古井贡Ｂ：2018年半年度报告（英文版）

ANHUI GUJING DISTILLERY COMPANY LIMITED

INTERIM REPORT 2018

August 2018

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Part I Important Notes, Table of Contents and Definitions

The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,

supervisors and senior management of Anhui Gujing Distillery Company Limited (hereinafter

referred to as the “Company”) hereby guarantee the factuality, accuracy and completeness of

the contents of this Report and its summary, and shall be jointly and severally liable for anymisrepresentations, misleading statements or material omissions therein.

Liang Jinhui, the Company’s legal representative, Ye Changqing, the Company’s ChiefAccountant, and Zhu Jiafeng, head of the Company’s financial department (equivalent to

financial manager) hereby guarantee that the Financial Statements carried in this Report arefactual, accurate and complete.

All the Company’s directors have attended the Board meeting for the review of this Report

and its summary.Any plans for the future and other forward-looking statements mentioned in this Report and

its summary shall NOT be considered as absolute promises of the Company to investors.Therefore, investors are reminded to exercise caution when making investment decisions.The Company has no interim dividend plan, either in the form of cash or stock.This Report and its summary have been prepared in both Chinese and English. Should therebe any discrepancies or misunderstandings between the two versions, the Chinese versionsshall prevail.

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Part I Important Notes, Table of Contents and Definitions 2Part II Corporate Information and Key Financial Information 5Part III Business Summary 8Part IV Operating Performance Discussion and Analysis 9Part V Significant Events 21Part VI Share Changes and Shareholder Information 28Part VII Preferred Shares 32Part VIII Directors, Supervisors and Senior Management 33Part IX Corporate Bonds 34Part X Financial Report 35Part XI Documents Available for Reference 158

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Term	Definition
The “Company”, “ Gu Jing” or “we”	Anhui Gujing Distillery Company Limited and its consolidated subsidiaries, except where the context otherwise requires
Gujing Group	Anhui Gujing Group Co., Ltd.
Yellow Crane Tower	Yellow Crane Tower Distillery Co., Ltd.
The “Reporting Period” or “Current Period”	The period from 1 January 2018 to 30 June 2018
RMB, RMB’0,000	Expressed in the Chinese currency of Renminbi, expressed in ten thousand Renminbi

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Part II Corporate Information and Key Financial Information

I Corporate Information

Stock name	Gujing Distillery, Gujing Distillery-B	Stock code	000596, 200596
Stock exchange for stock listing	Shenzhen Stock Exchange
Company name in Chinese	安徽古井贡酒股份有限公司
Abbr. (if any)	古井
Company name in English (if any)	ANHUI GUJING DISTILLERY COMPANY LIMITED
Abbr. (if any)	GU JING
Legal representative	Liang Jinhui

	Board Secretary	Securities Representative
Name	Ye Changqing	Mei Jia
Address	Gujing Town, Bozhou City, Anhui Province, P.R.China	Gujing Town, Bozhou City, Anhui Province, P.R.China
Tel.	[phone]	[phone]
Fax	[phone]	[phone]
Email address	[e-mail]	[e-mail]

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□ Applicable √ Not applicable

The newspapers designated by the Company for information disclosure, the website designated by the CSRC for disclosing the

Company’s periodic reports and the place for keeping such reports did not change in the Reporting Period. The said information can

be found in the 2017 Annual Report.

IV Key Financial Information

Indicate by tick mark whether there is any retrospectively restated datum in the table below.

□ Yes √ No

	H1 2018	H1 2017	Change (%)
Operating revenue (RMB)	4,783,083,895.33	3,670,127,764.59	30.32%
Net profit attributable to the listed company’s shareholders (RMB)	892,422,337.64	548,889,891.65	62.59%
Net profit attributable to the listed company’s shareholders before exceptional items (RMB)	872,348,474.12	483,955,014.12	80.25%
Net cash generated from/used in operating activities (RMB)	668,946,891.61	425,365,224.08	57.26%
Basic earnings per share (RMB/share)	1.77	1.09	62.39%
Diluted earnings per share (RMB/share)	1.77	1.09	62.39%
Weighted average return on net assets (%)	13.94%	9.86%	4.08%
	30 June 2018	31 December 2017	Change (%)
Total assets (RMB)	11,210,703,795.70	10,152,862,119.05	10.42%
Net assets attributable to the listed company’s shareholders (RMB)	6,802,798,440.44	6,459,078,378.38	5.32%

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XI Exceptional Gains and Losses

√ Applicable □ Not applicable

Unit: RMB

Item	Reporting Period	Note
Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs)	-3,419,972.96
Government subsidies charged to current profit or loss (exclusive of government subsidies given in the Company’s ordinary course of business at fixed quotas or amounts as per government’s uniform standards)	4,708,036.05
Gain or loss on fair-value changes in trading financial assets and liabilities & investment income from disposal of trading financial assets and liabilities and available-for-sale financial assets (exclusive of effective portion of hedges that arise in the Company’s ordinary course of business)	12,507,302.31
Non-operating income and expense other than above	13,674,195.49
Less: Income tax effects	6,827,920.31
Non-controlling interests effects (net of tax)	567,777.06
Total	20,073,863.52	--

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Part III Business Summary

I Core 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 liquor and spirits.

As one of China’s traditional top eight liquor brands, the Company is the first listed liquor and spirits 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, beingpresented as a hometown specialty by Cao Cao, a famous warlord in China’s history, to Emperor Han Xiandi (name: Liu Xie) in A.D.

196, and was continually presented to the royal house since then. With crystalline liquid, rich aroma, a fine flavor and a lingeringaftertaste, the Gujing spirit has helped the Company win four national distilled spirit golden awards, a golden award at the 13

th

SIAL

Paris, the title of China’s “Geographical Indication Product”, the recognition as a “Key Cultural Relics Site under the StateProtection”, the recognition with a “National Intangible Cultural Heritage Protection Project”, a Quality Award from the Anhuiprovincial government, a title of “National Quality Benchmark”, among other honors.

II Material Changes in Major Assets

1. Material Changes in Major Assets

□ Applicable √ Not applicable

2. Major Assets Overseas

□ Applicable √ Not applicable

III Core Competitiveness Analysis

Is the Company subject to any disclosure requirements for special industries?No.

No material changes occurred to the Company’s core competitiveness in the Reporting Period.

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Part IV Operating Performance Discussion and Analysis

I Overview

In the first half of 2018, China’s economy was generally stable and further restructuring was seen. As for the liquor and spirits

industry, concentration was increasing.Under the common efforts of the Board and all the staff, for the six months from January to June 2018, the Company recordedoperating revenue of RMB4,783 million, up 30.32% compared to the same period of last year; and a net profit attributable to theCompany as the parent of RMB892 million, representing a year-on-year growth of 62.59%. As such, the operating goals that theCompany had set for the first half of 2018 at the beginning of the year were all accomplished. To achieve that, the Company took the

following main measures in the Reporting Period: ① continuously strengthening branding with more investments to carry forwardthe brand revitalization programme; ② promoting digital marketing to carry on with the “5.0” strategy; ③ reinforcing quality control,which has resulted in higher-quality liquor and spirits; ④ stimulating endogenous driving force through better management; ⑤strengthening safety and environmental protection management to ensure smooth operations; ⑥ enhancing system and riskassessment to optimize business processes; and ⑦ improving corporate culture by promoting party committee-management

integration.

II Analysis of Core Businesses

See “I Overview” above.

Year-on-year changes in key financial data:

Unit: RMB

	H1 2018	H1 2017	Change (%)	Main reason for change
Operating revenue	4,783,083,895.33	3,670,127,764.59	30.32%	More upmarket products were sold
Cost of sales	1,042,675,468.24	913,179,198.91	14.18%
Selling expense	1,597,300,315.17	1,249,688,761.13	27.82%
Administrative expense	280,500,337.72	263,421,695.43	6.48%
Finance costs	-20,284,906.55	-17,264,642.65	-17.49%
Income tax expense	320,789,915.24	203,016,533.12	58.01%	Rise in gross profit
Net cash generated from/used in operating activities	668,946,891.61	425,365,224.08	57.26%	Rise in payments collected from customers
Net cash generated from/used in investing activities	-266,649,560.60	32,576,174.29	-918.54%	Decline in cash proceeds from disinvestment
Net cash generated	-503,600,000.00	-302,160,000.00	-66.67%	Rise in dividend

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from/used in financing activities				distributed
Net increase in cash and cash equivalents	-101,302,668.99	155,781,398.37	-165.03%	Decline in net cash generated from investing and financing activities
	30 June 2018	31 December 2017	Change (%)	Main reason for change
Monetary assets	967,785,957.41	1,484,088,626.40	-34.79%	Decline in net increase in paid cash and cash equivalents
Notes receivable	1,898,811,744.49	720,611,126.78	163.50%	Notes were adopted more often in settlement of sales
Prepayments	82,209,009.71	41,729,637.34	97.00%	Rise in prepaid advertising fee
Available-for-sale financial assets	267,197,036.68	517,086,347.91	-48.33%	Rise in financial assets sold
Advances from customers	803,222,097.92	503,083,108.13	59.66%	Rise in sales revenue
Other current liabilities	804,829,022.62	182,846,942.10	340.17%	Rise in unrecognized expense
Other comprehensive income	8,418,551.86	53,520,827.44	-84.27%	Disposal of available-for-sale financial assets

	Operating revenue	Cost of sales	Gross profit margin	YoY change in operating revenue (%)	YoY change in cost of sales (%)	YoY change in gross profit margin (%)
By industry
Manufacturing	4,783,083,895.33	1,042,675,468.24	78.20%	30.32%	14.18%	3.08%
By product category
Liquor and spirits	4,707,210,564.91	1,010,894,998.63	78.52%	30.99%	15.28%	2.92%
Hotel services	41,620,289.12	18,192,924.18	56.29%	2.03%	4.45%	-1.01%
Other	34,253,041.30	13,587,545.43	60.33%	-4.03%	-27.95%	13.17%
By operating segment

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Domestic	4,776,503,422.80	1,040,361,772.83	78.22%	30.17%	13.96%	3.10%
Overseas	6,580,472.53	2,313,695.41	64.84%	759.68%	715.97%	1.88%

	30 June 2018		30 June 2017		Change in percentage (%)	Reason for material change
	Value	As % of total assets	Value	As % of total assets
Monetary assets	967,785,957.41	8.63%	688,690,424.44	7.17%	1.46%
Accounts receivable	19,492,576.07	0.17%	14,701,820.59	0.15%	0.02%
Inventories	2,140,586,455.59	19.09%	1,846,271,997.98	19.23%	-0.14%
Investment property	5,055,069.67	0.05%	8,160,298.60	0.09%	-0.04%
Fixed assets	1,717,043,900.68	15.32%	1,785,781,644.39	18.60%	-3.28%
Construction in progress	76,076,053.22	0.68%	77,471,004.70	0.81%	-0.13%

Item	Beginning amount	Gain/loss on fair-value changes in Reporting Period	Cumulative fair-value changes charged to equity	Impairment allowance for Reporting Period	Purchased in Reporting Period	Sold in Reporting Period	Ending amount
Financial assets
1. Financial assets at fair value through profit or loss (exclusive of derivatives)	99,800.76	396,379.39	0.00	0.00	1,539,796.23	978,316.65	1,057,659.73

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2. Derivative financial assets	0.00	0.00	0.00	0.00	0.00	0.00	0.00
3. Available-for-sale financial assets	517,086,347.91	0.00	-41,442,155.53	0.00	0.00	208,447,155.70	267,197,036.68
Subtotal of financial assets	517,186,148.67	396,379.39	-41,442,155.53	0.00	1,539,796.23	209,425,472.35	268,254,696.41
Total of the above	517,186,148.67	396,379.39	-41,442,155.53	0.00	1,539,796.23	209,425,472.35	268,254,696.41
Financial liabilities	0.00	0.00	0.00	0.00	0.00	0.00	0.00

Item	Ending carrying value	Reasons
Other monetary funds	45,000,000.00	Drawing the bill for pledge of bank deposits
Notes receivable	99,930,600.00	Endorsement for pledge
Total	144,930,600.00

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V Investments Made

1. Total Investments Made

□ Applicable √ Not applicable

2. Significant Equity Investments Made in the Reporting Period

□ Applicable √ Not applicable

3. Significant Non-Equity Investments Ongoing in the Reporting Period

□ Applicable √ Not applicable

4. Financial Investments(1) Securities Investments

√ Applicable □ Not applicable

Unit: RMB

Variety of securities

Code of securities

Name of securities

Initial investment cost

Accounting measurement model

Beginning carrying value

Gain/loss on fair value changes in the Reporting Period

Cumulative fair value changes charged to equity

Purchased in the Reporting Period

Sold in the Reporting Period

Gain/loss in the Reporting Period

Ending carrying value

Accounting title

Source of funds

Domestic/overseas stock

000001

PAYH

70,317,243.98

Fair value method

106,943,823.70

-25,087,573.68

81,856,250.02

11,586,297.23

0.00

Available-for-sale financial asset

Self-owned funds

Domestic/overse

601988

ZGYH

44,385,674.20

Fair value

71,313,507.00

-6,466,716.00

0.00

0.00

64,846,791.00

Available-for-sa

Self-owne

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as stock				method								le financial asset	d funds
Funds		GFNSTYR 1st E Securities Investment Funds	150,000,000.00	Fair value method	127,154,958.08		-564,052.40		126,590,905.68	8,841,868.22	0.00	Available-for-sale financial asset	Self-owned funds
Funds		ZXYSDP 1st Assets Management Plan	200,000,000.00	Fair value method	211,674,059.13		-9,323,813.45		0.00	10,883,000.00	202,350,245.68	Available-for-sale financial asset	Self-owned funds
Other ending holding securities investments				--								--	--
Total			464,702,918.18	--	517,086,347.91		-41,442,155.53		208,447,155.70	31,311,165.45	267,197,036.68	--	--
Disclosure date of the announcement about the board’s consent for the securities investment			Naught
Disclosure date of the announcement about the general meeting’s consent for the securities investment (if any)			Naught

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Operator

Relationship with the Company

Connected transaction

Type of derivative

Initial investment amount

Starting date

Ending date

Beginning investment amount

Purchased in the Reporting Period

Sold in the Reporting Period

Impairment provision (if any)

Ending investment amount

Proportion of closing investment amount in the Company’s ending net assets

Actual gain/loss in the Reporting Period

Reverse repurchase of national debt

Naught

No

Reverse repurchase of national debt

0.00

5,000

12,000

17,000

0

0

0.00%

21.44

Total

0.00

--

--

5,000

12,000

17,000

0

0

0.00%

21.44

Capital source for derivative investment

Company’s own funds

Lawsuits involved (if applicable)

N/A

Disclosure date of board announcement approving derivative investment (if any)

30 August 2013

Disclosure date of shareholders’ meeting announcement approving derivative investment (if any)

N/A

Analysis of risks and control measures associated with derivative investments held in the Reporting Period (including but not limited to market risk, liquidity risk, credit risk, operational risk, legal risk, etc.)

The Company had controlled the relevant risks strictly according to the Derivatives Investment Management System.

Changes in market prices or fair value of derivative investments during the Reporting Period (fair value analysis should include measurement method and related assumptions and parameters)

Naught

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Significant changes in accounting policies and specific accounting principles adopted for derivative investments in the Reporting Period compared to previous reporting period

Naught

Opinion of independent directors on derivative investments and risk control

Based on the sustainable development of the main business and the sufficient free idle money, the Company increased the profits through investing in the reasonable financial derivative instruments, which was in favor of improving the service efficiency of the idle funds; in order to reduce the investment risks of the financial derivative instruments, the Company had set up corresponding supervision mechanism for the financial derivative instrument business and formulated reasonable accounting policy as well as specific principles of financial accounting; the derivative Investment business developed separately took national debts as mortgage object, which was met with the cautious and steady risks management principle and the interest of the Company and shareholders. Therefore, agreed the Company to develop the derivative Investment business of reverse repurchase of national debt not more than the limit of RMB0.3 billion.

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Unit: RMB

Company name	Relationship with the Company	Main business scope	Registered capital	Total assets	Net assets	Operating revenues	Operating profit	Net profit
Bozhou Gujing Sales Co., Ltd	Subsidiary	Wholesales of distilled spirit, construction materials, feeds and assistant materials	84,864,497.89	3,210,400,453.96	511,474,706.76	4,253,242,535.90	502,639,601.02	373,876,477.59
Anhui Longrui Glass Co., Ltd	Subsidiary	Manufacture and sale of glass products	86,660,268.98	272,051,488.82	227,087,845.41	113,642,525.23	25,405,466.53	21,249,089.19
Yellow Crane Tower Wine Industry Co., Ltd	Subsidiary	Production and sales of distilled spirit	400,000,000.00	801,720,368.65	529,953,868.24	429,495,365.21	66,529,234.06	50,054,993.63
Shanghai Gujing Jinhao Hotel Management Co., Ltd.	Subsidiary	Hotel management and house lease	54,000,000.00	205,362,160.86	81,853,741.49	37,879,862.42	6,957,747.80	3,584,728.10

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Subsidiaries obtained or disposed in the Reporting Period:

□ Applicable √ Not applicable

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VIII Structured Bodies Controlled by the Company

□ Applicable √ Not applicable

IX Performance Forecast for January-September 2018

Warning of possible loss or considerable YoY change in the accumulative net profit made during the period-beginning to the end ofthe next reporting period, as well as the reasons:

□ Applicable √ Not applicable

X Risks Facing the Company and Countermeasures

1. 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.2. Countermeasures(1) MarketingBuild Anhui market and accelerate Henan's market construction. Intensify strategic node market promotion, establish thecommanding 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 managementContinuously boost intelligent and green brewing process, implement quality upgrading action plan, enhance information, scientificand systematic management of product quality, lay a solid foundation for quality management. Make full use of the platform ofNational 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 toimplement automation and intellectualization.(3) Management innovationFocus 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 theenterprise. 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 managementsystem.(4) Human resourcesBuild the development channel and improve the incentive mechanism. Advocate a "united, tense, serious and lively" officeatmosphere, establish a sound multi-level talent cultivation system, and further improve the various talent assessment system andincentive 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".

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(5) Corporate cultural constructionThoroughly study and implement the spirit of the 19th National Congress of the Communist Party of China and Xi Jinping Thoughton Socialism with Chinese Characteristics for a New Era, and guide all the Party members to enhance their thought and actionconsciousness to maintain the core. Focus on the general keynote of "establishing, revitalizing and stabilizing the enterprise throughParty building", tighten the politics string, build the organization wall, main a strict standard in probity and ensure co-frequencyresonance 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.

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Part V Significant Events

I Annual and Extraordinary General Meeting Convened during the Reporting Period

1. General Meeting Convened during the Reporting Period

Meeting	Type	Investor participation ratio	Convened date	Disclosure date	Index to disclosed information
The 2017 Annual General Meeting	Annual General Meeting	58.79%	22 May 2018	23 May 2018	For details, see Announcement about Resolutions of 2017 Annual General Meeting of the Company disclosed on China Securities Journal, Shanghai Securities News, Ta Kung Pao (HK), and http://www.cninfo.com.cn on 23 May 2018.

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IV Engagement and Disengagement of CPAs Firm

Has the Interim financial report been audited?

□Yes √ No

This Interim Report is unaudited.

V Explanations Given by Board of Directors and Supervisory Committee Regarding

“Modified Auditor’s Report” Issued by CPAs Firm for the Reporting Period

□ Applicable √ Not applicable

VI Explanations Given by Board of Directors Regarding “Modified Auditor’s Report” Issued

for Last Year

□ Applicable √ Not applicable

VII Bankruptcy and Restructuring

□ Applicable √ Not applicable

No such cases in the Reporting Period.

VIII Legal Matters

Significant lawsuits or arbitrations:

□ Applicable √ Not applicable

No such cases in the Reporting Period.Other legal matters:

□ Applicable √ Not applicable

IX Punishments and Rectifications

□ Applicable √ Not applicable

No such cases in the Reporting Period.

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X Credit Conditions of the Company as well as its Controlling Shareholder and ActualController

□ Applicable √ Not applicable

XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures forEmployees

□ Applicable √ Not applicable

No such cases in the Reporting Period.

XII Significant Connected Transactions

1. Connected Transactions Relevant to Routine Operations

□ Applicable √ Not applicable

No such cases in the Reporting Period.

2. Connected Transactions Regarding Purchase or Sales of Assets or Equity Interests

□ Applicable √ Not applicable

No such cases in the Reporting Period.

3. Connected Transactions Regarding Joint Investments in Third Parties

□ Applicable √ Not applicable

No such cases in the Reporting Period.

4. Credits and Liabilities with Connected Parties

□ Applicable √ Not applicable

No such cases in the Reporting Period.

5. Other Significant Connected Transactions

□ Applicable √ Not applicable

No such cases in the Reporting Period.

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XIII. Particulars about the Non-operating Occupation of Funds by the ControllingShareholder and Other Connected Parties of the Company

□ Applicable √ Not applicable

The Company was not involved in the non-operating occupation of funds by the controlling shareholder and other connected partiesduring the Reporting Period.

XIV. 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. Other Significant Contracts

□ Applicable √ Not applicable

No such cases in the Reporting Period.

XV. Social Responsibilities

Indicate by tick mark whether the Company or any of its subsidiaries is a heavily polluting business identified by the environmental

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protection authorities of ChinaYes

Name of company or subsidiary company	Name of major pollutant and typical pollutant	Way of discharge	Quantity of discharge outlet	Distribution of discharge outlet	Discharge concentration	Pollutant discharge standard implemented	Total discharge	Permitted discharge	Excess discharge
Anbui Gujing Distillery Co., Ltd.	COD	Directly discharge	3	Gujing plant Zhangji plant Headquarter plant	75.81 mg/L	≤100 mg/L	106.06 t	155.05 t	Naught
Anbui Gujing Distillery Co., Ltd.	NH3-N	Directly discharge	3	Gujing plant Zhangji plant Headquarter plant	6.38mg/L	≤10 mg/L	8.93 t	15.53 t	Naught
Anbui Gujing Distillery Co., Ltd.	Smoke	Organized discharge	3	Gujing plant Zhangji plant Headquarter plant	37mg/m?	≤80mg/ m?	18 t	Naught	Naught
Anbui Gujing Distillery Co., Ltd.	Sulfur Dioxide	Organized discharge	3	Gujing plant Zhangji plant Headquarter plant	250mg/ m?	≤400mg/ m?	121.8 t	Naught	Naught
Anbui Gujing Distillery Co., Ltd.	Nitrogen oxide	Organized discharge	3	Gujing plant Zhangji plant Headquarter plant	273mg/ m?	≤400mg/ m?	132.8 t	Naught	Naught
Anhui Longrui Glass Co.,	Smoke	Organized discharge	3	No. 1 furnace No. 2	43mg/ m?	≤200mg/ m?	6.6 t	Naught	Naught

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Ltd				furnace No. 3 furnace
Anhui Longrui Glass Co., Ltd	Sulfur Dioxide	Organized discharge	3	No. 1 furnace No. 2 furnace No. 3 furnace	182mg/ m?	≤850mg/ m?	27.9 t	Naught	Naught
Anhui Longrui Glass Co., Ltd	Nitrogen oxide	Organized discharge	3	No. 1 furnace No. 2 furnace No. 3 furnace	335mg/ m?	≤700mg/ m?	51.1 t	Naught	Naught

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Other environment information that should be disclosedLongrui Glass Co., Ltd, as subsidiary of the Company, shares sewage treatment system with the Company to dispose household andindustrial waste water. Waste water will be treated by sewage treatment station of the Company before being discharged according torelevant discharge standard and the discharge process can meet requirements of GB27631-2011Discharge Standard of WaterPollutants for Fermentation Alcohol and Distilled Spirits Industry. Glass furnaces flue gas of Longrui Glass Co., Ltd will be dusted,desulfurized and denitrated according to relevant standard before being discharged and the discharge process can meet requirementsof GB9078-1996 Emission Standard of Air Pollutants for Industrial Kiln and Furnace.Other related environment protection informationNo

2. Targeted Measures Taken to Help People Lift Themselves Out of Poverty(1) Summary of Precision Poverty Alleviation for the Reporting Period

In accordance with the requirements of the State, Anhui Provincial Party Committee and Government, and Bozhou Municipal PartyCommittee and Government on precision poverty alleviation, the Company has established targeted support towards 176poorfamilies in Bali village, Wuma town, Qiaocheng District, Bozhou. The Company has established a complete and formal long-termmechanism for poverty alleviation targeted at those families. A supporting policy of one file for one family, one card for one family,

and one policy for one family has been implemented based on the principle of “organizations are responsible for villages and cadresare responsible for families”, and files have been created based on family members, major labor force, farmland and income structure

of poor families in each poor village. Since the implementation of poverty alleviation work, Bali Village in Wuma Town has allachieved poverty alleviation and has a fixed income.

(2) Subsequent Plan for Precision Poverty Alleviation

First, the Company will continue to engage in poverty alleviation and strengthen its efforts in targeted support towards poor families;second, the Company will continue to implement the supporting policy of the Provincial Party Committee and Government and theMunicipal Party Committee and Government, soundly advancing the poverty alleviation work in line with the relevant requirementsto carry out the social responsibility.

XVI. Other Significant Events

□ Applicable √ Not applicable

No such cases in the Reporting Period.

XVII. Significant Events of Subsidiaries

□ Applicable √ Not applicable

~ 28 ~

Part VI Share Changes and Shareholder Information

I. Share Changes

Unit: share

	Before		Increase/decrease (+/-)					After
	Number	Percentage (%)	New issues	Bonus shares	Bonus issue from profit	Other	Subtotal	Number	Percentage (%)
I. Restricted shares	0	0.00%						0	0.00%
II. Non-restricted shares	503,600,000	100.00%						503,600,000	100.00%
1 RMB ordinary shares	383,600,000	76.17%						383,600,000	76.17%
2 Domestically listed foreign shares	120,000,000	23.83%						120,000,000	23.83%
III. Total shares	503,600,000	100.00%						503,600,000	100.00%

~ 29 ~

III. Total Number of Shareholders and Their Shareholdings

Unit: share

Total number of ordinary shareholders at the period-end		18,171				Total number of preference shareholders with resumed voting rights at the period-end (if any) (see Note 8)			0
5% or greater ordinary shareholders or the top 10 ordinary shareholders
Name of shareholder	Nature of shareholder		Shareholding percentage (%)	Total shares held at the period-end	Increase/decrease during the Reporting Period		Number of restricted shares held	Number of non-restricted shares held	Pledged or frozen shares
									Status	Number
ANHUI GUJING GROUP COMPANY LIMITED	State-owned legal person		53.89%	271,404,022				271,404,022	Pledge	114,000,000
NORGES BANK	Foreign legal person		2.89%	14,554,480				14,554,480
GAOLING FUND,L.P.	Foreign legal person		2.47%	12,446,408				12,446,408
AGRICULTURAL BANK OF CHINA- E FUND CONSUMPTION SECTOR STOCK SECURITIES INVESTMENT FUND	Other		1.49%	7,485,278				7,485,278
CHINA INT'L CAPITAL CORP HONG KONG SECURITIES LTD	Foreign legal person		1.46%	7,372,976				7,372,976
UBS (LUX) EQUITY FUND - CHINA OPPORTUNITY (USD)	Foreign legal person		1.41%	7,096,361				7,096,361
CENTRAL HUIJIN ASSET MANAGEMENT	State-owned legal person		1.30%	6,543,600				6,543,600

~ 30 ~

CO., LTD.
GREENWOODS CHINA ALPHA MASTER FUND	Foreign legal person	0.98%	4,939,963			4,939,963
UBS (LUX) EQUITY FUND - GREATER CHINA (USD)	Foreign legal person	0.90%	4,541,338			4,541,338
3W GREATER CHINA FOCUS FUND	Foreign legal person	0.70%	3,529,479			3,529,479
Strategic investor or general corporation becoming a top ten shareholder due to placing of new shares (if any) (note 3)		N/A
Explanation on connected relationship or/and persons acting in concert among the above-mentioned shareholders		Among the shareholders above, the Company’s controlling shareholder—Anhui Gujing Group Company Limited—is not a connected party of other shareholders; nor are they parties acting in concert as defined in the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed Companies. As for the other shareholders, the Company does not know whether they are connected parties or whether they belong to parties acting in concert as defined in the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed Companies.
Shareholdings of the top ten non-restricted ordinary shareholders
Name of shareholder		Number of non-restricted shares held at the period-end					Type of shares
							Type		Number
ANHUI GUJING GROUP COMPANY LIMITED		271,404,022					RMB ordinary share		271,404,022
NORGES BANK		14,554,480					Domestically listed foreign share		14,554,480
GAOLING FUND,L.P.		12,446,408					Domestically listed foreign share		12,446,408
AGRICULTURAL BANK OF CHINA- E FUND CONSUMPTION SECTOR STOCK SECURITIES INVESTMENT FUND		7,485,278					RMB ordinary share		7,485,278
CHINA INT'L CAPITAL CORP HONG KONG SECURITIES LTD		7,372,976					Domestically listed foreign		7,372,976

~ 31 ~

		share
UBS (LUX) EQUITY FUND - CHINA OPPORTUNITY (USD)	7,096,361	Domestically listed foreign share	7,096,361
CENTRAL HUIJIN ASSET MANAGEMENT CO., LTD.	6,543,600	RMB ordinary share	6,543,600
GREENWOODS CHINA ALPHA MASTER FUND	4,939,963	Domestically listed foreign share	4,939,963
UBS (LUX) EQUITY FUND - GREATER CHINA (USD)	4,541,338	Domestically listed foreign share	4,541,338
3W GREATER CHINA FOCUS FUND	3,529,479	Domestically listed foreign share	3,529,479
Connected or acting-in-concert parties among the top ten non-restrictedly tradable share holders and between the top ten non-restrictedly tradable share holders and the top ten shareholders	Among the shareholders above, the Company’s controlling shareholder—Anhui Gujing Group Company Limited—is not a connected party of other shareholders; nor are they parties acting in concert as defined in the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed Companies. As for the other shareholders, the Company does not know whether they are connected parties or whether they belong to parties acting in concert as defined in the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed Companies.
Top ten ordinary shareholders conducting securities margin trading (if any) (see Note 4)	N/A

~ 32 ~

Part VII Preferred Shares

□ Applicable √ Not applicable

No preferred shares in the Reporting Period.

~ 33 ~

Part VIII Directors, Supervisors and Senior Management

I Changes in Shareholdings of Directors, Supervisors and Senior Management

□ Applicable √ Not applicable

There were no changes in shareholdings of directors, supervisors, and senior management in the Reporting Period. For details, seeAnnual Report of 2017.

II Changes in Directors, Supervisors and Executive Officers

□ Applicable √ Not applicable

~ 34 ~

Part IX Corporate Bonds

Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue before the approval date of thisReport or were due but could not be redeemed in full?No

~ 35 ~

Part X Financial Report

I. Auditor’s Report

Whether the interim report has been audited?

□Yes √ No

The interim report of the Company has not been audited.

II. Financial Statements

The unit of the financial statements attached: RMB

1. Consolidated Balance Sheet

Prepared by Anhui Gujing Distillery Company Limited

30 June 2018

Unit: RMB

Item	30 June 2018	31 December 2017
Current assets:
Monetary assets	967,785,957.41	1,484,088,626.40
Settlement reserve
Interbank loans granted
Financial assets at fair value through profit or loss	1,057,659.73	99,800.76
Derivative financial assets
Notes receivable	1,898,811,744.49	720,611,126.78
Accounts receivable	19,492,576.07	22,466,143.06
Prepayments	82,209,009.71	41,729,637.34
Premiums receivable
Reinsurance receivables
Receivable reinsurance contract reserve
Interest receivable	19,403,178.08	13,883,178.08
Dividends receivable
Other receivables	12,882,228.59	15,390,106.14

~ 36 ~

Financial assets purchased under resale agreements
Inventories	2,140,586,455.59	2,064,130,297.51
Assets classified as held for sale
Current portion of non-current assets
Other current assets	2,167,041,053.66	1,772,310,946.58
Total current assets	7,309,269,863.33	6,134,709,862.65
Non-current assets:
Loans and advances to customers
Available-for-sale financial assets	267,197,036.68	517,086,347.91
Held-to-maturity investments
Long-term receivables
Long-term equity investments
Investment property	5,055,069.67	5,343,777.33
Fixed assets	1,717,043,900.68	1,792,254,178.56
Construction in progress	76,076,053.22	54,496,798.56
Engineering materials
Proceeds from disposal of fixed assets
Productive living assets
Oil and gas assets
Intangible assets	747,362,393.05	691,381,442.67
R&D expense
Goodwill	478,283,495.29	478,283,495.29
Long-term prepaid expense	74,201,576.33	69,238,523.78
Deferred income tax assets	223,740,381.46	92,157,477.74
Other non-current assets	312,474,025.99	317,910,214.56
Total non-current assets	3,901,433,932.37	4,018,152,256.40
Total assets	11,210,703,795.70	10,152,862,119.05
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

~ 37 ~

through profit or loss
Derivative financial liabilities
Notes payable	188,073,094.09	200,750,000.00
Accounts payable	292,602,067.69	435,615,039.83
Advances from customers	803,222,097.92	503,083,108.13
Financial assets sold under repurchase agreements
Handling charges and commissions payable
Payroll payable	249,960,170.72	372,374,014.37
Taxes payable	413,938,710.44	420,984,845.45
Interest payable
Dividends payable
Other payables	1,103,986,706.45	1,032,543,553.34
Reinsurance payables
Insurance contract reserve
Payables for acting trading of securities
Payables for underwriting of securities
Liabilities directly associated with assets classified as held for sale
Current portion of non-current liabilities
Other current liabilities	804,829,022.62	182,846,942.10
Total current liabilities	3,856,611,869.93	3,148,197,503.22
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	41,140,119.46	43,706,503.22
Deferred income tax liabilities	105,037,408.26	119,779,105.90

~ 38 ~

Other non-current liabilities
Total non-current liabilities	146,177,527.72	163,485,609.12
Total liabilities	4,002,789,397.65	3,311,683,112.34
Owners’ equity:
Share capital	503,600,000.00	503,600,000.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves	1,295,405,592.25	1,295,405,592.25
Less: Treasury shares
Other comprehensive income	8,418,551.86	53,520,827.44
Specific reserve
Surplus reserves	256,902,260.27	256,902,260.27
General reserve
Retained profits	4,738,472,036.06	4,349,649,698.42
Total equity attributable to owners of the Company as the parent	6,802,798,440.44	6,459,078,378.38
Non-controlling interests	405,115,957.61	382,100,628.33
Total owners’ equity	7,207,914,398.05	6,841,179,006.71
Total liabilities and owners’ equity	11,210,703,795.70	10,152,862,119.05

Item	30 June 2018	31 December 2017
Current assets:
Monetary assets	772,284,862.52	1,276,262,109.02
Financial assets at fair value through profit or loss	1,057,659.73	99,800.76
Derivative financial assets
Notes receivable	1,707,225,175.49	674,521,654.40
Accounts receivable	7,614,296.08	8,509,918.03
Prepayments	24,857,999.07	8,534,600.82

~ 39 ~

Interest receivable
Dividends receivable
Other receivables	103,848,091.62	130,357,778.75
Inventories	1,888,382,381.02	1,818,358,884.18
Assets classified as held for sale
Current portion of non-current assets
Other current assets	1,525,688,078.30	1,554,870,774.98
Total current assets	6,030,958,543.83	5,471,515,520.94
Non-current assets:
Available-for-sale financial assets	266,691,636.68	516,530,547.91
Held-to-maturity investments
Long-term receivables
Long-term equity investments	1,155,089,408.32	1,155,089,408.32
Investment property	25,599,187.91	26,409,050.95
Fixed assets	1,248,446,627.92	1,303,119,011.66
Construction in progress	62,902,724.31	44,673,219.38
Engineering materials
Proceeds from disposal of fixed assets
Productive living assets
Oil and gas assets
Intangible assets	191,482,188.30	185,868,178.71
R&D expense
Goodwill
Long-term prepaid expense	52,071,942.48	58,563,409.89
Deferred income tax assets	45,869,242.45	37,996,747.93
Other non-current assets	12,474,026.00	12,474,026.00
Total non-current assets	3,060,626,984.37	3,340,723,600.75
Total assets	9,091,585,528.20	8,812,239,121.69
Current liabilities:
Short-term borrowings
Financial liabilities at fair value through profit or loss
Derivative financial liabilities
Notes payable	46,282,864.09	0.00

~ 40 ~

Accounts payable	198,568,181.33	347,757,180.53
Advances from customers	2,231,969,430.14	1,680,678,175.37
Payroll payable	89,036,488.26	110,435,403.45
Taxes payable	130,156,087.08	262,884,211.13
Interest payable
Dividends payable
Other payables	229,014,721.93	173,250,790.29
Liabilities directly associated with assets classified as held for sale
Current portion of non-current liabilities
Other current liabilities	69,116,753.96	18,296,415.85
Total current liabilities	2,994,144,526.79	2,593,302,176.62
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	37,612,568.27	39,976,048.28
Deferred income tax liabilities	6,095,966.89	19,792,209.68
Other non-current liabilities
Total non-current liabilities	43,708,535.16	59,768,257.96
Total liabilities	3,037,853,061.95	2,653,070,434.58
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	8,390,260.80	53,454,736.38

~ 41 ~

Specific reserve
Surplus reserves	251,800,000.00	251,800,000.00
Retained profits	4,042,780,098.10	4,103,151,843.38
Total owners’ equity	6,053,732,466.25	6,159,168,687.11
Total liabilities and owners’ equity	9,091,585,528.20	8,812,239,121.69

Item	H1 2018	H1 2017
1. Revenue	4,783,083,895.33	3,670,127,764.59
Including: Operating revenue	4,783,083,895.33	3,670,127,764.59
Interest income
Premium income
Handling charge and commission income
2. Operating costs and expenses	3,630,830,299.47	3,012,871,713.47
Including: Cost of sales	1,042,675,468.24	913,179,198.91
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	729,467,173.53	606,131,354.51
Selling expense	1,597,300,315.17	1,249,688,761.13
Administrative expense	280,500,337.72	263,421,695.43
Finance costs	-20,284,906.55	-17,264,642.65
Asset impairment loss	1,171,911.36	-2,284,653.86
Add: Gain on changes in fair value (“-” for loss)	236,707.77	-119,656.35
Investment income (“-” for loss)	68,775,019.95	81,017,484.47
Including: Share of profit or loss of joint ventures and associates

~ 42 ~

Foreign exchange gain (“-” for loss)
Asset disposal income (“-” for loss)	154,437.81	487,886.67
Other income	4,487,036.05	23,716,926.49
3. Operating profit (“-” for loss)	1,225,906,797.44	762,358,692.40
Add: Non-operating income	14,758,797.76	14,961,789.67
Less: Non-operating expense	4,438,013.04	2,189,022.01
4. Profit before taxation (“-” for loss)	1,236,227,582.16	775,131,460.06
Less: Income tax expense	320,789,915.24	203,016,533.12
5. Net profit (“-” for net loss)	915,437,666.92	572,114,926.94
5.1 Net profit from continuing operations (“-” for net loss)	915,437,666.92	572,114,926.94
5.2 Net profit from discontinued operations (“-” for net loss)
Net profit attributable to owners of the Company as the parent	892,422,337.64	548,889,891.65
Net profit attributable to non-controlling interests	23,015,329.28	23,225,035.29
6. Other comprehensive income, net of tax	-45,102,275.58	-19,896,472.08
Attributable to owners of the Company as the parent	-45,102,275.58	-19,896,472.08
6.1 Items that will not be reclassified to profit or loss
6.1.1 Changes in net liabilities or assets caused by remeasurements 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 reclassified to profit or loss	-45,102,275.58	-19,896,472.08
6.2.1 Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method
6.2.2 Gain/Loss on changes in fair value of available-for-sale financial assets	-45,102,275.58	-19,896,472.08
6.2.3 Gain/Loss arising from reclassification of held-to-maturity

~ 43 ~

investments to available-for-sale financial assets
6.2.4 Effective gain/loss on cash flow hedges
6.2.5 Differences arising from translation of foreign currency-denominated financial statements
6.2.6 Other
Attributable to non-controlling interests
7. Total comprehensive income	870,335,391.34	552,218,454.86
Attributable to owners of the Company as the parent	847,320,062.06	528,993,419.57
Attributable to non-controlling interests	23,015,329.28	23,225,035.29
8. Earnings per share
8.1 Basic earnings per share	1.77	1.09
8.2 Diluted earnings per share	1.77	1.09

Item	H1 2018	H1 2017
1. Operating revenue	2,373,509,719.96	2,032,050,832.48
Less: Cost of sales	962,446,727.32	808,157,556.90
Taxes and surtaxes	612,880,006.38	521,153,270.11
Selling expense	90,185,702.99	119,601,430.10
Administrative expense	190,821,389.57	180,104,417.79
Finance costs	-17,205,534.12	-8,358,356.49
Asset impairment loss	1,440,847.72	-1,943,865.48
Add: Gain on changes in fair value (“-” for loss)	236,707.77	-119,656.35
Investment income (“-” for loss)	61,302,268.33	74,940,152.97
Including: Share of profit or loss of joint ventures and associates
Asset disposal income (“-” for loss)	0.00	117,524.82

~ 44 ~

Other income	2,363,480.01	20,551,597.62
2. Operating profit (“-” for loss)	596,843,036.21	508,825,998.61
Add: Non-operating income	12,278,301.09	2,446,478.83
Less: Non-operating expense	3,316,344.52	798,234.93
3. Profit before taxation (“-” for loss)	605,804,992.78	510,474,242.51
Less: Income tax expense	162,576,738.06	136,935,504.91
4. Net profit (“-” for net loss)	443,228,254.72	373,538,737.60
4.1 Net profit from continuing operations (“-” for net loss)	443,228,254.72	373,538,737.60
4.2 Net profit from discontinued operations (“-” for net loss)
5. Other comprehensive income, net of tax	-45,064,475.58	-19,923,772.08
5.1 Items that will not be reclassified to profit or loss
5.1.1 Changes in net liabilities or assets caused by remeasurements 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 reclassified to profit or loss	-45,064,475.58	-19,923,772.08
5.2.1 Share of other comprehensive income of investees that will be reclassified into profit or loss under equity method
5.2.2 Gain/Loss on changes in fair value of available-for-sale financial assets	-45,064,475.58	-19,923,772.08
5.2.3 Gain/Loss arising from reclassification of held-to-maturity investments to available-for-sale financial assets
5.2.4 Effective gain/loss on cash flow hedges
5.2.5 Differences arising from translation of foreign currency-denominated financial statements

~ 45 ~

5.2.6 Other
6. Total comprehensive income	398,163,779.14	353,614,965.52
7. Earnings per share
7.1 Basic earnings per share	0.88	0.74
7.2 Diluted earnings per share	0.88	0.74

Item	H1 2018	H1 2017
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services	4,168,785,414.04	3,555,497,838.84
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	1,526,552.28	14,260,319.10
Cash generated from other operating activities	578,221,173.31	163,681,861.39
Subtotal of cash generated from operating activities	4,748,533,139.63	3,733,440,019.33
Payments for commodities and services	805,659,265.35	519,208,246.66

~ 46 ~

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 commissions paid
Policy dividends paid
Cash paid to and for employees	777,363,928.00	664,176,293.14
Taxes paid	1,875,377,764.19	1,695,407,866.03
Cash used in other operating activities	621,185,290.48	429,282,389.42
Subtotal of cash used in operating activities	4,079,586,248.02	3,308,074,795.25
Net cash generated from/used in operating activities	668,946,891.61	425,365,224.08
2. Cash flows from investing activities:
Proceeds from disinvestments	1,050,984,415.12	2,122,314,171.98
Investment income	64,643,822.92	79,384,831.47
Net proceeds from disposal of fixed assets, intangible assets and other long-lived assets	170,207.20	412,563.04
Net proceeds from disposal of subsidiaries or other business units
Cash generated from other investing activities	0.00	1,646,000.00
Subtotal of cash generated from investing activities	1,115,798,445.24	2,203,757,566.49
Payments for acquisition of fixed assets, intangible assets and other long-lived assets	160,906,209.61	74,306,031.33
Payments for investments	1,221,541,796.23	2,096,875,360.87
Net increase in pledged loans granted
Net payments for acquisition of subsidiaries and other business units
Cash used in other investing activities
Subtotal of cash used in investing activities	1,382,448,005.84	2,171,181,392.20
Net cash generated from/used in investing activities	-266,649,560.60	32,576,174.29

~ 47 ~

3. Cash flows from financing activities:
Capital contributions received
Including: Capital contributions by non-controlling interests to subsidiaries
Increase in borrowings obtained
Net proceeds from issuance of bonds
Cash generated from other financing activities
Subtotal of cash generated from financing activities
Repayment of borrowings
Payments for interest and dividends	503,600,000.00	302,160,000.00
Including: Dividends paid by subsidiaries to non-controlling interests
Cash used in other financing activities
Subtotal of cash used in financing activities	503,600,000.00	302,160,000.00
Net cash generated from/used in financing activities	-503,600,000.00	-302,160,000.00
4. Effect of foreign exchange rate changes on cash and cash equivalents
5. Net increase in cash and cash equivalents	-101,302,668.99	155,781,398.37
Add: Cash and cash equivalents, beginning of the period	1,024,088,626.40	527,849,026.07
6. Cash and cash equivalents, end of the period	922,785,957.41	683,630,424.44

Item	H1 2018	H1 2017
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services	1,823,943,040.35	2,364,605,355.19
Tax rebates	0.00	13,013,817.25
Cash generated from other operating activities	637,265,577.14	79,147,317.52
Subtotal of cash generated from operating activities	2,461,208,617.49	2,456,766,489.96

~ 48 ~

Payments for commodities and services	621,024,637.00	451,629,264.08
Cash paid to and for employees	299,547,110.96	280,790,376.47
Taxes paid	1,185,933,500.57	1,125,948,368.08
Cash used in other operating activities	122,550,902.77	114,239,605.20
Subtotal of cash used in operating activities	2,229,056,151.30	1,972,607,613.83
Net cash generated from/used in operating activities	232,152,466.19	484,158,876.13
2. Cash flows from investing activities:
Proceeds from disinvestments	860,984,415.12	2,069,314,171.98
Investment income	62,684,376.34	78,831,554.77
Net proceeds from disposal of fixed assets, intangible assets and other long-lived assets
Net proceeds from disposal of subsidiaries or other business units
Cash generated from other investing activities	0.00	1,646,000.00
Subtotal of cash generated from investing activities	923,668,791.46	2,149,791,726.75
Payments for acquisition of fixed assets, intangible assets and other long-lived assets	84,656,707.92	59,402,496.47
Payments for investments	621,541,796.23	1,969,875,360.87
Net payments for acquisition of subsidiaries and other business units
Cash used in other investing activities
Subtotal of cash used in investing activities	706,198,504.15	2,029,277,857.34
Net cash generated from/used in investing activities	217,470,287.31	120,513,869.41
3. Cash flows from financing activities:
Capital contributions received
Increase in borrowings obtained
Net proceeds from issuance of bonds
Cash generated from other financing activities
Subtotal of cash generated from financing activities

~ 49 ~

Repayment of borrowings
Payments for interest and dividends	503,600,000.00	302,160,000.00
Cash used in other financing activities
Sub-total of cash used in financing activities	503,600,000.00	302,160,000.00
Net cash generated from/used in financing activities	-503,600,000.00	-302,160,000.00
4. Effect of foreign exchange rate changes on cash and cash equivalents
5. Net increase in cash and cash equivalents	-53,977,246.50	302,512,745.54
Add: Cash and cash equivalents, beginning of the period	826,262,109.02	225,792,686.26
6. Cash and cash equivalents, end of the period	772,284,862.52	528,305,431.80

~ 50 ~

7. Consolidated Statements of Changes in Owners’ Equity

H1 2018

Unit: RMB

Item

H1 2018

Equity attributable to owners of the Company as the parent

Non-controlling interests

Total owners’ equity

Share capital

Other equity instruments

Capital reserves

Less: Treasury shares

Other comprehensive income

Specific reserve

Surplus reserves

General reserve

Retained profits

Preferred shares

Perpetual bonds

Other

1. Balances as of end of prior year

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

Add: Adjustments for changed accounting policies

Adjustments for corrections of previous errors

Adjustments for business combinations involving enterprises under common control

Other adjustments

2. Balances as of beginning of the

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

~ 51 ~

year
3. Increase/ decrease in the period (“-” for decrease)							-45,102,275.58				388,822,337.64	23,015,329.28	366,735,391.34
3.1 Total comprehensive income							-45,102,275.58				892,422,337.64	23,015,329.28	870,335,391.34
3.2 Capital increased and reduced by owners
3.2.1 Ordinary shares increased by shareholders
3.2.2 Capital increased by holders of other equity instruments
3.2.3 Share-based payments included in owners’ equity
3.2.4 Other
3.3 Profit distribution											-503,600,000.00		-503,600,000.00
3.3.1 Appropriation to

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surplus reserves

3.3.2 Appropriation to general reserve

3.3.3 Appropriation to owners (or shareholders)

-503,600,000.00

-503,600,000.00

3.3.4 Other

3.4 Carryforwards 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

~ 53 ~

Withdrawn for the period
3.5.2 Used during the period
3.6 Other
4. Balances as of end of the period	503,600,000.00				1,295,405,592.25		8,418,551.86		256,902,260.27		4,738,472,036.06	405,115,957.61	7,207,914,398.05

Item

H1 2017

Equity attributable to owners of the Company as the parent

Non-controlling interests

Total owners’ equity

Share capital

Other equity instruments

Capital reserves

Less: Treasury shares

Other comprehensive income

Specific reserve

Surplus reserves

General reserve

Retained profits

Preferred shares

Perpetual bonds

Other

1. Balances as of end of prior year

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

Add: Adjustments for changed accounting policies

Adjustments for corrections of previous errors

Adjustments for business combinations

~ 54 ~

involving enterprises under common control
Other adjustments
2. Balances as of beginning of the year	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
3. Increase/ decrease in the period (“-” for decrease)							17,376,349.49				846,580,644.93	36,491,092.53	900,448,086.95
3.1 Total comprehensive income							17,376,349.49				1,148,740,644.93	36,491,092.53	1,202,608,086.95
3.2 Capital increased and reduced by owners
3.2.1 Ordinary shares increased by shareholders
3.2.2 Capital increased by holders of other equity instruments
3.2.3 Share-based payments included

~ 55 ~

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 general reserve

3.3.3 Appropriation to owners (or shareholders)

-302,160,000.00

-302,160,000.00

3.3.4 Other

3.4 Carryforwards 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

~ 56 ~

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 the period	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

Item	H1 2018
	Share capital	Other equity instruments			Capital reserves	Less: Treasury shares	Other comprehensive income	Specific reserve	Surplus reserves	Retained profits	Total owners’ equity
		Preferred shares	Perpetual bonds	Other
1. Balances as of end of prior year	503,600,000.00				1,247,162,107.35		53,454,736.38		251,800,000.00	4,103,151,843.38	6,159,168,687.11
Add: Adjustments for changed accounting

~ 57 ~

policies
Adjustments for corrections of previous errors
Other adjustments
2. Balances as of beginning of the year	503,600,000.00				1,247,162,107.35		53,454,736.38		251,800,000.00	4,103,151,843.38	6,159,168,687.11
3. Increase/ decrease in the period (“-” for decrease)							-45,064,475.58			-60,371,745.28	-105,436,220.86
3.1 Total comprehensive income							-45,064,475.58			443,228,254.72	398,163,779.14
3.2 Capital increased and reduced by owners
3.2.1 Ordinary shares increased by shareholders
3.2.2 Capital increased by holders of other equity instruments
3.2.3 Share-based payments included in owners’ equity
3.2.4 Other
3.3 Profit distribution										-503,600,000.00	-503,600,000.00
3.3.1 Appropriation to surplus reserves
3.3.2 Appropriation to owners (or										-503,600,000.00	-503,600,000.00

~ 58 ~

shareholders)
3.3.3 Other
3.4 Carryforwards 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
4. Balances as of end of the period	503,600,000.00				1,247,162,107.35		8,390,260.80		251,800,000.00	4,042,780,098.10	6,053,732,466.25

Item	H1 2017
	Share capital	Other equity instruments	Capital reserves	Less:	Other	Specific	Surplus	Retained profits	Total owners’

~ 59 ~

		Preferred shares	Perpetual bonds	Other		Treasury shares	comprehensive income	reserve	reserves		equity
1. Balances as of end of prior year	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
Add: Adjustments for changed accounting policies
Adjustments for corrections of previous errors
Other adjustments
2. Balances as of beginning of the year	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
3. Increase/ decrease in the period (“-” for decrease)							16,139,180.74			795,948,489.75	812,087,670.49
3.1 Total comprehensive income							16,139,180.74			1,098,108,489.75	1,114,247,670.49
3.2 Capital increased and reduced by owners
3.2.1 Ordinary shares increased by shareholders
3.2.2 Capital increased by holders of other equity instruments
3.2.3 Share-based payments included in owners’ equity

~ 60 ~

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 shareholders)										-302,160,000.00	-302,160,000.00
3.3.3 Other
3.4 Carryforwards 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
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

~ 61 ~

~ 62 ~

Anhui Gujing Distillery Company LimitedNotes to Financial Statements for H1 2018

(Currency Unit Is RMB Unless Otherwise Stated)

I. Company Profile

Authorized by document WGZGZ (1996) No.053 of Anhui Administrative Bureau of State-owned Property,

Anhui Gujing Distillery Company Limited (“the Company”) was established as a limited liability company with

net assets of RMB377,167,700 and state-owned shares of 155,000,000 shares and considered Anhui GujingCompany as the only promoter. The registration place was Bozhou Anhui China. The Company was established

on 5 March 1996 by document of WZM (1996) No.42 of Anhui People’s Government. The Company set up

plenary session on 28 May 1996 and registered in Anhui on 30 May 1996 with business license of 14897271-1.

The Company has issued 60,000,000 domestic listed foreign shares (“B” shares) in June 1996 and 20,000,000ordinary shares (“A shares) on September 1996, ordinary shares are listed in national and par value is RMB1.00

per share. Those A shares and B shares are listed in Shenzhen Stock exchange.Headquarter of the Company is located in Gujing Bozhou Anhui. The Company and its subsidiaries (the Company)specialize in producing and selling white spirit.Registered capitals of the Company were RMB235,000,000 with stocks of 235,000,000, of which 155,000,000shares were issued in China, B shares of 60,000,000 shares and A shares of 20,000,000 shares. The book value ofthe stocks of the Company was of RMB1 per share.On 29 May 2006, a shareholder meeting was held to discuss and approval a program of equity division of A share,the program was implement in June 2006. After implementation, all shares are outstanding share, which include147,000,000 shares with restrict condition on disposal, represent 62.55% of total equity, and 88,000,000 shareswithout restrict condition on disposal, represent 37.45% of total equity.The Company issued <Announcement of release restriction shares by Anhui Gujing Distillery Company Limited>on 27 June 2007, 11,750,000 outstanding shares with restrict condition on disposal are listed in stock market on 29June 2007. Up to that day, outstanding shares with restrict condition on disposal are 135,250,000, representing57.55% of total equity, the share without restrict condition are 99,750,000, representing 42.45% of total equity.The Company issued <Announcement of release restriction shares by Anhui Gujing Distillery Company Limited>on 17 July 2008, 11,750,000 outstanding shares with restrict condition on disposal are listed in stock market on 18July 2008. Up to that day, outstanding shares with restrict condition on disposal are 123,500,000, representing52.55% of total equity, the share without restrict condition are 111,500,000, representing 47.45% of total equity.The Company issued <Announcement of release restriction shares by Anhui Gujing Distillery Company Limited>on 24 July 2009, 123,500,000 outstanding shares with restrict condition on disposal are listed in stock market on

29 July 2009. Up to that day, the Company’s all shares are all tradable.

~ 63 ~

Approved by the CSRC Document Zheng-Jian-Xu-Ke [2011] No. 943, the Company privately offered 16,800,000ordinary shares (A-shares) to special investors on 15 July 2011, with a par value of RMB1 and the price ofRMB75.00 per share, raising RMB1,260,000,000.00 in total, the net amount of raised funds stood atRMB1,227,499,450.27 after deducting RMB32,500,549.73 of various issuance expenses. Certified PublicAccountants verified the raised capital upon its arrival and issued the Capital Verification Report Reanda-Yan-Zi[2011] No. 1065. After private issuance, the share capital of the Company increased to RMB251.8 million.Pursuant to the Resolution of The 2011 Annual General Meeting, the Company that considered 251,800,000 shares

as base number on 31 December 2011 transferred capital reserve into share capital at a rate of “10 shares for per 10shares” accounting for 251,800,000 shares and implemented in the year of 2012. Upon the transference, the

registered capitals increased to RMB503,600,000.In April 2016, the company entered a strategic cooperation agreement with Wuhan Tianlong Yellow Crane TowerCo., Ltd., creating a new age for cooperation related to Chinese famous spirit. As the only Chinese famous spiritin Hubei Province, it features unique mellow taste, elegant appearance and tempting smell. Moreover, YellowCrane Tower White Spirit won the Golden Prize respectively in 1984 and 1989 National White Spirit Appraisal

Competition as one of the business card representing Hubei Province’s economy. At present, the company has

established three major bases in Wuhan, Xianning and Suizhou, of which, Xianning Base has integrated

modernism, ecologism and high technology as a new spirit-making base, known as “the most beautiful chateau inChina”. In 2016, Yellow Crane Tower Spirit won “2015 Top 10 Star Product in Hubei Province”.

By 30 June 2018, the Company issued 503,600,000 shares.The company is registered at Gujing Town, Bozhou City, Anhui Province.The approved business of the Company including procurement of grain (operating with business license),manufacture of distilled spirits, wine distilling facilities, packaging material, bottles, alcohol, grease (limited tobyproducts from wine manufacture), and research and development of high-tech, biotechnology development,agricultural and sideline products deep processing, as well as sale of self-manufacturing products.The Company as the parent and the final company as the parent is Anhui Gujing Company Co., Ltd in China.Financial statement of the Company will be released on 27 August 2018 by the Board of Directors.

On 30 June 2018, there were 23 subsidiaries included in the consolidation scope. Please refer to Note VIII “Rightsand Interests in other Entities” for details.

II. Basis for the Preparation of Financial Statements

1. Basis for the PreparationWith the going-concern assumption as the basis and based on transactions and other events that actually occurred,the Company prepared financial statements in accordance with the ASBE-Basic Standard (No. 33 issued decreedby Ministry of Finance and No. 76 revised decreed by Ministry of Finance), the 41 specific standards ofAccounting Standards for Business Enterprises issued by Ministry of Finance of the PRC on 15 February 2006 and

~ 64 ~

revised thereafter, Application Guidance of Accounting Standard for Business Enterprises, Interpretation of

Accounting Standards for Business Enterprises and other regulations(hereinafter referred to as “the AccountingStandards for Business Enterprises”, “China Accounting Standards” or “CAS”), Rules for Preparation Conventionof Disclosure of Public Offering Companies No.15 – General Regulations for Financial Reporting (revised in 2014)

by China Securities Regulatory Commission.In line with relevant rules of ASBE, financial accounting of the Company is based on accrual system. Exceptfinancial instruments and instrument real estate, the financial statement is calculated on the basis of history costs.Available-for-sale non-current assets are calculated by the lower one of fair value deducting estimated costs andoriginal costs meeting the standard of available-for-sale. If assets confront impairment, it shall be withdrawnprovision for impairment in line with relevant stipulations.2. Continuous OperationThe management of the Company executed the assessment on the continuation ability and had not discovered anyevent or situation caused significant suspicion on the continuation ability. Thus, the financial statements compiledbased on the hypothesis of the continuation.

III. Declaration of Compliance with the Enterprise Accounting Standards

The financial statements of the Company have been prepared in accordance with the Enterprise AccountingStandards to present truly and completely the financial position of the Company on June 30, 2018, operatingresults, cash flow from January to June in 2018 and other relevant information. The financial statement of the

Company met the relevant disclosure requirements of financial statement and notes of “Compiling stipulations ofpublic information disclosure No.15---general rules of financial statement” (revised in 2014).

IV. Main Accounting Policies and Accounting Estimates

The company and various subsidiaries are mainly specialized in manufacturing and selling white spirit. Accordingto the actual production & operation and related ASBE provisions, this company and various subsidiaries haveformulated some specific accounting policies and estimations related to various transactions and matters including

revenue recognition. Please refer to Note IV. 23 “Revenues” for details. For any description of major accountingjudgment and estimations made by the company’s management, please refer to Note IV. 28 “Major AccountingJudgment and Estimations” for details.

1. Accounting YearAccounting year is divided to annual term and medium term. Accounting medium refers to reporting periodshorter than a complete accounting period. The Company employs a period of calendar days from January 1

st

toDecember 31

st

each year as accounting year.2. Operating CycleNormal operating cycle refers to the period from the Company purchases the assets for processing to realize thecash or cash equivalents. The Company regards 12 months as an operating cycle and regards which as the

~ 65 ~

partition criterion of the mobility of the assets and liabilities.3. Bookkeeping Base CurrencyRenminbi is the dominant currency used in the economic circumstances where the Company and its domesticsubsidiaries are involved. Therefore, the Company and its domestic subsidiaries use Renminbi as theirbookkeeping base currency. And the Company adopted Renminbi as the bookkeeping base currency whenpreparing the financial statements for the reporting period.4. Accounting Treatment Methods for Business Combinations Under the Same Control and those not Underthe Same Control

The term “business combinations” refers to a transaction or event bringing together two or more separate

enterprises into one reporting entity. Business combinations are classified into the business combinations underthe same control and the business combinations not under the same control.(1) Accounting treatment of the business combination that is under the same controlA business combination involving enterprises under common control is a business combination in which all of thecombining enterprises are ultimately controlled by the same party or parties both before and after the businesscombination, and that control is not transitory. The assets and liabilities obtained are measured at the carryingamounts as recorded by the enterprise being combined at the combination date. The difference between thecarrying amount of the net assets obtained and the carrying amount of consideration paid for the combination (orthe total face value of shares issued) is adjusted to share premium in the capital reserve. If the balance of sharepremium is insufficient, any excess is adjusted to retained earnings. Other direct expenses occur when theCompany conducting business combinations is recognized in current profit and loss. The combination date is thedate on which one combining enterprise effectively obtains control of the other combining enterprises.Those assets and liabilities obtained by the Company during the business combination should be recognized in thecarrying value of the equity of the merged party on the merger date. The difference between the carrying amountof the net assets obtained and carrying amount of the merger consideration (or total par value of issued shares)paid shall be adjusted to capital reserve. If the capital reserve is not sufficient to absorb the difference, any excessshall be adjusted against retained earnings.Direct costs of a business combination shall be reckoned into current gains and losses.(2) Accounting treatment of the business combination that is not under the same controlA business combination involving entities not under common control is a business combination in which all of thecombining entities are not ultimately controlled by the same party or parties both before and after the businesscombination. In business combination not under the same control, acquirer refers to party obtaining control ofother combining corporations in the date of acquisition and acquiree refers to corporation participating incombination. Date of acquire refers to the date the acquirer actually obtaining control of the acquiree.

~ 66 ~

As for combination not under the same control, costs of combination includes assets that acquirers occur in thedate of combination in order to obtain control of acqirees, loans, fair value of issued equity securities,intermediary costs such as audit, legal services and evaluation consultation, and other administrative fees occurredin the reporting period. As for trading costs that acquirers as combination consideration issue equity securities ordebt securities, it shall be reckoned into initial accounts of equity securities or debt securities. As for businesscombination realized by several exchanges and trades, in the combined financial statement of the Company, theCompany shall recalculate the stock right obtained by acquirees before the date of acquisition in line with fairvalue of the stock right in the date of acquisition. When the Company acts as the combination party, the cost of abusiness combination paid by the acquirer is the aggregate of the fair value at the acquisition date of assets given(including share equity of the acquiree held before the combination date), liabilities incurred or assumed, and

equity securities issued by the acquirer. Any excess of the cost of a business combination over the acquirer’sinterest in the fair value of the acquiree’s identifiable net assets is recognized as goodwill, while any excess of theacquirer’s interest in the fair value of the acquiree’s identifiable net assets over the cost of a business combination

is recognized in profit or loss. The cost of equity securities or liability securities as on combination considerationoffering is recognized in initial recording capital on equity securities or liability securities. Other direct expensesoccur when the Company conducting business combinations is recognized in current profit and loss. Thedifference between the fair value and the carrying amount of the assets given is recognized in profit or loss. The

Company, at the acquisition date, recognized the acquiree’s identifiable asset, liabilities and contingent liabilities

at their fair value at that date. The acquisition date is the date on which the acquirer effectively obtains control ofthe acquiree.

As for deductible temporary difference of acquirers obtained by acquirers which can’t be confirmed due to failure

of meeting the confirmation requirements of deferred income tax assets, if there is newly information proving theexistence of relevant situation in the date of acquisition in a year after the acquisition date and financial benefits ofdeductible temporary difference of acquirers in the date of acquisition are estimated to be realized, deferredincome tax assets shall be confirmed. At the same time, goodwill shall be decreased. If goodwill is insufficient,the difference shall be reckoned into current gains and losses; except the above circumstance, reliable deferredincome tax assets relevant to the Company shall be reckoned into current gains and losses.For a business combination not involving enterprise under common control, which achieved in stages that

involves multiple exchange transactions, according to “The notice of the Ministry of Finance on the issuance ofAccounting Standards Interpretation No. 5” (CaiKuai [2012] No. 19) and Article 51 of Accounting Standards forEnterprises No. 33 – Consolidated Financial Statements on the “package deal” criterion (see Note IV. 5 (2)), tojudge 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 Note IV. 13 “long-terminvestment” accounting treatment, if it does not belong to the “package deal” to distinguish the individual

~ 67 ~

financial statements and the consolidated financial statements related to the accounting treatment:

In the individual financial statements, the sum of the book value and new investment cost of the Company holdsin the acquiree before the acquiring date shall be considered as initial cost of the investment. Other relatedcomprehensive gains in relation to the equity interests that the Company holds in the acquiree before the acquiringdate shall be treated on the same basis as the acquiree directly disposes the related assets or liabilities whendisposing the investment (that is, except for the corresponding share in the changes in the net liabilities or assets

with a defined benefit plan measured at the equity method arising from the acquiree’s re-measurement, the others

shall be transferred into current investment gains).

In the Company’s consolidated financial statements, as for the equity interests that the Company holds in the

acquiree before the acquiring date, they shall be re-measured according to their fair values at the acquiring date;the positive difference between their fair values and carrying amounts shall be recorded into the investment gainsfor the period including the acquiring date. Other related comprehensive gains in relation to the equity intereststhat the Company holds in the acquiree before the acquiring date shall be treated on the same basis as the acquireedirectly disposes the related assets or liabilities when disposing the investment (that is, except for thecorresponding share in the changes in the net liabilities or assets with a defined benefit plan measured at the

equity method arising from the acquiree’s re-measurement, the others shall be transferred into current investment

gains on the acquiring date).5. Methods for Preparing Consolidated Financial Statements(1) Principle for determining the consolidation scope

The consolidation scope for financial statements is determined on the basis of control. The term “control” is the

power of the Company upon an investee, with which it can take part in relevant activities of the investee to obtainvariable returns and is able to influence the amount of returns. The consolidated financial statements comprise thefinancial statements of the Company and its subsidiaries. A subsidiary is an enterprise or entity controlled by theCompany.The Company would reassess it if the involved relevant factors of above control definitions changed, which wascaused by changes of relevant facts and situations.(2) Methods for preparing the consolidated financial statementsThe Company begins to include subsidiaries into consolidation scope from the date obtaining net assets ofsubsidiaries and actual control of production and operation and terminates to include subsidiaries intoconsolidation scope from the date losing actual control of subsidiaries. As for the disposal of subsidiaries,operating results and cash flow are included in consolidated income statement and consolidated statement of cashflow before the date of the disposal; as for current disposal of subsidiaries, opening balance of the consolidatedbalance sheet shall not be adjusted. As for subsidiaries increased in the combination not under the same control,operating results and cash flow after the date of the acquisition are included in consolidated income statement and

~ 68 ~

consolidated statement of cash flow, in addition, opening balance of the consolidated balance sheet shall not beadjusted. As for subsidiaries increased in the combination under the same control and combined parties underacquisition, operating results and cash flow from the beginning of combination to the date of combination areincluded in consolidated income statement and consolidated statement of cash flow, in addition, opening balanceof the consolidated balance sheet shall be adjusted.Where a subsidiary was acquired during the reporting period, through a business combination involving entitiesunder common control, the financial statements of the subsidiary are included in the consolidated financialstatements as if the combination had occurred at the date that common control was established. Therefore theopening balances and the comparative figures of the consolidated financial statements are restated. In the

preparation of the consolidated financial statements, the subsidiary’s assets, liabilities and results of operations are

included in the consolidated balance sheet based on their carrying amounts; while results of operations areincluded in the consolidated income statement, from the date that common control was established.All the significant inter-company balances, trading and unrealized profits shall be offset when preparing theconsolidated financial statement.If current loss shoulder by minority shareholders of a subsidy over the proportion enjoyed by minority

shareholders in a subsidy at owners’ equity at period-begin, its balance still offset minority shareholders’ equity.

When the accounting period or accounting policies of a subsidiary are different from those of the Company, the

Company makes necessary adjustments to the financial statements of the subsidiary based on the Company’s own

accounting period or accounting policies. Intra-Company balances and transactions, and any unrealized profit orloss arising from intra-Company transactions, are eliminated in preparing the consolidated financial statements.Unrealized losses resulting from intra-Company transactions are eliminated in the same way as unrealized gainsbut only to the extent that there is no evidence of impairment.When losing control right of subsidiaries because of the disposal of stock right investment or other reasons, theCompany shall recalculate residual stock right in accordance to the fair value in the date of losing control right. Asfor remaining equity investment after disposal, the Company will re-account it according to the fair value at thedate the control was lost. Any profit or loss occurred shall be recorded into the investment income during the

period of losing control right. Then follow-up measurement of remaining equity shall be arranged in line with “No.2—Long-term Equity Investment” or “No. 22—Affirmation and Calculation of Financial Instrument”. Moredetails please refer to Note IV, 13 “Long-term Equity Investment” or Note IV, 9 “Financial Instrument”.

The company through multiple transactions step deals with disposal of the subsidiary's equity investment until theloss of control; need to distinguish between equity until the disposal of a subsidiary's loss of control over whetherthe transaction is package deal. Terms of the transaction disposition of equity investment in a subsidiary, subject tothe following conditions and the economic impact of one or more of cases, usually indicates that several

transactions should be accounted for as a package deal: ① these transactions are considered simultaneously, or inthe case of mutual influence made, ② these transactions as a whole in order to achieve a complete business results;

~ 69 ~

③ the occurrence of a transaction depends on occurs at least one other transaction ; ④ a transaction look alone is

not economical, but when considered together with other transaction is economical. If they do not belong to the

package deal, each of them separately, as the case of a transaction in accordance with “without losing control overthe disposal of a subsidiary part of long-term equity investments” (see Note IV. 13. (2) ④)) and “due to thedisposal of certain equity investments or other reasons lost control of a subsidiary of the original” (see previous

paragraph) principles applicable accounting treatment. Until the disposal of the equity investment loss of controlof a subsidiary of the transactions belonging to the package deal, the transaction will be used as a disposal of asubsidiary and the loss of control of the transaction. However, before losing control of the price of each disposalentitled to share in the net assets of the subsidiary's investment corresponding to the difference between thedisposals, recognized in the consolidated financial statements as other comprehensive income, loss of control overthe transferred together with the loss of control or loss in the period.6. Classification of Joint Arrangements and Accounting Treatment of Joint OperationsA joint arrangement refers to an arrangement jointly controlled by two participants or above. The Companyclassifies joint arrangements into joint operations and joint ventures according to its rights and duties in the jointarrangements. A joint operation refers to a joint arrangement where the Company enjoys assets and has to bearliabilities related to the arrangement. A joint venture refers to a joint arrangement where the Company is onlyentitled to the net assets of the arrangement.

The Company’s investments in joint ventures are measured at the equity method according to the accountingpolicies mentioned in Note IV. 13 (2) ② “Long-term equity investments measured at the equity method”.

For a joint operation, the Company, as a joint operator, recognizes the assets and liabilities that it holds and bearsin the joint operation, and recognizes the jointly-held assets and jointly-borne liabilities according to the

Company’s stake in the joint operation; recognizes the income from sale of the Company’s share in the output ofthe joint operation; recognizes the income from sale of the joint operation’s outputs according to the Company’s

stake in it; and recognizes the expense solely incurred to the Company and the expense incurred to the joint

operation according to the Company’s stake in it.

When the Company, as a joint operator, transfers or sells assets (the assets not constituting business, the samebelow) to the joint operation, or purchases assets from the joint operation, before the assets are sold to a third party,the Company only recognizes the share of the other joint operators in the gains and losses arising from the sale.Where impairment occurs to the assets as prescribed in <The Accounting Standard No. 8 for Business

Enterprises—Asset Impairment>, the Company shall fully recognizes the loss for a transfer or sale of assets to a

joint operation; and shall recognize the loss according to its stake in the joint operation for a purchase of assetsfrom the joint operation.7. Recognition Standard for Cash and Cash EquivalentsCash and cash equivalents of the Company include cash on hand, ready usable deposits and investments having

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short holding term (normally will be due within three months from the day of purchase), with strong liquidity andeasy to be exchanged into certain amount of cash that can be measured reliably and have low risks of change.8. Foreign Currency Businesses and Translation of Foreign Currency Financial Statements(1) Accounting treatments for translation of foreign currency transactionsThe foreign currency transactions are recorded, on initial recognition in the functional currency, by applying [thespot exchange rate on the date of the transaction / an exchange rate that approximates the actual spot exchangerate on the date of transaction]. The exchange of foreign currency and transactions related to the foreign exchangeare translated at the spot exchange rate.(2) Accounting treatments for translation of foreign currency monetary items and non-monetary itemsAt the balance sheet date, foreign currency monetary items are translated using the spot exchange rate at 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, ② hedging accounting, the

exchange difference related to hedging instruments for the purpose of net oversea operating investment isrecorded 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 rateprevailing on the transaction date, and the amount denominated in the functional currency is not changed.Non-monetary foreign currency items measured at fair value are translated at the spot exchange rate prevailing atthe date when the fair values are determined. The exchange difference thus resulted are recognized in profit or lossfor the current period or as capital reserve.9. Financial InstrumentsThe Company recognizes a financial asset or liability when it becomes a party of the relevant financial instrumentcontract. Financial assets and liabilities are measured at fair value in initial recognition. As for the financial assetsand liabilities measured at fair value of which changes are recorded into current gains and losses, the relevantdealing expenses are directly recorded into gains and losses; and the dealing expenses on other kinds of financialassets and liabilities are included in the amounts initially recognized.(1) Determination of the fair value of main financial assets and financial liabilitiesFair value refers to the price that a market participant shall receive for selling an asset or shall pay for transferringa liability in an orderly transaction on the measurement date. As for the financial assets or financial liabilities forwhich there is an active market, the quoted prices in the active market shall be used to determine the fair values

thereof. The quoted prices in the active market refers to the prices available from stock exchange, broker’s

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agencies, guilds, pricing organization and etc., which represent the actual trading price under equal transaction.Where there is no active market for a financial instrument, the enterprise concerned shall adopt value appraisaltechniques, including the prices adopted by the parties, who are familiar with the condition, in the latest markettransaction upon their own free will, the current fair value obtained by referring to other financial instruments ofthe same essential nature, the cash flow capitalization method and the option pricing model, etc., to determine itsfair value.(2) Classification, recognition and measurement of financial assetsThe purchase and sale of financial assets under the normal ways shall be recognized and stopped to be recognizedrespectively at the price of transaction date. Financial assets shall be classified into the following four categorieswhen they are initially recognized: (a) the financial assets which are measured at their fair values and the variationof which is recorded into the profits and losses of the current period, (b) the investments which will be held totheir maturity; (c) loans and the account receivables; and (d) financial assets available for sale.

① The financial assets which are measured at their fair values and the variation of which is recorded into the

profits and losses of the current periodIncluding transactional financial assets and the financial assets which are designated to be measured at their fairvalue when they are initially recognized and of which the variation is recorded into the profits and losses of thecurrent period;

The financial assets meeting any of the following requirements shall be classified as transactional financial assets：

A. The purpose to acquire the said financial assets is mainly for selling them in the near future; B. Forming a partof the identifiable combination of financial instruments which are managed in a centralized way and for whichthere are objective evidences proving that the enterprise may manage the combination by way of short-term profitmaking in the near future; C. Being a derivative instrument, excluding the designated derivative instrumentswhich are effective hedging instruments, or derivative instruments to financial guarantee contracts, and thederivative instruments which are connected with the equity instrument investments for which there is no quotedprice in the active market, whose fair value cannot be reliably measured, and which shall be settled by deliveringthe said equity instruments.The financial assets meeting any of the following requirements shall be designated as financial assets which aremeasured at their fair values and the variation of which is recorded into the profits and losses of the current periodfor initial recognition: A. the designation can eliminate or significantly reduce the difference of relevant gains andlosses between recognition and measurement causing from different bases for measurement of financial assets; B.The official written documents for risk management and investment strategies of the enterprise have clearly statedthat it shall, manage, evaluate and report to important management personnel based on the fair value, about thefinancial assets Company or the Company of financial assets & liabilities which the financial assets are belong to.For the financial assets which are measured at their fair values and the variation of which is recorded into the

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profits and losses of the current period shall continue to be measured by fair value, gains and losses of change infair value, dividends and interest related with these financial assets should be recorded into gains and losses ofcurrent period.

② Held-to-maturity investment

The term "held-to-maturity investment" refers to a non-derivative financial asset with a fixed date of maturity, afixed or determinable amount of repo price and which the enterprise holds for a definite purpose or the enterpriseis able to hold until its maturity.For the held-to-maturity investment adopting actual interest rate method, which is measured at thepost-amortization costs, the profits and losses that arise when such financial assets or financial liabilities areterminated from recognition, or are impaired or amortized, shall be recorded into the profits and losses of thecurrent period.The actual interest rate method refers to the method by which the post-amortization costs and the interest incomesof different installments or interest expenses are calculated in light of the actual interest rates of the financialassets or financial liabilities (including a set of financial assets or financial liabilities). The actual interest raterefers to the interest rate adopted to cash the future cash flow of a financial asset or financial liability within thepredicted term of existence or within a shorter applicable term into the current carrying amount of the financialasset or financial liability.When the actual interest rate is determined, the future cash flow shall be predicted on the basis of taking intoaccount all the contractual provisions concerning the financial asset or financial liability (the future credit lossesshall not be taken into account).and also the various fee charges, trading expenses, premiums or reduced values,etc., which are paid or collected by the parties to a financial asset or financial liability contract and which form apart of the actual interest rate.

③ Loans and the accounts receivables

Loans and the accounts receivables refer to non-derivative financial assets, which there is no quotation in theactive market, with fixed recovery cost or recognizable. Financial assets that are defined as loans and the accountsreceivables by the Company including notes receivables, accounts receivables, interest receivable, dividendsreceivable and other receivables etc..Loans and the accounts receivables are made follow-up measurement on the basis of post-amortization costsemploying the effective interest method. Gains or loss arising from the termination recognition, impairmentoccurs or amortization shall be recorded into the profits and losses of the current period.

④ Assets available for sales

Assets available for sales including non-derivative financial asset that has been assigned as assets available forsales on the initial recognition and financial assets excluded those measured at fair value and of which the

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variation into profits and losses of the current period, they are some financial assets, loans and accountsreceivables, held-to-maturity investment.The cost at the period-end of the available-for-sale liabilities instruments should be confirmed according to itsamortized cost method, that is the initially recognized amount which deduct the principal that had been repaid, toplus or minus the accumulative amortization amount formed by the amortization between the difference of theinitially recognized amount and the amount on the due date that adopted the actual interest rate method, and at thesame time deduct the amount after the impairment loss happened. The cost at the period-end of theavailable-for-sale liabilities instruments is its initial cost.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 be carried forward when the said

financial assets stopped recognition, then it shall be recorded into the profits and losses of the current period. But,the equity instrument investment which neither have quotation in the active market nor its fair value could not bereliable measured, as well as the derivative financial assets that concern with the equity instruments and should besettled through handing over to its equity instruments, should take the follow-up measurement according to thecost.Interest receive during the holding of assets available for sales and cash dividends with distribution announcementby invested companies, it shall be recorded into the profits and losses of the current period.(3) Impairment of financial assetsThe Company assesses at the balance sheet date the carrying amount of every financial asset except for thefinancial assets that measured by the fair value. If there is objective evidence indicating a financial asset may beimpaired, a provision is provided for the impairment.The Company carries out a separate impairment test for every financial asset which is individually significant. Asfor a financial asset which is individually insignificant, an impairment test is carried out separately or in thefinancial asset Company with similar credit risk. Where the financial asset (individually significant orinsignificant) is found not impaired after the separate impairment test, it is included in the financial assetCompany with similar credit risk and tested again on the Company basis. Where the impairment loss is recognizedfor an individual financial asset, it is not included in the financial asset Company with similar credit risk for animpairment test.

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 presentvalue of future cash flow. The difference is recorded as impairment loss. If there is objective evidence to indicatethe recovery of value of financial assets after impairment, and it is related with subsequent event after recognitionof loss, the impairment loss recorded originally can be reversed. The carrying value of financial assets after

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impairment loss reversed shall not exceed the amortized cost of the financial assets without provisions ofimpairment loss on the reserving date.

② Impairment of available-for-sale financial assets

When it judged that the decrease of fair value of the available-for-sale equity instrument investment is serious andnot temporarily after comprehensive considering relevant factors, it reflected that the available-for-sale equity

instrument investment occurred impairment. Of which, the “serious decline” refers to the accumulative declinerange of the fair value over 20%; while the “non-temporary decline” refers to the consecutive decline time of the

fair value over 12 months.Where an available-for-sale financial asset is impaired, the accumulative losses arising from the decrease of thefair value of the capital reserve which is directly included are transferred out and recorded in the profits and lossesfor the current period. The accumulative losses transferred out are the balance obtained from the initially obtainedcost of the said financial asset after deducting the principals as taken back, the amortized amount, the current fairvalue and the impairment loss originally recorded in the profits and losses.Where the impairment loss has been recognized for an available-for-sale financial asset, if, within the accountingperiods thereafter, there is any objective evidence proving that the value of the said financial asset has beenrestored and the restoration is objectively related to the events that occur after the impairment loss was recognized,the originally recognized impairment loss is reversed. The impairment losses on the available-for-sale equityinstrument investments are reversed and recognized as other comprehensive incomes, and the impairment losseson the available-for-sale liability instruments are reversed and recorded in the profits and losses for the currentperiod.The impairment loss incurred to an equity instrument investment for which there is no quoted price in the activemarket and whose fair value cannot be reliably measured, or incurred to a derivative financial asset which isconnected with the said equity instrument investment and which must be settled by delivering the said equityinvestment, is not reversed.(4) Recognition and measurement of financial asset transfers

Where a financial asset satisfies any of the following requirements, the recognition of it is terminated: ① Thecontractual rights for collecting the cash flow of the said financial asset are terminated; ② The said financial asset

has been transferred and nearly all of the risks and rewards related to the ownership of the financial asset to the

transferee; or ③ The said financial asset has been transferred. And the Company has ceased its control on the said

financial asset though it neither transfers nor retains nearly all of the risks and rewards related to the ownership ofthe financial asset.Where the Company neither transfers nor retains nearly all of the risks and rewards related to the ownership of afinancial asset, and it does not cease its control on the said financial asset, it recognizes the relevant financial asset

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and liability accordingly according to the extent of its continuous involvement in the transferred financial asset.The term "continuous involvement in the transferred financial asset" refers to the risk level that the enterprisefaces resulting from the change of the value of the financial asset.If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the difference betweenthe amounts of the following 2 items is recorded in the profits and losses of the current period: (1) The book valueof the transferred financial asset; and (2) The sum of consideration received from the transfer, and theaccumulative amount of the changes of the fair value originally recorded in other comprehensive incomes.If the transfer of partial financial asset satisfies the conditions to stop the recognition, the book value of thetransferred financial asset is apportioned between the portion whose recognition has been stopped and the portionwhose recognition has not been stopped according to their respective relative fair value, and the differencebetween the amounts of the following 2 items is included into the profits and losses of the current period: (1) Thesummation of the consideration received from the transfer and the portion of the accumulative amount of changesin the fair value originally recorded in other comprehensive incomes which corresponds to the portion whoserecognition has been stopped; and (2) The amortized carrying amounts of the aforesaid amounts.In respect of the assets using recourse to sell or using endorsement to transfer, the Company needs to determinewhether almost all of the risks and rewards of the financial asset ownership are transferred. If almost all of therisks and rewards of the financial asset ownership had been transferred to the transferee, derecognize the financialassets. For almost all of the risks and rewards of the financial asset ownership retained, do not end to recognizethe financial assets. For which neither transfer or retain almost all of the risks and rewards of the financial assetownership, continuously judge whether the Company retain the control of the assets, and conduct accountingtreatment according to the principle of mentioned in the previous paragraphs.(5) Classification and measurement of financial liabilitiesIn the initial recognition, financial liabilities are divided into the financial liabilities measured at fair values andwhose changes are recorded in current gains and losses and other financial liabilities. Financial liabilities areinitially recognized at their fair values. As for a financial liability measured at fair value and whose changes arerecorded in current gains and losses, the relevant trading expense is directly recorded in the profits and losses forthe current period. As for other financial liabilities, the relevant trading expenses are recorded in the initiallyrecognized amounts.

① Financial liabilities measured at fair values and whose changes are recorded in current gains and losses

Such financial liabilities are divided into transactional financial liabilities and financial liabilities designated to bemeasured at fair values and whose changes are recorded in current gains and losses in the initial recognition underthe same conditions where such financial assets are divided into transactional financial assets and financial assetsdesignated to be measured at fair values and whose changes are recorded in current gains and losses in the initialrecognition.

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Financial liabilities measured at fair values and whose changes are recorded in current gains and losses aresubsequently measured at their fair values. Gains or losses arising from the fair value changes, as well as thedividend and interest expenses in relation to the said financial liabilities, are recorded in the profits and losses forthe current period.

② Other financial liabilities

As for a derivative financial liability connected to an equity instrument for which there is not quoted price in anactive market and whose fair value cannot be reliably measured and which must be settled by delivering the equityinstrument, it is subsequently measured on the basis of costs. Other financial liabilities are subsequently measuredaccording to the amortized cost using the actual interest rate method. Gains or losses arising from de-recognitionor amortization of the said financial liabilities is recorded in the profits and losses for the current period.

③ Financial guarantee contract and loan commitment

For the financial guarantee contracts which are not designated as a financial liability measured at its fair value andthe variation thereof is recorded into the profits and losses of the current period, or the loan commitment which isnot designated as a financial liability measured at its fair value and the variation thereof is recorded into the gainsand losses that will be loaned lower than the market interest rate, which shall be initially recognized by fair value,and the subsequent measurement shall be made after they are initially recognized according to the higher one of

the following: a. the amount as determined according to the Accounting Standards for Enterprises No. 13 –

Contingencies; b. the surplus after accumulative amortization as determined according to the principles of theAccounting Standards for Enterprises No. 14 - Revenues is subtracted from the initially recognized amount.(6) De-recognition of financial liabilitiesOnly when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of thefinancial liability be terminated in all or partly. Where the Company (debtor) enters into an agreement with acreditor so as to substitute the existing financial liabilities by way of any new financial liability, and if thecontractual stipulations regarding the new financial liability is substantially different from that regarding theexisting financial liability, it terminates the recognition of the existing financial liability, and at the same timerecognizes the new financial liability.Where the recognition of a financial liability is totally or partially terminated, the enterprise concerned shallinclude into the profits and losses of the current period for the gap between the book value which has beenterminated from recognition and the considerations it has paid (including the non-cash assets it has transferred outand the new financial liabilities it has assumed)(7) Derivatives and embedded derivativesDerivative financial instruments include derivatives are initially measured at fair value at the date when thederivative contracts are entered into and are substantially re-measured at fair value. The resulting gain and loss is

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recognized in profit or loss.An embedded derivative is separated from the hybrid instrument, where the hybrid instrument is not designated asa financial asset or financial liability at fair value though 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 economiccharacteristics and risks of the host contract; and (b) a separate instrument with the same terms as the embeddedderivative would meet the definition of a derivative. If the Company is unable to measure the embedded derivativeseparately either at acquisition or at a subsequent balance sheet date, it designates the entire hybrid instrument as afinancial asset or financial liability at fair value through profit or loss.(8) Offsetting financial assets and financial liabilitiesWhen the Company has a legal right that is currently enforceable to set off the recognized financial assets andfinancial liabilities, and intends either to settle on a net basis, or to realize the financial asset and settle thefinancial liability simultaneously, a financial asset and a financial liability shall be offset and the net amount ispresented in the balance sheet. Except for the above circumstances, financial assets and financial liabilities shallbe presented separately in the balance sheet and shall not be offset.(9) Equity instrumentsAn equity instrument is any contract that evidences a residual interest in the assets of the Company after deductingall of its liabilities. The Company issues (including refinancing), re-purchases, sells or written-offs the equityinstrument as the disposing of the changes of the equity. The Company not recognized the changes of the fairvalue of the equity instrument. The transaction expenses related to the equity transaction would be deducted fromthe 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.10. ReceivablesThe receivables by the Company include account receivables, and other receivables.(1) Criteria for recognition of bad debts:

The Company carries out an inspection on the balance sheet date. Where there is any objective evidence provingthat the receivables have been impaired, an impairment provision shall be made:

1) A serious financial difficulty occurs to the issuer or debtor;2) The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the payment ofinterests or the principal, etc.;3) The debtor will probably become bankrupt or carry out other financial reorganizations;4) Other objective evidences showing the impairment of the receivables.

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(2) Method for bad debts provision

① Provisions of bad debts in account receivables that is individually significant.

The Company recognized the accounts receivables which amounted to more than 2 million as the accountreceivables that is individual significant.For an account receivable that is individually significant, the asset is individually assessed for impairment, theimpairment loss is recognized at the difference between the present value of future cash flow less the carryingamount, and provision is made accordingly.

② Provisions of bad debts in account receivables that individually insignificant item with similar credit risk

characteristics that have significant risk:

A. Evidence of credit risk characteristicsWhether the financial asset is individually significant or not individually significant, it is included in a group offinancial assets with similar credit risk characteristics and collectively assessed for impairment. Such credit riskreflects the repayment of all due amount under the contract, and is related to the estimation of future cash flowexpected to be derived from the assets.Evidence of portfolios:

Item	Basis
Age portfolios	Age
Connected party portfolios	Companies within the combination scope of the Company

Item	Provision
Age portfolios	Age analysis method
Connected party portfolios	Don’t withdraw the bad debts provision unless the related-party lost the repaying capability

Category	Proportion for accounts receivable (%)	Proportion for other receivable (%)
Within 1 year (including 1 year, similarly hereinafter)
Including: [within 6 months]	1.00	1.00

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Category	Proportion for accounts receivable (%)	Proportion for other receivable (%)
[7 to 12 months]	5.00	5.00
1 to 2 years	10.00	10.00
2 to 3 years	50.00	50.00
Over 3 years	100.00	100.00

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items, but for large quantity and low-unit-price inventories, falling price provision of inventories shall be madebased on the category of inventories; for those inventories that relating to the same product line that have similarpurposes or end uses, are produced and marketed in the same geographical area, and cannot be practicablyevaluated separately from other items in that product line, their falling price provision of inventories shall beconsolidated.After withdrawing the depreciation reserves for inventories, if the factors, which cause any write-down of theinventories, have disappeared, the amount of write-down shall be recovered and reversed from the originalamount of depreciation reserve for inventories. The reversed amount shall be included in the profits and losses ofthe current period.(4) Inventory system for inventories is perpetual inventory system(5) Amortization method of the low-value consumption goods and packing articlesLow-value consumption goods: one-off amortization method; Packing articles: one-off amortization method12. Assets Held for Sale and Disposal GroupThe company classifies a non-current asset or disposal group as held for sale if its carrying amount will berecovered principally through a sale transaction rather than through continuing use. For this to be the case, thefollowing conditions shall be met: a) the asset (or disposal group) must be available for immediate sale in itspresent condition subject to terms that are usual and customary for sales of such assets or disposal groups; b) thecompany has made the resolution on the disposal plan and must be committed to a plan to sell the asset (ordisposal group); c) the sale is expected to be completed within one year from the date of classification. A disposalgroup is a group of assets to be disposed of, by sale or otherwise, together as a group in a single transaction, andliabilities directly associated with those assets that will be transferred in the transaction. The group shall includegoodwill 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 carryingamount and fair value less costs to sell on initial recognition and subsequent remeasuremnt on the balance sheetdate. An impairment loss is recognised when the carrying amount is higher than the fair value less costs to sell,and allowance for impairment is recognised accordingly. For the disposal group, the recognised impairment losson assets is offset against the carrying amount of the goodwill in the disposal group, and then reduced inproportion of the book value of the non-current assets applicable to "Accounting Standard for BusinessEnterprises No. 42 - Non-current Assets Held for Sale, Disposal Group and Discontinued Operations (hereinafterreferred to as "held for sale accounting principle") measurement requirements. The company shall recognise again during the period for any subsequent increase in fair value less costs to sell of an asset, but not in excess ofthe cumulative impairment loss that has been recognised after the reclassification to non-current assets held for

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sale. The book value of assets in the disposal group is increased proportionately according to the proportion of thebook value of each non-current asset except for goodwill. Impairment loss recognised before the reclassificationto 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 is not subject todepreciation or amortization. The interest and other expenses on liabilities held in the disposal group for sale arecontinuously recognised.Non-current assets or disposal group that no longer meet the conditions of non-current asset held for sell shall beremoved from the category, and shall be measured at the lower of the following: (1) The carrying amount beforeclassification as held for sale after adjustment of depreciation, amortization or impairment that should berecognised if it is not classified as non-current assets held for sell; (2) recoverable amount.13. Long-term Equity InvestmentsThe long-term equity investments of this part refer to the long-term equity investments that the Company hascontrol, joint control or significant influence over the investees. The long-term equity investment that theCompany does not have control, joint control or significant influence over the investees, should be recognized asavailable-for-sale financial assets or be measured by fair value with the changes should be included in thefinancial assets accounting of the current gains and losses, and please refer the details of the accounting policies to

Notes IV. 9 “Financial instrument”.

Joint control, refers to the control jointly owned according to the relevant agreement on an arrangement by theCompany and the relevant activities of the arrangement should be decided only after the participants which sharethe control right make consensus. Significant influence refers to the power of the Company which could anticipatein the finance and the operation polices of the investees, but could not control or jointly control the formulation ofthe policies with the other parties.(1) Recognition of investment costsAs for long-term equity investments acquired by enterprise merger, if the merger is under the same control, the

share of the book value of the owner’s equity of the merged enterprise, on the date of merger, is regarded as the

initial cost of the long-term equity investment. The difference between the initial cost of the long-term equityinvestment and the payment in cash, non-cash assets transferred as well as the book value of the debts borne bythe merging party shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retainedearnings shall be adjusted. If the consideration of the merging enterprise is that it issues equity securities, it shall,on the date of merger, regard the share of the book value of the shareholder's equity of the merged enterprise onthe consolidated financial statement of the ultimate control party as the initial cost of the long-term equityinvestment. The total face value of the stocks issued shall be regarded as the capital stock, while the differencebetween the initial cost of the long-term equity investment and total face value of the shares issued shall offset

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against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted.The equities of the combined party which respectively acquired through multiple transaction under the samecontrol that ultimately form into the combination of the enterprises under the same control, should be disposedaccording whether belongs to package deal; if belongs to package deal, each transaction would be executedaccounting treatment by the Company as a transaction of acquiring the control right. If not belongs to packagedeal, it shall, on the date of merger, regard the enjoyed share of the book value of the shareholder's equity of themerged enterprise on the consolidated financial statement of the ultimate control party as the initial cost of thelong-term equity investment, and as for the difference between the initial investment cost of the long-term equityinvestment and sum of the book value of the long-term equity investment before the combination and the bookvalue of the consideration of the new payment that further required on the combination date, should adjust thecapital reserve; if the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. The equityinvestment held before the combination date which adopted the equity method for accounting, or the othercomprehensive income confirmed for the available-for-sale financial assets, should not have any accountingdisposal for the moment.For the long-term investment required from the business combination under different control, the initialinvestment cost regarded as long-term equity investment on the purchasing date according to the combination cost,the combination costs shall be the sum of the fair values of the assets paid, the liabilities incurred or assumed andthe equity securities issued by the Company. The equities of the acquirees which respectively acquired throughmultiple transaction that ultimately form into the combination of the enterprises under the different control, shouldbe disposed according whether belongs to package deal; if belongs to package deal, each transaction would beexecuted accounting treatment by the Company as a transaction of acquiring the control right. If not belongs topackage deal, the sum of the book value of the original held equity investment of the acquirees and the newlyadded investment cost should be regarded as the initial investment cost of the long-term equity investment thatchanged to be accounted by cost method. If the original held equity is calculated by cost method, the otherrelevant comprehensive income would not have any accounting disposal for the moment. If the original heldequity investment is the financial assets available for sale, its difference between the fair value and the book valueas well as the accumulative changes of the fair value that include in the other comprehensive income, shouldtransfer into the current gains and losses.The commission fees for audit, law services, assessment and consultancy services and other relevant expensesoccurred in the business combination by the combining party or the purchase party, shall be recorded into currentprofits and losses upon their occurrence; the transaction expense from the issuance of equity securities or bondssecurities which are as consideration for combination by the combining party, should be recorded as the initialamount of equity securities and bonds securities.Besides the long-term equity investments formed by business combination, the other long-term equity investments

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shall be initially measured by cost, the cost is fixed in accordance with the ways of gaining, such as actual cashpayment paid by the Company, the fair value of equity securities issued by the Company, the agreed value of theinvestment contract or agreement, the fair value or original carrying amount of exchanged assets fromnon-monetary assets exchange transaction, the fair value of the long-term equity investments, etc. The expenses,taxes and other necessary expenditures directly related with gaining the long-term equity investments shall also berecorded into investment cost. The long-term equity investment cost for those could execute significant influenceson the investees because of appending the investment or could execute joint control but not form as control,should be as the sum of the fair value of the original held equity investment and the newly added investment cost

recognized according to the No. 22 of Accounting Standards for Business Enterprises—Recognition and

Measurement of Financial Instrument.(2) Subsequent measurement and recognition of gains or lossesA long-term equity investment where the investing enterprise has joint control (except for which forms intocommon operators) or significant influence over the investors should be measured by equity method. Moreover,long-term equity investment adopting the cost method in the financial statements, and which the Company hascontrol on invested entity.

① Long-term equity investment measured by adopting cost method

The price of a long-term equity investment measured by adopting the cost method shall be included at its initialinvestment cost and append as well as withdraw the cost of investing and adjusting the long-term equityinvestment. The return on investment at current period shall be recognized in accordance with the cash dividendor profit announced to distribute by the invested entity, except the announced but not distributed cash dividend orprofit included in the actual payment or consideration upon gaining the investment.

②Long-term equity investment measured by adopting equity methodIf the initial cost of a long-term equity investment is more than the Company’s attributable share of the fair valueof the invested entity’s identifiable net assets for the investment, the initial cost of the long-term equity investmentmay not be adjusted. If the initial cost of a long-term equity investment is less than the Company’s attributableshare of the fair value of the invested entity’s identifiable net assets for the investment, the difference shall be

included in the current profits and losses and the cost of the long-term equity investment shall be adjustedsimultaneously.When measured by adopting equity method, respectively recognize investment income and other comprehensiveincome according to the net gains and losses as well as the portion of other comprehensive income which shouldbe enjoyed or be shared, and at the same time adjust the book value of the long-term equity investment;corresponding reduce the book value of the long-term equity investment according to profits which be declared todistribute by the investees or the portion of the calculation of cash dividends which should be enjoyed; for the

other changes except for the net gains and losses, other comprehensive income and the owners’ equity except for

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the profits distribution of the investees, should adjust the book value of the long-term equity investment as well asinclude in the capital reserve. The investing enterprise shall, on the ground of the fair value of all identifiableassets of the invested entity when it obtains the investment, recognize the attributable share of the net profits andlosses of the invested entity after it adjusts the net profits of the invested entity. If the accounting policies adoptedby the investees is not accord with that of the Company, should be adjusted according to the accounting policies ofthe Company and the financial statement of the investees during the accounting period and according which torecognize the investment income as well as other comprehensive income. For the transaction happened betweenthe Company and associated enterprises as well as joint ventures, if the assets launched or sold not form intobusiness, the portion of the unrealized gains and losses of the internal transaction, which belongs to the Companyaccording to the calculation of the enjoyed proportion, should recognize the investment gains and losses on thebasis. But the losses of the unrealized internal transaction happened between the Company and the investeeswhich belongs to the impairment losses of the transferred assets, should not be neutralized. The assets launched bythe Company to the associated enterprises or the joint ventures if could form into business, the long-term equityinvestment without control right which acquired by the investors, should regard the fair value of the launchedbusiness as the initial investment cost the newly added long-term equity investment, and for the differencebetween the initial investment cost and the book value of the launched business, should be included into thecurrent gains and losses with full amount. The assets sold by the Company to the associated enterprises or thejoint ventures if could form into business, the difference between the acquired consideration and the book value ofthe business should be included in the current gains and losses with full amount. The assets purchased by theCompany to the associated enterprises or the joint ventures if could form into business, should be accounting

disposed according to the regulations of No. 20 of ASBE—Business Combination, and should be recognized gains

or losses related to the transaction with full amount.The Company shall recognize the net losses of the invested enterprise until the book value of the long-term equityinvestment and other long-term rights and interests which substantially form the net investment made to theinvested entity are reduced to zero. However, if the Company has the obligation to undertake extra losses, it shallbe recognized as the estimated liabilities in accordance with the estimated duties and then recorded intoinvestment losses at current period. If the invested entity realizes any net profits later, the Company shall, after theamount of its attributable share of profits offsets against its attributable share of the un-recognized losses, resumerecognizing its attributable share of profits.For the long-term equity investment held by the Company before the first execution of the new accountingcriterion of the associated enterprises and joint ventures, if there is debit difference of the equity investmentrelated to the investment, should be included in the current gains and losses according to the amount of thestraight-line amortization during the original remained period.

③ Acquiring shares of minority interest

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In the preparation for the financial statements, the balance existed between the long-term equity investmentincreased by acquiring shares of minority interest and the attributable net assets on the subsidiary calculated bythe increased shares held since the purchase date (or combination date), the capital reserves shall be adjusted, ifthe capital reserves are not sufficient to offset, the retained profits shall be adjusted.

④ Disposal of long-term equity investment

In the preparation of financial statements, the Company disposed part of the long-term equity investment onsubsidiaries without losing its controlling right on them, the balance between the disposed price and attributable

net assets of subsidiaries by disposing the long-term equity investment shall be recorded into owners’ equity;

where the Company losses the controlling right by disposing part of long-term equity investment on such

subsidiaries, it shall treated in accordance with the relevant accounting policies in Note IV. 5 (2) “Method onpreparation of combined financial statements”.

For other ways on disposal of long-term equity investment, the balance between the book value of the disposedequity and its actual payment gained shall be recorded into current profits and losses.For the long-term equity investment measured by adopting equity method, if the remained equity after disposal

still adopts the equity method for measurement, the other comprehensive income originally recorded into owners’

equity should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly disposed

by the investees according to the corresponding proportion. The owners’ equity recognized owning to the changesof the other owners’ equity except for the net gains and losses, other comprehensive income and the profits

distribution of the investees, should be transferred into the current gains and losses according to the proportion.For the long-term equity investment which adopts the cost method of measurement, if the remained equity stilladopt the cost method, the other comprehensive income recognized owning to adopting the equity method formeasurement or the recognition and measurement standards of financial instrument before acquiring the control ofthe investees, should adopt the same basis of the accounting disposal of the relevant assets or liabilities directlydisposed by the investees and should be carried forward into the current gains and losses according to the

proportion; the changes of the other owners’ equity except for the net gains and losses, other comprehensive

income and the profits distribution among the net assets of the investees which recognized by adopting the equitymethod for measurement, should be carried forward into the current gains and losses according to the proportion.For those the Company lost the control of the investees by disposing part of the equity investment as well as theremained equity after disposal could execute joint control or significant influences on the investees, should changeto measure by equity method when compiling the individual financial statement and should adjust themeasurement of the remained equity to equity method as adopted since the time acquired; if the remained equityafter disposal could not execute joint control or significant influences on the investees, should change theaccounting disposal according to the relevant regulations of the recognition and measurement standards offinancial instrument, and its difference between the fair value and book value on the date lose the control right

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should be included in the current gains and losses. For the other comprehensive income recognized by adoptingequity method for measurement or the recognition and measurement standards of financial instrument before theCompany acquired the control of the investees, should execute the accounting disposal by adopting the same basisof the accounting disposal of the relevant assets or liabilities directly disposed by the investees when lose the

control of them, while the changes of the other owners’ equity except for the net gains and losses, other

comprehensive income and the profits distribution among the net assets of the investees which recognized byadopting the equity method for measurement, should be carried forward into the current gains and lossesaccording to the proportion. Of which, for the disposed remained equity which adopted the equity method for

measurement, the other comprehensive income and the other owners’ equity should be carried forward according

to the proportion; for the disposed remained equity which changed to execute the accounting disposal according tothe recognition and measurement standards of financial instrument, the other comprehensive income and the other

owners’ equity should be carried forward in full amount.

For those the Company lost the control of the investees by disposing part of the equity investment, the disposedremained equity should change to calculate according to the recognition and measurement standards of financialinstrument, and difference between the fair value and book value on the date lose the control right should beincluded in the current gains and losses. For the other comprehensive income recognized from the original equityinvestment by adopting the equity method, should execute the accounting disposal by adopting the same basis ofthe accounting disposal of the relevant assets or liabilities directly disposed by the investees when terminate the

equity method for measurement, while for the owners’ equity recognized owning to the changes of the otherowner’s equity except for the net gains and losses, other comprehensive income and the profits distribution of the

investees, should be transferred into the current investment income with full amount when terminate adopting theequity method.The Company respectively disposes the equity investment of the subsidiaries through multiple transactions untillose the control right, if the above transactions belongs to the package deal, should execute the accountingdisposal by regarding each transaction as a deal of disposing the equity investment of the subsidiaries until losethe control right, while the difference between each expenses of the disposal and the book value of the long-termequity investment in accord with the disposed equity before losing the control right, should firstly be recognizedas other comprehensive income then be transferred into the current gains and losses of losing the control rightalong until the time when lose it.14. Investment PropertyInvestment property is held to earn rentals or for capital appreciation or for both. Investment property includesleased or ready to transfer after capital appreciation land use rights and leased buildings. Besides, for the idleconstructions held by the Company for operation and lease, if the Board of Directors (or the similar institutions)made the written resolutions which affirmatively disclosed to use which for operation and lease with the intention

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would not change in the short term, should also be presented as the investment property.Investment property is initially measured at cost. Subsequent expenditures related to an investment real estate arelikely to flow about the economic benefits of the asset and its cost can be measured reliably, is included in the costof investment real estate. Other subsequent expenditures of gains or losses should be recorded in the current gainsand losses when occurred.The Company uses the cost model for subsequent measurement of investment property, and in accordance withthe depreciation or amortization of buildings or land use rights policy.

Investment property impairment test method and impairment accrual method described in Note IV. 20 “Long-termassets impairment”.

Occupied real estate for investment property or investment property is transferred to owner-occupied real estate orstock conversion as the recorded value after the conversion, according to the book value before the conversion.From the date of transference, investment properties shall be transferred into fixed assets or intangible assets wheninvestment properties transfer into self-owned properties. From the date of transference, fixed assets or intangibleassets shall be transferred into investment properties when the intention of self-owned properties changes to beearning rents. Upon transference, investment properties using cost modeling shall use its book value beforetransference as the entry value after transference; investment properties using fair value shall use its fair value inthe date of transference as the entry value after transference.As for investment property disposed or perpetually out of use, and estimated without economic benefits from thedisposal, confirmation shall be terminated. Disposal consideration of the investment property after sale,transference, discard or damage deducting its book value and relating taxes shall be recorded into current gainsand losses.15. Fixed Assets(1) Recognized standard of fixed assetsThe term "fixed assets" refers to the tangible assets that simultaneously possess the features as follows: they areheld for the sake of producing commodities, rendering labor service, renting or business management; and theiruseful life is in excess of one fiscal year.(2) Depreciation methods of fixed assetsThe initial measurement of a fixed asset shall be made at its cost after considering the effect of expected discardexpenses. The Group shall withdraw the depreciation of fixed assets by adopting the straight-line method since thesecond month of its useful life. Useful life, expected net salvage value (refers to the expected amount that theGroup may obtain from the current disposal of a fixed asset after deducting the expected disposal expenses at theexpiration of its expected useful life) and annual depreciation rate of each fixed assets are as below:

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Category of fixed assets	Method	Useful life (Y)	Expected net salvage value (%)	Annual deprecation (%)
Housing and building	Average method of useful life	8.00-35.00	3.00-5.00	2.70-12.10
Machinery equipments	Average method of useful life	5.00-10.00	3.00-5.00	9.50-19.40
Transportation vehicle	Average method of useful life	4.00	3.00	24.25
Office equipment and others	Average method of useful life	3.00	3.00	32.33

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during the construction period, borrowing costs capitalized before it is ready for intended use and other relevantcosts. Construction in progress is transferred to a fixed asset when it is ready for intended use.Testing method for provision impairment of construction in progress and accrued method for provision

impairment please refer to Note IV. 20 “Long-term assets impairment”.

17. Borrowing CostsBorrowing costs include interest, amortization of discounts or premiums related to borrowings, ancillary costsincurred in connection with the arrangement of borrowings, and exchange differences arising from foreigncurrency borrowings. The borrowing costs that are directly attributable to the acquisition, construction orproduction of a qualifying asset are capitalized. The amounts of other borrowing costs incurred are recognized asan expense in the period in which they are incurred. Qualifying assets are asset (fixed assets, investment propertyand inventories, etc.) that necessarily take a substantial period of time for acquisition, construction or productionto get ready for their intended use or sale.Where funds are borrowed for a specific-purpose, the amount of interest to be capitalized is the actual interestexpense incurred on that borrowing for the period less any bank interest earned from depositing the borrowedfunds before being used on the asset or any investment income on the temporary investment of those funds. Wherefunds are borrowed for a general-purpose, the amount of interest to be capitalized on such borrowings isdetermined by applying a weighted average interest rate to the weighted average of the excess amounts ofaccumulated expenditure on the asset over and above the amounts of specific-purpose borrowings.During the capitalization period, exchange differences related to a specific-purpose borrowing denominating inforeign currency are all capitalized. Exchange differences in connection with general-purpose borrowings arerecognized in profit or loss in the period in which they are incurred.Assets qualified for capitalization are the fixed assets, investment properties or inventories which need a long timeof construction or production activities before ready for intended used or sale.Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or productionof a qualifying asset is interrupted by activities other than those necessary to prepare the asset for its intended useor sale, when the interruption is for a continuous period of more than 3 months. Borrowing costs incurred duringthese periods recognized as an expense for the current period until the acquisition, construction or production isresumed.18. Intangible Assets(1) Intangible asset

The term “intangible asset” refers to the identifiable non-monetary assets without physical shape, possessed or

controlled by enterprises.The intangible assets are initially measured by its cost. Expenses related to intangible assets, if the economic

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benefits related to intangible assets are likely to flow into the enterprise and the cost of intangible assets can bemeasured reliably, shall be recorded as cost of intangible assets. The expenses other than this shall be booked inthe profit or loss when they occur.Land use rights that are purchased by the Company are accounted for as intangible assets. Buildings, such asplants that are developed and constructed by the Company, and relevant land use rights and buildings, areaccounted for as intangible assets and fixed assets, respectively. Payments for the land and buildings purchasedare allocated between the land use rights and the buildings; if they cannot be reasonably allocated all of the landuse rights and buildings should accounted for as fixed assets.When an intangible asset with a definite useful life is available for use, its original cost less net residual value andany accumulate impairment losses is amortized over its estimated useful life using the straight-line method. Anintangible asset with an indefinite useful life is not amortized.For an intangible asset with a definite useful life, the Company reviews the useful life and amortization method atthe end of the period, and makes adjustment when necessary. An additional review is also carried out for usefullife of the intangible assets with indefinite useful life. If there is evidence showing the foreseeable limit period ofeconomic benefits generated to the enterprise by the intangible assets, then estimate its useful life and amortizeaccording to the policy of intangible assets with definite useful life.(2) Research and development costCost of research and development is distinguished into the research phase and the development phases.Cost of the research phase is recognized in the profit or loss in the period in which it is incurred.Unless the following conditions are satisfied, cost of the development phase is recognized in the profit or loss inthe period in which it is incurred:

① it is technically feasible to complete the intangible asset so as to use it or sell it;② it is clearly invented to complete the intangible asset in order to use it or sell it;③ it is probable that the intangible asset is capable of generating future economic benefit, such as the market for

the product produced by the intangible asset or the intangible asset itself, it is objectively evidential that theintangible asset is economically usable if it is going to be used internally;

④ there are sufficient technical, financial and other resources to complete the intangible asset and to use it or sell

it;

⑤ the cost of the development of the intangible can be measured reliably.

If the cost cannot be distinguished into the search phase and the development phase, it is recognized in the profitor loss for the period in which it is incurred.(3) Impairment of intangible assets

Impairment and provisions of intangible assets are disclosed on Note IV. 20 “Long-term assets impairment”.

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19. Long-term Deferred ExpenditureAn item long-term deferred expenses is an expense which has been incurred and which has a beneficial period (aperiod during which an expense is expected to bring economic benefits to an entity) which is longer than one yearand which includes at least part of the reporting period during which the expense was incurred and subsequentreporting periods. An item of long-term deferred expenses is recognized at the actual amount of the expenseincurred and allocated in each month of the beneficial period using the straight line method.20. Long-term Assets ImpairmentNon-financial assets with non-current nature include fixed assets, construction in progress, intangible assets withdefinite useful lives, investment properties measured by cost methods and long-term equity investment onsubsidiaries, jointly operations. The Company assesses whether there are any indicators of impairment for allnon-financial assets at the balance sheet date, and impairment test is carried out and recoverable value is estimatedif such an indicator exits. Goodwill and intangible assets with indefinite useful lives, as well as intangible assetsnot ready for use, are tested for impairment annually regardless of indicators of impairment.Impairment of loss is calculated and provisions taken by the difference if the recoverable value of the assets islower than the book value. The recoverable value is the higher of estimated present value of the future expectedcash flows from the asset and net fair value of the asset less disposed cost. The fair value of asset is determined by

the sales agreement price within an arm’s length transaction. In case there is no sales agreement, but there is active

market of assets, the fair value can be determined by the selling price. If there is neither sales agreement nor activemarket, the fair value of the asset can be estimated based on the best information obtained. Disposal expensesinclude expenses related to the legislation, taxes, transportations and the direct expense for the asset to be readyfor sale. When calculating the present value of expected future cash flows from an asset or asset Group, themanagement shall estimate the expected future cash flows from the asset or asset Group and choose a suitablediscount rate in order to calculate the present value of those cash flows.Provision for asset impairment is calculated and determined on the individual basis. If the recoverable ofindividual asset is hard to estimate, the recoverable amount can be determined by the asset Group where subjectasset belongs. Asset Group is the smallest set of assets that can have cash flow in independently.The Company determines whether goodwill is impaired at least on an annual basis. This requires an estimation ofthe present value of the future expected cash flows from the asset Groups or sets of asset Groups to which thegoodwill is allocated. Estimating the present value requires the Company to make an estimate of the expectedfuture cash flows from the asset Groups or sets of asset Groups and also choose a suitable discount rate in order tocalculate the present value of those cash flows. Once the loss from above asset impairment is recognized, therecoverable part cannot be reserved in the subsequent periods.21. Payroll

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The payroll of the Company mainly includes the short-term employee compensation, welfare after demission,demission welfare and other long-term employee benefits. Of which:

Short-term compensation mainly including salary, bonus, allowances and subsidies, employee services andbenefits, medical insurance premiums, birth insurance premium, industrial injury insurance premium, housingfund, labor union expenditure and personnel education fund, non-monetary benefits etc. The short-termcompensation actually happened during the accounting period when the active staff offering the service for theGroup should be recognized as liabilities and is included in the current gains and losses or relevant assets cost. Ofwhich the non-monetary benefits should be measured according to the fair value.Welfare after demission mainly includes setting drawing plan. Of which setting the drawing plan mainly includesbasic endowment insurance, unemployment insurance and annuity etc, and the corresponding payable and depositamount should be included into the relevant assets cost or the current gains and losses when happen.If an enterprise cancels the labor relationship with any employee prior to the expiration of the relevant laborcontract or brings forward any compensation proposal for the purpose of encouraging the employee to accept alayoff, and should recognize the payroll liabilities occurred from the demission welfare base on the earlier datebetween the time when the Group could not one-sided withdraw the demission welfare which offered by the planor layoff proposal owning to relieve the labor relationship and the date the Group recognizes the cost related to thereorganization of the payment of the demission welfare and at the same time includes which into the current gainsand losses. But if the demission welfare is estimated that could not totally pay after the end of the annual reportwithin 12 months, should be disposed according to other long-term payroll payment.The inside employee retirement plan is treated by adopting the same principle with the above dismiss ion welfare.

The group would recorded the salary and the social security insurance fees paid and so on from the employee’s

service terminative date to normal retirement date into current profits and losses (dismiss ion welfare) under thecondition that they meet the recognition conditions of estimated liabilities.The other long-term welfare that the Group offers to the staffs, if met with the setting drawing plan, should beaccounting disposed according to the setting drawing plan, while the rest should be disposed according to thesetting revenue plan.22. Estimated LiabilitiesRecognition of accrued liabilities:

Obligation with contingency factor such as external hypothecate, lawsuit or arbitrage in dispute, guarantee onquality of product, cut-down plan, loss of contract, recombine obligation, obligation on abandon fixed asset, andmeet the follow condition simultaneously would determined as liabilities: (1) This obligation is current obligationof the Company; and, (2) The performance of this obligation will probably cause economic benefits outflow of theCompany; and, (3) The amount of this obligation can be reliably measured.

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On balance sheet date the Company performed relate obligation that consider risk, incertitude, time value ofcurrency of contingency factor. According to the best estimate of the expenditure required to settle the presentobligation for estimated liabilities measured.If the expenditure required to settle the liability is expected to be fully or partly compensated by a third party, todetermine the amount of compensation will be received at the basic, separately recognized as an asset, and isrecognized in the amount of compensation does not exceed the carrying value of estimated liabilities.23. Revenues(1) Commodity sales revenuesNo revenue from selling goods may be recognized unless the following conditions are met simultaneously: thesignificant risks and rewards of ownership of the goods have been transferred to the buyer by the enterprise; theenterprise retains neither continuous management right that usually keeps relation with the ownership noreffective control over the sold goods; the relevant amount of revenue can be measured in a reliable way; therelevant economic benefits may flow into the enterprise; and the relevant costs incurred or to be incurred can bemeasured in a reliable way.

In the Company’s daily accounting practices, as for the domestic sales, when the products had shipped out of the

library and had handed over to the buyers, and the major risk as well as the reward on the ownership of theproducts had transferred to them, without keeping any continued management right which commonly related tothe ownership nor carrying out any effective control of the products which had been sold, and at the same time theamounts received could be calculated reliably, and the relevant economic interest may flow into the enterprise, aswell as the relevant costs which had occurred or is going to occur could be calculated reliably, should recognizethe implementation of the commodity sales revenues. As for the overseas sales, should recognize theimplementation of the revenues when the goods had made shipment and gained the customs export declaration.(2) Revenues from providing labor servicesIf an enterprise can reliably estimate the outcome of a transaction concerning the labor services it provides, it shallrecognize the revenue from providing services employing the percentage-of-completion method on the balancesheet date. The percentage-of-completion is determined by the proportion of the costs incurred against theestimated total costs.The outcome of a transaction concerning the providing of labor services can be measured in a reliable way, means

that the following conditions shall be met simultaneously: ① The amount of revenue can be measured in a reliableway; ② The relevant economic benefits are likely to flow into the enterprise; ③ The schedule of completionunder the transaction can be confirmed in a reliable way; ④ The costs incurred or to be incurred in the transaction

can be measured in a reliable way.If the Company can not measure the result of a transaction concerning the providing of labor services in a reliableway, it shall be conducted in accordance with the following circumstances, respectively: If the cost of labor

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services incurred is expected to be compensated, the compensation amount for the cost of labor services shall berecognized as the revenue from providing labor service, and the cost of labor service incurred shall be as thecurrent cost; if the cost of labor services incurred is not expected to compensate, no revenue from the providing oflabor services may be recognized.Where a contract or agreement signed between Group and other enterprises concerns selling goods and providingof labor services, if the part of sale of goods and the part of providing labor services can be distinguished fromeach other and can be measured respectively, the part of sale of goods and the part of providing labor servicesshall be treated respectively. If the part of selling goods and the part of providing labor services can not bedistinguished from each other, or if the part of sale of goods and the part of providing labor services can bedistinguished from each other but can not be measured respectively, both parts shall be conducted as sellinggoods.(3) Royalty revenueIn accordance with relevant contract or agreement, the amount of royalty revenue should be recognized as revenue

on accrual basis. In the Company’s daily accounting practices, it should be calculated and recognized according to

the chargeable time and methods in accordance with the relevant contract or agreement.(4) Interest revenue

In accordance with the time that others use the Group’s monetary capital and the actual rate.

24. Government SubsidiesGovernment grants are transfer of monetary assets and non-monetary assets from the government to the Companyat no consideration, excluding the capital invested by the government as equity owner. Government grant can beclassified as grant related to the assets and grants related to the income. The government grants which wereacquired by the Company will be used to purchase or otherwise form become long-term assets will be defined asgrant related to the assets; the others will be defined as grants related to the income. If the files have not clearlydefined government grants objects, it will be divided in the following manner compartmentalize the grants intorant related to the assets and grants related to the income: (1) government documents defined specific projectstargets, according to the relative proportion of the budgets of specific items included the expenditure of to formassets and the expenditure will be charged into expense to be divided, the division ratio required at each balancesheet date for review and make changes if necessary; (2) government documents to make a general presentationpurposes only, does not specify a particular project, as grants related to the income.If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received orreceivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. If the fairvalue cannot be reliably determined, it is measured at a nominal amount. A government grant measured at anominal amount is recognized immediately in profit or loss for the period.When received the government grants actually, recognized and measured them by the actual amount received.However, there is strong evidence that the end of fiscal support policies able to meet the conditions specified in

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the relevant funds are expected to be able to receive financial support, measured at the amount receivable.Government grants are measured according to the amount receivable shall also comply with the followingconditions: (1) grants receivable of government departments issued a document entitled have been confirmed, orcould reasonably estimated in accordance with the relevant provisions of its own official release of financialresources management approach, and the expected amount of a material uncertainty which does not exist; (2) it isbased on the local financial sector to be officially released and financial support for the project and its financial

fund management approach voluntarily disclosed in accordance with the provisions of “Regulations on DisclosureGovernment Information”, and the management approach should be (inclusive of any compliance business

conditions may apply), and not specifically formulated for specific businesses;(3) related grants approval has beenclearly committed the deadline, and is financed by the proceeds of a corresponding budget as a guarantee, so thatwill be received within the prescribed period with the a reasonable assurance; (4) according to the specificcircumstances of the Company and the subsidy matter, should satisfy the other conditions (if any).A government grant related to an asset is recognised as deferred income, and evenly amortized to profit or lossover the useful life of the related assetin a reasonable and systematic manner. For a government grant related toincome, if the grant is a compensation for related expenses or losses to be incurred in subsequent period, the grantis recognised as deferred income, and recognised in profit or loss over the periods in which the related costs arerecognised. If the grant is a compensation for related expenses or losses already incurred, the grant is recognisedimmediately in profit or loss for the period.Government subsidies including both assets-related parts and income-related parts should be treated separately. Ifit is difficult to seperate, the government subsidiesas a whole will be classified as income-related governmentgrants.The government grants related to the daily activities of the Company are included in other income or offset therelated costs according to the essence of the economic business. The government grants unrelated to the dailyactivities are included in the non-operating income and expenses.For repayment of a government grant already recognized, if there is a related deferred income, the repayment isoffset against the carrying amount of the deferred income, and any excess is recognized in profit or loss for theperiod. If there is no related deferred income, the repayment is recognized immediately in profit or loss for theperiod.25. Deferred Tax Assets and Deferred Tax Liabilities(1) Income tax for the current periodAt the balance sheet date, current income tax liabilities or assets for the current and prior periods are measured atthe amount expected to be paid (or recovered) according to the requirements of tax laws. The calculation forincome tax expenses in the current period is based on the taxable income according to the related tax laws afteradjustment to the accounting profit of the reporting period.

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(2) Deferred income tax assets and liabilitiesFor temporary differences between the carrying amount of certain assets or liabilities and their tax base, orbetween the nil carrying amount of those items that are not recognized as assets or liabilities and their tax basethat can be determined according to tax laws, deferred tax assets and liabilities are recognized using the balancesheet liability method.For temporary differences associated with the initial recognition of goodwill and the initial recognition of an assetor liability arising from a transaction (not a business combination) that affects neither the accounting profit nortaxable profits (or deductible losses) at the time of transaction, no deferred tax asset or liability is recognized. Fortaxable temporary differences associated with investments in subsidiaries and associates, and interests in jointventures, no deferred income tax liability related is recognized except where the Company is able to control thetiming of reversal of the temporary difference and it is probable that the temporary difference will not reverse inthe foreseeable future. All deferred income tax liabilities arising from taxable temporary differences except theones mentioned above are recognized.For temporary deductible differences associated with the initial recognition of an asset or liability arising from atransaction (not a business combination) that affects neither the accounting profit nor taxable profits (or deductiblelosses) at the time of transaction, no deferred tax asset is recognized. For taxable temporary deductible differencesassociated with investments in subsidiaries and associates, and interests in joint ventures, no deferred income taxasset related is recognized if it is impossible to reversal the temporary difference in the foreseeable future, or it isnot probable to obtain taxable income which can be used for the deduction of the temporary difference in thefuture. Except mentioned above, the Company recognizes other deferred income tax assets that can deducttemporary differences to the extent that it is probable that taxable profits will be available against which thedeductible temporary differences can be utilized.For the deductible losses and tax credit that can be carried forward, deferred tax assets for deductible temporarydifferences are recognized to the extent that it is probable that taxable profits will be available against which thedeductible temporary differences can be utilized.At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates according to tax laws,which are expected to apply in the period in which the asset is realized or the liability is settled.At the balance sheet date, the Company reviews the carrying amount of deferred tax assets. If it is no longerprobable that sufficient taxable profit will be available in future periods to allow the benefits of the deferred taxassets to be used, the Company reduces the carrying amount of deferred tax assets. The amount of such reductionis reversed when it becomes probable that sufficient taxable profit will be available.(3) Income tax expensesIncome tax expenses consist of current income tax and deferred income tax.The expenses from income tax and deferred income tax, as well as the revenue, shall be recorded into profit orloss in current accounting period, except expense for income tax of the current period and deferred income tax

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that booked into other income or equity and adjusted carrying value of deferred income tax goodwill arose frombusiness combination.(4) Income tax offsetWhen we have the legal right, and have intended to, to make settlement with net amount or through the assetacquisition and liability fulfillment simultaneously, the Company shall present the net value from the offsetbetween current income tax asset and current income tax liability in the financial statement.When the Company has the legal right to make a settlement with the current income tax asset and current incometax liability, and the deferred income tax asset and deferred income tax liability are related to the same taxablesubject under the same tax payer, or related to different taxable subject, but the intension of net value settlement inregard of the current income tax asset and current income tax liability, the Company shall present net value afterthe offset of deferred income tax asset and deferred income tax liability.26. LeasesA finance lease is a lease that transfers in substance all the risks and rewards incident to ownership of an asset.Title may or may not eventually be transferred. An operating lease is a lease other than a finance lease.(1) The Company as Lessee under operating LeaseLease payments under an operating lease are recognized by a lessee on a straight-line basis over the lease term,and either included in the cost of the related asset or charged to profit or loss for the current period. The contingentrents shall be recorded in the profit or loss of the period in which they actually arise.(2) The Company as Leaser under operating LeaseLease income from operating leases shall be recognized by the leaser in profit or loss on a straight-line basis overthe lease term. Initial direct cost of significance in amount shall be capitalized when incurred. If another basis ismore systematic and rational, that basis may be used. Contingent rents are credited to profit or loss in the period inwhich they actually arise.(3) The Company as Lessee under financing LeaseFor an asset that is held under a finance lease, at the lease commencement, the leased asset is recorded at thelower of its fair value at the lease commencement and the present value of the minimum lease payments, and theminimum lease payment is recorded as the carrying amount of the long-term payables; the difference between therecorded amount of the leased asset and the recorded amount of the payable is accounted for as unrecognizedfinance charge, Initial direct costs incurred by the lessee during the process of negotiating and securing the leaseagreement shall be added to the amount recognized for the leased asset. The net amount of minimum leasepayment deducted by the unrecognized finance shall be separated into long-term liabilities and long-term liabilitywithin one year for presentation.Unrecognized finance charge shall be computed by the effective interest method during the lease term. Contingentrent shall be booked into profit or loss when actually incurred.

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(4) In the case of the lessor of a financing leaseFor an asset that is leased out under a finance lease, the aggregate of the minimum lease receipts at the inceptionof the lease and the initial direct costs is recorded as a finance lease receivable, and unguaranteed residual value isrecorded at the same time; the difference between the aggregate of the minimum lease receipt, initial direct costs,and unguaranteed residual value, and the aggregate of their present values, is recognized as unearned financeincome, which is amortized using the effective interest rate method over each period during the lease term.Finance lease receivable less unearned finance income shall be separated into long-term liabilities and long-termliability within one year for presentation.Unearned finance income shall be computed by the effective interest method during the lease term. Contingentrent shall be credited into profit or loss in which actually incurred.27. Changes in Main Accounting Policies and Estimates(1) Change of accounting policiesThere was no any change of accounting policies(2) Change of main accounting estimatesThere was no any change of main accounting estimates.28. Significant Account Judgment and EstimatesThe Company is required to make judgments, estimates and assumptions about the carrying amounts of items inthe financial statements that cannot be measured accurately, due to the internal uncertainties of operation activities.

These judgments, estimates and assumptions are based on historical experiences of the Company’s management

as well as other factors that are considered to be relevant. These judgments, estimates and assumptions may affectvalue of the financial statements in revenue, expenses, assets and liabilities and the disclosure of contingency atthe balance sheet date. However, the result derived from those uncertainties in estimates may lead significantadjustments to the carrying amounts of the assets or liabilities affected in the future.The Company has reviews the judgments, estimates and assumptions regularly on the basis of going concern.Where the changes in accounting estimates only affect the period when changes occurred, and they are recognizedwithin the same period. Where the changes in accounting estimates affect both current period and future period,the changes are recognized within the period of change and future period.At balance sheet date, the followings are the significant areas where the Company needs to make judgment,estimates and assumptions over the value of items in the financial statements:

(1) Classification of leaseThe 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, orwhether the Company has substantially held the risks and rewards related to the ownership of leased assets.

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(2) Allowance for bad debtAccording to the relevant accounting policies of the Company in receivables, allowance method is used for bad

debt’s calculation. The impairment of receivables is calculated based on the assessment of recoverable of

receivables. Assurance of receivable impairment needs judgments and estimations from the management. Thedifference between actual results and original estimates shall have impact on the carrying amount of receivablesand receivable bad debt provisions or the reverse during the change of estimation.(3) Impairment of inventoriesThe Company measures inventories by the lower of cost and realizable net value according to the accountingpolicies in regard of inventories and provisions for decline in value of inventories are made if the cost is higherthan their net realizable value and obsolete and slow-movement inventories. Inventories decline in value to netrealizable value is the estimated selling price in the ordinary course of business. Net realizable value is determinedon the basis of clear evidence obtained, and takes into consideration the purposes of holding inventories and effectof post balance sheet events. The difference between the actual result and the original estimates shall have impacton reverse of the carrying amount of the inventories and their decline in value or provisions during the period ofchange.(4) The fair value of financial instrumentsFor a financial instrument which has no active market, the Company establishes fair value by using variousvaluation methods, including of discounted cash flow analysis model. The Company needs to estimate future cashflow, credit risk, volatility and relationship during the valuation and choose appropriate discount rate. Suchassumptions have uncertainties and their changes shall have impact on the fair value of financial instruments.(5) Impairment of financial assets available-for-saleThe Company determine the available-for-sale financial asset is impaired relies on judgments and assumptions ofmanagement, to determine whether impairment loss is recognized in the income statement. The process of makingthe judgments and assumptions, the Company is required to assess the extent and duration of the fair value of theinvestment below cost, as well as investment financial position and short-term business outlook, includingindustry conditions, technological change, the credit rating, default rates and counterparty risk.(6) Impairment of non-financial, non-current assetsThe Company assesses whether there are any indicators of impairment for all non-current assets other thanfinancial assets at the balance sheet date. For an intangible asset that has indefinite useful life, impairment test ismade in addition to the annual impairment test if there is any indication of impairment. For non-current assetsother than financial assets, impairment test is made when there is any indication that its account balance cannot berecovered.Impairment exists when the recoverable amount of an asset is the higher of its fair value less cost of disposal andpresent value of the future cash flows expected to be derived from the asset.Net value between the difference of fair value and disposal cost is determined by reference of the price of similar

~ 100 ~

product in a sale agreement in an arm’s length transaction or an observable market price less the additional cost

directly attributable to the disposal of the asset.

When estimating the present value of future cash flow, significant judgments are made over the asset’s production,

selling price and relevant operating expenses, and discount rate used to calculate present value. All availablematerials that are considered to be relevant shall be used in the estimation of recoverable value. These materialsinclude estimations of production, selling price and operating expenses based on reasonable and supportableassumptions.The Company makes an impairment test for goodwill at least at each year end. This requires an estimation ofpresent value of future cash flow of the assets or assets group where goodwill has been allocated. The Companyshall makes estimation on the future cash flow derived from assets or assets group and determine an appropriatediscount rate for the present value of future cash flow when the estimation of present value of future cash flow ismade.(7) Depreciation and amortizationInvestment property, fixed assets and intangible assets are depreciated and amortized using the straight-linemethod over their useful lives after taking into account residual value. The useful lives are regularly reviewed todetermine the depreciation and amortization costs charged in each reporting period. The useful lives aredetermined based on historical experience of similar assets and the estimated technical changes. If there is anindication that there has been a change in the factor used to determine the depreciation or amortization, the rate ofdepreciation or amortization is revised.(8) Deferred tax assetsThe group shall recognize all unused tax losses as deferred tax assets to the extent that it is probable that futuretaxable profit will be available against which the unused tax losses and unused tax credits can be utilized. Thisrequires the management of the Company make a lot of judgments over the estimation of time period, value andtax planning strategies when future taxable profit incurs so that the value of deferred tax assets can be determined.(9) Income tax

There are some transactions where ultimate tax treatments and calculations have uncertainties in the Company’s

everyday operation. If it is possible for any item to make expenditure before tax that needs to be approved fromcompetent tax authorities. If there is any difference between finalized determination value and their initialestimations value, the difference shall have the impact on the income tax and deferred income tax of the currentperiod during the final determination.(10) Accrued liabilitiesAccording with the terms of the contract, the existing knowledge and historical experience, product qualityassurance and expected contract losses, delay in delivery of liquidated damages are estimated and recognized asaccrued liabilities. In these matters has been the formation of a current obligation, and fulfilling the duty is likelyto lead to the outflow of economic benefits of the Company, the Company or the best estimate of the current

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obligation expenditure required recognized as a accrued liabilities. Recognition and measurement of accruedliabilities is dependent on the judgment of management. In the processing of judgment the company needed toappraise the related risks, uncertainties and time value of money and other factors.

V. Taxation

1. Main Taxes and Tax Rate

Category of taxes	Particulars about specific tax rate
VAT	Income tax was in accordance with 17%, 11%, and 6% of tax rate to calculate output tax and according to the balance of the current the deductibility deduct the input tax to calculate value added tax. (if the tax obligations is performed after 1 May 2018, the output tax shall be calculated by the tax rate of 16%, 10%, and 6%)
Consumption tax	Sales of wine RMB1 per 1000 ml or per kg to calculate the amount of consumption tax, a flat rate, 20% of the annual turnover to calculate the amount of consumption tax at valorem.
Urban maintenance and construction tax	1, 5, 7% of the actual taxable turnover amount.
Education expenses surcharge	3% of the actual taxable turnover amount.
Local education surcharge	2% of the actual taxable turnover amount.
Enterprise income tax	For details, see the table below

Name of the entities	Income tax rate
Anhui Longrui Glass Co., Ltd	15%
Anhui Ruisiweier Technology Co., Ltd	15%
Bozhou Gujin Rubbish Recycling Co., Ltd	10%
Wuhan Yashibo Technology Co., Ltd	10%
Hubei Hechuanyuan Trade Co., Ltd	10%
Anhui Gujing Distillery Company Limited and its other subsidiaries	25%

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which shall be valid in 3 years. Corresponding corporate income tax was also paid at the rate of 15% from Januaryto June in 2018.(3) According to Notification for extending coverage of preferential income tax policies for small enterprises with

low profits (Financial and taxation (2017) No. 43), published by Ministry of Finance of the People’s Republic of

China and State Administration of Taxation, from 1 January 2017 to 31 December 2019, for small enterprises withlow profits, of which the annual taxable income amount is under RMB0.5 million (including RMB0.5 million),the income tax deduction shall be 50% of the taxable income amount and the corporate income tax rate shall bereduced to 20%. For subsidiaries of the Company, BozhouGujing Recycling Co., Ltd, Wuhan Yashibo TechnologyCo., Ltd and Hubei Hechuyuan Commercial & Trading Co., Ltd, which satisfy conditions for small enterpriseswith low profits, the actual prevailing tax shall be reduced to 10% from January to June in 2018.

VI. Notes on Major Items in Consolidated Financial Statements of the Company

The following notes (including notes on major items in consolidated financial statements of the Company), unlessotherwise noted, the opening period was 1 January 2018, the closing period was 30 June 2018.1. Monetary Funds

Item	Ending balance	Beginning balance
Cash in treasury	364,726.59	369,197.41
Bank deposit	921,933,834.69	1,440,617,397.53
Other monetary funds	45,487,396.13	43,102,031.46
Total	967,785,957.41	1,484,088,626.40
Of which: the total amount deposited in overseas	0.00	0.00

Item	Ending balance	Beginning balance
Trading financial assets	1,057,659.73	99,800.76
Of which: equity tool investment	1,057,659.73	99,800.76
Total	1,057,659.73	99,800.76

Item

Ending balance

Beginning balance

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Item	Ending balance	Beginning balance
Bank acceptance bill	1,896,811,744.49	720,611,126.78
Trade acceptance bill	2,000,000.00	0.00
Total	1,898,811,744.49	720,611,126.78

Item	Amount of recognition termination at the period-end	Amount of not terminated recognition at the period-end
Bank acceptance bill	415,100,060.67	0.00
Total	415,100,060.67	0.00

Category	Ending balance
	Carrying amount		Bad debt provision		Carrying value
	Amount	Proportion (%)	Amount	Withdrawal proportion (%)
Accounts receivable with significant single amount for which bad debt provision separately accrued	0.00	0.00	0.00	0.00	0.00
Accounts receivable withdrawal of bad debt provision of by credit risks characteristics:	20,644,132.48	100.00	1,151,556.41	5.58	19,492,576.07
Accounts receivable with insignificant single amount for which bad debt provision separately accrued	0.00	0.00	0.00	0.00	0.00
Total	20,644,132.48	100.00	1,151,556.41	5.58	19,492,576.07

Category	Beginning balance
	Carrying amount	Bad debt provision	Carrying

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	Amount	Proportion (%)	Amount	Withdrawal proportion (%)	value
Accounts receivable with significant single amount for which bad debt provision separately accrued	0.00	0.00	0.00	0.00	0.00
Accounts receivable withdrawal of bad debt provision of by credit risks characteristics:	23,800,576.11	100.00	1,334,433.05	5.61	22,466,143.06
Accounts receivable with insignificant single amount for which bad debt provision separately accrued	0.00	0.00	0.00	0.00	0.00
Total	23,800,576.11	100.00	1,334,433.05	5.61	22,466,143.06

Aging	Ending balance
	Account receivable	Bad debt provision	Withdrawal proportion (%)
Within 1 year	19,477,898.54	273,272.84	1.40
[Of which: within 6 months]	17,515,552.21	175,155.52	1.00
[7-12 months]	1,962,346.33	98,117.32	5.00
1 to 2 years	307,078.19	30,707.82	10.00
2 to 3 years	23,160.00	11,580.00	50.00
Over 3 years	835,995.75	835,995.75	100.00
Total	20,644,132.48	1,151,556.41	5.58

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(1) List by Aging Analysis

Aging	Ending balance		Beginning balance
	Amount	Proportion	Amount	Proportion
Within 1 year	79,562,981.71	96.79	40,817,554.03	97.81
1 to 2 years	2,319,508.00	2.82	82,115.23	0.20
2 to 3 years	36,520.00	0.04	828,648.08	1.99
Over 3 years	290,000.00	0.35	1,320.00	0.00
Total	82,209,009.71	100.00	41,729,637.34	100.00

Item	Ending balance	Beginning balance
Interest of certificate of deposit	19,403,178.08	13,883,178.08
Total	19,403,178.08	13,883,178.08

Category	Ending balance
	Carrying amount		Bad debt provision		Carrying value
	Amount	Proportion (%)	Amount	Withdrawal proportion (%)
Other accounts receivable with significant single amount for which bad debt provision separately accrued	40,850,949.35	74.18	40,850,949.35	100.00	0.00
Other accounts receivable withdrawn bad debt provision according to credit risks characteristics	14,220,757.86	25.82	1,338,529.27	9.41	12,882,228.59
Other accounts receivable with insignificant single amount for which bad debt provision separately accrued	0.00	0.00	0.00	0.00	0.00
Total	55,071,707.21	100.00	42,189,478.62	76.61	12,882,228.59

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(Continued)

Category	Beginning balance
	Carrying amount		Bad debt provision		Carrying value
	Amount	Proportion (%)	Amount	Withdrawal proportion (%)
Other accounts receivable with significant single amount for which bad debt provision separately accrued	40,850,949.35	71.04	40,850,949.35	100.00	0.00
Other accounts receivable withdrawn bad debt provision according to credit risks characteristics	16,651,396.91	28.96	1,261,290.77	7.57	15,390,106.14
Other accounts receivable with insignificant single amount for which bad debt provision separately accrued	0.00	0.00	0.00	0.00	0.00
Total	57,502,346.26	100.00	42,112,240.12	73.24	15,390,106.14

Other accounts receivable (unit)	Ending balance
	Other accounts receivable	Bad debt provision	Withdrawal proportion (%)	Withdrawal reason
Hengxin Securities Co., Ltd.	29,010,449.35	29,010,449.35	100.00	Enter enterprise bankruptcy liquidation
Jianqiao Securities Co., Ltd.	11,840,500.00	11,840,500.00	100.00	Enter enterprise bankruptcy liquidation
Total	40,850,949.35	40,850,949.35	100.00	--

Aging	Ending balance
	Other accounts receivable	Bad debt provision	Withdrawal proportion (%)
Within 1 year	12,128,336.42	204,974.58	1.69
[Of which: within 6 months]	10,036,055.96	100,360.56	1.00
[7-12 months]	2,092,280.46	104,614.02	5.00
1 to 2 years	1,054,178.94	105,417.89	10.00

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Aging	Ending balance
	Other accounts receivable	Bad debt provision	Withdrawal proportion (%)
2 to 3 years	20,211.41	10,105.71	50.00
Over 3 years	1,018,031.09	1,018,031.09	100.00
Total	14,220,757.86	1,338,529.27	9.41

Nature	Ending carrying amount	Beginning carrying amount
Securities investment	40,850,949.35	40,850,949.35
Margin &cash pledge	6,064,299.92	4,593,198.69
Business travel borrowing charges	2,228,900.64	2,088,800.78
Rent and utilities fee	2,330,083.24	6,241,851.35
Others	3,597,474.06	3,727,546.09
Total	55,071,707.21	57,502,346.26

Name of the entity	Nature	Ending balance	Aging	Proportion (%)	Bad debt provision Ending balance
No.1	Securities investment	2,901,0449.35	Over 3 years	52.68	29,010,449.35
No.2	Securities investment	1,1840,500.00	Over 3 years	21.50	11,840,500.00
No. 3	Cash deposit	500,000.00	Within 6 months	0.91	5,000.00
No. 4	Others	415,000.00	Within 6 months	0.75	4,150.00
No. 5	Prepayment of oil fee	369,185.37	Within 6 months	0.67	3,691.85
Total	--	42,135,134.72	--	76.51	40,863,791.20

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(1) Category of Inventory

Item	Ending balance
	Carrying amount	Falling price reserves	Carrying value
Raw materials& package	113,213,102.26	16,779,560.13	96,433,542.13
Homemade semi-finished products and goods in process	1,832,857,138.37	0.00	1,832,857,138.37
Finished product	227,219,100.50	15,923,325.41	211,295,775.09
Total	2,173,289,341.13	32,702,885.54	2,140,586,455.59

Item	Beginning balance
	Carrying amount	Falling price reserves	Carrying value
Raw materials& package	132,151,695.59	17,029,623.45	115,122,072.14
Homemade semi-finished products and goods in process	1,705,396,599.74	0.00	1,705,396,599.74
Finished product	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

Item	Beginning balance	Increase		Decrease		Ending balance
		Withdrawal	Others	Reverse or write-off	Others
Raw materials& package	17,029,623.45	0.00	0.00	250,063.32	0.00	16,779,560.13
Finished product	14,395,712.60	1,527,612.81	0.00	0.00	0.00	15,923,325.41
Total	31,425,336.05	1,527,612.81	0.00	250,063.32	0.00	32,702,885.54

Item	Specific basis of withdrawal of falling price reserves of inventory	Reasons for reversal	Reasons for write-off
Raw materials&	The realizable net value was lower		The raw material withdrawn impairment disposed in

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Item	Specific basis of withdrawal of falling price reserves of inventory	Reasons for reversal	Reasons for write-off
package	than the cost		Reporting Period
Finished product	The realizable net value was lower than the cost		The raw material withdrawn impairment disposed in Reporting Period

Item	Ending balance	Beginning balance
Financial products	2,100,110,858.42	1,741,000,000.00
Tax to be deducted	66,930,195.24	31,310,946.58
Total	2,167,041,053.66	1,772,310,946.58

Item	Ending balance			Beginning balance
	Carrying amount	Depreciation reserves	Carrying value	Carrying amount	Depreciation reserves	Carrying value
Available-for-sale equity instruments	267,197,036.68	0.00	267,197,036.68	517,086,347.91	0.00	517,086,347.91
Of which: measured at fair value	267,197,036.68	0.00	267,197,036.68	517,086,347.91	0.00	517,086,347.91
Measured by cost	0.00	0.00	0.00	0.00	0.00	0.00
Total	267,197,036.68	0.00	267,197,036.68	517,086,347.91	0.00	517,086,347.91

Category	Available-for-sale equity instruments	Available-for-sale debt instruments	Total
Cost of the equity instruments/amortized cost of the liabilities instruments	255,972,300.88	0.00	255,972,300.88
Fair value	267,197,036.68	0.00	267,197,036.68
Changed amount of the fair value accumulatively included in other comprehensive income	11,224,735.80	0.00	11,224,735.80
Withdrawn impairment amount	0.00	0.00	0.00

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Item	Houses and buildings	Land use right	Total
I. Original carrying value
1. Beginning balance	8,680,555.75	2,644,592.00	11,325,147.75
2. Increased amount of the period	0.00	0.00	0.00
3. Decreased amount of the period	146,888.55	0.00	146,888.55
(1) Disposal	146,888.55	0.00	146,888.55
(2) Other transfer	0.00	0.00	0.00
4. Ending balance	8,533,667.20	2,644,592.00	11,178,259.20
II. Accumulative depreciation and accumulative amortization
1. Beginning balance	5,393,723.68	587,646.74	5,981,370.42
2. Increased amount of the period	140,899.80	28,013.28	168,913.08
Withdrawal or amortization	140,899.80	28,013.28	168,913.08
3. Decreased amount of the period	27,093.97	0.00	27,093.97
(1) Disposal	27,093.97	0.00	27,093.97
(2) Other transfer	0.00	0.00	0.00
4. Ending balance	5,507,529.51	615,660.02	6,123,189.53
III. Depreciation reserves
1. Beginning balance	0.00	0.00	0.00
2. Increased amount of the period	0.00	0.00	0.00
Withdrawing	0.00	0.00	0.00
3. Decreased amount of the period	0.00	0.00	0.00
(1) Disposal	0.00	0.00	0.00
(2) Other transfer	0.00	0.00	0.00
4. Ending balance	0.00	0.00	0.00
IV. Carrying value
1. Ending carrying value	3,026,137.69	2,028,931.98	5,055,069.67
2. Beginning carrying value	3,286,832.07	2,056,945.26	5,343,777.33

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(1) List of Fixed Assets

Item	Houses and buildings	Machinery equipment	Transportation equipment	Office equipment and other	Total
I. Original carrying value
1. Beginning balance	1,994,106,003.80	885,870,116.23	63,990,533.99	119,237,780.37	3,063,204,434.39
2. Increased amount of the period	2,700,436.19	8,303,581.15	1,351,123.42	19,660,845.87	32,015,986.63
(1) Purchase	0.00	3,769,485.95	1,351,123.42	1,799,553.67	6,920,163.04
(2) Transfer of project under construction	2,553,547.64	4,534,095.20	0.00	17,861,292.20	24,948,935.04
(3) Taking back of rental housing	146,888.55	0.00	0.00	0.00	146,888.55
3. Decreased amount of the period	23,309,796.95	26,063,847.16	3,950,265.71	15,443,005.41	68,766,915.23
(1) Disposal or Scrap	17,395,203.59	26,063,847.16	3,950,265.71	15,443,005.41	62,852,321.87
(2) Other decrease	5,914,593.36	0.00	0.00	0.00	5,914,593.36
4. Ending balance	1,973,496,643.04	868,109,850.22	61,391,391.70	123,455,620.83	3,026,453,505.79
II. Accumulative depreciation
1. Beginning balance	673,130,286.33	441,060,956.92	50,053,304.86	90,358,146.27	1,254,602,694.38
2. Increased amount of the period	35,933,032.13	46,846,937.31	2,726,849.95	11,041,043.53	96,547,862.92
(1) Withdrawal	35,905,938.16	46,846,937.31	2,726,849.95	11,041,043.53	96,520,768.95
(2) Taking back of rental housing	27,093.97	0.00	0.00	0.00	27,093.97
3. Decreased amount of the period	13,625,432.00	16,424,122.62	3,782,097.06	12,815,760.29	46,647,411.97
(1) Disposal or Scrap	13,625,432.00	16,424,122.62	3,782,097.06	12,815,760.29	46,647,411.9

~ 112 ~

Item	Houses and buildings	Machinery equipment	Transportation equipment	Office equipment and other	Total
					7
4. Ending balance	695,437,886.46	471,483,771.61	48,998,057.75	88,583,429.51	1,304,503,145.33
III. Depreciation reserves
1. Beginning balance	7,061,980.08	8,691,493.68	7,047.07	587,040.62	16,347,561.45
2. Increased amount of the period	0.00	0.00	0.00	0.00	0.00
(1) Withdrawal	0.00	0.00	0.00	0.00	0.00
3. Decreased amount of the period	3,665,687.29	7,775,414.38	0.00	0.00	11,441,101.67
(1) Disposal or Scrap	3,665,687.29	7,775,414.38	0.00	0.00	11,441,101.67
4. Ending balance	3,396,292.79	916,079.30	7,047.07	587,040.62	4,906,459.78
IV. Carrying value
1. Ending carrying value	1,274,662,463.79	395,709,999.31	12,386,286.88	34,285,150.70	1,717,043,900.68
2. Beginning carrying value	1,313,913,737.39	436,117,665.63	13,930,182.06	28,292,593.48	1,792,254,178.56

Item	Original carrying value	Accumulative depreciation	Impairment provision	Carrying value	Notes
Houses and buildings	10,740,209.84	7,238,483.71	3,396,292.79	105,433.34
Machinery equipment	8,203,103.85	7,235,401.18	916,079.30	51,623.37
Transportation equipment	58,119.66	49,329.00	7,047.07	1,743.59
Office equipment and others	900,605.02	286,559.74	587,040.62	27,004.66
Total	19,902,038.37	14,809,773.63	4,906,459.78	185,804.96

Item

Carrying value

Reason

~ 113 ~

Item	Carrying value	Reason
Houses and building	797,896,268.71	In process
Total	797,896,268.71	--

Item	Ending balance			Beginning balance
	Carrying amount	Depreciation reserves	Carrying value	Carrying amount	Depreciation reserves	Carrying value
Operation network of Gujing	0.00	0.00	0.00	5,272,286.37	0.00	5,272,286.37
Renovation project of potential safety concerns	3,486,657.81	0.00	3,486,657.81	20,643,371.11	0.00	20,643,371.11
Phase II of CRM project	1,876,678.16	0.00	1,876,678.16	1,876,678.16	0.00	1,876,678.16
Renovation of rain sewage pipe network outside the factory	8,529,729.73	0.00	8,529,729.73	8,529,729.73	0.00	8,529,729.73
Phase II of BPM project	0.00	0.00	0.00	1,025,641.03	0.00	1,025,641.03
Exhibition center of Bengbu products	878,152.15	0.00	878,152.15	878,152.15	0.00	878,152.15
Hangzhou experience pavilion	895,690.29	0.00	895,690.29	99,622.64	0.00	99,622.64
Tianjin experience pavilion	0.00	0.00	0.00	113,207.55	0.00	113,207.55
Technical improvement project of automation of brewing	8,374,584.66	0.00	8,374,584.66	113,207.55	0.00	113,207.55
Half open wine library in Gujing plant	28,060,455.11	0.00	28,060,455.11	1,127,033.31	0.00	1,127,033.31
Renovation project of deep disposal of sewagedisposal station	3,634,231.28	0.00	3,634,231.28	3,634,231.28	0.00	3,634,231.28

~ 114 ~

Item	Ending balance			Beginning balance
	Carrying amount	Depreciation reserves	Carrying value	Carrying amount	Depreciation reserves	Carrying value
Yellow Crane Tower Chateau and museum	0.00	0.00	0.00	2,726,775.89	0.00	2,726,775.89
Equipment installation project	0.00	0.00	0.00	1,096,197.71	0.00	1,096,197.71
Other projects with small single amount	14,531,206.65	0.00	14,531,206.65	7,360,664.08	0.00	7,360,664.08
Crushing plant production line of Wuliang	1,162,393.16	0.00	1,162,393.16	0.00	0.00	0.00
Renovation project of Zhangji sewage for upgrading	1,867,356.20	0.00	1,867,356.20	0.00	0.00	0.00
35KV electric power project	668,437.01	0.00	668,437.01	0.00	0.00	0.00
Project of Anhui in Shanghai office	1,521,295.56	0.00	1,521,295.56	0.00	0.00	0.00
Renovation project of monitoring upgrading	589,185.45	0.00	589,185.45	0.00	0.00	0.00
Total	76,076,053.22	0.00	76,076,053.22	54,496,798.56	0.00	54,496,798.56

Name o f item	Estimated number	Beginning balance	Increase Amount	Amount that transferred to fixed assets of the period	Other decreased amount of the period	Ending balance
Operation network of Gujing	8,350,000.00	5,272,286.37	942,121.54	0.00	6,214,407.91	0.00
Renovation project of potential safety concerns	180,107,600.00	20,643,371.11	350,137.01	17,506,850.31	0.00	3,486,657.81
Phase II of CRM	2,300,000.00	1,876,678.16	0.00	0.00	0.00	1,876,678.16

~ 115 ~

project
Renovation of rain sewage pipe network outside the factory	10,520,000.00	8,529,729.73	0.00	0.00	0.00	8,529,729.73
Phase II of BPM project	2,600,000.00	1,025,641.03	683,760.68	0.00	1,709,401.71	0.00
Exhibition center of Bengbu products	2,100,000.00	878,152.15	0.00	0.00	0.00	878,152.15
Hangzhou Experience Center	7,000,000.00	99,622.64	796,067.65	0.00	0.00	895,690.29
Tianjin Experience Center	5,600,000.00	113,207.55	2,170,915.12	0.00	2,284,122.67	0.00
Technical improvement project of automation of brewing	274,300,000.00	113,207.55	8,261,377.11	0.00	0.00	8,374,584.66
Half open wine library in Gujing plant	109,916,500.00	1,127,033.31	26,933,421.80	0.00	0.00	28,060,455.11
Renovation project of deep disposal of sewagedisposal station	8,500,000.00	3,634,231.28	0.00	0.00	0.00	3,634,231.28
Yellow Crane Tower Chateau and museum	26,000,000.00	2,726,775.89	0.00	0.00	2,726,775.89	0.00
Equipment installation project	3,400,000.00	1,096,197.71	838,290.60	1,934,488.31	0.00	0.00
Other projects with small single amount	69,885,610.00	7,360,664.08	13,127,144.67	5,507,596.42	449,005.68	14,531,206.65
Crushing plant production line of Wuliang	13,411,600.00	0.00	1,162,393.16	0.00	0.00	1,162,393.16
Renovation project of Zhangji sewage for upgrading	8,000,000.00	0.00	1,867,356.20	0.00	0.00	1,867,356.20
35KV electric power project	1,252,920.43	0.00	668,437.01	0.00	0.00	668,437.01
Project of Anhui in Shanghai office	8,000,000.00	0.00	1,521,295.56	0.00	0.00	1,521,295.56

~ 116 ~

Renovation project of monitoring upgrading	25,000,000.00	0.00	589,185.45	0.00	0.00	589,185.45
Total	766,244,230.43	54,496,798.56	59,911,903.56	24,948,935.04	13,383,713.86	76,076,053.22

Project name	Proportion estimated of the project accumulative input (%)	Project Progress (%)	Accumulative amount of capitalized interests	Of which: the amount of the capitalized interests of the period	Capitalization rate of the interests of the period (%)	Capital resources
Operation network of Gujing	74.42	100.00				Self-owned fund
Renovation project of potential safety concerns	72.19	95.00				Self-owned fund
Phase II of CRM project	81.59	97.00				Self-owned fund
Renovation of rain sewage pipe network outside the factory	81.08	95.00				Self-owned fund
Phase II of BPM project	65.75	100.00				Self-owned fund
Exhibition center of Bengbu products	41.82	90.00				Self-owned fund
Hangzhou Experience Center	12.80	90.00				Self-owned fund
Tianjin Experience Center	40.79	100.00				Self-owned fund
Technical improvement project of automation of brewing	3.05	5.00				Self-owned fund
Half open wine library in Gujing plant	27.82	70.00				Self-owned fund
Renovation project of deep disposal of sewagedisposal station	42.76	95.00				Self-owned fund
Yellow Crane Tower Chateau and museum	57.69	100.00				Self-owned fund
Equipment installation project	56.90	50.00				Self-owned fund
Other projects with small single	29.32	50.00				Self-owned

~ 117 ~

Project name	Proportion estimated of the project accumulative input (%)	Project Progress (%)	Accumulative amount of capitalized interests	Of which: the amount of the capitalized interests of the period	Capitalization rate of the interests of the period (%)	Capital resources
amount						fund
Crushing plant production line of Wuliang	8.67	10.00				Self-owned fund
Renovation project of Zhangji sewage for upgrading	23.34	30.00				Self-owned fund
35KV electric power project	53.35	60.00				Self-owned fund
Project of Anhui in Shanghai office	19.02	80.00				Self-owned fund
Renovation project of monitoring upgrading	2.36	10.00				Self-owned fund
Total						--

Item	Land use right	Patent right	Software	Trademark	Total
I. Original carrying value
1. Beginning balance	628,279,302.56	45,889,466.19	16,616,834.45	169,116,600.00	859,902,203.20
2. Increased amount of the period	55,254,656.00	0.00	9,215,354.37	0.00	64,470,010.37
(1) Purchase	55,254,656.00	0.00	1,250,519.12	0.00	56,505,175.12
(2) Internal R & D	0.00	0.00	0.00	0.00	0.00
(3) Transfer of construction in progress	0.00	0.00	7,964,835.25	0.00	7,964,835.25
3. Decreased amount of the period	0.00	0.00	0.00	0.00	0.00
(1) Disposal	0.00	0.00	0.00	0.00	0.00

~ 118 ~

Item	Land use right	Patent right	Software	Trademark	Total
4. Ending balance	683,533,958.56	45,889,466.19	25,832,188.82	169,116,600.00	924,372,213.57
II. Accumulated amortization
1. Beginning balance	115,286,620.37	45,721,513.97	7,162,253.07	350,373.12	168,520,760.53
2. Increased amount of the period	6,916,352.72	24,038.88	1,548,668.39	0.00	8,489,059.99
(1) Withdrawal	6,916,352.72	24,038.88	1,548,668.39	0.00	8,489,059.99
3. Decreased amount of the period	0.00	0.00	0.00	0.00	0.00
(1) Disposal	0.00	0.00	0.00	0.00	0.00
4. Ending balance	122,202,973.09	45,745,552.85	8,710,921.46	350,373.12	177,009,820.52
III. Depreciation reserves
1. Beginning balance	0.00	0.00	0.00	0.00	0.00
2. Increased amount of the period	0.00	0.00	0.00	0.00	0.00
(1) Withdrawal	0.00	0.00	0.00	0.00	0.00
3. Decreased amount of the period	0.00	0.00	0.00	0.00	0.00
(1) Disposal	0.00	0.00	0.00	0.00	0.00
4. Ending balance	0.00	0.00	0.00	0.00	0.00
IV. Carrying value
1. Ending carrying value	561,330,985.47	143,913.34	17,121,267.36	168,766,226.88	747,362,393.05
2. Beginning carrying value	512,992,682.19	167,952.22	9,454,581.38	168,766,226.88	691,381,442.67

Item

Beginning balance

Increase

Decrease

Ending balance

~ 119 ~

		Generated from enterprise merger	Other	disposal	Disposal
Yellow Crane Tower Distillery Co., Ltd.	478,283,495.29	0.00	0.00	0.00	0.00	478,283,495.29
Total	478,283,495.29	0.00	0.00	0.00	0.00	478,283,495.29

Item	Beginning balance	Increased amount	Amortization amount	Other decrease	Ending balance	Other reasons for decrease
Yeast house & yeast frame project	293,193.37	0.00	293,193.37	0.00	0.00
Reform on highly qualified base liquid project	0.00	0.00	0.00	0.00	0.00
Wine warehouse goods shelf	281,780.60	0.00	281,780.60	0.00	0.00
Specialty store decoration engineering	0.00	0.00	0.00	0.00	0.00
Beijing experience centre decoration	17,095,147.21	0.00	1,221,548.10	0.00	15,873,599.11
The relocation compensation of Beijing experience center	8,625,000.00	0.00	750,000.00	0.00	7,875,000.00
Pottery jar warehouse	10,652,526.78	0.00	2,203,971.00	0.00	8,448,555.78
Decoration project of wine culture museum	179,544.67	0.00	179,544.67	0.00	0.00
Sewage Treatment Project	3,650,000.00	0.00	300,000.00	0.00	3,350,000.00
Afforestation fees	241,885.66	0.00	121,885.18	0.00	120,000.48
Renovation of potential safety concerns	805,933.61	0.00	805,933.61	0.00	0.00
Shenzhen experience centre	3,552,763.50	134,384.47	676,097.56	0.00	3,011,050.41
Others	3,671,221.27	29,203.60	494,317.69	0.00	3,206,107.18
Landscape renovation of Zuimei Chateau	1,963,083.52	0.00	512,108.76	0.00	1,450,974.76
Zhengzhou Experience Center	4,174,238.80	0.00	263,636.16	0.00	3,910,602.64

~ 120 ~

Item	Beginning balance	Increased amount	Amortization amount	Other decrease	Ending balance	Other reasons for decrease
Shanghai Experience Center	2,412,303.20	0.00	629,296.50	0.00	1,783,006.70
Hefei Experience Center	1,945,119.27	0.00	466,828.62	0.00	1,478,290.65
Renovation project of plant of fruit and vegetable wine	1,025,154.32	0.00	246,037.02	0.00	779,117.30
Kitchen renovation of Beijing Experience Center	651,423.70	0.00	55,049.82	0.00	596,373.88
Decoration project of Beijing Product Display and Reception Center	450,450.45	18,078.94	46,852.98	0.00	421,676.41
Decoration of Dingyuan pub	0.00	407,980.05	45,331.12	0.00	362,648.93
Decoration of Tianjin EcperienceCenter	0.00	2,284,122.67	76,137.42	0.00	2,207,985.25
Decoration project of Yellow Crane Tower Chateau	7,567,753.85	12,933,525.46	1,174,692.46	0.00	19,326,586.85
Total	69,238,523.78	15,807,295.19	10,844,242.64	0.00	74,201,576.33

Item	Ending balance		Beginning balance
	Deductible temporary Differences	Deferred income tax assets	Deductible temporary Differences	Deferred income tax assets
Bad debt provision	43,341,035.03	10,835,258.76	43,446,673.17	10,853,076.08
Impairment of inventories	32,676,185.64	8,169,046.41	31,398,636.15	7,804,115.47
Impairment provision of the fixed assets	4,906,459.78	1,226,614.95	16,319,563.99	4,079,686.68
Deferred income	41,140,119.46	10,285,029.86	43,706,503.22	10,614,699.02
Accrued expenses	751,867,337.27	187,966,834.32	170,866,990.79	42,716,747.69
Deductible losses	9,959,599.85	2,489,899.96	36,422,859.63	9,100,740.51
Unrealized internal salesprofits	11,070,788.80	2,767,697.20	8,947,215.47	2,236,803.87
Deducted payroll payable	0.00	0.00	19,804,188.04	4,751,608.42

~ 121 ~

carryingforward to the next period
Total	894,961,525.83	223,740,381.46	370,912,630.46	92,157,477.74

Item	Ending balance		Beginning balance
	Taxable temporary differences	Deferred income tax liabilities	Taxable temporary differences	Deferred income tax liabilities
Change of fair value of trading financial assets	281,087.04	70,271.76	44,379.27	11,094.82
Change in fair value of available-for-sale financial assets	11,224,735.80	2,806,183.95	71,361,103.28	17,840,275.82
Additional deduction of difference of fixed assets	12,915,766.17	3,228,941.54	7,851,477.60	1,962,869.40
Asset evaluation increment of business combination not under the same control	395,728,044.05	98,932,011.01	399,859,463.44	99,964,865.86
Total	420,149,633.06	105,037,408.26	479,116,423.59	119,779,105.90

Item	Ending balance	Beginning balance
Deductible temporary difference	26,699.90	54,697.36
Deductible losses	4,729,929.29	4,331,653.92
Total	4,756,629.19	4,386,351.28

Item	Ending balance	Beginning balance
Certificate of deposit	300,000,000.00	300,000,000.00
Prepayment of equipment and house purchase	12,474,025.99	17,910,214.56
Total	312,474,025.99	317,910,214.56

Category	Ending balance	Beginning balance
Bank acceptance bill	141,790,230.00	200,750,000.00
Trade acceptance	46,282,864.09	0.00

~ 122 ~

Category	Ending balance	Beginning balance
Total	188,073,094.09	200,750,000.00

Item	Ending balance	Beginning balance
Payment for materials	180,724,444.02	260,407,500.55
Prepayment for projects and equipment	57,035,111.24	89,176,879.87
Others	54,842,512.43	86,030,659.41
Total	292,602,067.69	435,615,039.83

Item	Ending balance	Unpaid/ Un-carry-over reason
A Company	2,252,093.02	Final payment of the project
B Company	1,090,000.00	Final payment of the project
C Company	769,163.75	Final payment of the project
D Company	577,691.84	Final payment of the project
E Company	393,392.70	Final payment of the project
Total	5,082,341.31	--

Item	Ending balance	Beginning balance
Loans	803,222,097.92	503,083,108.13
Total	803,222,097.92	503,083,108.13

Item	Beginning balance	Increase	Decrease	Ending balance
I. Short-term salary	371,459,202.44	612,262,256.05	734,646,283.48	249,075,175.01
II. Post-employment benefit-defined contribution plans	914,811.93	60,856,284.57	60,886,100.79	884,995.71
III. Termination benefits	0.00	0.00	0.00	0.00
IV. Other benefits due within one	0.00	0.00	0.00	0.00

~ 123 ~

year
Total	372,374,014.37	673,118,540.62	795,532,384.27	249,960,170.72

Item	Beginning balance	Increase	Decrease	Ending balance
1. Salary, bonus, allowance, subsidy	298,131,004.17	540,715,242.30	670,816,860.60	168,029,385.87
2. Employee welfare	3,692,980.00	5,249,944.98	8,942,924.98	0.00
3. Social insurance	236,208.08	23,336,040.33	23,332,954.33	239,294.08
Of which: 1. Medical insurance premiums	196,904.35	20,334,551.37	20,331,465.37	199,990.35
Work-related injury insurance	20,069.87	1,243,369.69	1,243,369.69	20,069.87
Maternity insurance	19,233.86	1,758,119.27	1,758,119.27	19,233.86
4. Housing fund	9,051,999.88	24,981,359.37	24,018,883.07	10,014,476.18
5. Labor union budget and employee education budget	60,347,010.31	17,979,669.07	7,534,660.50	70,792,018.88
6. short-term paid absence	0.00	0.00	0.00	0.00
7. Short-term profits sharing plan	0.00	0.00	0.00	0.00
Total	371,459,202.44	612,262,256.05	734,646,283.48	249,075,175.01

Item	Beginning balance	Increase	Decrease	Ending balance
1. Basic pension benefits	867,739.31	58,763,572.31	58,793,391.53	837,920.09
2. Unemployment insurance	47,072.62	2,092,712.26	2,092,709.26	47,075.62
Total	914,811.93	60,856,284.57	60,886,100.79	884,995.71

Item	Ending balance	Beginning balance
VAT	18,061,149.68	78,832,243.10
Consumption tax	19,628,722.12	210,532,348.09
Corporate income tax	333,472,335.50	92,299,563.98
Personal income tax	6,210,976.43	3,949,866.64

~ 124 ~

Item	Ending balance	Beginning balance
Urban maintenance and construction tax	12,851,793.29	11,904,195.78
Stamp tax	661,823.10	486,594.48
Education Surcharge	11,943,990.42	11,127,386.19
Others	11,107,919.90	11,852,647.19
Total	413,938,710.44	420,984,845.45

Nature	Ending balance	Beginning balance
Margin &cash pledge	934,758,741.09	874,462,125.60
Quality guarantee deposit	42,694,470.42	12,061,326.71
Housing deduction	10,014,476.18	9,051,999.88
Unsettled sales discount	36,395,275.05	54,471,463.99
Others	80,123,743.71	82,496,637.16
Total	1,103,986,706.45	1,032,543,553.34

Item	Ending balance	Beginning balance
Accrued expenses	804,829,022.62	182,846,942.10
Total	804,829,022.62	182,846,942.10

Item	Beginning balance	Increase	Decrease	Ending balance	Formed reason
Government subsidies	43,706,503.22	0.00	2,566,383.76	41,140,119.46	Related to assets
Total	43,706,503.22	0.00	2,566,383.76	41,140,119.46	--

Item	Beginning balance	Increase	Decrease				Ending balance	Related to assets/ income
			Recorded into non-operating revenue	Recorded into other income	Offset costs	Other decrease
Technical reform of wine	317,708.39	0.00	0.00	31,249.98	0.00	0.00	286,458.41	Related to the

~ 125 ~

Item	Beginning balance	Increase	Decrease				Ending balance	Related to assets/ income
			Recorded into non-operating revenue	Recorded into other income	Offset costs	Other decrease
production system								assets
Instruments subsidies	1,212,750.00	0.00	0.00	110,250.00	0.00	0.00	1,102,500.00	Related to the assets
Intelligent solid brewing technology innovation project	182,291.61	0.00	0.00	15,625.02	0.00	0.00	166,666.59	Related to the assets
Anhui service industry development guide fund	1,380,487.88	0.00	0.00	146,341.44	0.00	0.00	1,234,146.44	Related to the assets
Anhui innovative province construction independent innovation ability construction subsidy	3,409,210.00	0.00	0.00	365,272.50	0.00	0.00	3,043,937.50	Related to the assets
Energy-saving and reform project of coal-fired industry boiler and glass furnace	165,750.00	0.00	0.00	76,500.00	0.00	0.00	89,250.00	Related to the assets
Bozhou city logistics center	120,000.00	0.00	0.00	30,000.00	0.00	0.00	90,000.00	Related to the assets

~ 126 ~

Item	Beginning balance	Increase	Decrease				Ending balance	Related to assets/ income
			Recorded into non-operating revenue	Recorded into other income	Offset costs	Other decrease
project
Equipment subsidy	865,168.63	0.00	0.00	71,769.86	0.00	0.00	793,398.77	Related to the assets
Financial subsidy for energy-saving project	465,956.93	0.00	0.00	265,811.76	0.00	0.00	200,145.17	Related to the assets
Financial subsidy for technology innovation	950,152.42	0.00	0.00	267,110.76	0.00	0.00	683,041.66	Related to the assets
Special fund to enterprise development directed by municipal finance	82,500.00	0.00	0.00	15,000.00	0.00	0.00	67,500.00	Related to the assets
Iot traceability system project	4,083,750.00	0.00	0.00	556,875.00	0.00	0.00	3,526,875.00	Related to the assets
Land refund	23,663,240.29	0.00	0.00	275,103.09	0.00	0.00	23,388,137.20	Related to the assets
Motor and boiler energy-saving reform project	550,000.16	0.00	0.00	68,749.98	0.00	0.00	481,250.18	Related to the assets
Automated storage hook and product quality online monitoring	453,125.00	0.00	0.00	46,875.00	0.00	0.00	406,250.00	Related to the assets
Research fund on smart	563,400.00	0.00	0.00	0.00	0.00	0.00	563,400.00	Related to the

~ 127 ~

Item	Beginning balance	Increase	Decrease				Ending balance	Related to assets/ income
			Recorded into non-operating revenue	Recorded into other income	Offset costs	Other decrease
Koji-making technology								assets
Renovation of Gujing Zhangji Spirit Room	930,208.35	0.00	0.00	23,749.98	0.00	0.00	906,458.37	Related to the assets
Key technical cooperation on isotopic authenticity of important food	480,000.00	0.00	0.00	0.00	0.00	0.00	480,000.00	Related to the assets
Food security enhancement project	965,517.25	0.00	0.00	68,965.50	0.00	0.00	896,551.75	Related to the assets
Comprehensive subsidies for air pollution prevention	2,865,286.31	0.00	0.00	131,133.89	0.00	0.00	2,734,152.42	Related to the assets
Total	43,706,503.22	0.00	0.00	2,566,383.76	0.00	0.00	41,140,119.46

Item	Beginning balance	Increase/decrease in Reporting Period (+,-)					Ending balance
		Newly issue share	Bonus shares	Bonus issue from profit	Others	Subtotal
The sum of shares	503,600,000.00	0.00	0.00	0.00	0.00	0.00	503,600,000.00

Item	Beginning balance	Increase	Decrease	Ending balance
Capital premium	1,262,552,456.05	0.00	0.00	1,262,552,456.05
Other capital reserves	32,853,136.20	0.00	0.00	32,853,136.20
Total	1,295,405,592.25	0.00	0.00	1,295,405,592.25

~ 128 ~

29. Other Comprehensive Income

Item	Beginning balance	Reporting Period					Ending balance
		Income before taxation in the Current Period	Less: recorded in other comprehensive income in prior period and transferred in profit or loss in the Current Period	Less: Income tax expense	Attributable to owners of the Company as the parent after tax	Attributable to non-controlling interests after tax
I. Other comprehensive income cannot be reclassified into profits and losses in future	0.00	0.00	0.00	0.00	0.00	0.00	0.00
II. Other comprehensive reclassified into profits or losses	53,520,827.44	-41,442,155.53	14,020,658.94	-10,360,538.89	-45,102,275.58	0.00	8,418,551.86
Of which: profits or losses of change in fair value of available-for-sale financial assets	53,520,827.44	-41,442,155.53	14,020,658.94	-10,360,538.89	-45,102,275.58	0.00	8,418,551.86
Total	53,520,827.44	-41,442,155.53	14,020,658.94	-10,360,538.89	-45,102,275.58	0.00	8,418,551.86

Item	Beginning balance	Increase	Decrease	Ending balance
Statutory surplus reserves	256,902,260.27	0.00	0.00	256,902,260.27
Total	256,902,260.27	0.00	0.00	256,902,260.27

~ 129 ~

Item	Reporting Period	Same period of last year
Beginning balance of retained profits before adjustments	4,349,649,698.42	3,503,069,053.49
Total beginning balance of retained profits before adjustments (Increase+, decrease-)	0.00	0.00
Beginning balance of retained profits after adjustments	4,349,649,698.42	3,503,069,053.49
Add: Net profit attributable to owners of the Company	892,422,337.64	1,148,740,644.93
Less: Withdrawal of statutory surplus reserves	0.00	0.00
Withdrawal of discretional surplus reserves	0.00	0.00
Withdrawal of generic risk reserve	0.00	0.00
Dividend of common stock payable	503,600,000.00	302,160,000.00
Dividend of common stock transfer into share capital	0.00	0.00
Ending retained profits	4,738,472,036.06	4,349,649,698.42

Item	Reporting Period		Same period of last year
	Sales revenue	Cost of sales	Sales revenue	Cost of sales
Main operations	4,761,127,411.98	1,030,168,914.20	3,640,782,146.34	891,178,513.56
Other operations	21,956,483.35	12,506,554.04	29,345,618.25	22,000,685.35
Total	4,783,083,895.33	1,042,675,468.24	3,670,127,764.59	913,179,198.91

Item	Reporting Period	Same period of last year
Consumption tax	563,325,650.24	477,359,578.63
Urban maintenance, construction tax and educational surcharge	142,213,013.80	107,125,009.74
Urban land use tax	6,015,282.37	6,268,387.32
Real estate tax	8,375,687.33	8,038,252.32
Stamp duty	3,804,040.42	3,894,182.32
Others	5,733,499.37	3,445,944.18
Total	729,467,173.53	606,131,354.51

~ 130 ~

Item	Reporting Period	Same period of last year
Employee’s remuneration	136,422,226.05	123,985,954.16
Business travel charges	46,668,654.04	47,121,726.34
Advertising expense	340,669,501.89	185,979,223.96
Transport fees	26,869,004.77	23,693,930.48
Promotion fees	661,443,573.05	556,575,629.94
Sample wine	153,728,608.24	113,260,666.41
Labor cost	194,269,250.64	157,857,846.03
Other sales expenses	37,229,496.49	41,213,783.81
Total	1,597,300,315.17	1,249,688,761.13

Item	Reporting Period	Same period of last year
Employee’s remuneration	156,429,758.02	138,467,339.94
Office expenses	15,386,308.57	6,842,426.24
Repair charge	30,444,032.33	29,106,759.72
Depreciation charge	29,064,059.09	28,961,402.74
Amortization of intangible assets	8,489,059.99	7,794,696.58
Sewage charge	6,066,176.72	11,408,909.28
Business travel charges	1,093,709.89	847,155.37
Water & electricity fees	5,668,025.21	5,009,938.09
Others	27,859,207.90	34,983,067.47
Total	280,500,337.72	263,421,695.43

Item	Reporting Period	Same period of last year
Interest expenses	0.00	0.00
Less: Interest income	21,644,883.48	17,954,811.63
Exchange gains and losses	608,331.71	409,322.34
Others	751,645.22	280,846.64

~ 131 ~

Item	Reporting Period	Same period of last year
Total	-20,284,906.55	-17,264,642.65

Item	Reporting Period	Same period of last year
Bad debt loss	-105,638.14	-260,798.74
Inventory falling price loss	1,277,549.50	-2,023,855.12
Total	1,171,911.36	-2,284,653.86

Sources	Reporting Period	Same period of last year
Financial assets at fair value through profit or loss	236,707.77	-119,656.35
Of which: gains on changes in fair value of derivative financial assets	0.00	0.00
Total	236,707.77	-119,656.35

Item	Reporting Period	Same Period of last year
Investment income from disposal of financial assets at fair value through profit or loss	1,271,471.00	2,329,585.99
Investment income from holding of available-for-dale financial assets	50,743,630.89	22,622,635.21
Investment income from disposal of available-for-sale financial assets	10,999,123.54	49,254,878.84
Other	5,760,794.52	6,810,384.43
Total	68,775,019.95	81,017,484.47

Item	Reporting Period	Same Period of last year	Amount recorded in the current non-recurring profit or loss
Fixed assets disposal income	154,437.81	487,886.67	154,437.81
Total	154,437.81	487,886.67	154,437.81

Item	Reporting Period	Same Period of last year	Amount recorded in the current non-recurring profit or loss
Government subsidy related to routine business activities	4,487,036.05	23,716,926.49	4,487,036.05

~ 132 ~

Item	Reporting Period	Same Period of last year	Amount recorded in the current non-recurring profit or loss
Total	4,487,036.05	23,716,926.49	4,487,036.05

Item	Reporting Period	Same Period of last year	Amount recorded in the current non-recurring profit or loss
Gains from damage or scrap of non-current assets	728,876.14	0.00	728,876.14
Government subsidy unrelated to routine business activities	221,000.00	600,000.00	221,000.00
Income from penalty and compensations	7,587,991.61	7,861,891.12	7,587,991.61
Sales of scrap	5,808,369.37	3,475,474.77	5,808,369.37
Other	412,560.64	3,024,423.78	412,560.64
Total	14,758,797.76	14,961,789.67	14,758,797.76

Item	Reporting Period	Same Period of last year	Amount recorded in the current non-recurring profit or loss
Losses on damage or scrap of non-current assets	4,303,286.91	1,193,100.98	4,303,286.91
Other	134,726.13	995,921.03	134,726.13
Total	4,438,013.04	2,189,022.01	4,438,013.04

Item	Reporting Period	Same Period of last year
Current income tax expense	452,080,424.72	320,222,019.81
Deferred income tax expense	-131,290,509.48	-117,205,486.69
Total	320,789,915.24	203,016,533.12

~ 133 ~

46. Cash Flow Statement(1) Cash Generated from Other Operating Activities

Item	Reporting Period	Same Period of last year
Margin	52,007,634.47	126,884,726.25
Government subsidies	615,100.00	7,686,580.00
Interest income	21,644,883.48	17,954,811.63
Recovery of restricted monetary capital	460,000,000.00	0.00
Other	43,953,555.36	11,155,743.51
Total	578,221,173.31	163,681,861.39

Item	Reporting Period	Same Period of last year
Cash paid in selling expense and administrative expense	526,682,839.55	414,549,277.31
Pledged fixed term deposits used to issue notes payable or cash deposit of notes	45,000,000.00	0.00
Other	49,502,450.93	14,733,112.11
Total	621,185,290.48	429,282,389.42

Item	Reporting Period	Same Period of last year
Received government subsidies related to assets	0.00	1,646,000.00
Total	0.00	1,646,000.00

Supplemental information	Reporting Period	Same period of last year
1. Reconciliation of net profit to net cash flows generated from operating activities
Net profit	915,437,666.92	572,114,926.94
Add: Provision for impairment of assets	1,171,911.36	-2,284,653.86
Depreciation of fixed assets, oil-gas assets, and productive living assets	96,520,768.95	95,173,432.11

~ 134 ~

Supplemental information	Reporting Period	Same period of last year
Amortization of investment property	168,913.08	242,646.14
Amortization of intangible assets	8,489,059.99	7,794,696.58
Amortization of long-term prepaid expenses	10,844,242.64	22,860,604.61
Losses on disposal of fixed assets, intangible assets and other long-lived assets (gains: negative)	154,437.81	705,214.31
Losses on scrap of fixed assets (gains: negative)	3,574,410.77	0.00
Losses from variation of fair value (gains: negative)	-236,707.77	119,656.35
Finance costs (gains: negative)	608,331.71	409,322.34
Investment loss (gains: negative)	-68,775,019.95	-81,017,484.47
Decrease in deferred income tax assets (gains: negative)	-131,582,903.72	-117,120,093.84
Increase in deferred income tax liabilities (“-” means decrease)	292,394.23	-7,892,851.83
Decrease in inventory (gains: negative)	-77,733,707.57	-59,838,961.48
Decrease in accounts receivable generated from operating activities (gains: negative)	-1,205,967,657.32	-656,394,178.36
Increase in accounts payable used in operating activities (decrease: negative)	708,414,366.71	652,862,975.93
Amortization of deferred income	2,566,383.76	-2,370,027.39
Certificate of deposit	405,000,000.00	0.00
Net cash generated from/used in operating activities	668,946,891.61	425,365,224.08
2. Significant investing and financing activities without involvement of cash receipts and payments
Conversion of debt into capital	0.00	0.00
Convertible corporate bonds due within one year	0.00	0.00
Fixed assets under financing lease	0.00	0.00
3. Net increase/decrease of cash and cash equivalents:
Ending balance of cash	922,785,957.41	683,630,424.44
Less: beginning balance of cash	1,024,088,626.40	527,849,026.07
Add: ending balance of cash equivalents	0.00	0.00

~ 135 ~

Supplemental information	Reporting Period	Same period of last year
Less: beginning balance of cash equivalents	0.00	0.00
Net increase in cash and cash equivalents	-101,302,668.99	155,781,398.37

Item	Ending balance	Beginning balance
I. Cash	922,785,957.41	1,024,088,626.40
Of which: cash on hand	364,726.59	369,197.41
Bank deposits on demand	921,933,834.69	990,617,397.53
Other monetary funds on demand	487,396.13	33,102,031.46
II. Cash and cash equivalents	0.00	0.00
Of which: Bond investment due within three months	0.00	0.00
III. Ending balance of cash and cash equivalents	922,785,957.41	1,024,088,626.40

Item	Reporting Period
Negotiability amount of trade bills	409,809,334.11
Of which: payment for goods	409,809,334.11

Item	Ending carrying value	Restriction reason
Other monetary capital	45,000,000.00	Bank deposits pledged for issuing notes
Notes receivable	99,930,600.00	Pledged by notes
Total	144,930,600.00	--

Name	Main operating place	Registration place	Nature of business	Holding percentage (%)		Way of gaining
				Directly	Indirectly

~ 136 ~

Name	Main operating place	Registration place	Nature of business	Holding percentage (%)		Way of gaining
				Directly	Indirectly
Bozhou Gujing Sales Co., Ltd.	Bozhou, Anhui	Bozhou, Anhui	Business trading	100.00		Investment
Bozhou Gujing Transportation Co., Ltd.	Bozhou, Anhui	Bozhou, Anhui	Transportation	99.00	1.00	Investment
Anhui Longrui Glass Co., Ltd.	Bozhou, Anhui	Bozhou, Anhui	Production	100.00		Investment
Bozhou Gujing Waste Reclamation Co., Ltd.	Bozhou, Anhui	Bozhou, Anhui	Waste cycled	100.00		Investment
Anhui Jinyunlai Culture & Media Co., Ltd.	Hefei Anhui	Hefei Anhui	Ads marketing	100.00		Investment
Anhui Swisse Will Science & Technology Co., Ltd.	Bozhou, Anhui	Bozhou, Anhui	Technology research	100.00		Investment
Anhui Subway Cordial Wine Co., Ltd.	Bozhou, Anhui	Bozhou, Anhui	Production	100.00		Investment
Shanghai Gujing Jinhao Hotel Management Co., Ltd.	Shanghai	Shanghai	Hotel management	100.00		Business combination under the same control
Bozhou Gujing Hotel Co., Ltd.	Bozhou, Anhui	Bozhou, Anhui	Hotel operating	100.00		Business combination under the same control
Anhui Yuanqing Environmental Co. , Ltd.	Bozhou, Anhui	Bozhou, Anhui	Sewage Treatment	100.00		Investment
Anhui Gujing Cloud E-commerce Co., Ltd.	Hefei, Anhui	Hefei, Anhui	E-commerce	100.00		Investment
Anhui Zhenrui Construction Engineering Co., Ltd.	Bozhou, Anhui	Bozhou, Anhui	Engineering construction	100.00		Investment
Anhui RunAnXinKe Testing Technology Co., Ltd	Bozhou, Anhui	Bozhou, Anhui	Food detection	100.00		Investment
Wuhan Pride Yellow Crane Tower Distillery Co., Ltd.	Wuhan, Hubei	Wuhan, Hubei	Production	51.00		Business combination not under the same control

~ 137 ~

Name	Main operating place	Registration place	Nature of business	Holding percentage (%)		Way of gaining
				Directly	Indirectly
Pride Yellow Crane Tower Distillery (Xianning) Co., Ltd.	Xianning, Hubei	Xianning, Hubei	Production		51.00	Business combination not under the same control
Hubei Yellow Crane Tower Distillery Co., Ltd.	Suizhou, Hubei	Suizhou, Hubei	Production		51.00	Business combination not under the same control
Tian Long Jin Di (Wuhan) Co., Ltd.	Wuhan, Hubei	Wuhan, Hubei	Commercial trade		51.00	Business combination not under the same control
Xianning Junhe Sales Co., Ltd.	Xianning, Hubei	Xianning, Hubei	Commercial trade		51.00	Business combination not under the same control
Hubei Junhe Advertising Co., Ltd.	Wuhan, Hubei	Wuhan, Hubei	Ads marketing		51.00	Business combination not under the same control
Wuhan Junya Shibo Technology Co., Ltd.	Wuhan, Hubei	Wuhan, Hubei	Technology development		51.00	Investment
Wuhan Junya Sales Co., Ltd.	Wuhan, Hubei	Wuhan, Hubei	Commercial trade		51.00	Investment
Suizhou Junhe Trading Co., Ltd.	Suizhou, Hubei	Suizhou, Hubei	Business trading		51.00	Investment
Hubei Hechuyuan Trading Co., Ltd.	Wuhan, Hubei	Wuhan, Hubei	Business trading		51.00	Investment

~ 138 ~

(2) Significant Not Wholly-owned Subsidiary

Name	Shareholding proportion of non-controlling interests	The profit or loss attributable to non-controlling interests	Declaring dividends distributed to non-controlling interests	Ending balance of non-controlling interests
Wuhan Pride Yellow Crane Tower Distillery Co., Ltd.	49.00	23,015,329.28	0.00	405,115,957.61

Name	Ending balance
	Current assets	Non-current assets	Total assets	Current liabilities	Non-current liability	Total liabilities
Wuhan Pride Yellow Crane Tower Distillery Co., Ltd.	472,762,807.51	724,685,605.19	1,197,448,412.70	271,205,313.30	99,493,197.97	370,698,511.27

Name	Beginning balance
	Current assets	Non-current assets	Total assets	Current liabilities	Non-current liability	Total liabilities
Wuhan Pride Yellow Crane Tower Distillery Co., Ltd.	441,615,299.44	678,572,840.91	1,120,188,140.35	239,818,614.70	100,576,052.97	340,394,667.67

Name	Reporting Period				Same period of last year
	Operating revenue	Net profit	Total comprehensive income	Cash flows from operating activities	Operating revenue	Net profit	Total comprehensive income	Cash flows from operating activities
Wuhan Pride Yellow Crane Tower Distillery	429,495,365.21	46,956,428.75	46,956,428.75	73,102,943.91	347,068,706.22	42,796,425.53	42,796,425.53	92,368,110.24

~ 139 ~

Name	Reporting Period	Same period of last year
Co., Ltd.

~ 140 ~

policies of the Company and the items of sale contracts, the Company gives priority to first paymentshipment, only small amount of credit transactions and examines and verifies the credit of the client whotrading with by credit way.The Company's working capital was in bank with higher credit rating, so credit risk of working capital waslow.3. Liquidity Risk

When managing liquidity risk, the Company maintained the management’s believe that supervising the

sufficient cash and cash equivalents to meet the operating demand of the Company and reduce the influenceof the fluctuation of cash flow.

X. The Disclosure of Fair Value

1. Ending Fair Value of Assets and Liabilities at Fair Value

Item	Ending fair value
	Fair value measurement items at level 1	Fair value measurement items at level 2	Fair value measurement items at level 3	Total
I. Consistent fair value measurement
(I) Financial assets at fair value through profit or loss	1,057,659.73			1,057,659.73
1. Trading financial assets	1,057,659.73			1,057,659.73
(1) Equity instrument investment	1,057,659.73			1,057,659.73
(II) Available-for-sale financial assets	267,197,036.68			267,197,036.68
1. Equity instrument investment	267,197,036.68			267,197,036.68
Total assets consistently measured at fair value	267,197,036.68			267,197,036.68

~ 141 ~

Name	Registration place	Nature of business	Registered capital	Proportion of share held by the Company as the parent against the Company (%)	Proportion of voting rights owned by the Company as the parent against the Company (%)
Anhui Gujing Group Co., Ltd.	Anhui	Beverage, Construction materials, and plastic productions manufacture	1,000,000,000.00	53.89	53.89

Name	Relationship
Anhui Ruifuxiang Food Co., Ltd	Affiliated enterprise of controlling shareholder and actual controller
Anhui Ruijing Restaurant Management Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Anhui Haochidian Catering Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Shanghai Ruiyao Hotel Management Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Shanghai Beihai Restaurant Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Anhui Ruijing Trade Travel (Group) Co., Ltd	Affiliated enterprise of controlling shareholder and actual controller
Bozhou Hotel Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Anhui Gujing Real Estates Group Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
East Ruijing Enterprise Investment Development Co., Ltd	Affiliated enterprise of controlling shareholder and actual controller
Anhui Hengxin Pawn Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Bozhou Ruineng Thermoelectricity Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Holiday Inn Hefei	Affiliated enterprise of controlling shareholder and actual controller
Bozhou Rufuxiang High-protein Feed Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Anhui Gujing Hotel Development Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Anhui Ruixin Pawn Co., Ltd	Affiliated enterprise of controlling shareholder and actual controller

~ 142 ~

Name	Relationship
Anhui Zhongxin Financial Leasing Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Anhui Huixin Finance Investment Group Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Hefei Longxin Financial Management Consulting Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Bozhou Anxin Microcredit Co., Ltd	Affiliated enterprise of controlling shareholder and actual controller
Large Central Plain Wine Valley Culture Tourism Development Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Anhui Xinyuan Government Landscape Engineering Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Bozhou Gujing Hotel Co., Ltd	Affiliated enterprise of controlling shareholder and actual controller
Anhui Youxin Financing Guarantee Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Anhui Aoxin Real Estate Development Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Anhui Lixin E-Commerce Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Anhui Xinxin Property Management Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Bozhou Huisheng Building Catering Company	Affiliated enterprise of controlling shareholder and actual controller
Bozhou Gujing Junlai Hotel Management Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Bozhou Gujing Real Estates Management Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Bozhou Gujing Real Estates Development Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Anhui Gujing International Travel Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Anhui Jinzhai Gujing Real Estate Development Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Anhui Shenglong Trading Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Anhui Zhonggu Tourism Development Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller
Anhui Gujing Health Industry Co., Ltd.	Affiliated enterprise of controlling shareholder and actual controller

Connected party

Content

Reporting Period

Same period of last year

~ 143 ~

Connected party	Content	Reporting Period	Same period of last year
Anhui Ruifuxiang Food Co., Ltd	Purchase of raw material	0.00	15,810.48
Bozhou Hotel Co., Ltd.	Accepting food and accommodation services	1,859,506.20	807,692.59
Anhui Ruijing Restaurant Management Co., Ltd.	Accepting catering services	23,043.00	89,759.00
Anhui Xinyuan Government Landscape Engineering Co., Ltd.	Afforestation fees	482,050.39	589,278.15
Holiday Inn Hefei	Purchase of goods	132,717.52	35,451.28
Holiday Inn Hefei	Accepting food and accommodation services	41,549.36	70,699.06
Anhui Gujing Hotel Development Co., Ltd.	Accepting labor service	156.04	3,413.21
Anhui Gujing Hotel Development Co., Ltd.	Purchase of materials	0.00	7,245.28
Bozhou Gujing Junlai Hotel Management Co., Ltd.	Accepting food and accommodation services	259,021.00	149,579.79
Anhui Gujing Hotel Development Co., Ltd.	Accepting food and accommodation services	4,819.00	26,285.00
Bozhou Huisheng Building Catering Company	Accepting food and accommodation services	1,349,445.00	1,592,452.00
Anhui Haochidian Catering Co., Ltd.	Accepting food and accommodation services	30,300.00	4,800.00
Anhui Gujing International Travel Co., Ltd.	Accepting labor service	38,228.00	12,240.00
Bozhou Gujing Hotel Co., Ltd	Purchase of commercial residential buildings	0.00	11,900,000.00
Anhui Huixin Finance Investment Group Co., Ltd.	Accepting labor service	134,803.75	0.00
Total	--	4,355,639.26	15,304,705.84

Connected party	Content	Reporting Period	Same period of last year
Anhui Hengxin Pawn Co., Ltd.	Sales of white spirit	3,683.59	6,176.78

~ 144 ~

Connected party	Content	Reporting Period	Same period of last year
Anhui Gujing Group Co., Ltd.	Sales of small sized materials	19,624.03	62,464.38
Anhui Gujing Group Co., Ltd.	Providing labor service	0.00	9,897.94
Anhui Gujing Group Co., Ltd.	Providing catering and accommodation services	124,239.79	102,811.00
Bozhou Huisheng Building Catering Company	Sales of white spirit	34,082.23	17,000.00
Bozhou Hotel Co., Ltd.	Sales of white spirit	47,383.29	61,965.81
Anhui Ruijing Trade Travel (Group) Co., Ltd	Sales of white spirit	5,718,162.07	2,498,463.23
Anhui Ruijing Trade Travel (Group) Co., Ltd	Providing catering and accommodation services	12,388.57	599.99
Anhui Ruijing Trade Travel (Group) Co., Ltd	Sales of materials	356.00	0.00
Anhui Ruifuxiang Food Co., Ltd	Sales of white spirit	331,900.64	339,877.92
Anhui Huixin Finance Investment Group Co., Ltd.	Sales of white spirit	1,236,821.89	14,683.36
Anhui Gujing Hotel Development Co., Ltd.	Sales of white spirit	73,937.00	14,529.91
Anhui Gujing Real Estates Group Co., Ltd.	Sales of white spirit	531,449.33	9,854.52
Anhui Gujing Real Estates Group Co., Ltd.	Providing labor service	6,756.76	456,621.63
Bozhou Gujing Real Estates Development Co., Ltd.	Sales of white spirit	11,475.45	20,033.69
Bozhou Gujing Real Estates Development Co., Ltd.	Providing catering and accommodation services	0.00	600.00
Bozhou Ruineng Thermoelectricity Co., Ltd.	Sales of white spirit	145,564.41	128,848.87
Bozhou Ruineng Thermoelectricity Co., Ltd.	Providing labor service	252,252.25	0.00
Bozhou Ruifuxiang High-protein Feed Co., Ltd.	Sales of white spirit	18,051.34	20,332.81
Anhui Aoxin Real Estate Development Co., Ltd.	Sales of white spirit	7,553.44	6,099.86
Anhui Lixin E-Commerce Co., Ltd.	Sales of white spirit	64,181.89	7,435.83
Anhui Ruixin Pawn Co., Ltd	Sales of white spirit	9,755.53	5,499.01
Anhui Xinxin Property Management Co., Ltd.	Sales of white spirit	23,587.69	21,703.08
Anhui Youxin Financing Guarantee Co., Ltd.	Sales of white spirit	4,374.98	3,089.68
Anhui Zhongxin Financial Leasing Co., Ltd.	Sales of white spirit	7,026.79	6,102.42

~ 145 ~

Connected party	Content	Reporting Period	Same period of last year
Bozhou Anxin Microcredit Co., Ltd	Sales of white spirit	7,399.60	5,800.72
Bozhou Gujing Hotel Co., Ltd	Sales of white spirit	9,363.27	24,100.26
Bozhou Gujing Junlai Hotel Management Co., Ltd.	Sales of white spirit	9,270.55	4,307.69
Bozhou Gujing Real Estates Management Co., Ltd.	Sales of white spirit	39,987.82	38,442.24
Large Central Plain Wine Valley Culture Tourism Development Co., Ltd.	Providing labor service	15,057.68	5,485.98
Large Central Plain Wine Valley Culture Tourism Development Co., Ltd.	Utilities	39,974.95	94,630.14
Large Central Plain Wine Valley Culture Tourism Development Co., Ltd.	Providing catering and accommodation services	10,818.00	20,896.00
Large Central Plain Wine Valley Culture Tourism Development Co., Ltd.	Sales of small sized materials	2,516.56	5,101.65
Large Central Plain Wine Valley Culture Tourism Development Co., Ltd.	Sales of white spirit	1,135,798.58	337,678.77
Anhui Haochidian Catering Co., Ltd.	Sales of white spirit	25,571.62	182,598.15
Anhui Shenglong Trading Co., Ltd.	Providing catering and accommodation services	6,900.00	400.00
Anhui Shenglong Trading Co., Ltd.	Sales of white spirit	247,600.01	0.00
Anhui Xinyuan Government Landscape Engineering Co., Ltd.	Sales of small sized materials	8,100.01	8,507.41
Anhui Gujing International Travel Co., Ltd.	Providing catering and accommodation services	46,824.00	3,960.00
Anhui Gujing International Travel Co., Ltd.	Sales of small sized materials	470.95	0.00
East Ruijing Enterprise Investment Development Co., Ltd	Providing labor service	0.00	201,390.13
Hefei Longxin Financial Management Consulting Co., Ltd.	Sales of white spirit	1,510.68	7,902.56
Anhui Zhonggu Tourism Development Co., Ltd.	Sales of small sized materials	120.85	0.00

~ 146 ~

Connected party	Content	Reporting Period	Same period of last year
Anhui Zhonggu Tourism Development Co., Ltd.	Providing catering and accommodation services	13,125.00	0.00
Anhui Gujing Health Industry Co., Ltd.	Sales of small sized materials	10,061.26	0.00
Anhui Gujing Health Industry Co., Ltd.	Sales of white spirit	3,103.45	0.00
Anhui Jinzhai Gujing Real Estate Development Co., Ltd.	Sales of white spirit	95,255.39	0.00
Holiday Inn Hefei	Providing catering and accommodation services	56,825.49	0.00
Total	--	10,470,264.68	4,755,893.42

Name of lessor	Category of leased assets	The lease income confirmed in the Reporting Period	The lease income confirmed in the same period of last year
Anhui Gujing Group Co., Ltd.	Houses and buildings	1,095,238.10	1,095,238.10

Name of lessee	Category of leased assets	The lease income confirmed in the Reporting Period	The lease income confirmed in the same period of last year
Anhui Gujing Hotel Management Co., Ltd.	Houses and buildings	246,190.48	246,190.49

Item	Ending balance	Beginning balance
Accounts receivable:
Anhui Ruifuxiang Food Co., Ltd	5,257.31	5,257.31
Anhui Gujing Group Co., Ltd.	0.00	2,250.00
Large Central Plain Wine Valley Culture Tourism Development Co., Ltd.	0.00	3,860.00
Bozhou Ruineng Thermoelectricity Co., Ltd.	14,000.00	0.00
Total	19,257.31	11,367.31

~ 147 ~

Item	Ending balance	Beginning balance
Other accounts receivable:
Anhui Gujing Real Estates Group Co., Ltd.	25,342.50	25,342.50
Bozhou Ruineng Thermoelectricity Co., Ltd.	19,450.00	19,450.00
Total	44,792.50	44,792.50

Item	Ending balance	Beginning balance
Advances from customers:
Anhui Ruijing Trade Travel (Group) Co., Ltd	0.00	3,854,332.31
Large Central Plain Wine Valley Culture Tourism Development Co., Ltd.	1,372,380.00	2,193,069.10
Anhui Ruijing Restaurant Management Co., Ltd.	75,936.30	0.00
Bozhou Gujing Real Estates Development Co., Ltd.	49,890.32	0.00
Total	1,498,206.62	6,047,401.41
Other accounts payable:
Anhui Ruifuxiang Food Co., Ltd	0.00	6,726.00
Anhui Ruijing Trade Travel (Group) Co., Ltd	0.00	23,678.36
Anhui Gujing Group Co., Ltd.	2,742.45	0.00
Total	2,742.45	30,404.36

Item	Ending balance	Beginning balance
Minimum lease payments of irrevocable operating lease
1 year after balance date	2,300,000.00	2,300,000.00
2 year after balance date	2,300,000.00	2,300,000.00
3 year after balance date	2,300,000.00	2,300,000.00

~ 148 ~

Item	Ending balance	Beginning balance
Subsequent years	20,508,333.33	21,658,333.33
Total	27,408,333.33	28,558,333.33

Category	Ending balance
	Carrying amount		Bad debt provision		Carrying value
	Amount	Proportion (%)	Amount	Withdrawal proportion (%)
Accounts receivable with significant single amount for which bad debt provision separately accrued	0.00	0.00	0.00	0.00	0.00
Accounts receivable withdrawal of bad debt provision of by credit risks characteristics:	8,343,188.95	100.00	728,892.87	8.74	7,614,296.08
Accounts receivable with insignificant single amount for which bad debt provision separately accrued	0.00	0.00	0.00	0.00	0.00
Total	8,343,188.95	100.00	728,892.87	8.74	7,614,296.08

~ 149 ~

Category	Beginning balance
	Carrying amount		Bad debt provision		Carrying value
	Amount	Proportion (%)	Amount	Withdrawal proportion (%)
Accounts receivable with significant single amount for which bad debt provision separately accrued	0.00	0.00	0.00	0.00	0.00
Accounts receivable withdrawal of bad debt provision of by credit risks characteristics:	9,168,249.97	100.00	658,331.94	7.18	8,509,918.03
Accounts receivable with insignificant single amount for which bad debt provision separately accrued	0.00	0.00	0.00	0.00	0.00
Total	9,168,249.97	100.00	658,331.94	7.18	8,509,918.03

Aging	Ending balance
	Accounts receivable	Bad debt provision	Withdrawal proportion (%)
Within 1 year	0.00	0.00	0.00
[Of which: within 6 months]	0.00	0.00	0.00
[7-12 months]	0.00	0.00	0.00
1 to 2 years	0.00	0.00	0.00
2 to 3 years	0.00	0.00	0.00
Over 3 years	728,892.87	728,892.87	100.00
Total	728,892.87	728,892.87	100.00

Name of the group	Ending balance
	Accounts receivable	Bad debt provision	Withdrawal proportion (%)
Connected group within the combination scope	7,614,296.08	0.00	0.00
Total	7,614,296.08	0.00	0.00

~ 150 ~

The amount of bad debt provision withdrawn during the Reporting Period was RMB70,560.93.(3) Particulars of Accounts Receivable with Actual Verification during the Reporting PeriodNo such cases in the Reporting Period.(4) Top 5 Accounts Receivable in Ending Balance Collected according to the Arrears PartyTotal amount of the Top 5 accounts receivable in ending balance collected according to the arrears party wasRMB7,413,311.01, accounting for 88.85% of the total ending balance of accounts receivable, and the total ofending balance of bad debt provision withdrawn was RMB0.00.2. Other Accounts Receivable(1) Other Accounts Receivable Disclosed by Category

Category	Ending balance
	Carrying amount		Bad debt provision		Carrying value
	Amount	Proportion (%)	Amount	Withdrawal proportion (%)
Other accounts receivable with significant single amount for which bad debt provision separately accrued	40,850,949.35	28.08	40,850,949.35	100.00	0.00
Other accounts receivable withdrawn bad debt provision according to credit risks characteristics	104,616,570.41	71.92	768,478.79	0.73	103,848,091.62
Other accounts receivable with insignificant single amount for which bad debt provision separately accrued	0.00	0.00	0.00	0.00	0.00
Total	145,467,519.76	100.00	41,619,428.14	28.61	103,848,091.62

Category	Beginning balance
	Carrying amount		Bad debt provision		Carrying value
	Amount	Proportion (%)	Amount	Withdrawal proportion (%)
Other accounts receivable with significant single amount for which bad debt provision separately accrued	40,850,949.35	23.76	40,850,949.35	100.00	0.00
Other accounts receivable withdrawn bad debt provision according to credit risks characteristics	131,103,824.99	76.24	746,046.24	0.57	130,357,778.75

~ 151 ~

Category	Beginning balance
	Carrying amount		Bad debt provision		Carrying value
	Amount	Proportion (%)	Amount	Withdrawal proportion (%)
Other accounts receivable with insignificant single amount for which bad debt provision separately accrued	0.00	0.00	0.00	0.00	0.00
Total	171,954,774.34	100.00	41,596,995.59	24.19	130,357,778.75

Other accounts receivable (unit)	Ending balance
	Other accounts receivable	Bad debt provision	Withdrawal proportion (%)	Withdrawal reason
Hengxin Securities	29,010,449.35	29,010,449.35	100.00	Under the bankruptcy liquidation
Jianqiao Securities	11,840,500.00	11,840,500.00	100.00	Under the bankruptcy liquidation
Total	40,850,949.35	40,850,949.35

Aging	Ending balance
	Other accounts receivable	Bad debt provision	Withdrawal proportion (%)
Within 1 year	2,593,577.25	32,291.80	1.25
[Of which: within 6 months]	2,434,676.49	24,346.76	1.00
[7-12 months]	158,900.76	7,945.04	5.00
1 to 2 years	465,288.96	46,528.90	10.00
2 to 3 years	0.00	0.00	0.00
Over 3 years	689,658.09	689,658.09	100.00
Total	3,748,524.30	768,478.79	20.50

~ 152 ~

Name of the group	Ending balance
	Other accounts receivable	Bad debt provision	Withdrawal proportion (%)
Connected group within the consolidation scope	100,868,046.11	0.00	0.00
Total	100,868,046.11	0.00	0.00

Nature	Ending carrying amount	Beginning carrying amount
Intercourse funds between entities within combination scope	100,868,046.11	128,390,563.19
Securities investment	40,850,949.35	40,850,949.35
Margin &cash pledge	1,658,139.09	858,139.09
Borrowings by employees	115,000.00	16,164.00
Rent and utilities fee	505,321.35	1,023,996.61
Others	1,470,063.86	814,962.10
Total	145,467,519.76	171,954,774.34

Name of the entity	Relationship	Nature	Ending balance	Aging	Proportion to total ending balance of other accounts receivable (%)	Ending balance of bad debt provision
No.1	The Company’s subsidiary	Intercourse funds between entities within combination scope	94,808,659.13	Within 6 months	65.18	0.00
No.2	Non-connected party	Securities investment	29,010,449.35	Over 3 years	19.94	29,010,449.35

~ 153 ~

Name of the entity	Relationship	Nature	Ending balance	Aging	Proportion to total ending balance of other accounts receivable (%)	Ending balance of bad debt provision
No. 3	Non-connected party	Securities investment	11,840,500.00	Over 3 years	8.14	11,840,500.00
No. 4	The Company’s subsidiary	Intercourse funds between entities within combination scope	6,059,386.98	Within 1 year	4.17	0.00
No. 5	Non-connected party	Margin &cash pledge	500,000.00	Within 6 months	0.34	5,000.00
Total	--	--	142,218,995.46		97.77	40,855,949.35

Item	Ending balance			Beginning balance
	Carrying amount	Depreciation reserve	Carrying value	Carrying amount	Depreciation reserve	Carrying value
Investment to subsidiaries	1,155,089,408.32	0.00	1,155,089,408.32	1,155,089,408.32	0.00	1,155,089,408.32
Total	1,155,089,408.32	0.00	1,155,089,408.32	1,155,089,408.32	0.00	1,155,089,408.32

Investee	Beginning balance	Increase	Decrease	Ending balance	Depreciation reserve withdrawn	Ending balance of depreciation reserve
Bozhou Gujing Sales Co., Ltd.	68,949,286.89	0.00	0.00	68,949,286.89	0.00	0.00
Anhui Longrui Glass Co., Ltd.	85,267,453.06	0.00	0.00	85,267,453.06	0.00	0.00
Shanghai Gujing	49,906,854.63	0.00	0.00	49,906,854.63	0.00	0.00

~ 154 ~

Investee	Beginning balance	Increase	Decrease	Ending balance	Depreciation reserve withdrawn	Ending balance of depreciation reserve
Jinhao Hotel Management Co., Ltd.
Bozhou Gujing Hotel Co., Ltd.	648,646.80	0.00	0.00	648,646.80	0.00	0.00
Gujing Transportation Co., Ltd.	6,875,743.00	0.00	0.00	6,875,743.00	0.00	0.00
Anhui Swisse Will Science & Technology Co., Ltd.	40,000,000.00	0.00	0.00	40,000,000.00	0.00	0.00
Anhui Subway Cordial Wine Co., Ltd.	30,000,000.00	0.00	0.00	30,000,000.00	0.00	0.00
Anhui Yuanqing Environmental Co. , Ltd.	16,000,000.00	0.00	0.00	16,000,000.00	0.00	0.00
Anhui Gujing Cloud E-commerce Co., Ltd.	5,000,000.00	0.00	0.00	5,000,000.00	0.00	0.00
Anhui Zhenrui Construction Engineering Co., Ltd.	10,000,000.00	0.00	0.00	10,000,000.00	0.00	0.00
Wuhan Pride Yellow Crane Tower Distillery	816,000,000.00	0.00	0.00	816,000,000.00	0.00	0.00

~ 155 ~

Investee	Beginning balance	Increase	Decrease	Ending balance	Depreciation reserve withdrawn	Ending balance of depreciation reserve
Co., Ltd.
Anhui Jinyunlai Culture & Media Co., Ltd.	15,000,000.00	0.00	0.00	15,000,000.00	0.00	0.00
Bozhou Gujing Waste Reclamation Co., Ltd.	1,441,423.94	0.00	0.00	1,441,423.94	0.00	0.00
Anhui RunAnXinKe Testing Technology Co., Ltd	10,000,000.00	0.00	0.00	10,000,000.00	0.00	0.00
Total	1,155,089,408.32	0.00	0.00	1,155,089,408.32	0.00	0.00

Item	Reporting Period		Same period of last year
	Operating revenue	Cost of sales	Operating revenue	Cost of sales
Main operations	2,331,145,973.42	930,097,754.58	1,996,798,133.21	787,209,683.22
Other operations	42,363,746.54	32,348,972.74	35,252,699.27	20,947,873.68
Total	2,373,509,719.96	962,446,727.32	2,032,050,832.48	808,157,556.90

Item	Reporting Period	Same period of last year
Investment income generating from long-term equity accounted by cost method	0.00	0.00
Investment income generated from disposal of financial assets at fair value through profit or loss	1,271,471.00	2,329,585.99
Investment income generated from the holding of available-for-sale financial assets	49,031,673.79	23,355,688.14
Investment income generated from the disposal of available-for-sale financial assets	10,999,123.54	49,254,878.84

~ 156 ~

Item	Reporting Period	Same period of last year
Total	61,302,268.33	74,940,152.97

Item	Amount	Explanation
Gains/losses on the disposal of non-current assets	-3,419,972.96
Tax rebates, reductions or exemptions due to approval beyond authority or the lack of official approval documents	0.00
Government grants recognized in the current period, except for those acquired in the ordinary course of business or granted at certain quotas or amounts according to the government’s unified standards	4,708,036.05
Capital occupation charges on non-financial enterprises that are recorded into current gains and losses	0.00
Gains due to that the investment costs for the Company to obtain subsidiaries, associates and joint ventures are lower than the enjoyable fair value of the identifiable net assets of the investees when making the investments	0.00
Gain/loss on non-monetary asset swap	0.00
Gain/loss on entrusting others with investments or asset management	0.00
Asset impairment provisions due to acts of God such as natural disasters	0.00
Gains and losses from debt restructuring	0.00
Expenses on business reorganization, such as expenses on staff arrangements, integration, etc.	0.00
Gain/loss on the part over the fair value due to transactions with distinctly unfair prices	0.00
Current net gains and losses of subsidiaries acquired in business combination under the same control from period-begin to combination date	0.00
Profit and loss from contingencies irrelative to the normal business operations of company	0.00
Gain/loss from change of fair value of trading financial assets and liabilities, and investment gains from disposal of trading financial assets and liabilities and available-for-sale financial assets, other than valid hedging related to the Company’s common businesses	12,507,302.31
Depreciation reserves returns of receivables with separate depreciation test	0.00
Gain/loss on entrustment loans	0.00

~ 157 ~

Item	Amount	Explanation
Gain/loss on change of the fair value of investing real estate of which the subsequent measurement is carried out adopting the fair value method	0.00
Effect on current gains/losses when a one-off adjustment is made to current gains/losses according to requirements of taxation, accounting and other relevant laws and regulations	0.00
Custody fee income when entrusted with operation	0.00
Other non-operating income and expense other than the above	13,674,195.49
Project confirmed with the definition of non-recurring gains and losses and losses	0.00
Subtotal	27,469,560.89
Income tax effects	6,827,920.31
Non-controlling interests effects (after tax)	567,777.06
Total	20,073,863.52

Profit as of Reporting Period	Weighted average ROE (%)	EPS (Yuan/share)
		EPS-basic	EPS-diluted
Net profit attributable to ordinary shareholders of the Company	13.94	1.77	1.77
Net profit attributable to ordinary shareholders of the Company after deduction of non-recurring profit and loss	13.63	1.73	1.73

~ 158 ~

Part XI Documents Available for Reference

(I) Financial statements signed and sealed by the Company’s legal representative, theCompany’s Chief Accountant and the head of the Company’s financial department

(equivalent to financial manager); and

(II) All originals of the Company’s documents and announcements that have been

publicly disclosed in the Reporting Period on the media designated by the ChinaSecurities Regulatory Commission.

Chairman of the Board: (Liang Jinhui)

Anhui Gujing Distillery Company Limited

27 August 2018