction rather than through
continuing use. For this to be the case, the following conditions shall be met: a) the asset
(or disposal group) must be available for immediate sale in its present condition subject to
terms that are usual and customary for sales of such assets or disposal groups; b) the
company has made the resolution on the disposal plan and must be committed to a plan to
sell the asset (or disposal group); c) the sale is expected to be completed within one year
from the date of classification. A disposal group is a group of assets to be disposed of, by
sale or otherwise, together as a group in a single transaction, and liabilities directly
associated with those assets that will be transferred in the transaction. The group shall
include goodwill acquired in a business combination if the group is a cash-generating unit to
which goodwill has been allocated in accordance with the requirements of Accounting
Standard for Business Enterprises No. 8 – Impairment of assets.
The company measure a non-current asset or disposal group classified as held for sale at
the lower of its carrying amount and fair value less costs to sell on initial recognition and
subsequent remeasurement on the balance sheet date. An impairment loss is recognized
when the carrying amount is higher than the fair value less costs to sell, and allowance for
impairment is recognized accordingly. For the disposal group, the recognized impairment
loss on assets is offset against the carrying amount of the goodwill in the disposal group,
and then reduced in proportion of the book value of the non-current assets applicable to
\"Accounting Standard for Business Enterprises No. 42 - Non-current Assets Held for Sale,
Disposal Group and Discontinued Operations (hereinafter referred to as \"held for sale
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accounting principle\") measurement requirements. The company shall recognize a gain
during the period for any subsequent increase in fair value less costs to sell of an asset, but
not in excess of the cumulative impairment loss that has been recognized after the
reclassification to non-current assets held for sale. The book value of assets in the disposal
group is increased proportionately according to the proportion of the book value of each
non-current asset except for goodwill. Impairment loss recognized before the
reclassification to non-current assets held for sell shall not be recovered.
Non-current asset or non-current asset in the disposal group classified as held for sale are
not subject to depreciation or amortization. The interest and other expenses on liabilities
held in the disposal group for sale are continuously recognized.
Non-current assets or disposal group that no longer meet the conditions of non-current
asset held for sell shall be removed from the category, and shall be measured at the lower
of the following: (a) The carrying amount before classification as held for sale after
adjustment of depreciation, amortization or impairment that should be recognized if it is not
classified as non-current assets held for sell; (b) recoverable amount.
4.13 Long-term equity investments
Long-term equity investments in this section refer to the long-term investment through
which the Company has control, joint control, or material influence on the investee.
Long-term equity investments through which the Company does not have control, joint
control or material influence on the investee shall be recognized as available-for-sale
financial assets or financial assets measured by fair value with changes in fair value
recognized in profit or loss. See Note 4.9 for details.
Joint control is the contractually agreed sharing of control over economic activity and exists
when the strategic financial and operating decisions relating to the activity require the
unanimous consent of the parties sharing control. Significant influence is the power to
participate in the financial and operating policy decisions of the investee but is not control or
joint control over those policies.
4.13.1 Determination of Investment cost
Long-term equity investment acquired through business combination under common
control are measured at the acquirer's share of the combination date book value of the
acquiree's net equity in the ultimate controller's consolidated financial statements. The
difference between the initial cost and cash paid, non-monetary assets transferred, and
liabilities assumed by is adjusted to capital reserves, and to retained earnings if capital
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reserves are insufficient. If the consideration is paid by issuing equity instruments, the initial
cost is measured at the acquirer's share of the combination date book value of the
acquiree's net equity in the ultimate controller's consolidated financial statements, with the
face value of the equity instruments issued recognized as share capital and the difference
between the initial cost and the face value of the equity instruments issued adjusted to
capital reserves, and to retained earnings if capital reserves is insufficient.For business
combination involving entities under common control achieved through multiple
transactions (acquisition in stages), the multiple agreements are assessed to determine
whether they should be viewed as a lump-sum purchase. Where multiple agreements of an
acquisition in stages are viewed as a lump-sum purchase, the transactions are viewed as
one transaction that acquires the control power. Where multiple agreements of an
acquisition fail the conditions of a lump-sum purchase, long-term equity investment
acquired through business combination under common control are measured at the
acquirer's share of the combination date book value of the acquiree's net equity in the
ultimate controller's consolidated financial statements. The difference between the initial
cost, and the book value of the long-term equity investment before combination date and
considerations paid to acquire new shares on the combination date, is adjusted to capital
reserves, and to retained earnings if capital reserves are insufficient.
Long-term equity investment acquired through business combination not under common
control is measured at combination cost on the combination date. The combination cost
includes assets contributed by the purchaser, liabilities incurred or assumed by, and fair
value of the equity instruments issued by the acquirer. For business combination involving
entities not under common control achieved through multiple transactions (acquisition in
stages), the multiple agreements are assessed to determine whether they should be
viewed as a lump-sum purchase. Where multiple agreements of an acquisition in stages
are viewed as a lump-sum purchase, the transactions are viewed as one transaction that
acquires the control power. Where multiple agreements of an acquisition fail the conditions
of a lump-sum purchase, long-term equity investment acquired through business
combination not under common control are measured at the sum of the original book value
of the equity investment on the investee and the new investment cost, which is regarded as
the new initial cost of the long-term investment when transferred to cost method. If the
original equity is measured by the equity method, not accounting treatment is applied to
relevant other comprehensive income temporarily.
The audit, legal services, valuation, and other directly associated administrative expenses
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incurred by the acquirer are recognized in profit or loss on the transaction dates.
Long-term equity investments acquired not through business combination are measured at
cost on initial recognition. Depending on the way of acquisition, the cost of acquisition can
be the total cash paid, the fair value of equity instrument issued, the contract price, the fair
value or book value of the assets given away in the case of non-monetary asset exchange,
or the fair value of the relevant long-term equity investments. The cost of acquisition of a
long-term equity investment acquired not through business combination also includes all
directly associated expenses, applicable taxes and fees, and other necessary expenses.
When the Company increase investment to have material influence or joint control, but not
control over the investee, long-term investments are measured at the sum of the fair value
of initial equity investment and cost of new investment as defined in CAS22-Recognition
and Measurement of Financial Assets.
4.13.2 Subsequent measurement and recognition and measurement of gain or loss
Where a long-term equity investment gives the Company either joint control or significant
influence over the respective investee, the investment is subsequently measured using the
equity method.
Where a long-term equity investment gives the Company control over the respective
investee, the investment is subsequently measured at cost.
4.13.2.1 Long-term equity investments measured at cost
A long-term equity investment is measured at the cost of investment, excluding declared
cash dividends or profit pending distribution included in the consideration paid. Investment
income for the relevant period from a long-term equity investment measured at cost is
recognized as the Company's share of the cash dividends or profit declared for distribution
by the investee.
4.13.2.2 Long-term equity investments measured using the equity method
When the cost of a long-term equity investment measured using the equity method on initial
recognition exceeds the Company's share of the fair value of the respective investee's net
identifiable assets, no adjustment is made to the cost of the investment for the excess.
When the Company's share of the fair value of an investee's net identifiable assets exceeds
the cost of the respective long-term equity investment measured using the equity method
on initial recognition, adjustment is made to the cost of the investment for the difference and
the difference is carried to profit or loss for the period during which the investment is
recognized.
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Investment income or loss and other comprehensive income for the relevant period from a
long-term equity investment measured using the equity method is measured at the
Company's share of the net profit or loss and other comprehensive income of the
respective investee for the relevant period, and the book value of long-term equity
investments is adjusted accordingly. If the investee declares profit distribution or cash
dividends, long-term equity investments are reduced by the Company’s share of declared
profit distribution or cash dividends in the investee. Long-term equity investments will be
adjusted, and capital reserves are recognized with variations other than net profit or loss,
other comprehensive income, and profit distribution. When computing the Company's share
of the net profit or loss of the investee for the relevant period, net profit or loss of the
investee for the relevant period is adjusted, if necessary, for the fair value of the investee's
identifiable assets and identifiable liabilities on acquisition and the Company's accounting
policies and accounting period. Investment income and other comprehensive income is
recognized accordingly. The computation of the Company's share of the net profit or loss of
the investee for the relevant period also eliminates unrealized profit and loss arising from
transactions between the Company and the investee (a joint venture or associate,
whichever is applicable) and contributing or selling assets to the investee which forms an
operation, to the extent of the Company's share calculated by the Company's shareholding
in the investee for the relevant period, except for the unrealized loss resulted from
impairment of transferred assets. When contributing assets to the joint venture or associate
by the Company forms an operation, and the investor acquires the long-term equity
investment without control, long-term equity investments are measured at fair value of the
contributed operations, with the difference between initial investment cost and book value
of the contributed operation fully recognized in profit or loss for the period. When selling
assets to the joint venture or associate by the Company forms an operation, the difference
between considerations received and book value of the operation is fully recognized in
profit and loss for the period. When purchasing assets from the joint venture or associate
by the Company belongs to an operation, income and losses are fully recognized as
specified in CAS20-Business Combination.
When the Company's share of an investee's net loss exceeds the sum of the carrying
amount of the respective long-term equity investment measured using the equity method
and other investments in the investee, the carrying amount of the long-term equity
investment and other investments in the investee is reduced to zero. If the Company is
obliged to share loss of the investee after its long-term equity investment and other
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investments have been reduced to zero, an investment loss and provision is recognized to
the extent of the estimated obligation. If the investee reports profits in subsequent periods,
the Company only recognizes its share of profit after its share of profit equals the share of
loss not recognized.
For long-term equity investments in associates and joint ventures which had been held by
the Company before its first time adoption of new accounting standards, where the initial
investment cost of a long-term equity investment exceeds the Company’s share in the
investee’s net assets at the time of acquisition, the excess is amortized and is recognized in
profit or loss on a straight-line basis over the original remaining life.
4.13.2.3 Acquisition of minority interests
If minority interests in an investee is acquired by the Company, during the Company's
preparation of the consolidated financial statements, the difference between the Company's
cumulative share of the investees net assets calculated on the basis of the new
shareholding in the investee from the acquisition date (or combination date) and the
Company's investment in the investee following the minority interest acquisition is adjusted
to capital reserves, and to retained earnings if capital reserves is insufficient.
4.13.2.4 Disposal of long-term equity investments
On the consolidated financial statements, when partly disposal of a long-term equity
investment in a subsidiary which does not cause loss of control over the subsidiary, the
difference between the consideration for disposal and the net identifiable asset given away
proportionate to the disposed shares in the subsidiary is recognized in equity; partly
disposal of a long-term equity investment in a subsidiary which causes loss of control over
the subsidiary is accounted for in accordance with Note 4.5.2.
The difference between the consideration for disposal of long-term equity investments and
the carrying amount of the long-term equity investments disposed of is recognized in profit
or loss for the period during which the investments are disposed of.
When a long-term equity investment measured using the equity method is disposed, and
the residual equity after disposal is still measured using equity method, the respective
cumulative other comprehensive income recognized in equity proportionate to the disposed
of investment shall adopt the same accounting treatment as the investee disposes of
relevant assets or liabilities directly. Movement in investee's equity other than changes in
net profit or loss, other comprehensive income, and profit distribution is recognized in profit
or loss proportionally.
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When a long-term equity investment measured using the cost method is disposed and the
residual equity after disposal is still measured using cost method, other comprehensive
income, which is recognized by equity method or recognition and measurement applicable
to financial instruments prior to the Company's acquisition of control over the investee, shall
adopt the same accounting treatment as the the investee disposes relevant assets or
liabilities directly on the date of loss of control, and profit or loss is recognized proportionally.
Movement in investee's equity other than changes in net profit or loss, other
comprehensive income, and profit distribution is recognized in profit or loss proportionally.
Where the Company's control over an investee is lost due to partial disposal of investment
in the investee and the Company continues to have significant influence over the investee
after the partial disposal, the investment is measured by equity method in the Company's
separate financial statements; where the Company's control over an investee is lost due to
partial disposal of investment in the investee and the Company ceases to have significant
influence over the investee after the partial disposal, the investment is measured in
accordance with the recognition and measurement principles applicable to financial
instruments in the Company's separate financial statements and the difference between the
fair value and book value of the remaining investment at the date of loss of control is
recognized in profit or loss. Cumulative other comprehensive income relevant to the
investment, which is recognized by equity method or recognition and measurement
principles applicable to financial instruments prior to the Company's acquisition of control
over the investee, shall adopt the same accounting treatment as the investee disposes
relevant assets or liabilities directly on the date of loss of control, The investee's equity
movement other than changes in net profit or loss, other comprehensive income and profit
distribution, as a result of accounting by equity method, is recognized in profit or loss when
control is lost. Where the remaining investment is measured by equity method, the
afore-mentioned other comprehensive income and other equity movement are recognized
in profit or loss proportionate to the disposal; Where the remaining investment is measured
in accordance with the recognition and measurement principles applicable to financial
instruments, the afore-mentioned other comprehensive income and other equity movement
are fully recognized in profit or loss.
Where the Company's joint control or significant influence over an investee is lost due to
partial disposal of investment in the investee, the remaining investment in the investee is
measured in accordance with the recognition and measurement principles applicable to
financial instruments, the difference between the fair value and the book value of the
remaining investment at the date of loss of joint control or significant influence is recognized
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in profit or loss. Cumulative other comprehensive income relevant to the investment, which
is recognized by equity method or recognition and measurement principles applicable to
financial instruments prior to the Company's acquisition of control over the investee, shall
adopt the same accounting treatment as the investee disposes relevant assets or liabilities
directly on the date of loss of control, The investee's equity movement other than changes
in net profit or loss, other comprehensive income and profit distribution, as a result of
accounting by equity method, is recognized in profit or loss when control is lost.
Where the Company's control over an investee is lost through multiple disposals and the
multiple disposals can be viewed as a lump-sum transaction, the multiple disposals are
accounted for one single transaction which results in the Company's loss of control over the
investee. Difference between the consideration received and the book value of the
investment disposed at each time of disposal is recognized in other comprehensive income
and reclassified in full to profit or loss at the period when control over the investee is lost.
4.14 Investment property
Investment property is held to earn rentals or for capital appreciation or for both. Investment
property includes leased or ready to transfer after capital appreciation land use rights and
leased buildings. Investment property is initially measured at cost. Subsequent
expenditures related to an investment real estate are likely to flow about the economic
benefits of the asset, and its cost can be measured reliably, is included in the cost of
investment real estate. Other subsequent expenditure in the profit or loss when it incurred.
The Group uses the cost model for subsequent measurement of investment property, and
in accordance with the depreciation or amortization of buildings or land use rights policy.
Investment property impairment test method and impairment accrual method described in
Note 20 “Non-current and non-financial assets impairment.\"
Occupied real estate for investment property or investment property is transferred to the
owner-occupied real estate or stock conversion as the recorded value after the conversion,
according to the book value before the conversion.
Investment property change into the Owner-occupied real estate, since the change of date
for the investment property, is transferred to fixed assets or intangible assets. Change the
owner-occupied property held to earn rentals or for capital appreciation, since the change
of date, the fixed assets or intangible assets to investment property. Conversion occurs
when converted to investment property using the cost model, as the book value before the
conversion of the recorded value after the conversion; converted to investment property
measured at fair value model, the fair value of the conversion date as the recorded value
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after conversion.
Derecognized, when the investment property is disposed of or permanently withdrawn from
use and the expected economic benefits, cannot be obtained from the disposal of
investment property. Proceeds on disposal of investment property is sold, transferred,
retired or damaged through profit or loss after deducting the book value and related taxes.
4.15 Fixed assets
4.15.1 Definition
Fixed assets refer to the tangible assets that are held for the sake of producing
commodities, rendering labor service, renting or business management and their useful life
is in excess of one fiscal year.
4.15.2 Depreciation of fixed assets
Fixed assets are stated at cost and consider the impact of expected costs of abandoning
the initial measurement. From the following month of a state of intended use, depreciation
method of the straight-line method is used for different categories of fixed assets to take
depreciation. The recognition of the classification, useful life and estimated residual rate
are as follows:
Category Expected useful life Estimated residual value (%) Depreciation (%)
Houses and building 8.00-35.00 3.00-5.00 2.70-12.10
Machineries 5.00-10.00 3.00-5.00 9.50-19.40
Vehicles 4.00 3.00 24.25
Administrative equipment and others 3.00 3.00 32.33
Expected net residual value of fixed assets is the balance of the Company currently
obtained from the disposal of the asset less the estimated costs of disposal amount,
assuming the asset is out of useful life and state the expected service life in the end.
4.15.3 Assessment of impairment and impairment allowance
Impairment and provisions of fixed assets are disclosed on Note 4.20 Impairment of
non-current and non-financial assets.
4.15.4 Recognition and measurement of fixed assets held under financial lease
A finance lease is a lease that transfers in substance all the risks and rewards incident to
ownership of an asset. The title may or may not eventually be transferred.
Fixed assets that are held under finance leases shall be depreciated by applying the same
policy as that for the fixed assets owned by the Company. If it can be reasonably
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determined that the ownership of the leased assets can be obtained at the end of the lease
period, the leased assets are depreciated over their useful lives; otherwise, the leased
assets are depreciated over the shorter of the lease terms and the useful lives of the
leased assets.
4.15.5 Other relevant information
A fixed asset is recognized only when the economic benefits associated with the asset will
probably flow to the Company and the cost of the asset can be measured reliably.
Subsequent expenditure incurred for a fixed asset that meets the recognition criteria shall
be included in the cost of the fixed asset, and the carrying amount of the component of the
fixed asset that is replaced shall be derecognized. Otherwise, such expenditure shall be
recognized in profit or loss in the period in which they are incurred.
The revenue from selling or transferring or disposing of a fixed asset is booked into profit
and loss after deduction of carrying value and related tax.
The Company conducts a review of useful life, expected net realizable value and
depreciation methods of the fixed asset at least on an annual base. Any change is
regarded as a change in accounting estimates.
4.16 Construction in progress
The cost of construction in progress is measured at the actual expenditure incurred,
including construction expenditure and capitalization of borrowing costs and other
applicable costs incurred prior to the completion. An item of construction in progress is
reclassified to fixed asset upon completion.
See Note 4.20 for details of assessment for impairment of construction in progress and
impairment allowance for construction in progress.
4.17 Borrowing costs
Borrowing costs include interests on loans, amortization of discount or premium, ancillary
expenses, and foreign exchange difference on loans denominated in foreign currencies.
Borrowing costs directly associated with the acquisition of construction of a qualifying
asset are eligible for capitalization. Capitalization starts when expenditure on the qualifying
asset is incurred, borrowing costs are incurred, or production or construction of the
qualifying asset for its intended use or sales is started, whichever is later. Capitalization
stops when the qualifying assets reach the condition of its intended use or sales. All other
borrowing costs are recognized in profit or loss for the period during which they are
incurred.
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When a loan is taken out specifically for the construction of a particular qualifying asset,
the interest expense capitalized for a particular period is the residual amount after
deducting interest income from unused facilities for the period and/or income from
temporary investment of the unused facilities for the period from the interest expense
incurred for the period. Borrowing costs on general purpose financing are calculated by
multiplying the weighted average of the excess of cumulative capital expenditure over the
designated financing facilities with the capitalization rate of general purpose financing. The
capitalisation rate of general purpose financing is calculated as the weighted average of
the interest rates of general purpose financing.
Foreign exchange difference on designated financing denominated in foreign currencies
incurred during the capitalization period is wholly capitalized. Foreign exchange difference
on general purpose financing denominated in foreign currencies is recognized in profit or
loss for the period during which it is incurred.
A qualifying asset is an item of fixed assets, investment property, inventories, etc. which
requires a substantial period of time for the construction or production for its intended use
of sales.
If the construction or production of a qualifying asset stops for a period longer than three
months, capitalization of borrowing costs is suspended until the construction or production
is resumed.
4.18 Intangible assets
4.18.1 Intangible asset
An intangible asset is an identifiable non-monetary asset without a physical form which is
owned or control by the Company.
Intangible assets are measured at cost on initial recognition. If it is probable that economic
benefits associated with expenditure directly associated with an item of intangible assets
will flow to the Company and the cost of the expenditure can be reliably measured, the
expenditure is measured as part of the intangible asset's initial cost; all other expenditure
is recognized in profit or loss for the period during which it is incurred.
Land use rights acquired are generally recognized as intangible assets. In the case of a
self-constructed building, the costs of acquiring the respective land use right(s) and the
costs of building construction are separately recognized and measured as intangible
assets and fixed assets respectively. In the case of a purchased building, the costs of
acquisition are allocated to land use right(s) and building; if the reasonable allocation is
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impossible, the costs of acquisition as a whole are recognized and measured as fixed
assets.
For an item of intangible assets which is with a finite useful life, the residual amount after
deducting its estimated residual value and previously recognized impairment from its cost
is amortized over its estimated remaining useful life using the straight-line method starting
from the month in which it reaches the conditions of its intended use of sales. Intangible
assets with infinite useful life are not amortized.
Useful lives of intangible assets are a review on each balance sheet date. If circumstances
indicate that there is a change in the useful life of an item of intangible assets with a finite
useful life, a change in accounting estimates is carried out. If circumstances indicate that
the useful life of an item of intangible assets with infinite useful life becomes finite, the
useful life of the intangible asset is estimated, and the intangible asset is amortized
accordingly.
4.18.2 Research and development expenditure
A research and development project is divided into research stage and development
stage.
Expenditure incurred during the research stage is recognized in profit or loss for the period
during which it is incurred.
Expenditure incurred during the development stage is recognized as intangible assets if all
of the following conditions are satisfied:
a. it is technically feasible to complete the intangible asset so that it can be used or sold;
and
b. the Company has clear intention to complete the intangible asset and to use it or sell it;
and
c. it is evidential that the intangible asset will generate economic benefits either by selling
the intangible asset itself or the goods produced by the intangible asset or by using it
internally; and
d. there are sufficient technical, financial and other resources to complete the intangible
asset and the Company is able to use it or sell it, and
e. expenditure incurred in the development stage of the intangible asset can be reliably
measured.
Where a research and development project cannot be separated into the research stage
and development stage, all expenditure incurred for the project is recognized in profit or
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loss for the period during which it is incurred.
4.18.3 Assessment of impairment and impairment allowance
See Note 4.20 for details of assessment for impairment of intangible assets and
impairment allowance for intangible assets.
4.19 Deferred charges
An item of deferred charges is an expense incurred which brings economic benefits to the
Company for a period exceeding one year starting from the transaction date. An item of
deferred charges is amortized over its estimated useful life using the straight-line method.
4.20 Impairment of non-current assets
Non-current non-monetary assets, such as fixed assets, construction in progress,
intangible assets with finite useful life, investment property measured by cost, and
long-term equity investments in subsidiaries, joint ventures, and associates, are assessed
for impairment on each balance sheet date. If circumstances on a balance-sheet date
indicate that a non-current non-monetary asset is impaired, the recoverable amount of the
asset is estimated. The recoverable amounts of goodwill, intangible assets with infinite
useful live and intangible assets which have not yet reached the conditions of their
intended use or sales are estimated at least once a year regardless of whether there is an
indication of impairment.
If the carrying amount of a non-current non-monetary asset exceeds its estimated
recoverable amount, the excess of the carrying amount over the estimated recoverable
amount is recognized as impairment allowance, and an impairment loss of the same
amount is recognized. The estimated recoverable amount of an asset is the higher of the
residual amount after deducting disposal expense of the asset from its fair value and the
present value of its future cash flows. Where there is a sales contract for an asset, and the
contract is entered into for an arm's length transaction, the fair value of the asset is the
contract price; where there isn't a sales contract for an asset, but there is an active market
for it, the fair value of the asset is price offered by the buyer; where there is neither a sales
contract nor an active market for an asset, the fair value of the asset is the best estimate
based on all available information. The disposal cost of an asset includes legal expenses,
applicable taxes and fees and transportation costs directly associated with the asset's
disposal and all direct costs necessary to bring the asset to its sellable condition. The
present value of an asset's future cash flows is calculated by multiplying the cash flows
arising from the continual use of the asset and its disposal at an appropriate discount rate.
An impairment allowance is generally calculated on the basis of individual assets. If it is not
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possible to estimate the recoverable amount of an individual asset, the recoverable
amount of a cash-generating unit to which the asset belongs is estimated. A
cash-generating unit is the smallest combination of assets that are capable of cash flow
generation.
Goodwill separately presented on the (consolidated) financial statements is allocated to
cash-generating units or groups of units that are expected to benefit from the synergy of
business combination for impairment testing. Where the recoverable amount a
cash-generating unit (or group of units) is lower than its carrying amount, an impairment
loss is recognized. The impairment loss is firstly allocated to the goodwill allocated to the
unit (or group of units) and then to individual assets pro rata on the basis of the carrying
amount of each asset in the unit (or group of units)
The impairment loss recognized in accordance with this section is irreversible in
subsequent periods.
4.21 Employee Benefits
The employee benefits of the company include short-term employee benefits,
post-employment benefits, termination benefits and other long-term employee benefits:
Short-term employee benefits include wages, bonuses, allowances and subsidies, welfare,
health insurance, maternity insurance, work injury insurance, housing funds, labor union
funds, employee education funds, non-monetary benefits etc. Short-term employee
benefits are recognized as liabilities and profit or loss account or the costs associated with
the asset during the accounting period when employees actually provide services. The non
-monetary benefits are measured at fair value.
Post-employment benefits include defined contribution plans and defined benefit plans.
Defined contribution plan which includes the basic pension, unemployment insurance and
annuities shall be recognized as cost of related assets or profit or loss.
When the Company terminates the labor relationship with employees prior to the
employment contracts, or encourages employees to accept voluntary redundancy
compensation proposals in this company, a provision shall be recognized for the
compensation arising from the termination of employment relationship with employees at
the time when the Company cannot unilaterally withdraw layoff proposal termination
benefits provided due to termination of employment or the company ensures the costs
related to the payment for termination benefits related to the restructuring, which one is
early to confirm employee benefits liabilities, and recorded as profit or loss. However, if
termination benefits cannot be fully paid within twelve months of the reporting date the
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liability shall be processed in accordance with other long-term employee benefits.
Retirement plan adopts the same principles as the termination benefits. The salaries and
insurance to be paid from the date when employees stop providing services to the date of
normal retirement shall be recognized in profit or loss (termination benefits) when
satisfying the requirements of a provision.
Other long-term employee benefits provided by the company to employees that are in line
with defined contribution plans shall adopt the accounting treatment in accordance with
defined contribution plans, otherwise the accounting treatment of defined benefit plans.
4.22 Provisions
A contingent liability is recognized as provision if all or the following conditions are
satisfied:
a. it is a present obligation assumed by the Company; and
b. it is probable that the fulfillment of the obligation will cause economic benefit flows from
the Company; and
c. the amount of the obligation can be reliably measured.
A provision is measured on a balance-sheet date as the best estimate of the amount that is
required for the fulfillment of the present obligation after considering of the risks and
uncertainty associated with the respective contingent events and the time value of money.
If the amount required for settlement of a provision is wholly or partly reimbursed by a third
party, the reimbursement is recognized separately as an asset to the extent of the carrying
amount of the provision if it is probable that the reimbursement becomes receivable.
4.23 Revenue
4.23.1 Revenue from sales of goods
Revenue arising from sales of goods are recognized if all of the following conditions are
satisfied: significant risks and rewards attached to the ownership of the goods have been
transferred to the buyer; and the Company neither retains continual involvement with
management generally associated with the ownership of the goods nor exercise effective
control over the goods sold; and the amount of revenue can be reliably measured; and it is
probable that economic benefits arising from the sales will flow to the Company; and
expenses incurred or to be incurred associated with the goods sold can be reliably
measured.
Revenue arising from domestic sales of goods is recognized when goods are dispatched
and delivered to the buyer, when significant risks and rewards attached to the ownership of
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the goods sold are passed to the buyer, when neither continual involvement in the rights
normally associated with the ownership of the goods sold nor effective control over the
goods controls are retained, when revenue arising from the goods sold is reliably
measurable, when inflow of future economic benefits is probable, and when cost incurred
or to be incurred associated with the goods sold is reliably measurable. Revenue arising
from non-domestic sales of goods is recognized when goods are loaded on board and
when the export clearance with the custom is completed.
4.23.2 Revenue from rendering of services
When the income of service rendered can be reliably estimated, revenue arising from the
service is recognized based on a percentage of completion on the respective balance
sheet date. The percentage of completion of service rendered is determined by the
proportion that costs incurred to date bear to the estimated total costs.
The outcome of service rendered can be reliably estimated if all of the following conditions
are satisfied: a. the amount of revenue can be reliably measured; b. it is probable that
associated economic benefits will flow to the Company; c. the percentage of completion of
service rendered can be reliably measured; and d. costs incurred to date and to be
incurred can be reliably measured.
When the outcome of service rendered cannot be reliably estimated, revenue is
recognized to the extent that costs incurred to date and to is incurred are expected to be
reimbursed, and costs incurred to date are recognized in profit or loss for the periods
during which they are incurred. When costs incurred are not expected to be reimbursed,
no revenue is recognized.
If a contract entered into by the Company and a counterparty involves both sales of goods
and rendering of services and revenue arising from goods sold and services rendered can
be distinguished, revenue from sales of goods and rendering of services are separately
accounted for; if, however, revenue arising from goods sold and services rendered cannot
be distinguished or can be distinguished but cannot be separately measured, all revenue
is accounted for as revenue arising from sales of goods.
4.23.3 Royalty income
Royalties are recognized on an accrual basis in accordance with the substance of the
relevant agreement.
4.23.4 Interest income
Interest income is determined by the length of time over which the Company's financial
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resources are used by other parties using the effective interest rate method.
4.24 Government Grants
A government grant is a transfer of monetary and non-monetary assets from the
government to the Company for no consideration, excluding resources transferred to the
Company by the government in the capacity of the shareholder. Government grants include
grants related to assets and grants related to income.
Government grants obtained by the Company which is relevant to construction or
acquisition of long-term assets are classified as asset-related government grants; all other
government grants are classified as revenue-related government grants. For government
grants without a specified beneficiary, the Company performs classification in accordance
with the following criteria.
a. Where a grant is obtained for a specified project, the grant is spat into asset-related and
revenue related portions proportionate to the project's investment to expense ratio; the
classification is reviewed on each balance sheet date and revised if necessary.
b. Where a grant is obtained for general purpose, the grant as a whole is classified as a
revenue-related government grant.
If a government grant is in the form of monetary assets, it is measured at the amount
received or receivable. If a government grant is in the form of non-monetary assets, it is
measured by the fair value of the assets; if the fair value of the assets granted cannot be
reliably measured, the grant is measured by the nominal value of the assets and is
recognized immediately in profit or loss for the relevant period.
In general, the Company recognizes a government grant when it is actually received, and
measures at the amount actually received. However, a government grant may be
recognized as receivable if it is objectively evidential on the reporting date that conditions
for the grant receipt are satisfied and that the grant is receivable. A government grant is
recognized as receivable if all following conditions are satisfied:
a. the amount of the grant is expressly stipulated in an official publication by the authorized
governmental agency or can be reasonably estimated in accordance with fiscal
pronouncement issued by the authorized governmental agency, and the estimate is not
subject to significant uncertainty;
b. the grant is officially disclosed as part of publicly disclosed fiscal subsidized projects by
the local fiscal government bodies in accordance with the Government Information
Disclosure Directives and is managed in accordance with the fiscal plan published and the
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management of the grant if not entity-specific, i.e., every eligible entity is entitled to apply;
c. the term for payment is expressly stipulated in the official pronouncement, and the
payment is backed by fiscal planning so that it is reasonable to expect receipt within the
term of the payment; and
d. other conditions (inapplicable) need to be satisfied taking into account the Company's
circumstances.
Grants related to assets are recognized as deferred income and amortized over the useful
life of the relevant assets using the straight-line method. A grant related to income is
recognized as deferred income if it is related to expenses or loss to be incurred in the future
and is carried to profit or loss for the period during which the relevant expenses or loss are
recognized; it is recognized in profit or loss for the period during which it is received or
becomes receivable if it is related to expenses or loss already incurred. When assets are
sold, transferred, disposed or scraped before the end of useful life, the remaining differed
income will be transferred to profit or loss in the current period of asset disposal.
The government grants related to the daily activities of the Company are included in other
income or offsetting the related costs according to the substance of the economic business.
The government grants unrelated to the daily activities are included in the non-operating
income and expenses.
Where a recognized grant becomes repayable, the amount repayable is firstly charged to
the remaining deferred income (if any); the remaining amount after charge to deferred
income is recognized in profit or loss for the period during which it becomes repayable.
4.25 Deferred tax assets and deferred tax liabilities
4.25.1 Current income tax
The current income tax liability (asset) on a balance-sheet date is measured at the amount
of current income tax payable (receivable) computed in accordance with the relevant tax
law. Current income tax expense is computed on the basis of taxable profit (loss) which is
the amount after the adjustment of the relevant accounting profit (loss) in accordance with
the relevant tax law.
4.25.2 Deferred tax assets and deferred tax liabilities
Deferred tax assets and deferred tax liabilities are recognized on an accrual basis for the
temporary difference between the carrying amounts of assets and liabilities and their tax
bases and the temporary difference arising from the difference in recognition criteria for
assets and liabilities between CAS and relevant tax provisions.
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No deferred tax liability is recognized for the temporary taxable difference arising from the
initial recognition of goodwill and the initial recognition of assets and liabilities acquired or
assumed resulting from transactions which are not business combination, and which do not
have impact on both accounting profit and taxable profit (deductible tax loss) at the time of
their occurrence. Similarly, the deferred tax liability is not recognized for temporary taxable
difference associated with investments in subsidiaries, associates, and joint ventures if the
Company can control the reverse of the temporary difference and it is probable that the
temporary difference is not expected to reverse in the foreseeable future. Except for the
circumstances described hereabove, the deferred tax liability is recognized for all other
taxable temporary difference.
No deferred tax asset is recognized for the temporary deductible difference arising from the
initial recognition of assets and liabilities acquired or assumed resulting from transactions
which are not a business combination, and which do not have an impact on both
accounting profit and taxable profit (deductible tax loss) at the time of their occurrence.
Similarly, deferred tax asset is not recognized for temporary deductible difference
associated with investments in subsidiaries, associates, and joint ventures if the Company
can control the reverse of the temporary difference and it is probable that the temporary
difference is not expected to reverse in the foreseeable future. Except for the
circumstances described hereabove, deferred tax asset is recognized for all other
deductible temporary difference to the extent that it is probable that taxable profit will be
available against which the temporary deductible difference can be utilized.
Deferred tax asset is recognized for deductible tax loss and tax credit carrying forward to
the extent that it is probable that taxable profit will be available against which the deductible
tax loss and tax credit carryforward can be utilized.
Deferred tax assets and deferred tax liabilities are measured on a balance-sheet date on
the basis of tax rates expected to be applicable in accordance with relevant tax law at the
time when the relevant assets are recovered, or relevant liabilities settled.
The carrying amount of deferred tax assets is reviewed on each balance sheet date. If it is
probable that insufficient taxable profit is available to utilize the deferred tax assets, the
carrying amount of deferred tax assets is reduced. When it is probable that sufficient
taxable profit becomes available after the carrying amount of deferred tax assets has been
reduced, the reduction is reversed.
4.25.3 Income tax expenses
Income tax expenses include current income tax expenses and deferred income tax
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expenses.
All current income tax expenses (credit) and deferred income tax expenses (gains) are
recognized in profit or loss for the relevant period except for a. current income tax and
deferred income tax on transactions and events which are accounted for in other
comprehensive income or directly in equity, which are included in other comprehensive
income or directly recognized in equity depending on the treatment of its underlying
transactions and events, and b. deferred income tax arising from business combination,
which is accounted for as an adjustment to the carrying amount of the respective goodwill.
4.25.4 Offsetting of income tax
A current income tax liability and current income tax asset are presented on (consolidated)
financial statements after netting only if the Company is permitted by law to settle the asset
and liability net in cash and is planning to do so or to recover the asset and settle the
liability simultaneously.
A deferred tax asset and deferred tax liability are presented on (consolidated) financial
statements after netting only if all of the following conditions are satisfied: the Company is
permitted by law to settle the current asset and liability related to an income tax net in cash;
and the deferred tax asset and deferred tax liability arising from that income tax is levied by
the same tax authority on the same entity or on different entities but the relevant entities are
planning to settle the underlying income tax net in cash or simultaneously recover the
relevant assets and settle the relevant liabilities during each future period during which
significant deferred tax assets and deferred tax liabilities are reversed.
4.26 Lease
A financial lease is a lease which in substance transfers all risks and rewards attached to
the ownership of the leased asset to the lessee although the ownership of the leased asset
ultimately may or may not be transferred. An operating lease is any lease that does not fall
within the meaning of a financial lease.
4.26.1 Operating lease to which the Company is the lessee
Lease payments for an operating lease to which the Company is the lessee are amortized
over the lease term using the straight-line method and recognized in the cost of the relevant
asset or expense, whichever is applicable. Initial expenses incurred for activities directly
attributable to the lease are recognized in profit or loss for the period during which they are
incurred. Contingent rental payments are recognized in profit or loss when they are
incurred.
4.26.2 Operating lease to which the Company is the lessor
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Rental income from an operating lease to which the Company is the lessor is amortized
over the lease term using the straight-line method. Significant initial expenses incurred for
activities directly attributable to the lease are capitalized at the time when they are incurred
and amortized over the lease term in the same manner as the amortization of rental income;
insignificant expenses initial expenses incurred for activities directly attributable to the
lease are recognized in profit or loss for the period during which they are incurred.
Contingent rental income is recognized in profit or loss when it is received or becomes
receivable.
4.26.3 Financial lease to which the Company is the lessee
At the commencement of a financial lease to which the Company is the Lessee, the lower
of the lease-commencement-date fair value of the leased asset and the present value of
the minimum lease payment is recognized as the cost of the leased asset; the minimum
lease payment is recognized as a long-term payable; and the excess of the long-term
payable over the amount recognized as the cost of the leased asset is recognized as
unrecognized lease expenditure. Expenses incurred during the negotiation and signing of
the lease contract for activities directly attributable to the lease are recognized as part of
the cost of the leased asset. The residual amount after deducting the unrecognized lease
expenditure from the long-term payable is divided into non-current liability and non-current
liability due within one year depending on maturity and presented on (consolidated)
financial statements separately.
The unrecognized lease expenditure is amortized over the lease term using the effective
interest rate method, and the amortization is recognized as lease expense in profit or loss
for the relevant period. Contingency lease rental is recognized in profit or loss when it is
incurred.
4.26.4 Financial lease to which the Company is the lessor
At the commencement of a financial lease to which the Company is the lessor, the sum of
the minimum lease rental receivable and the initial expenses incurred for activities directly
attributable to the lease is recognized as the initial amount of the respective financial lease
rental receivable; unguaranteed residual value is recorded, if any; the excess of the present
value of the sum of the minimum lease rental receivable, the initial expenses incurred for
activities directly attributable to the lease and the unguaranteed residual value over the
sum itself is recognized as unrecognized lease income. The residual amount after
deducting the unrecognized lease income from the financial lease rental receivable is
divided into non-current receivable and non-current receivable due within one year
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depending on maturity and presented on (consolidated) financial statements separately.
The unrecognized lease income is amortized over the lease term using the effective
interest rate method, and the amortization is recognized as lease income in profit or loss for
the relevant period. Contingency lease rental income is recognized in profit or loss when it
is received or becomes receivable.
4.27 Changes in major accounting policies and accounting estimates
4.27.1 Change of accounting policies
Changes in accounting policies due to the implementation of the new Accounting
Standards for Business Enterprises.
The Ministry of Finance published , a revised version of
and (CaiKuai [2017] No.30) in 2017. The
company has prepared the financial Statements for the year 2017 in accordance with the
principles and notice mentioned above. 4.27.2 Change of accounting estimates
There is no significant change in accounting estimates for the company during the reporting
period.
4.28 Significant account judgment and estimates
During the application of accounting policies, judgements, estimates, and presumption
need to be made for elements of financial statements, which cannot be precisely measured
due to inherent uncertainty existing in operating activities. The judgments, estimates, and
presumption are made on the basis of the Company's past experience and other relevant
factors. The exercise of judgements, estimates, and presumption has an impact on the
measurement of revenue, expenses, assets and liabilities and the disclosure of contingent
liabilities on the balance sheet date. However, the inherent uncertainty of the judgments,
estimates, and presumption may result in future significant adjustments to be made to the
measurement of the affected assets and liabilities.
The judgments, estimates, and presumption are regularly reviewed on the basis of going
concern. Where a change in accounting estimates is applicable, its impact on financial
statements is recognized in the period during which the change occurs if the change has an
impact on the financial statements for that period only; and in subsequent periods if the
change also has an impact on the financial statements for subsequent periods.
Significant elements of financial statements and areas that are subject to judgements,
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estimates and presumption on the balance-sheet date include the following.
4.28.1 Classification of lease
The Company classifies leases as operating lease and financing lease according to the rule
stipulated in the Accounting Standard for Business Enterprises No. 21--Leasing. The
management shall make analysis and judgment on whether the risks and rewards related
to the title of leased assets has been transferred to the leaser, or whether the Company has
substantially held the risks and rewards related to the ownership of leased assets.
4.28.2 Recognition of impairment allowance for receivables
In accordance with accounting policies applicable to receivables, loss arising from
impairment of receivables is accounted for by allowance. Impairment of receivables are
assessed on the basis of the collectability of receivables and the assessment requires
judgements and estimates exercised by the management. Difference between actual
results and the estimates will have impact on the carrying amount of receivables and the
recognition and reverse of impairment allowance for receivable for the period during which
the estimates are changed.
4.28.3 Recognition of impairment allowance for inventories
In accordance with accounting policies applicable to inventories, impairment allowance for
inventories is recognized for inventories of which the carrying amount exceeds the net
realizable value and inventories which are obsolete or have impaired salability. Loss arising
from impairment of inventories is measured on the basis of the salability and net realizable
value of the respective inventories. Judgements and estimates regarding impairment
allowance for inventories require conclusive evidence obtained by the management and
consideration of the purpose of inventory holding, impact of post balance-sheet-date events
and other relevant factors. Difference between actual results and the estimates will have
impact on the carrying amount of inventories and the recognition and reverse of impairment
allowance for inventories for the period during which the estimates are changed.
4.28.4 Fair value of financial instruments
Fair value of financial instruments which are not quoted in an active market are measured
by valuation techniques such as the discounted cash flow model, etc. Estimates of future
cash flows, credit risks, market movement and relevance and choice of the appropriate
discount rates are required for the measurement. Inherent uncertainty is inevitable in
making these estimates and the change of estimates will have impact of the fair value of the
respective financial instruments.
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4.28.5 Impairment of financial assets available-for-sale
Impairment of available-for-sale financial assets and hence recognition of impairment loss
recognized in profit or loss general depend on estimates and presumption made by the
management. In making the judgements and estimates, the Company assesses the extent
and duration that the cost of an available-for-sale financial asset exceeding its fair value
and considers the investee's financial position and short-term prospects, including factors
such as industry environment, technology advances, credit rating, default rates, and risks
faced by peer entities.
4.28.6 Impairment of non-financial, non-current assets
Non-current assets are assessed for indicators of impairment on each balance sheet date.
In addition, intangible assets with infinite useful life are subject to impairment testing on
each balance-sheet date and whenever there is evidence indicating impairment; other
non-financial non-current assets are subject to impairment testing only if their evidence
indicating that the carrying amount becomes non-collectible.
Impairment exists when the carrying amount of an asset or cash-generating unit exceeds
its recoverable amount, which is higher of the residual amount after deducting necessary
expenses for disposal from its fair value and the present value of its future cash flows.
An asset's residual amount after deducting necessary expenses for disposal is determined
by reference to the residual amount after deducting the incremental costs to dispose the
asset from the selling price provided by contracts for sales of similar assets or the
observable market price of similar assets.
When estimating the present value of future cash flows of an asset or cash-generating unit,
significant judgments must be made regarding the production capacity, selling price,
relevant operating costs of the asset or cash-generating unit and relevant discount rates for
discounting the cash flows. The Company considers all available relevant information when
determining the recoverable amount, including estimates regarding future production
capacity, selling price and relevant operating costs made on the basis of reasonable and
supportive presumption.
Goodwill is assessed for impairment at least annually. The assessment involves an
estimate of the present value of the future cash flows associated with the assets or groups
of assets to which goodwill has been allocated. The estimate considers the future cash
flows associated with the assets or groups of assets to which goodwill has been allocated
and the applicable discount rates for cash flow discounting.
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4.28.7 Depreciation and amortization
Investment property, fixed assets, and intangible assets are depreciated (amortized) over
their useful lives using the straight-line method after considering of their residual value.
Useful lives of these assets are regularly reviewed for the purpose of determining the
depreciation and amortization recognized for each period. Useful lives are determined on
the basis of the Company's past experience on similar assets and expected new
technology development. If existing estimates change significantly, the adjustment is made
to the depreciation and amortization for future periods.
4.28.8 Deferred tax assets
All unutilized tax loss is recognized as deferred tax assets to the extent it is probable that
taxable profit will be available against which the deductible tax loss can be utilized.
Significant judgments are required to estimate the timing and amount of future taxable profit
and to consider tax planning strategy so as to determine the number of deferred tax assets
to be recognized.
4.27.9 Income tax
During the ongoing operation of the Company, there is uncertainty in the treatment for and
amounts of certain transactions for income tax purpose. For example, the deductibility of
certain expenses for income tax purpose is subject to the approval by the relevant tax
authority. If the ultimate outcome of the uncertainty differs from the original estimate, the
difference will have an impact on the current income tax expenses and deferred income tax
expenses for the relevant period.
4.28.10 Accrued liabilities
Provision is recognized for product warranty, onerous contract, buy-back obligation, etc. on
the basis of contract terms, current knowledge, and past experiences. A provision is
recognized when a contingent event has resulted in a present obligation, the fulfillment of
the present obligation will result in an outflow of economic benefits. The amount recognized
is the best estimate of expenses that would be incurred to fulfill the present obligation. The
recognition and measurement of provisions significantly depend on judgments of the
management. In exercising judgment, the Company assesses risks and uncertainty
associated with the contingent events and the time value of money, etc.
Note 5 Taxation
5.1 Major taxes and tax rate
Tax Tax rate (%)
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Gujing Aged Original Spirits Annual Report 2017
Tax Tax rate (%)
Output VAT is charged at 6% or 17% on taxable income; VAT payable is calculated at the excess of
Value-added tax output VAT over input VAT.
The consumption taxes have been provided at the rate of CNY 1.00 yuan per kg, or 1,000 ml follow
Consumption tax the quantity, and the consumption tax has been provided at the rate of 20% of the taxable sales.
Business tax The business tax rate is the 5% of taxable income.
Urban maintenance Sum of VAT payable, consumption duty payable and business tax payable for the reporting period,
and construction surcharge and exempt and deductible tax at the rate of 1, 5, 7%.
Sum of VAT payable, consumption duty payable and business tax payable for the reporting period,
Education surcharge and exempt and deductible tax at the rate of 3%.
Sum of VAT payable, consumption duty payable and business tax payable for the reporting period,
Local education surcharge and exempt and deductible tax at the rate of 2%.
Corporate income tax See the table below.
The income tax rate of entities:
Entity Income tax rate
Anhui Longrui Glass Co.,Ltd 15%
Anhui Ruisiweier Technology Co., Ltd 15%
Bozhou Gujing waste recycling limited liability company 10%
Wuhan Yashibo tech. Co., Ltd. 10%
Hubei Hechuyuan Commercial Co., Ltd. 10%
Anhui Gujing Distillery Co.,Ltd and other subsidiaries 25%
5.2 Tax incentives and approval
5.2.1 Anhui Longrui Glass Co., Ltd., a subsidiary of the Company, was granted the
High-tech Enterprise Certificate (No. GR201634001204) on December 5, 2016 upon the
qualification of high-tech enterprise. The certificate valid for three years and the applicable
income tax rate in 2017 is 15%.
5.2.2 Anhui Ruisiweier Technology Co., Ltd, a subsidiary of the Company, was granted the
High-tech Enterprise Certificate (No. GR201634000832) on October 21, 2016, upon the
qualification of high-tech enterprise. The certificate valid for three years and the applicable
income tax rate in 2017 is 15%.
5.2.3 According to the “Notice of the Ministry of Finance and the State Administration of
Taxation on expanding the scope of preferential income tax policies regarding small
low-profit enterprises” (CaiShui [2017] No. 43), for small low-profit enterprises with an
annual taxable income of less than CNY500,000.00 (including CNY500,000.00), that the
taxable income is calculated by 50% of original taxable income, and the corporate income
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tax rate is 20% from 1 January 2017 to 31 December 2019. The subsidiaries of the
company including Bozhou Gujing Waste Reclamation Co., Ltd., Wuhan Yashibo
Technology Co., Ltd. and Hubei Hechuyuan Commercial Co., Ltd. meet the conditions for
small low-profit enterprises and the actual tax rate for 2017 is 10%.
Note 6 Notes to significant elements of the financial statements
Unless otherwise stated (incl. notes to significant elements of the financial statements is),
the current year is 2017; the prior year is 2016 respectively.
6.1 Monetary funds
Items Balance as at 31/12/2017 Balance as at 31/12/2016
Cash in hand 369,197.41 323,885.02
Bank deposit 1,440,617,397.53 527,379,498.81
Other monetary fund 43,102,031.46 5,205,642.24
Total 1,484,088,626.40 532,909,026.07
Including: The total amount of deposit abroad 0.00 0.00
Note: CNY 450 million of the bank deposit was structured time deposit as at 31/12/2017,
which will expire in May 2018 and cannot be withdrawn before the expiration date. CNY 10
million of other monetary funds were restricted due to pledging for opening bank
acceptance as at 31/12/2017. There was no other restriction on the use of money due to
mortgages, pledges, etc. as at the reporting date; there was no restriction on cross-border
remittance of cash deposited in banks outside of China.
6.2 Financial assets measured by fair value with changes in fair value recognized in
profit or loss
Items Balance as at 31/12/2017 Balance as at 31/12/2016
Held for trading financial assets 99,800.76 429,190.68
Including: invest in equity instrument 99,800.76 429,190.68
Total 99,800.76 429,190.68
6.3 Notes receivable
6.3.1 Disclosure by classification
Classification Balance as at 31/12/2017 Balance as at 31/12/2016
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Classification Balance as at 31/12/2017 Balance as at 31/12/2016
Bank acceptance 720,611,126.78 534,386,586.59
Total 720,611,126.78 534,386,586.59
6.3.2 Pledged notes receivable at the end of the current year
Pledged notes receivable as at 31/12/2017 amounted to CNY 3 million.
6.3.3 Immature notes receivable transferred at the end of the current year
Item Amount derecognized as at 31/12/2017 Amount not derecognized as at 31/12/2017
Bank acceptance 292,167,559.60 0.00
Total 292,167,559.60 0.00
6.4 Accounts receivable
6.4.1 Disclosure by classification
Balance as at 31/12/2017
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
Accounts receivable of individual significance
subject to individually assessment for 0.00 0.00 0.00 0.00 0.00
impairment
Accounts receivable portfolio subject to
23,800,576.11 100.00 1,334,433.05 5.61 22,466,143.06
impairment by credit risk:
Accounts receivable of individually
insignificance subject to individually 0.00 0.00 0.00 0.00 0.00
assessment for impairment
Total 23,800,576.11 100.00 1,334,433.05 5.61 22,466,143.06
(Continued)
Balance as at 31/12/2016
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
Accounts receivable of individual significance
subject to individually assessment for 0.00 0.00 0.00 0.00 0.00
impairment
Accounts receivable portfolio subject to
14,155,948.37 100.00 1,868,685.49 13.20 12,287,262.88
impairment by credit risk:
Accounts receivable of individually 0.00 0.00 0.00 0.00 0.00
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Gujing Aged Original Spirits Annual Report 2017
Balance as at 31/12/2016
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
insignificance subject to individually
assessment for impairment
Total 14,155,948.37 100.00 1,868,685.49 13.20 12,287,262.88
Disclosure by age:
Balance as at 31/12/2017
Age
Carrying amount Allowance for bad debt % of total
Within 1 year 22,582,302.32 269,783.94 1.19
Including: within 6 months 21,483,488.72 214,843.26 1.00
7– 12 months 1,098,813.60 54,940.68 5.00
1-2years 83,959.72 8,395.97 10.00
2-3years 156,121.87 78,060.94 50.00
Over3years 978,192.20 978,192.20 100.00
Total 23,800,576.11 1,334,433.05 5.61
6.4.2 Recognition, recovery and reversal of allowance for bad debt
The amount of allowance for bad debts recognized during the year is CNY 534,252.44.
6.4.3 Accounts receivable written off during the current reporting period.
Accounts receivable written off during the current reporting period amounted to CNY
2,040.00.
6.4.4 Details of top five accounts receivable
The total amount of top five accounts receivables summarised by debtors as at the end of
the current year is CNY 7,648,361.99, accounting for 32.14% of the total accounts
receivable as at the end of current year, the total corresponding allowance for bad debts is
CNY373,538.27.
6.5 Advances to suppliers
6.5.1 Disclosure by age
Balance as at 31/12/2017 Balance as at 31/12/2016
Age
Amount % of total Amount % of total
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Gujing Aged Original Spirits Annual Report 2017
Balance as at 31/12/2017 Balance as at 31/12/2016
Age
Amount % of total Amount % of total
Within 1 year 40,817,554.03 97.81 73,928,796.23 98.86
1 to 2 years 82,115.23 0.20 853,434.06 1.14
2 to 3 years 828,648.08 1.99 1,991.30 0.00
Over 3 years 1,320.00 0.00 0.00 0.00
Total 41,729,637.34 100.00 74,784,221.59 100.00
6.5.2 Details of top five advances to suppliers
The total amount of top five advances to suppliers as at the end of the current year is CNY
32,951,885.34, accounting for 78.97% of the total advance to suppliers.
6.6 Interest receivables
Items Balance as at 31/12/2017 Balance as at 31/12/2016
Interests on certified savings 13,883,178.08 2,843,178.08
Total 13,883,178.08 2,843,178.08
6.7 Other receivables
6.7.1 Disclosure by classification
Balance as at 31/12/2017
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
Other receivable of individual significance
subject to individually assessment for 40,850,949.35 71.04 40,850,949.35 100.00 0.00
impairment
Other receivable portfolio subject to
16,651,396.91 28.96 1,261,290.77 7.57 15,390,106.14
impairment by credit risk:
Other receivable of individually insignificance
subject to individually assessment for 0.00 0.00 0.00 0.00 0.00
impairment
Total 57,502,346.26 100.00 42,112,240.12 73.24 15,390,106.14
(Continued)
Balance as at 31/12/2016
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
~ 147 ~
Gujing Aged Original Spirits Annual Report 2017
Balance as at 31/12/2016
Items Carrying amount Allowance for bad debt
Book value
Amount % of total Amount % of total
Other receivable of individual
significance subject to individually 41,342,938.53 78.14 41,342,938.53 100.00 0.00
assessment for impairment
Other receivable portfolio subject to
11,564,231.44 21.86 798,834.41 6.91 10,765,397.03
impairment by credit risk:
Other receivable of individually
insignificance subject to individually 0.00 0.00 0.00 0.00 0.00
assessment for impairment
Total 52,907,169.97 100.00 42,141,772.94 79.65 10,765,397.03
6.7.1.1 Other receivables of individual significance and subject to individual impairment
assessment
Balance as at 31/12/2017
Debtor Carrying Allowance for Rate of
Reason for allowance
amount bad debt Allowance (%)
Enterprise is in the proceeding
Hengxin Securities 29,010,449.35 29,010,449.35 100.00
of liquidation bankruptcy
Enterprise is in the proceeding
Jianqiao Securities 11,840,500.00 11,840,500.00 100.00
Of liquidation bankruptcy
Total 40,850,949.35 40,850,949.35 100.00
6.7.1.2 Other receivables using the age analysis method for measurement of impairment
allowances
Balance as at 31/12/2017
Age Carrying Allowance for Rate of
amount bad debt Allowance (%)
Within 1 year 15,205,900.53 215,559.92 1.42
Including: within 6 months 13,618,377.87 136,183.79 1.00
7-12 months 1,587,522.66 79,376.13 5.00
1-2 years 391,499.72 39,149.97 10.00
2-3 years 94,831.57 47,415.79 50.00
Over 3years 959,165.09 959,165.09 100.00
Total 16,651,396.91 1,261,290.77 7.57
~ 148 ~
Gujing Aged Original Spirits Annual Report 2017
6.7.2 Recognition, recovery and reversal of allowance for bad debt
The amount of reversal of allowance for bad debt was CNY 29,532.82 in the current year.
Other receivables amounting to CNY 491,989.18, which was fully accrued for bad debts
allowance in the previous period, has been collected during the current year.
6.7.3 Other receivable written off in the current year
Other receivable written off in the current year amounted to CNY 6,345.00.
6.7.4 The classification of other receivables
Nature Balance as at 31/12/2017 Balance as at 31/12/2016
Investment in securities 40,850,949.35 41,342,938.53
Deposit and guarantee 4,593,198.69 1,457,444.95
Loan for business trip 2,088,800.78 2,024,382.20
Rent and water, electric and gas expense 6,241,851.35 4,242,987.61
Others 3,727,546.09 3,839,416.68
Total 57,502,346.26 52,907,169.97
6.7.5 Details of top five other receivables
% of the
Allowance balance at
Debtor Relationships Nature Carrying amount Age total
the year-end
amount
Investment in
1st Non-related party 29,010,449.35 Over 3 years 50.45 29,010,449.35
securities
Investment in
2nd 11,840,500.00 Over 3 years 20.59 11,840,500.00
securities
Non-related party
3rd Prepaid for oil fee 4,153,997.54 Within 6 months 7.22 41,539.98
Non-related party
4th Non-related party Deposit 500,000.00 Within 6 months 0.87 5,000.00
5th Non-related party Others 200,000.00 Within 6 months 0.35 2,000.00
Total 45,704,946.89 79.48 40,899,489.33
6.8 Inventories
6.8.1 Disclosure by classification
Items Balance as at 31/12/2017
~ 149 ~
Gujing Aged Original Spirits Annual Report 2017
Carrying amount before
Impairment allowance Net carrying amount
impairment allowance
Raw material 132,151,695.59 17,029,623.45 115,122,072.14
Work in progress 1,705,396,599.74 0.00 1,705,396,599.74
Finished goods 258,007,338.23 14,395,712.60 243,611,625.63
Total 2,095,555,633.56 31,425,336.05 2,064,130,297.51
(Continued)
Balance as at 31/12/2016
Items Carrying amount before
Impairment allowance Net carrying amount
impairment allowance
Raw material 122,173,639.41 8,897,753.50 113,275,885.91
Work in progress 1,426,282,016.97 0.00 1,426,282,016.97
Finished goods 255,258,344.54 8,383,210.92 246,875,133.62
Total 1,803,714,000.92 17,280,964.42 1,786,433,036.50
6.8.2 Impairment allowance for inventories
Increase in the current year The decrease in the current year
Items Balance as at 31/12/2016 Recovered or Balance as at 31/12/2017
Accrual Other Other
Written off
Raw material 8,897,753.50 9,383,716.68 0.00 1,251,846.73 0.00 17,029,623.45
Finished goods 8,383,210.92 13,871,930.41 0.00 7,859,428.73 0.00 14,395,712.60
Total 17,280,964.42 23,255,647.09 0.00 9,111,275.46 0.00 31,425,336.05
6.8.3 Reason for impairment recognition and reversal or written-off
The reason for
The basis of recognition of impairment allowance for recovering impairment The reasons for inventory impairment
Items
inventories allowance for written-off at the current year
inventories
Market prices decrease, and
Raw materials impaired
Raw material resulting in raw material’s
have been disposed
a net realizable value lower than the cost
Market prices decrease, and
Finished goods impaired
Finished goods resulting in Finished goods’ net realizable
have been disposed
a value lower than the cost
6.9 Other current assets
~ 150 ~
Gujing Aged Original Spirits Annual Report 2017
Items Balance as at 31/12/2017 Balance as at 31/12/2016
Financial products 1,741,000,000.00 1,750,000,000.00
Deductible tax 31,310,946.58 278,829.24
Total 1,772,310,946.58 1,750,278,829.24
6.10 Available-for-sale financial assets
6.10.1 The situation of available-for-sale financial assets
Balance as at 31/12/2017 Balance as at 31/12/2016
Items Carrying
Carrying amount Impairment Net carrying amount Impairment Net carrying amount
amount
Available for sale equity
517,086,347.91 0.00 517,086,347.91 404,029,552.27 0.00 404,029,552.27
instruments
Including: measured by
517,086,347.91 0.00 517,086,347.91 404,029,552.27 0.00 404,029,552.27
fair value
Measured by cost 0.00 0.00 0.00 0.00 0.00 0.00
Other 517,086,347.91 0.00 517,086,347.91 404,029,552.27 0.00 404,029,552.27
6.10.2 The available for sale financial asset which is measured by fair value at the year end
Classification of the available for sale Equity instrument Debt instrument available
Total
financial asset available for sale for sale
The cost of the equity instrument or the
445,725,244.63 0.00 445,725,244.63
amortized cost of the debt instrument
Fair value 517,086,347.91 0.00 517,086,347.91
The amount of the fair value change
71,361,103.28 0.00 71,361,103.28
recognized into comprehensive income
Impairment allowance 0.00 0.00 0.00
6.11 Investment property
Items Houses and buildings Land use rights Total
1. Cost:
1.1 Balance as at 31/12/2016 12,952,376.16 2,644,592.00 15,596,968.16
1.2 Increased in current year 0.00 0.00 0.00
1.3 Decreased in current year 4,271,820.41 0.00 4,271,820.41
1.3.1 Reclassified to fixed assets 369,880.00 0.00 369,880.00
1.3.2 Other transfer out 3,901,940.41 0.00 3,901,940.41
~ 151 ~
Gujing Aged Original Spirits Annual Report 2017
Items Houses and buildings Land use rights Total
1.4 Balance as at 31/12/2017 8,680,555.75 2,644,592.00 11,325,147.75
2. Accumulated Depreciation and
accumulated amortization
2.1 Balance as at 31/12/2016 6,637,952.24 556,071.18 7,194,023.42
2.2 Increased in current year 355,737.96 31,575.56 387,313.52
2.2.1 Accrual or amortization 355,737.96 31,575.56 387,313.52
2.3 Decreased in current year 1,599,966.52 0.00 1,599,966.52
2.3.1 Reclassified to fixed assets 369,880.00 0.00 369,880.00
2.3.2 Other decrease 1,230,086.52 0.00 1,230,086.52
2.4 Balance as at 31/12/2017 5,393,723.68 587,646.74 5,981,370.42
3. Impairment allowance
3.1Balance as at 31/12/2016 0.00 0.00 0.00
3.2 Increased in current year 0.00 0.00 0.00
3.2.1 Accrual 0.00 0.00 0.00
3.3 Decreased in current year 0.00 0.00 0.00
3.3.1 Reclassified to fixed assets 0.00 0.00 0.00
3.3.2 Other transfer out 0.00 0.00 0.00
3.4 Balance as at 31/12/2017 0.00 0.00 0.00
4. Carrying amount
4.1 Carrying amount as at 31/12/2017 3,286,832.07 2,056,945.26 5,343,777.33
4.2 Carrying amount as at 31/12/2016 6,314,423.92 2,088,520.82 8,402,944.74
6.12 Fixed assets
6.12.1 Circumstance of fixed assets
Houses and Office equipment
Items Machinery Vehicles Total
buildings and other
1. Cost:
1.1 Balance as at 31/12/2016 1,955,039,777.18 843,041,079.32 59,543,178.48 119,895,314.76 2,977,519,349.74
1.2 Increased in current year 48,679,220.85 78,318,066.59 8,715,747.80 5,095,581.23 140,808,616.47
~ 152 ~
Gujing Aged Original Spirits Annual Report 2017
Houses and Office equipment
Items Machinery Vehicles Total
buildings and other
1.2.1 Purchase 0.00 14,012,526.29 8,715,747.80 3,646,969.50 26,375,243.59
1.2.2 Transferred from
48,309,340.85 64,305,540.30 0.00 1,448,611.73 114,063,492.88
construction in-progress
1.2.3 Recovered from rental
369,880.00 0.00 0.00 0.00 369,880.00
housing
1.3 Decreased in current year 9,612,994.23 35,489,029.68 4,268,392.29 5,753,115.62 55,123,531.82
1.3.1 Disposal or scrap 9,612,994.23 35,489,029.68 4,268,392.29 5,753,115.62 55,123,531.82
1.4 Balance as at 31/12/2017 1,994,106,003.80 885,870,116.23 63,990,533.99 119,237,780.37 3,063,204,434.39
2. Accumulated Depreciation
2.1 Balance as at 31/12/2016 593,976,445.86 377,613,615.97 48,351,168.56 85,841,214.33 1,105,782,444.72
2.2 Increased in current year 84,159,965.39 90,551,346.57 5,631,713.52 10,114,743.66 190,457,769.14
2.2.1 Accrual 83,790,085.39 90,551,346.57 5,631,713.52 10,114,743.66 190,087,889.14
2.2.2 Recovered from rental
369,880.00 0.00 0.00 0.00 369,880.00
housing
2.3 Decreased in current year 5,006,124.92 27,104,005.62 3,929,577.22 5,597,811.72 41,637,519.48
2.3.1 Disposal or scrap 5,006,124.92 27,104,005.62 3,929,577.22 5,597,811.72 41,637,519.48
2.4 Balance as at 31/12/2017 673,130,286.33 441,060,956.92 50,053,304.86 90,358,146.27 1,254,602,694.38
3. Impairment allowance
3.1Balance as at 31/12/2016 4,192,270.86 1,265,656.39 7,047.07 580,345.64 6,045,319.96
3.2 Increased in current year 2,873,640.36 7,973,563.13 0.00 6,694.98 10,853,898.47
3.2.1 Accrual 2,873,640.36 7,973,563.13 0.00 6,694.98 10,853,898.47
3.3 Decreased in current year 3,931.14 547,725.84 0.00 0.00 551,656.98
3.3.1 Disposal or scrap 3,931.14 547,725.84 0.00 0.00 551,656.98
3.4 Balance as at 31/12/2017 7,061,980.08 8,691,493.68 7,047.07 587,040.62 16,347,561.45
4. Carrying amount
4.1 Carrying amount as at
1,313,913,737.39 436,117,665.63 13,930,182.06 28,292,593.48 1,792,254,178.56
31/12/2017
4.2 Carrying amount as at
1,356,871,060.46 464,161,806.96 11,184,962.85 33,473,754.79 1,865,691,585.06
31/12/2016
~ 153 ~
Gujing Aged Original Spirits Annual Report 2017
6.12.2 Temporarily idle fixed assets
Item Carrying value Depreciation Impairment Book value Notes
Houses and buildings 25,978,573.52 18,489,149.85 7,061,980.08 427,443.59
Machineries 20,615,597.79 11,480,398.74 8,691,493.68 443,705.37
Vehicles 58,119.66 49,329.00 7,047.07 1,743.59
Office equipment and other 900,605.02 286,559.74 587,040.62 27,004.66
Total 47,552,895.99 30,305,437.33 16,347,561.45 899,897.21
6.12.3 Fixed assets with pending ownership registration
Item Book value The reason for pending ownership registration
Houses and buildings 824,084,270.46 In the process
Total 824,084,270.46
6.13 Construction in progress
6.13.1 Details of construction in progress
Balance as at 31/12/2017 Balance as at 31/12/2016
impairm
Carrying amount Carrying amount
Items impairment ent Net carrying
before impairment Net carrying amount before impairment
allowance allowan amount
allowance allowance
ce
Based liquor
relocation of the
0.00 0.00 0.00 903,846.31 0.00 903,846.31
transformation and
facilities projects
Gujing operating
5,272,286.37 0.00 5,272,286.37 4,932,008.56 0.00 4,932,008.56
network system
Information integration
0.00 0.00 0.00 2,828,626.03 0.00 2,828,626.03
system
Renovation project of
potential safety 20,643,371.11 0.00 20,643,371.11 47,819,516.27 0.00 47,819,516.27
concerns
Wine culture museum
0.00 0.00 0.00 4,449,398.37 0.00 4,449,398.37
remold
Xianning Huanghelou
2700t filling depot 0.00 0.00 0.00 1,785,629.19 0.00 1,785,629.19
project
Hefei experience 0.00 0.00 0.00 2,822,179.84 0.00 2,822,179.84
~ 154 ~
Gujing Aged Original Spirits Annual Report 2017
Balance as at 31/12/2017 Balance as at 31/12/2016
impairm
Carrying amount Carrying amount
Items impairment ent Net carrying
before impairment Net carrying amount before impairment
allowance allowan amount
allowance allowance
ce
Centre design and
integration project
Process pipeline and
Gujing mixing and
0.00 0.00 0.00 1,133,754.23 0.00 1,133,754.23
storage automatic
control system
Sewage solution
station advanced
3,634,231.28 0.00 3,634,231.28 0.00 0.00 0.00
treatment renovation
project
Huanghelou chateau
2,726,775.89 0.00 2,726,775.89 0.00 0.00 0.00
and museum
Glass company
technological 0.00 0.00 0.00 21,359.22 0.00 21,359.22
improvement project
Machine installment 1,096,197.71 0.00 1,096,197.71 0.00 0.00 0.00
Gujing 2nd CRM
1,876,678.16 0.00 1,876,678.16 0.00 0.00 0.00
system
Plant outside raindrop
and waste net 8,529,729.73 0.00 8,529,729.73 0.00 0.00 0.00
improvement
BPM 2nd project 1,025,641.03 0.00 1,025,641.03 0.00 0.00 0.00
Bengbu products
878,152.15 0.00 878,152.15 0.00 0.00 0.00
exhibition Centre
Hangzhou experience
99,622.64 0.00 99,622.64 0.00 0.00 0.00
Centre
Tianjin experience
113,207.55 0.00 113,207.55 0.00 0.00 0.00
Centre
Brewing
automatization
113,207.55 0.00 113,207.55 0.00 0.00 0.00
technological
improvement project
Gujing plant half-open
1,127,033.31 0.00 1,127,033.31 0.00 0.00 0.00
wine cellar
~ 155 ~
Gujing Aged Original Spirits Annual Report 2017
Balance as at 31/12/2017 Balance as at 31/12/2016
impairm
Carrying amount Carrying amount
Items impairment ent Net carrying
before impairment Net carrying amount before impairment
allowance allowan amount
allowance allowance
ce
Other individual
project with 7,360,664.08 0.00 7,360,664.08 5,075,006.24 0.00 5,075,006.24
insignificant amounts
Total 54,496,798.56 0.00 54,496,798.56 71,771,324.26 0.00 71,771,324.26
6.13.2 Movement of significant construction in progress
Transferred to fixed Other decreases
Increase during the
Budgeted Balance as at assets during the during the current Balance as at
Items current reporting
cost 31/12/2016 current reporting 31/12/2017
period
reporting period period
Based liquor
relocation of
the
80,000.00 903,846.31 0.00 867,570.96 36,275.35 0.00
transformation
and facilities
projects
Gujing
operating
835.00 4,932,008.56 1,024,038.49 0.00 683,760.68 5,272,286.37
network
system
Information
integration 600.00 2,828,626.03 37,511.69 0.00 2,866,137.72 0.00
system
Renovation
project of
18,010.76 47,819,516.27 11,896,167.66 39,072,312.82 0.00 20,643,371.11
potential safety
concerns
Wine culture
museum 690.00 4,449,398.37 144,988.15 4,594,386.52 0.00 0.00
remold
Xianning
Huanghelou
899.83 1,785,629.19 4,766,947.55 6,552,576.74 0.00 0.00
2700t filling
depot project
Hefei
389.21 2,822,179.84 7,082.56 0.00 2,829,262.40 0.00
experience
~ 156 ~
Gujing Aged Original Spirits Annual Report 2017
Transferred to fixed Other decreases
Increase during the
Budgeted Balance as at assets during the during the current Balance as at
Items current reporting
cost 31/12/2016 current reporting 31/12/2017
period
reporting period period
Centre design
and integration
project
Process
pipeline and
Gujing mixing
438.83 1,133,754.23 2,616,887.86 3,750,642.09 0.00 0.00
and storage
automatic
control system
Multi-bacterial
cultivation 151.00 0.00 1,273,504.28 1,273,504.28 0.00 0.00
system
Sewage
solution station
advanced
611.54 0.00 3,634,231.28 0.00 0.00 3,634,231.28
treatment
renovation
project
Huanghelou
chateau and 2,600.00 0.00 12,226,750.61 1,932,220.87 7,567,753.85 2,726,775.89
museum
Glass
company
technological 2,291.63 21,359.22 24,737,821.79 24,759,181.01 0.00 0.00
improvement
project
Machine
280.00 0.00 1,096,197.71 0.00 0.00 1,096,197.71
installment
QR code
449.00 0.00 2,928,845.28 2,928,845.28 0.00 0.00
online devices
Gujing 2nd
230.00 0.00 2,002,891.75 0.00 126,213.59 1,876,678.16
CRM system
Desulfurization
and denitration 1,136.00 0.00 9,254,358.97 9,254,358.97 0.00 0.00
system
Plant outside 1,052.00 0.00 8,529,729.73 0.00 0.00 8,529,729.73
~ 157 ~
Gujing Aged Original Spirits Annual Report 2017
Transferred to fixed Other decreases
Increase during the
Budgeted Balance as at assets during the during the current Balance as at
Items current reporting
cost 31/12/2016 current reporting 31/12/2017
period
reporting period period
raindrop
and waste net
improvement
BPM 2nd
260.00 0.00 1,025,641.03 0.00 0.00 1,025,641.03
project
Bengbu
products
210.00 0.00 878,152.15 0.00 0.00 878,152.15
exhibition
Centre
Hangzhou
experience 700.00 0.00 99,622.64 0.00 0.00 99,622.64
Centre
Tianjin
experience 560.00 0.00 113,207.55 0.00 0.00 113,207.55
Centre
Brewing
automatization
technological 27,430.00 0.00 113,207.55 0.00 0.00 113,207.55
improvement
project
Gujing plant
half-open wine 10,991.65 0.00 1,127,033.31 0.00 0.00 1,127,033.31
cellar
Other
individual
project with 5,404.77 5,075,006.24 27,914,580.91 19,077,893.34 6,551,029.73 7,360,664.08
insignificant
amounts
Total —— 71,771,324.26 117,449,400.50 114,063,492.88 20,660,433.32 54,496,798.56
(Continued)
~ 158 ~
Gujing Aged Original Spirits Annual Report 2017
Including
Capitalization
The cumulative interests
The weight of Stage of rate applicable to
amount of capitalized Financial
Items cost to date in completion the current
interest during the resources
budgeted cost （%） reporting
capitalized current
period %
reporting period
Based liquor relocation of the
transformation 92.83 100.00 Owned fund
and facilities projects
Gujing operating network system 63.14 95.00 Owned fund
Information integration system 47.77 100.00 Owned fund
The renovation project of potential
72.00 90.00 Owned fund
safety concerns
Wine culture museum remold 67.00 100.00 Owned fund
Xianning Huanghelou 2700t filling
69.76 100.00 Owned fund
depot project
Hefei experience Centre design and
72.69 100.00 Owned fund
integration project
Process pipeline and Gujing mixing
85.00 100.00 Owned fund
and storage automatic control system
Multi-bacterial cultivation system 84.11 100.00 Owned fund
Sewage solution station advanced
60.00 90.00 Owned fund
treatment renovation project
Huanghelou chateau and museum 27.01 50.00 Owned fund
Glass company technological
103.68 100.00 Owned fund
improvement project
Machine installment 39.15 95.00 Owned fund
QR code online devices 65.00 100.00 Owned fund
Gujing 2nd CRM system 87.00 95.00 Owned fund
Desulfurization and denitration system 81.00 100.00 Owned fund
Plant outside raindrop
and waste net 81.00 90.00 Owned fund
improvement
BPM 2nd project 39.44 60.00 Owned fund
Bengbu products exhibition Centre 41.82 80.00 Owned fund
Hangzhou experience center 1.42 20.00 Owned fund
Tianjin experience center 2.02 20.00 Owned fund
~ 159 ~
Gujing Aged Original Spirits Annual Report 2017
Including
Capitalization
The cumulative interests
The weight of Stage of rate applicable to
amount of capitalized Financial
Items cost to date in completion the current
interest during the resources
budgeted cost （%） reporting
capitalized current
period %
reporting period
Brewing automatization
0.05 1.00 Owned fund
technological improvement project
Gujing plant half-open wine cellar 1.03 30.00 Owned fund
Other individual projects with
61.04 80.00 Owned fund
insignificant amounts
Total
6.14 Intangible assets
Items Land rights Patents Software Trademark Total
1. Cost:
1.1 Balance as at
628,279,302.56 45,866,942.63 10,058,954.96 169,116,600.00 853,321,800.15
31/12/2016
1.2 Increased in
0.00 22,523.56 6,557,879.49 0.00 6,580,403.05
current year
1.2.1 Purchase 0.00 22,523.56 848,974.34 0.00 871,497.90
1.2.2 Internal
research and 0.00 0.00 0.00 0.00 0.00
development
1.2.3 Transferred
from
0.00 0.00 5,708,905.15 0.00 5,708,905.15
construction in
progress
1.3 Decreased in
0.00 0.00 0.00 0.00 0.00
current year
1.3.1 Disposal 0.00 0.00 0.00 0.00 0.00
1.4 Balance as at
628,279,302.56 45,889,466.19 16,616,834.45 169,116,600.00 859,902,203.20
31/12/2017
2. Accumulated
~ 160 ~
Gujing Aged Original Spirits Annual Report 2017
Items Land rights Patents Software Trademark Total
amortization
2.1 Balance as at
102,006,461.48 45,714,910.47 4,915,899.12 0.00 152,637,271.07
31/12/2016
2.2 Increased in
13,280,158.89 6,603.50 2,246,353.95 350,373.12 15,883,489.46
current year
2.2.1 Accrual 13,280,158.89 6,603.50 2,246,353.95 350,373.12 15,883,489.46
2.3 Decreased in
0.00 0.00 0.00 0.00 0.00
current year
2.3.1 Disposal 0.00 0.00 0.00 0.00 0.00
2.4 Balance as at
115,286,620.37 45,721,513.97 7,162,253.07 350,373.12 168,520,760.53
31/12/2017
3. Impairment
allowance
3.1 Balance as at
0.00 0.00 0.00 0.00 0.00
31/12/2016
3.2 Increased in
0.00 0.00 0.00 0.00 0.00
current year
3.2.1 Accrual 0.00 0.00 0.00 0.00 0.00
3.3 Decreased in
0.00 0.00 0.00 0.00 0.00
current year
3.3.1 Disposal 0.00 0.00 0.00 0.00 0.00
3.4 Balance as at
0.00 0.00 0.00 0.00 0.00
31/12/2017
4. Carrying amount
4.1 Carrying
amount as at 512,992,682.19 167,952.22 9,454,581.38 168,766,226.88 691,381,442.67
31/12/2017
4.2 Carrying
amount as at 526,272,841.08 152,032.16 5,143,055.84 169,116,600.00 700,684,529.08
31/12/2016
~ 161 ~
Gujing Aged Original Spirits Annual Report 2017
6.15 Goodwill
Increased in the current Decreased in the
The name of the investee or the formation of Balance as at year current year Balance as at
goodwill 31/12/2016 Business 31/12/2017
Others Disposal Others
combination
Wuhan Tianlong Yellow Crane Tower Wine Co., Ltd. 478,283,495.29 0.00 0.00 0.00 0.00 478,283,495.29
Total 478,283,495.29 0.00 0.00 0.00 0.00 478,283,495.29
Note: According to the actual financial data and budget information, the Company
estimated net cash flow of the assets to determine the recoverable amount and according
to the “Asset appraisal report” (Huaxin Zhonghe Pingbao Zi [2018] B1062 Hao) issued by
Beijing Huaxin Public Assets Appraisal Co., Ltd. Shenzhen Branch, the future net cash flow
is greater than the book value and there is no impairment of the goodwill.
6.16 Long-term deferred charge
Amortization for Other The reason for
Balance as at Increase in the Balance as at
Items the current decreases in other
31/12/2016 current year 31/12/2017
reporting period current year decreases
Mold culture shelf
and Mold culture 1,395,010.07 0.00 1,101,816.70 0.00 293,193.37
bed
Transformation of
high - quality base 3,583,860.08 0.00 3,583,860.08 0.00 0.00
liquor
Wine library
845,341.88 0.00 563,561.28 0.00 281,780.60
shelves
Decoration works of
4,552,189.86 0.00 4,552,189.86 0.00 0.00
exclusive Shop
Decoration works of
Book value
Beijing experience 19,757,703.37 0.00 2,463,695.24 198,860.92 17,095,147.21
adjustment
center
Relocation
compensation of
10,125,000.00 0.00 1,500,000.00 0.00 8,625,000.00
Beijing experience
center
Pottery jars storage 15,060,486.86 0.00 4,407,960.08 0.00 10,652,526.78
Decoration works of
spirits culture 610,434.11 0.00 430,889.44 0.00 179,544.67
Museum
~ 162 ~
Gujing Aged Original Spirits Annual Report 2017
Amortization for Other The reason for
Balance as at Increase in the Balance as at
Items the current decreases in other
31/12/2016 current year 31/12/2017
reporting period current year decreases
Improvement
project of Sewage 4,250,000.00 0.00 600,000.00 0.00 3,650,000.00
Treatment Plant
Green cost 11,761,161.10 224,207.63 11,743,483.07 0.00 241,885.66
Potential safety
hazard 2,417,801.09 0.00 1,611,867.48 0.00 805,933.61
transformation
Shenzhen
4,885,049.82 0.00 1,332,286.32 0.00 3,552,763.50
experience center
Other 2,458,879.09 2,736,419.58 1,524,077.40 0.00 3,671,221.27
Winery landscape
2,831,715.21 151,140.52 1,019,772.21 0.00 1,963,083.52
upgrade
Zhengzhou
4,679,367.54 21,315.78 526,444.52 0.00 4,174,238.80
experience Centre
Shanghai Book value
4,374,397.27 0.00 1,479,693.33 482,400.74 2,412,303.20
experience Centre adjustment
Hefei experience
0.00 2,829,262.40 884,143.13 0.00 1,945,119.27
Centre
Fruits and
vegetables liquor
workshop 0.00 1,418,968.91 393,814.59 0.00 1,025,154.32
improvement
project
Beijing experience
center kitchen
0.00 699,833.78 48,410.08 0.00 651,423.70
improvement
project
Beijing products
exhibition and
reception Centre 0.00 450,450.45 0.00 0.00 450,450.45
improvement
project
Huanghelou
chateau
0.00 7,567,753.85 0.00 0.00 7,567,753.85
improvement
project
~ 163 ~
Gujing Aged Original Spirits Annual Report 2017
Amortization for Other The reason for
Balance as at Increase in the Balance as at
Items the current decreases in other
31/12/2016 current year 31/12/2017
reporting period current year decreases
Total 93,588,397.35 16,099,352.90 39,767,964.81 681,261.66 69,238,523.78
6.17 Deferred tax assets and deferred tax liabilities
6.17.1 Details of Recognized deferred tax assets
Balance as at 31/12/2017 Balance as at 31/12/2016
Items Deductible temporary Deductible temporary
Deferred tax assets Deferred tax assets
difference difference
Allowance for bad debt 43,446,673.17 10,853,076.08 44,010,458.43 10,996,043.87
Allowance for inventories impairment 31,398,636.15 7,804,115.47 17,280,964.42 4,268,065.64
Allowance for fixed assets impairment 16,319,563.99 4,079,686.68 6,017,322.50 1,504,126.30
Deferred income 43,706,503.22 10,614,699.02 43,978,795.45 10,964,946.75
Accrued expenses and discount 170,866,990.79 42,716,747.69 241,487,812.54 60,371,953.14
Recoverable tax loss 36,422,859.63 9,100,740.51 74,310,846.55 18,577,711.64
Non-realized internal profit 8,947,215.47 2,236,803.87 3,886,999.22 971,749.81
Carry over the payroll payables
19,804,188.04 4,751,608.42 0.00 0.00
deductible during the next period
Total 370,912,630.46 92,157,477.74 430,973,199.11 107,654,597.15
6.17.2 Details of Recognized deferred tax liabilities
Balance as at 31/12/2017 Balance as at 31/12/2016
Items Deductible temporary Deductible temporary
Deferred tax liabilities Deferred tax liabilities
difference difference
Changes in fair value of trading
44,379.27 11,094.82 157,639.98 39,410.00
financial asset
Changes in fair value of
71,361,103.28 17,840,275.82 48,192,637.29 12,048,159.32
available-for-sale financial assets
Difference in additional deduction of
7,851,477.60 1,962,869.40 11,629,445.21 2,907,361.30
fixed assets
Appreciation of assets by business
combination under non-common 399,859,463.44 99,964,865.86 409,168,287.60 102,292,071.90
control
Total 479,116,423.59 119,779,105.90 469,148,010.08 117,287,002.52
6.17.3 Unrecognized deferred tax assets
Items Balance as at 31/12/2017 Balance as at 31/12/2016
~ 164 ~
Gujing Aged Original Spirits Annual Report 2017
Items Balance as at 31/12/2017 Balance as at 31/12/2016
Deductible temporary difference 54,697.36 27,997.46
Taxable temporary differences 4,331,653.92 3,504,550.14
Total 4,386,351.28 3,532,547.60
6.17.4 The deductible losses of unrecognized deferred tax assets will be expired in the
following year
Year Balance as at 31/12/2017 Balance as at 31/12/2016 Note
Year 2018 0.00 0.00
Year 2019 0.00 0.00
Year 2020 2,059,849.97 2,059,849.97
Year 2021 1,444,700.17 1,444,700.17
Year 2022 827,103.78 0.00
Total 4,331,653.92 3,504,550.14
6.18 Other non-current assets
Items Balance as at 31/12/2017 Balance as at 31/12/2016
Large amount certified savings 300,000,000.00 300,000,000.00
Prepayments for equipment and properties 17,910,214.56 982,000.00
Total 317,910,214.56 300,982,000.00
6.19 Notes payable
Type Balance as at 31/12/2017 Balance as at 31/12/2016
Bank acceptance 200,750,000.00 11,270,000.00
Trade acceptance 0.00 28,583.00
Total 200,750,000.00 11,298,583.00
6.20 Accounts payable
6.20.1 Detail for accounts payable
Item Balance as at 31/12/2017 Balance as at 31/12/2016
Payment for Materials 260,407,500.55 182,974,644.45
For Constructions and equipment’s 89,176,879.87 101,736,100.57
For Others 86,030,659.41 56,261,621.19
~ 165 ~
Gujing Aged Original Spirits Annual Report 2017
Item Balance as at 31/12/2017 Balance as at 31/12/2016
Total 435,615,039.83 340,972,366.21
6.20.2 The details of significant accounts payable remaining unsettled for more than 1 year
Reason(s) for unsettlement Balance as at 31/12/2017 Reason(s) for unsettlement
Company A 2,252,093.02 Residual project balance
Company B 1,994,174.95 Residual project balance
Company C 1,090,000.00 Residual equipment balance
Company D 769,163.75 Residual project balance
Company E 577,691.84 Residual project balance
Total 6,683,123.56
6.21 Advances from customers
Item Balance as at 31/12/2017 Balance as at 31/12/2016
Payment for goods 503,083,108.13 623,990,614.91
Total 503,083,108.13 623,990,614.91
6.22 Employment benefits payable
6.22.1 Disclosure by classification
Balance Increase during Decrease during Balance
Items
at 31/12/2016 the current year the current year at 31/12/2017
1. Short-term employee benefits 287,527,410.11 1,387,944,900.74 1,304,013,108.41 371,459,202.44
2. Post-employment benefits 499,725.98 78,272,125.14 77,857,039.19 914,811.93
3. Termination benefits 0.00 0.00 0.00 0.00
4. Other benefits due within one year 0.00 0.00 0.00 0.00
Total 288,027,136.09 1,466,217,025.88 1,381,870,147.60 372,374,014.37
6.22.2 Disclosure by classification of short-term employee benefits
Balance Increase during Decrease during Balance
Category
at 31/12/2016 the current year the current year at 31/12/2017
1. Wages, salaries and subsidies 231,921,133.46 1,230,078,321.76 1,163,868,451.05 298,131,004.17
2. Employee welfare 0.00 55,721,006.88 52,028,026.88 3,692,980.00
3. Social insurance: 67,054.59 32,446,576.88 32,277,423.39 236,208.08
~ 166 ~
Gujing Aged Original Spirits Annual Report 2017
Balance Increase during Decrease during Balance
Category
at 31/12/2016 the current year the current year at 31/12/2017
Including: Medical insurance 53,976.40 27,814,532.42 27,671,604.47 196,904.35
Employment injury insurance 6,704.27 2,460,272.70 2,446,907.10 20,069.87
Maternity insurance 6,373.92 2,171,771.76 2,158,911.82 19,233.86
4. Housing provident fund 8,380,962.40 41,875,962.19 41,204,924.71 9,051,999.88
5. Labor union fee and employee education fee 47,158,259.66 27,823,033.03 14,634,282.38 60,347,010.31
6. Short-term paid absence 0.00 0.00 0.00 0.00
7. Short-term profit sharing plan 0.00 0.00 0.00 0.00
Total 287,527,410.11 1,387,944,900.74 1,304,013,108.41 371,459,202.44
6.22.3 Disclosure by defined contribution plan
Balance Increase during Decrease during Balance
Category
at 31/12/2016 the current year the current year at 31/12/2017
1. Basic pension 471,096.94 75,030,282.65 74,633,640.28 867,739.31
2. Unemployment insurance 28,629.04 3,241,842.49 3,223,398.91 47,072.62
Total 499,725.98 78,272,125.14 77,857,039.19 914,811.93
6.23 Taxes and fees payable
Tax (Fee) Balance as at 31/12/2017 Balance as at 31/12/2016
VAT 78,832,243.10 118,133,291.16
Consumption tax 210,532,348.09 219,571,438.66
Enterprise income tax 92,299,563.98 94,273,743.45
Personal income tax 3,949,866.64 1,562,260.59
Urban construction and maintenance tax 11,904,195.78 19,129,378.01
Stamp duty 486,594.48 871,395.56
Education surcharge 11,127,386.19 18,650,757.21
Others 11,852,647.19 14,767,387.21
Total 420,984,845.45 486,959,651.85
6.24 Other payables
~ 167 ~
Gujing Aged Original Spirits Annual Report 2017
Items Balance as at 31/12/2017 Balance as at 31/12/2016
Security deposit 874,462,125.60 587,919,286.15
Business trip borrowing 702,716.60 2,207,592.61
Guarantee 12,061,326.71 10,478,503.90
Personal housing provident fund paid by company 9,051,999.88 8,380,962.40
Unsettled discount 54,471,463.99 0.00
Others 81,793,920.56 32,485,926.47
Total 1,032,543,553.34 641,472,271.53
6.25 Other current liabilities
Items Balance as at 31/12/2017 Balance as at 31/12/2016
Accrued expense 182,846,942.10 241,487,812.54
Total 182,846,942.10 241,487,812.54
6.26 Government grants
6.26.1 Government grants recognized initially in 2017
Related to asset Related to income
Deduct Deduct Is grant
Items Amounts Deferred assets’ Deferred Other gains and Non-operating costs or receive
income book income incomes income expense d
value s
Intelligent koji
production 346,000.00 346,000.00 0.00 0.00 0.00 0.00 0.00 Yes
research fund
Food safety
protection
1,000,000.00 1,000,000.00 0.00 0.00 0.00 0.00 0.00 Yes
improvement
grant
Vital food
isotopes
authenticity key
480,000.00 480,000.00 0.00 0.00 0.00 0.00 0.00 Yes
technique
cooperation
subsidy
Atmosphere
3,889,000.00 3,889,000.00 0.00 0.00 0.00 0.00 0.00 Yes
pollution
~ 168 ~
Gujing Aged Original Spirits Annual Report 2017
Related to asset Related to income
Deduct Deduct Is grant
Items Amounts Deferred assets’ Deferred Other gains and Non-operating costs or receive
income book income incomes income expense d
value s
prevention and
management
subsidy
Tax refund 20,901,711.56 0.00 0.00 0.00 20,901,711.56 0.00 0.00 Yes
Provincial level
industrial design
center and
1,700,000.00 0.00 0.00 0.00 1,700,000.00 0.00 0.00 Yes
environmental
friendly plant
subsidy
Industry
development 1,500,000.00 0.00 0.00 0.00 1,500,000.00 0.00 0.00 Yes
subsidy
Scientific
research 1,201,200.00 0.00 0.00 0.00 1,201,200.00 0.00 0.00 Yes
subsidy
Stable
employment 677,123.00 0.00 0.00 0.00 677,123.00 0.00 0.00 Yes
subsidy
Patent subsidy 147,080.00 0.00 0.00 0.00 147,080.00 0.00 0.00 Yes
Exhibition
108,440.00 0.00 0.00 0.00 108,440.00 0.00 0.00 Yes
subsidy
Product quality
54,669.81 0.00 0.00 0.00 54,669.81 0.00 0.00 Yes
subsidy
Circular
economy
100,000.00 0.00 0.00 0.00 100,000.00 0.00 0.00 Yes
development
leading fund
Unemployment
43,100.00 0.00 0.00 0.00 43,100.00 0.00 0.00 Yes
subsidy
Employment
59,500.00 0.00 0.00 0.00 59,500.00 0.00 0.00 Yes
subsidy
Export subsidy 40,000.00 0.00 0.00 0.00 40,000.00 0.00 0.00 Yes
Trademark 200,000.00 0.00 0.00 0.00 200,000.00 0.00 0.00 Yes
~ 169 ~
Gujing Aged Original Spirits Annual Report 2017
Related to asset Related to income
Deduct Deduct Is grant
Items Amounts Deferred assets’ Deferred Other gains and Non-operating costs or receive
income book income incomes income expense d
value s
subsidy
High-tech
enterprise
600,000.00 0.00 0.00 0.00 0.00 600,000.00 0.00 Yes
recognition
reward
Other reward 937,851.79 0.00 0.00 0.00
