ANHUI GUJING DISTILLERY COMPANY LIMITED
SEMI-ANNUAL FINANCIAL REPORT 2021
August 2021
~ 1 ~
I Independent Auditor’s Report
Are these interim financial statements audited by an independent auditor?
□ Yes √ No
These interim financial statements have not been audited by an independent auditor.II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Anhui Gujing Distillery Company Limited
30 June 2021
Unit: RMB
Item 30 June 2021 31 December 2020
Current assets:
Monetary assets 12144304489.85 5971212569.66
Settlement reserve
Interbank loans granted
Held-for-trading financial assets 209115157.91 203877915.51
Derivative financial assets
Notes receivable
Accounts receivable 65349125.90 67933735.91
Accounts receivable financing 2003302090.64 1673510794.51
Prepayments 113375594.34 55575543.21
Premiums receivable
Reinsurance receivables
Receivable reinsurance contract
reserve
Other receivables 86173732.22 33451121.48
Including: Interest receivable
Dividends receivable
Financial assets purchased under
resale agreements
Inventories 3969932350.43 3416880808.96
Contract assets
Assets held for sale
~ 2 ~
Current portion of non-current assets
Other current assets 56469996.22 97412681.26
Total current assets 18648022537.51 11519855170.50
Non-current assets:
Loans and advances to customers
Investments in debt obligations
Investments in other debt obligations
Long-term receivables
Long-term equity investments 4975862.87 4915575.83
Investments in other equity
54910856.74 0.00
instruments
Other non-current financial assets
Investment property 4234372.30 4392943.54
Fixed assets 1829551984.09 1797789271.62
Construction in progress 425876594.64 279169201.60
Productive living assets
Oil and gas assets
Right-of-use assets 50181080.29 0.00
Intangible assets 1023016905.08 934711977.79
Development costs
Goodwill 538969677.36 478283495.29
Long-term prepaid expense 65781236.57 64591933.65
Deferred income tax assets 126821441.54 96972421.95
Other non-current assets 2007300.00 5943717.02
Total non-current assets 4126327311.48 3666770538.29
Total assets 22774349848.99 15186625708.79
Current liabilities:
Short-term borrowings 72231000.00 70665500.00
Borrowings from the central bank
Interbank loans obtained
Held-for-trading financial liabilities
Derivative financial liabilities
Notes payable 17730000.00 140614535.60
Accounts payable 469238592.62 505206561.86
~ 3 ~
Advances from customers
Contract liabilities 2213592055.02 1206573886.26
Financial assets sold under
repurchase agreements
Customer deposits and interbank
deposits
Payables for acting trading of
securities
Payables for underwriting of
securities
Employee benefits payable 362172696.63 498129114.76
Taxes payable 549835380.19 349142692.10
Other payables 1794127565.68 1396599161.14
Including: Interest payable
Dividends payable
Handling charges and commissions
payable
Reinsurance payables
Liabilities directly associated with
assets held for sale
Current portion of non-current
liabilities
Other current liabilities 675219788.39 320792383.03
Total current liabilities 6154147078.53 4487723834.75
Non-current liabilities:
Insurance contract reserve
Long-term borrowings 150125972.22 60117638.89
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities 47677911.46 0.00
Long-term payables
Long-term employee benefits
payable
Provisions
Deferred income 95344263.32 75111997.53
Deferred income tax liabilities 159346410.21 114821451.24
~ 4 ~
Other non-current liabilities
Total non-current liabilities 452494557.21 250051087.66
Total liabilities 6606641635.74 4737774922.41
Owners’ equity:
Share capital 528600000.00 503600000.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 6224747667.10 1295405592.25
Less: Treasury stock
Other comprehensive income 477971.52 0.00
Specific reserve
Surplus reserves 256902260.27 256902260.27
General reserve
Retained earnings 8610783989.67 7987380161.21
Total equity attributable to owners of
15621511888.56 10043288013.73
the Company as the parent
Non-controlling interests 546196324.69 405562772.65
Total owners’ equity 16167708213.25 10448850786.38
Total liabilities and owners’ equity 22774349848.99 15186625708.79
Legal representative: Liang Jinhui The Company’s chief accountant: Zhu Jiafeng
Head of the Company’s financial department: Zhu Jiafeng
2. Balance Sheet of the Company as the Parent
Unit: RMB
Item 30 June 2021 31 December 2020
Current assets:
Monetary assets 8863352312.80 4287808756.66
Held-for-trading financial assets 209115157.91 203877915.51
Derivative financial assets
Notes receivable
Accounts receivable 1179822.50 494976.27
Accounts receivable financing 1171454770.74 1399214331.97
~ 5 ~
Prepayments 65827793.88 11737580.47
Other receivables 278778850.21 141378010.40
Including: Interest receivable
Dividends receivable
Inventories 3197095753.40 2976360208.66
Contract assets
Assets held for sale
Current portion of non-current assets
Other current assets 10395729.97 9734249.41
Total current assets 13797200191.41 9030606029.35
Non-current assets:
Investments in debt obligations
Investments in other debt obligations
Long-term receivables
Long-term equity investments 1312692241.38 1118213665.32
Investments in other equity
instruments
Other non-current financial assets
Investment property 4234372.30 4392943.54
Fixed assets 1250097272.57 1322818855.86
Construction in progress 211265074.95 139865487.21
Productive living assets
Oil and gas assets
Right-of-use assets 46286878.62 0.00
Intangible assets 403977549.81 369163089.18
Development costs
Goodwill
Long-term prepaid expense 46153493.43 44072241.78
Deferred income tax assets 24343790.14 30716488.80
Other non-current assets 75999.80
Total non-current assets 3299050673.20 3029318771.49
Total assets 17096250864.61 12059924800.84
Current liabilities:
Short-term borrowings
~ 6 ~
Held-for-trading financial liabilities
Derivative financial liabilities
Notes payable 0.00 74535.60
Accounts payable 358440748.35 397554006.51
Advances from customers
Contract liabilities 1169598913.91 1130074436.39
Employee benefits payable 88167585.28 127974331.78
Taxes payable 336741977.34 200876134.49
Other payables 441176218.39 524000730.59
Including: Interest payable
Dividends payable
Liabilities directly associated with
assets held for sale
Current portion of non-current
liabilities
Other current liabilities 161917575.75 160738917.51
Total current liabilities 2556043019.02 2541293092.87
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities 43739404.14 0.00
Long-term payables
Long-term employee benefits
payable
Provisions
Deferred income 29654139.35 31601732.51
Deferred income tax liabilities 18296746.56 19407895.89
Other non-current liabilities
Total non-current liabilities 91690290.05 51009628.40
Total liabilities 2647733309.07 2592302721.27
Owners’ equity:
Share capital 528600000.00 503600000.00
Other equity instruments
~ 7 ~
Including: Preferred shares
Perpetual bonds
Capital reserves 6176504182.20 1247162107.35
Less: Treasury stock
Other comprehensive income
Specific reserve
Surplus reserves 251800000.00 251800000.00
Retained earnings 7491613373.34 7465059972.22
Total owners’ equity 14448517555.54 9467622079.57
Total liabilities and owners’ equity 17096250864.61 12059924800.84
3. Consolidated Income Statement
Unit: RMB
Item H1 2021 H1 2020
1. Revenue 7007496467.74 5519621000.62
Including: Operating revenue 7007496467.74 5519621000.62
Interest income
Insurance premium income
Handling charge and
commission income
2. Costs and expenses 5170893817.52 4162705858.66
Including: Cost of sales 1653818347.31 1313925592.48
Interest expense
Handling charge and
commission expense
Surrenders
Net insurance claims paid
Net amount provided as
insurance contract reserve
Expenditure on policy
dividends
Reinsurance premium
expense
Taxes and surcharges 1069811252.05 887997040.72
Selling expense 2028265595.93 1618049637.27
Administrative expense 467727393.70 395687673.15
~ 8 ~
R&D expense 19961346.26 15254382.98
Finance costs -68690117.73 -68208467.94
Including: Interest
4457905.49 28973275.97
expense
Interest
72689006.99 96891173.45
income
Add: Other income 34701412.82 14974353.66
Return on investment (“-” for loss) -5122111.50 18485972.20
Including: Share of profit or loss
60287.04 -53631.34
of joint ventures and associates
Income from the
derecognition of financial assets at
amortized cost (“-” for loss)
Exchange gain (“-” for loss)
Net gain on exposure hedges (“-”
for loss)
Gain on changes in fair value (“-”
5237242.40 -3596160.61
for loss)
Credit impairment loss (“-” for
1945965.69 -388444.57
loss)
Asset impairment loss (“-” for loss) 2464519.26 -5693185.77
Asset disposal income (“-” for
1014902.90 77867.25
loss)
3. Operating profit (“-” for loss) 1876844581.79 1380775544.12
Add: Non-operating income 25707115.31 20575161.54
Less: Non-operating expense 3255078.91 24273656.49
4. Profit before tax (“-” for loss) 1899296618.19 1377077049.17
Less: Income tax expense 478730726.66 370635522.24
5. Net profit (“-” for net loss) 1420565891.53 1006441526.93
5.1 By operating continuity
5.1.1 Net profit from continuing
1420565891.53 1006441526.93
operations (“-” for net loss)
5.1.2 Net profit from discontinued
operations (“-” for net loss)
5.2 By ownership
5.2.1 Net profit attributable to
1378803828.46 1024936604.36
owners of the Company as the parent
5.2.1 Net profit attributable to
41762063.07 -18495077.43
non-controlling interests
~ 9 ~
6. Other comprehensive income net of
796619.20 0.00
tax
Attributable to owners of the Company
477971.52 0.00
as the parent
6.1 Items that will not be
477971.52 0.00
reclassified to profit or loss
6.1.1 Changes caused by
remeasurements on defined benefit
schemes
6.1.2 Other comprehensive
income that will not be reclassified to
profit or loss under the equity method
6.1.3 Changes in the fair value of
477971.52 0.00
investments in other equity instruments
6.1.4 Changes in the fair value
arising from changes in own credit risk
6.1.5 Other
6.2 Items that will be reclassified to
profit or loss
6.2.1 Other comprehensive
income that will be reclassified to profit
or loss under the equity method
6.2.2 Changes in the fair value of
investments in other debt obligations
6.2.3 Other comprehensive
income arising from the reclassification
of financial assets
6.2.4 Credit impairment
allowance for investments in other debt
obligations
6.2.5 Reserve for cash flow
hedges
6.2.6 Differences arising from the
translation of foreign
currency-denominated financial
statements
6.2.7 Other
Attributable to non-controlling
318647.68 0.00
interests
7. Total comprehensive income 1421362510.73 1006441526.93
Attributable to owners of the Company
1379281799.98 1024936604.36
as the parent
~ 10 ~
Attributable to non-controlling
42080710.75 -18495077.43
interests
8. Earnings per share
8.1 Basic earnings per share 2.74 2.04
8.2 Diluted earnings per share 2.74 2.04
Legal representative: Liang Jinhui The Company’s chief accountant: Zhu Jiafeng
Head of the Company’s financial department: Zhu Jiafeng
4. Income Statement of the Company as the Parent
Unit: RMB
Item H1 2021 H1 2020
1. Operating revenue 3596233135.46 3297117172.49
Less: Cost of sales 1388312451.57 1317059263.62
Taxes and surcharges 912790380.44 826730898.61
Selling expense 26922520.17 22901348.42
Administrative expense 274336727.36 287708363.27
R&D expense 12595670.28 9137959.37
Finance costs -33519413.78 -44796771.26
Including: Interest expense 1102140.59 28288982.29
Interest income 34468139.72 73155252.32
Add: Other income 4448910.21 4622731.11
Return on investment (“-” for
-3772871.47 12434590.21
loss)
Including: Share of profit or
loss of joint ventures and associates
Income from the
derecognition of financial assets at
amortized cost (“-” for loss)
Net gain on exposure hedges (“-”
for loss)
Gain on changes in fair value (“-”
5237242.40 -3596160.61
for loss)
Credit impairment loss (“-” for
1815211.93 540745.12
loss)
Asset impairment loss (“-” for
2968599.03 -5693185.77
loss)
~ 11 ~
Asset disposal income (“-” for
1217988.71 60176.99
loss)
2. Operating profit (“-” for loss) 1026709880.23 886745007.51
Add: Non-operating income 17347810.40 15201396.26
Less: Non-operating expense 1424712.54 20488855.01
3. Profit before tax (“-” for loss) 1042632978.09 881457548.76
Less: Income tax expense 260679576.97 232611329.35
4. Net profit (“-” for net loss) 781953401.12 648846219.41
4.1 Net profit from continuing
781953401.12 648846219.41
operations (“-” for net loss)
4.2 Net profit from discontinued
operations (“-” for net loss)
5. Other comprehensive income net of
tax
5.1 Items that will not be reclassified
to profit or loss
5.1.1 Changes caused by
remeasurements on defined benefit
schemes
5.1.2 Other comprehensive income
that will not be reclassified to profit or
loss under the equity method
5.1.3 Changes in the fair value of
investments in other equity instruments
5.1.4 Changes in the fair value
arising from changes in own credit risk
5.1.5 Other
5.2 Items that will be reclassified to
profit or loss
5.2.1 Other comprehensive income
that will be reclassified to profit or loss
under the equity method
5.2.2 Changes in the fair value of
investments in other debt obligations
5.2.3 Other comprehensive income
arising from the reclassification of
financial assets
5.2.4 Credit impairment allowance
for investments in other debt
obligations
5.2.5 Reserve for cash flow hedges
~ 12 ~
5.2.6 Differences arising from the
translation of foreign
currency-denominated financial
statements
5.2.7 Other
6. Total comprehensive income 781953401.12 648846219.41
7. Earnings per share
7.1 Basic earnings per share 1.55 1.29
7.2 Diluted earnings per share 1.55 1.29
5. Consolidated Cash Flow Statement
Unit: RMB
Item H1 2021 H1 2020
1. Cash flows from operating activities:
Proceeds from sale of commodities
8064793672.94 6336568642.45
and rendering of services
Net increase in customer deposits and
interbank deposits
Net increase in borrowings from the
central bank
Net increase in loans from other
financial institutions
Premiums received on original
insurance contracts
Net proceeds from reinsurance
Net increase in deposits and
investments of policy holders
Interest handling charges and
commissions received
Net increase in interbank loans
obtained
Net increase in proceeds from
repurchase transactions
Net proceeds from acting trading of
securities
Tax rebates 3388614.96 3020222.21
Cash generated from other operating
1598870662.08 1323750535.31
activities
Subtotal of cash generated from
9667052949.98 7663339399.97
operating activities
~ 13 ~
Payments for commodities and
1273004707.79 733871614.50
services
Net increase in loans and advances to
customers
Net increase in deposits in the central
bank and in interbank loans granted
Payments for claims on original
insurance contracts
Net increase in interbank loans
granted
Interest handling charges and
commissions paid
Policy dividends paid
Cash paid to and for employees 1492074698.56 1250084349.76
Taxes paid 2121640018.53 1853009320.89
Cash used in other operating
4516366392.84 1484736014.18
activities
Subtotal of cash used in operating
9403085817.72 5321701299.33
activities
Net cash generated from/used in
263967132.26 2341638100.64
operating activities
2. Cash flows from investing activities:
Proceeds from disinvestment 396849809.53 309070000.00
Return on investment 1258176.12 18539603.54
Net proceeds from the disposal of
fixed assets intangible assets and other 1570219.30 92400.01
long-lived assets
Net proceeds from the disposal of
subsidiaries and other business units
Cash generated from other investing
activities
Subtotal of cash generated from
399678204.95 327702003.55
investing activities
Payments for the acquisition of fixed
assets intangible assets and other 285092874.96 220906338.24
long-lived assets
Payments for investments 404900000.00 44800000.00
Net increase in pledged loans granted
Net payments for the acquisition of
65186333.10 0.00
subsidiaries and other business units
Cash used in other investing
~ 14 ~
activities
Subtotal of cash used in investing
755179208.06 265706338.24
activities
Net cash generated from/used in
-355501003.11 61995665.31
investing activities
3. Cash flows from financing activities:
Capital contributions received 4962827169.81 0.00
Including: Capital contributions by
5280000.00 0.00
non-controlling interests to subsidiaries
Borrowings raised 130330000.00 50094500.00
Cash generated from other financing
activities
Subtotal of cash generated from
5093157169.81 50094500.00
financing activities
Repayment of borrowings 228437703.59
Interest and dividends paid 759464406.09 290708.33
Including: Dividends paid by
subsidiaries to non-controlling interests
Cash used in other financing
8235784.88 0.00
activities
Subtotal of cash used in financing
996137894.56 290708.33
activities
Net cash generated from/used in
4097019275.25 49803791.67
financing activities
4. Effect of foreign exchange rates
changes on cash and cash equivalents
5. Net increase in cash and cash
4005485404.40 2453437557.62
equivalents
Add: Cash and cash equivalents
5636903693.74 2944749918.09
beginning of the period
6. Cash and cash equivalents end of the
9642389098.14 5398187475.71
period
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
Item H1 2021 H1 2020
1. Cash flows from operating activities:
Proceeds from sale of commodities
7096307729.01 3777524502.26
and rendering of services
Tax rebates 0.00
~ 15 ~
Cash generated from other operating
2341213371.64 936783738.07
activities
Subtotal of cash generated from
9437521100.65 4714308240.33
operating activities
Payments for commodities and
1352698829.10 1149042873.79
services
Cash paid to and for employees 501300793.46 450118968.16
Taxes paid 1342951770.60 1415720556.26
Cash used in other operating
7545117742.35 508102703.30
activities
Subtotal of cash used in operating
10742069135.51 3522985101.51
activities
Net cash generated from/used in
-1304548034.86 1191323138.82
operating activities
2. Cash flows from investing activities:
Proceeds from disinvestment 386849809.53 276900000.00
Return on investment 438267.56 12434590.21
Net proceeds from the disposal of
fixed assets intangible assets and other 1475459.30 68000.00
long-lived assets
Net proceeds from the disposal of
3123346.37 0.00
subsidiaries and other business units
Cash generated from other investing
activities
Subtotal of cash generated from
391886882.76 289402590.21
investing activities
Payments for the acquisition of fixed
assets intangible assets and other 203961053.06 160840403.43
long-lived assets
Payments for investments 394900000.00 21800000.00
Net payments for the acquisition of
205920000.00 0.00
subsidiaries and other business units
Cash used in other investing
activities
Subtotal of cash used in investing
804781053.06 182640403.43
activities
Net cash generated from/used in
-412894170.30 106762186.78
investing activities
3. Cash flows from financing activities:
Capital contributions received 4957547169.81 0.00
Borrowings raised
~ 16 ~
Cash generated from other financing
activities
Subtotal of cash generated from
4957547169.81 0.00
financing activities
Repayment of borrowings
Interest and dividends paid 755225623.63 0.00
Cash used in other financing
7335784.88 0.00
activities
Subtotal of cash used in financing
762561408.51 0.00
activities
Net cash generated from/used in
4194985761.30 0.00
financing activities
4. Effect of foreign exchange rates
changes on cash and cash equivalents
5. Net increase in cash and cash
2477543556.14 1298085325.60
equivalents
Add: Cash and cash equivalents
4087808756.66 2079818830.20
beginning of the period
6. Cash and cash equivalents end of the
6565352312.80 3377904155.80
period
~ 17 ~
7. Consolidated Statements of Changes in Owners’ Equity
H1 2021
Unit: RMB
H1 2021
Equity attributable to owners of the Company as the parent
Other equity
Item Gener
instruments Less: Other Specifi Non-controlli Total owners’
Capital Surplus al Retained Othe
Share capital Treasur comprehensi c Subtotal ng interests equity Perpetu
Preferre Othe reserves reserves reserv earnings r
al y stock ve income reserve
d shares r e
bonds
1. Balance as
at the end of 503600000. 1295405592. 256902260. 7987380161. 10043288013. 405562772. 10448850786.the period of 00 25 27 21 73 65 38
prior year
Add:
Adjustment
for change in
accounting
policy
Adjustment
for
correction of
previous
error
Adjustment
~ 18 ~
for business
combination
under
common
control
Other
adjustments
2. Balance as
at the
beginning of 503600000. 1295405592. 256902260. 7987380161. 10043288013. 405562772. 10448850786.the 00 25 27 21 73 65 38
Reporting
Period
3. Increase/
decrease in
25000000.0 4929342074. 623403828.4 5578223874.8 140633552. 5718857426.8
the period 477971.52
0 85 6 3 04 7
(“-” for
decrease)
3.1 Total
1378803828. 1379281799.9 42080710.7 1421362510.7
comprehensi 477971.52
46 8 5 3
ve income
3.2
Capital
25000000.0 4929342074. 4954342074.8 98552841.2 5052894916.1
increased
0 85 5 9 4
and reduced
by owners
3.2.1
25000000.0 4929342074. 4954342074.8 4954342074.8
Ordinary
0 85 5 5
shares
~ 19 ~
increased by
owners
3.2.2
Capital
increased by
holders of
other equity
instruments
3.2.3
Share-based
payments
included in
owners’
equity
3.2.4 98552841.2
98552841.29
Other 9
3.3 Profit -755400000.0
-755400000.00 -755400000.00
distribution 0
3.3.1
Appropriatio
n to surplus
reserves
3.3.2
Appropriatio
n to general
reserve
3.3.3 -755400000.0
-755400000.00 -755400000.00
Appropriatio 0
~ 20 ~
n to owners
(or
shareholders
)
3.3.4
Other
3.4
Transfers
within
owners’
equity
3.4.1
Increase in
capital (or
share capital)
from capital
reserves
3.4.2
Increase in
capital (or
share capital)
from surplus
reserves
3.4.3
Loss offset
by surplus
reserves
3.4.4
Changes in
~ 21 ~
defined
benefit
schemes
transferred to
retained
earnings
3.4.5
Other
comprehensi
ve income
transferred to
retained
earnings
3.4.6
Other
3.5
Specific
reserve
3.5.1
Increase in
the period
3.5.2
Used in the
period
3.6 Other
4. Balance as
at the end of 528600000. 6224747667. 256902260. 8610783989. 15621511888. 546196324. 16167708213.477971.52
the 00 10 27 67 56 69 25
Reporting
~ 22 ~
Period
H1 2020
Unit: RMB
H1 2020
Equity attributable to owners of the Company as the parent
Item Other equity Gener
Less: Other Specifi Non-controlli Total owners’
instruments Capital Surplus al Retained Othe
Share capital Treasur comprehensi c Subtotal ng interests equity
Preferre Perpetu Othe reserves reserves reserv earnings r
y stock ve income reserve
d shares a l bonds r e
1. Balance as
at the end of 503600000. 1295405592. 256902260. 6888203911. 8944111764. 488042947.3 9432154711.the period of 00 25 27 92 44 0 74
prior year
Add:
Adjustment
for change in
accounting
policy
Adjustment
for
correction of
previous
error
Adjustment
for business
combination
~ 23 ~
under
common
control
Other
adjustments
2. Balance as
at the
beginning of 503600000. 1295405592. 256902260. 6888203911. 8944111764. 488042947.3 9432154711.the 00 25 27 92 44 0 74
Reporting
Period
3. Increase/
decrease in
-18495077.4
the period 269536604.36 269536604.36 251041526.933
(“-” for
decrease)
3.1 Total
1024936604. 1024936604. -18495077.4 1006441526.comprehensi
36 36 3 93
ve income
3.2 Capital
increased
and reduced
by owners
3.2.1
Ordinary
shares
increased by
owners
3.2.2
~ 24 ~
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 -755400000.0 -755400000.0 -755400000.0
distribution 0 0 0
3.3.1
Appropriatio
n to surplus
reserves
3.3.2
Appropriatio
n to general
reserve
3.3.3
Appropriatio
-755400000.0 -755400000.0 -755400000.0
n to owners
0 0 0
(or
shareholders)
~ 25 ~
3.3.4
Other
3.4
Transfers
within
owners’
equity
3.4.1
Increase in
capital (or
share capital)
from capital
reserves
3.4.2
Increase in
capital (or
share capital)
from surplus
reserves
3.4.3
Loss offset
by surplus
reserves
3.4.4
Changes in
defined
benefit
schemes
transferred to
~ 26 ~
retained
earnings
3.4.5
Other
comprehensi
ve income
transferred to
retained
earnings
3.4.6
Other
3.5
Specific
reserve
3.5.1
Increase in
the period
3.5.2
Used in the
period
3.6 Other
4. Balance as
at the end of
503600000. 1295405592. 256902260. 7157740516. 9213648368. 469547869.8 9683196238.the
00 25 27 28 80 7 67
Reporting
Period
~ 27 ~
8. Statements of Changes in Owners’ Equity of the Company as the Parent
H1 2021
Unit: RMB
H1 2021
Other equity instruments Less: Other
Item Specific Surplus Retained Total owners’
Share capital Preferred Perpetual Capital reserves Treasury comprehensive Other
Other reserve reserves earnings equity
shares bonds stock income
1. Balance as at the
end of the period of 503600000.00 1247162107.35 251800000.00 7465059972.22 9467622079.57
prior year
Add: Adjustment for
change in accounting
policy
Adjustment for
correction of previous
error
Other adjustments
2. Balance as at the
beginning of the 503600000.00 1247162107.35 251800000.00 7465059972.22 9467622079.57
Reporting Period
3. Increase/ decrease
in the period (“-” for 25000000.00 4929342074.85 26553401.12 4980895475.97
decrease)
3.1 Total
781953401.12 781953401.12
comprehensive income
3.2 Capital
25000000.00 4929342074.85 4954342074.85
increased and reduced
~ 28 ~
by owners
3.2.1 Ordinary
shares increased by 25000000.00 4929342074.85 4954342074.85
owners
3.2.2 Capital
increased by holders of
other equity
instruments
3.2.3 Share-based
payments included in
owners’ equity
3.2.4 Other
3.3 Profit
-755400000.00 -755400000.00
distribution
3.3.1
Appropriation to
surplus reserves
3.3.2
Appropriation to
-755400000.00 -755400000.00
owners (or
shareholders)
3.3.3 Other
3.4 Transfers within
owners’ equity
3.4.1 Increase in
capital (or share
capital) from capital
reserves
~ 29 ~
3.4.2 Increase in
capital (or share
capital) from surplus
reserves
3.4.3 Loss offset
by surplus reserves
3.4.4 Changes in
defined benefit
schemes transferred to
retained earnings
3.4.5 Other
comprehensive income
transferred to retained
earnings
3.4.6 Other
3.5 Specific reserve
3.5.1 Increase in
the period
3.5.2 Used in the
period
3.6 Other
4. Balance as at the
end of the Reporting 528600000.00 6176504182.20 251800000.00 7491613373.34 14448517555.54
Period
H1 2020
Unit: RMB
Item H1 2020
~ 30 ~
Other equity instruments Less: Other
Specific Surplus Retained Total owners’
Share capital Preferred Perpetual Capital reserves Treasury comprehensive Other
Other reserve reserves earnings equity
shares bonds stock income
1. Balance as at the
end of the period of 503600000.00 1247162107.35 251800000.00 6397131020.62 8399693127.97
prior year
Add: Adjustment for
change in accounting
policy
Adjustment for
correction of
previous error
Other adjustments
2. Balance as at the
beginning of the 503600000.00 1247162107.35 251800000.00 6397131020.62 8399693127.97
Reporting Period
3. Increase/ decrease
in the period (“-” for -106553780.59 -106553780.59
decrease)
3.1 Total
comprehensive 648846219.41 648846219.41
income
3.2 Capital
increased and
reduced by owners
3.2.1 Ordinary
shares increased by
owners
~ 31 ~
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
-755400000.00 -755400000.00
distribution
3.3.1
Appropriation to
surplus reserves
3.3.2
Appropriation to
-755400000.00 -755400000.00
owners (or
shareholders)
3.3.3 Other
3.4 Transfers
within owners’ equity
3.4.1 Increase in
capital (or share
capital) from capital
reserves
3.4.2 Increase in
capital (or share
capital) from surplus
~ 32 ~
reserves
3.4.3 Loss offset
by surplus reserves
3.4.4 Changes in
defined benefit
schemes transferred
to retained earnings
3.4.5 Other
comprehensive
income transferred to
retained earnings
3.4.6 Other
3.5 Specific
reserve
3.5.1 Increase in
the period
3.5.2 Used in
the period
3.6 Other
4. Balance as at the
end of the Reporting 503600000.00 1247162107.35 251800000.00 6290577240.03 8293139347.38
Period
~ 33 ~
Anhui Gujing Distillery Company Limited
Notes to Financial Statements for H1 2021
(Currency Unit Is RMB Unless Otherwise Stated)
1. BASIC INFORMATION ABOUT THE COMPANY
1.1 Corporate Information
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 RMB377167700 and state-owned shares of 155000000 shares and considered Anhui Gujing
Company 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 60000000 domestic listed foreign shares (“B” shares) in June 1996 and 20000000ordinary shares (“A shares) on September 1996 ordinary shares are listed in national and par value is RMB1.00per 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 RMB235000000 with stocks of 235000000 of which 155000000
shares were issued in China B shares of 60000000 shares and A shares of 20000000 shares. The book value of
the 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 include
147000000 shares with restrict condition on disposal represent 62.55% of total equity and 88000000 shares
without restrict condition on disposal represent 37.45% of total equity.The Company issued
on 27 June 2007 11750000 outstanding shares with restrict condition on disposal are listed in stock market on 29
June 2007. Up to that day outstanding shares with restrict condition on disposal are 135250000 representing
57.55% of total equity the share without restrict condition are 99750000 representing 42.45% of total equity.The Company issued
on 17 July 2008 11750000 outstanding shares with restrict condition on disposal are listed in stock market on 18
July 2008. Up to that day outstanding shares with restrict condition on disposal are 123500000 representing
52.55% of total equity the share without restrict condition are 111500000 representing 47.45% of total equity.The Company issued
on 24 July 2009 123500000 outstanding shares with restrict condition on disposal are listed in stock market on
~ 34 ~
29 July 2009. Up to that day the Company’s all shares are all tradable.Approved by the CSRC Document Zheng-Jian-Xu-Ke [2011] No. 943 the Company privately offered 16800000
ordinary shares (A-shares) to special investors on 15 July 2011 with a par value of RMB1 and the price of
RMB75.00 per share raising RMB1260000000.00 in total the net amount of raised funds stood at
RMB1227499450.27 after deducting RMB32500549.73 of various issuance expenses. Certified Public
Accountants 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 251800000shares as base number on 31 December 2011 transferred capital reserve into share capital at a rate of “10 sharesfor per 10 shares” accounting for 251800000 shares and implemented in the year of 2012. Upon the transference
the registered capitals increased to RMB503600000.In April 2016 the Company entered a strategic cooperation agreement with Wuhan Tianlong Yellow Crane Tower
Co. Ltd. creating a new age for cooperation related to Chinese famous spirit. As the only Chinese famous spirit
in Hubei Province it features unique mellow taste elegant appearance and tempting smell. Moreover Yellow
Crane 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 integratedmodernism 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”.In January 2021 the Company and Mingguang Distillery signed a strategic cooperation agreement. The unique
mung bean flavor adds to the famous liquor family of Gujing. This makes Gujing become a famous Chinese liquor
maker with "three brands" "four flavors" and "three production areas".By 30 June 2021 the Company issued 528600000 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 to
byproducts 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 2021 by the Board of Directors.1.2 Scope of Consolidation and Changes Thereof
(1) Incorporated subsidiaries of the Company
Proportion of Shareholding (or similar equity interest)
Name of Subsidiaries (%)
Direct Indirect
~ 35 ~
Proportion of Shareholding (or similar equity interest)
Name of Subsidiaries (%)
Direct Indirect
Bozhou Gujing Sales Co. Ltd. 100.00 -
Anhui Longrui Glass Co. Ltd 100.00 -
Bozhou Gujing Waste Reclamation Co. Ltd. (cancelled) 100.00 -
Anhui Jinyunlai Culture & Media Co. Ltd. 100.00 -
Anhui Ruisiweier Technology Co. Ltd. 100.00 -
Shanghai Gujing Jinhao Hotel Management Co. Ltd. 100.00 -
Bozhou Gujing Hotel Co. Ltd 100.00 -
Anhui Yuanqing Environmental Protection Co. Ltd. 100.00 -
Anhui Gujing Yunshang E-commerce Co. Ltd. 100.00 -
Anhui Zhenrui Construction Engineering Co. Ltd - 52.00
Anhui RunAnXinKe Testing Technology Co. Ltd. 100.00 -
Anhui Jiudao Culture Media Co. Ltd. 100.00 -
Anhui Jiuan Mechanical Electrical Equipment Co. Ltd. 100.00
Anhui Jiuhao China Railway Construction Engineering Co. Ltd. 52.00
Anhui Mingguang Wine Co. Ltd. 60.00
Mingguang Tiancheng Ming Wine Sales Co. Ltd. 60.00
Fengyang Xiaogang Village Ming Wine Distillery Co. Ltd. 42.00
Yellow Crane Tower Distillery Co. Ltd. 51.00 -
Yellow Crane Tower Distillery (Xianning) Co. Ltd. - 51.00
Yellow Crane Tower Distillery (Suizhou) Co. Ltd. - 51.00
Hubei Junlou Cultural Tourism Co. Ltd. - 51.00
Hubei Yellow Crane Tower Beverage Co. Ltd. - 51.00
Wuhan Yashibo Technology Co. Ltd. - 51.00
Hubei Xinjia Testing Technology Co. Ltd. - 51.00
Wuhan Tianlong Jindi Technology Development Co. Ltd - 51.00
Xianning Junhe Sales Co. Ltd - 51.00
-
Wuhan Junya Sales Co. Ltd 51.00
~ 36 ~
Proportion of Shareholding (or similar equity interest)
Name of Subsidiaries (%)
Direct Indirect
-
Suizhou Junhe Commercial Co. Ltd. 51.00
For details of the subsidiaries mentioned above please refer to Note 7 INTEREST IN OTHER ENTITIES
(2) Change of the scope of consolidation
Compared with the previous period the newly incorporated subsidiaries during the reporting period were Anhui
Mingguang Distillery Co. Ltd. Mingguang Tiancheng Ming Wine Sales Co. Ltd. Fengyang Xiaogang Village
Ming Wine Distillery Co. Ltd. Anhui Jiuhao China Railway Construction Engineering Co. Ltd. Anhui Jiuan
Mechanical Electrical Equipment Co. Ltd. and one subsidiary Bozhou Gujing Waste Reclamation Co. Ltd. was
cancelled.2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
2.1 Basis for Preparation
On the basis of continuous operations the Company shall confirm and measure actual transactions and events in
accordance with the Accounting Standards for Business Enterprises and its Application Guidelines and
Interpretation of the Standards and prepare financial statements. Besides the Company also discloses relevant
financial information in accordance with the China Securities Regulatory Commission (CSRC) Rules No. 15 on
the Compilation and Reporting of Corporate Information on Public Offerings -- General Provisions on Financial
Reports (2014 Revision).2.2 Continuation
The Company has assessed its ability to continually operate for the next twelve months from the end of the
reporting period and no any matters that may result in doubt on its ability as a going concern were noted.Therefore it is reasonable for the Company to prepare financial statements on the going concern basis.3. Important Accounting Policies and Estimations
The following important accounting policies and estimates of the Company shall be formulated in accordance
with the Accounting Standards for Business Enterprises. The business not mentioned shall be carried out in
accordance with the relevant accounting policies in the Accounting Standards for Business Enterprises.3.1 Statement of Compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Company are in compliance with in compliance with the Accounting
Standards for Business Enterprises which factually and completely present the Company’s financial positions on
30 June 2021 changes of owners’ equity business results and cash flows and other relevant information for H1
2021.3.2 Fiscal Period
~ 37 ~
The accounting year of the Company is from January 1 to December 31 in calendar year.3.3 Operating Cycle
The normal operating cycle of the Company is one year.3.4 Currency Used in Bookkeeping
The Company's functional currency is RMB and its overseas subsidiaries are operated in the currency of the main
economic environment in which they operate.3.5 Accounting Treatment of Business Combinations under and not under Common Control
(a) Business combinations under common control
The assets and liabilities that the Company obtains in a business combination under common control shall be
measured at their carrying amount of the acquired entity at the combination date. If the accounting policy adopted
by the acquired entity is different from that adopted by the acquiring entity the acquiring entity shall according to
accounting policy it adopts adjust the relevant items in the financial statements of the acquired party based on the
principal of materiality. As for the difference between the carrying amount of the net assets obtained by the
acquiring entity and the carrying amount of the consideration paid by it the capital reserve (capital premium or
share premium) shall be adjusted. If the capital reserve (capital premium or share premium) is not sufficient to
absorb the difference any excess shall be adjusted against retained earnings.For the accounting treatment of business combination under common control by step acquisitions please refer to
Note 3.6 (6).(b) Business combinations not under common control
The assets and liabilities that the Company obtains in a business combination not under common control shall be
measured at their fair value at the acquisition date. If the accounting policy adopted by the acquired entity is
different from that adopted by the acquiring entity the acquiring entity shall according to accounting policy it
adopts adjust the relevant items in the financial statements of the acquired entity based on the principal of
materiality. The acquiring entity shall recognise the positive balance between the combination costs and the fair
value of the identifiable net assets it obtains from the acquired entity as goodwill. The acquiring entity shall
pursuant to the following provisions treat the negative balance between the combination costs and the fair value
of the identifiable net assets it obtains from the acquired entity:
(i) It shall review the measurement of the fair values of the identifiable assets liabilities and contingent liabilities
it obtains from the acquired entity as well as the combination costs;
(ii) If after the review the combination costs are still less than the fair value of the identifiable net assets it
obtains from the acquired entity the balance shall be recognised in profit or loss of the reporting period.For the accounting treatment of business combination under the same control by step acquisitions please refer to
Note 3.6 (f).(c) Treatment of business combination related costs
~ 38 ~
The intermediary costs such as audit legal services and valuation consulting and other related management costs
that are directly attributable to the business combination shall be charged in profit or loss in the period in which
they are incurred. The costs to issue equity or debt securities for the consideration of business combination shall
be recorded as a part of the value of the respect equity or debt securities upon initial recognition.3.6 Method of Preparing the Consolidated Financial Statements
(a) Scope of consolidation
The scope of consolidated financial statements shall be determined on the basis of control. It not only includes
subsidiaries determined based on voting power (or similar) or other arrangement but also structured entities under
one or several contract arrangements.Control exists when the Company has all the following: power over the investee; exposure or rights to variable
returns from the Company’s involvement with the investee; and the ability to use its power over the investee to
affect the amount of the investor’s returns. Subsidiaries are the entities that controlled by the Company (including
enterprise a divisible part of the investee and structured entity controlled by the enterprise). A structured entity
(sometimes called a Special Purpose Entity) is an entity that has been designed so that voting or similar rights are
not the dominant factor in deciding who controls the entity.(b) Special requirement as the parent company is an investment entity
If the parent company is an investment entity it should measure its investments in particular subsidiaries as
financial assets at fair value through profit or loss instead of consolidating those subsidiaries in its consolidated
and separate financial statements. However as an exception to this requirement if a subsidiary provides
investment-related services or activities to the investment entity it should be consolidated.The parent company is defined as investment entity when meets following conditions:
a. Obtains funds from one or more investors for the purpose of providing those investors with investment
management services;
b. Commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation
investment income or both; and
c. Measures and evaluates the performance of substantially all of its investments on a fair value basis.If the parent company becomes an investment entity it shall cease to consolidate its subsidiaries at the date of the
change in status except for any subsidiary which provides investment-related services or activities to the
investment entity shall be continued to be consolidated. The deconsolidation of subsidiaries is accounted for as
though the investment entity partially disposed subsidiaries without loss of control.When the parent company previously classified as an investment entity ceases to be an investment entity
subsidiary that was previously measured at fair value through profit or loss shall be included in the scope of
consolidated financial statements at the date of the change in status. The fair value of the subsidiary at the date of
change represents the transferred deemed consideration in accordance with the accounting for business
~ 39 ~
combination not under common control.(c) Method of preparing the consolidated financial statements
The consolidated financial statements shall be prepared by the Company based on the financial statements of the
Company and its subsidiaries and using other related information.When preparing consolidated financial statements the Company shall consider the entire group as an accounting
entity adopt uniform accounting policies and apply the requirements of Accounting Standard for Business
Enterprises related to recognition measurement and presentation. The consolidated financial statements shall
reflect the overall financial position operating results and cash flows of the group.(i) Like items of assets liabilities equity income expenses and cash flows of the parent are combined with those
of the subsidiaries.(ii) The carrying amount of the parent’s investment in each subsidiary is eliminated (off-set) against the parent’s
portion of equity of each subsidiary.(iii) Eliminate the impact of intragroup transactions between the Company and the subsidiaries or between
subsidiaries and when intragroup transactions indicate an impairment of related assets the losses shall be
recognised in full.(iv) Make adjustments to special transactions from the perspective of the group.(d) Method of preparation of the consolidated financial statements when subsidiaries are acquired or
disposed in the reporting period
(i) Acquisition of subsidiaries or business
Subsidiaries or business acquired through business combination under common control
When preparing consolidated statements of financial position the opening balance of the consolidated balance
sheet shall be adjusted. Related items of comparative financial statements shall be adjusted as well deeming that
the combined entity has always existed ever since the ultimate controlling party began to control.Incomes expenses and profits of the subsidiary incurred from the beginning of the reporting period to the end of
the reporting period shall be included into the consolidated statement of profit or loss. Related items of
comparative financial statements shall be adjusted as well deeming that the combined entity has always existed
ever since the ultimate controlling party began to control.Cash flows from the beginning of the reporting period to the end of the reporting period shall be included into the
consolidated statement of cash flows. Related items of comparative financial statements shall be adjusted as well
deeming that the combined entity has always existed ever since the ultimate controlling party began to control.Subsidiaries or business acquired through business combination not under common control
When preparing the consolidated statements of financial position the opening balance of the consolidated
statements of financial position shall not be adjusted.Incomes expenses and profits of the subsidiary incurred from the acquisition date to the end of the reporting
~ 40 ~
period shall be included into the consolidated statement of profit or loss.Cash flows from the acquisition date to the end of the reporting period shall be included into the consolidated
statement of cash flows.(ii) Disposal of subsidiaries or business
When preparing the consolidated statements of financial position the opening balance of the consolidated
statements of financial position shall not be adjusted.Incomes expenses and profits incurred from the beginning of the subsidiary to the disposal date shall be included
into the consolidated statement of profit or loss.Cash flows from the beginning of the subsidiary to the disposal date shall be included into the consolidated
statement of cash flows.(e) Special consideration in consolidation elimination
(i) Long-term equity investment held by the subsidiaries to the Company shall be recognised as treasury stock of
the Company which is offset with the owner’s equity represented as “treasury stock” under “owner’s equity” in
the consolidated statement of financial position.Long-term equity investment held by subsidiaries between each other is accounted for taking long-term equity
investment held by the Company to its subsidiaries as reference. That is the long-term equity investment is
eliminated (off- set) against the portion of the corresponding subsidiary’s equity.(ii) Due to not belonging to paid-in capital (or share capital) and capital reserve and being different from retained
earnings and undistributed profit “Specific reserves” and “General risk provision” shall be recovered based on the
proportion attributable to owners of the parent company after long-term equity investment to the subsidiaries is
eliminated with the subsidiaries’ equity.(iii) If temporary timing difference between the book value of the assets and liabilities in the consolidated
statement of financial position and their tax basis is generated as a result of elimination of unrealized
inter-company transaction profit or loss deferred tax assets of deferred tax liabilities shall be recognised and
income tax expense in the consolidated statement of profit or loss shall be adjusted simultaneously excluding
deferred taxes related to transactions or events directly recognised in owner’s equity or business combination.(iv) Unrealised inter-company transactions profit or loss generated from the Company selling assets to its
subsidiaries shall be eliminated against “net profit attributed to the owners of the parent company” in full.Unrealized inter-company transactions profit or loss generated from the subsidiaries selling assets to the Company
shall be eliminated between “net profit attributed to the owners of the parent company” and “non-controllinginterests” pursuant to the proportion of the Company in the related subsidiaries. Unrealized inter-company
transactions profit or loss generated from the assets sales between the subsidiaries shall be eliminated between
“net profit attributed to the owners of the parent company” and “non-controlling interests” pursuant to the
proportion of the Company in the selling subsidiaries.~ 41 ~
(v) If loss attributed to the minority shareholders of a subsidiary in current period is more than the proportion of
non-controlling interest in this subsidiary at the beginning of the period non-controlling interest is still to be
written down.(f) Accounting for Special Transactions
(i) Purchasing of non-controlling interests
Where the Company purchases non-controlling interests of its subsidiary in the separate financial statements of
the Company the cost of the long-term equity investment obtained in purchasing non-controlling interests is
measured at the fair value of the consideration paid. In the consolidated financial statements difference between
the cost of the long-term equity investment newly obtained in purchasing non-controlling interests and share of
the subsidiary’s net assets from the acquisition date or combination date continuingly calculated pursuant to the
newly acquired shareholding proportion shall be adjusted into capital reserve (capital premium or share premium).If capital reserve is not enough to be offset surplus reserve and undistributed profit shall be offset in turn.(ii) Gaining control over the subsidiary in stages through multiple transactions
Business combination under common control in stages through multiple transactions
On the combination date in the separate financial statement initial cost of the long-term equity investment is
determined according to the share of carrying amount of the acquiree’s net assets in the ultimate controlling
entity’s consolidated financial statements after combination. The difference between the initial cost of the
long-term equity investment and the carrying amount of the long -term investment held prior of control plus book
value of additional consideration paid at acquisition date is adjusted into capital reserve (capital premium or share
premium). If the capital reserve is not enough to absorb the difference any excess shall be adjusted against
surplus reserve and undistributed profit in turn.In the consolidated financial statements the assets and liabilities acquired during the combination should be
recognized at their carrying amount in the ultimate controlling entity’s consolidated financial statements on the
combination date unless any adjustment is resulted from the difference in accounting policies. The difference
between the carrying amount of the investment held prior of control plus book value of additional consideration
paid on the acquisition date and the net assets acquired through the combination is adjusted into capital reserve
(capital premium or share premium). If the capital reserve is not enough to absorb the difference any excess shall
be adjusted against retained earnings.If the acquiring entity holds equity investment in the acquired entity prior to the combination date and the equity
investment is accounted for under the equity method related profit or loss other comprehensive income and other
changes in equity which have been recognised during the period from the later of the date of the Company
obtaining original equity interest and the date of both the acquirer and the acquiree under common control of the
same ultimate controlling party to the combination date should be offset against the opening balance of retained
earnings at the comparative financial statements period respectively.~ 42 ~
Business combination not under common control in stages through multiple transactions
On the consolidation date in the separate financial statements the initial cost of long-term equity investment is
determined according to the carrying amount of the original long-term investment plus the cost of new
investment.In the consolidated financial statements the equity interest of the acquired entity held prior to the acquisition date
shall be re-measured at its fair value on the acquisition date. Difference between the fair value of the equity
interest and its book value is recognised as investment income. The other comprehensive income related to the
equity interest held prior to the acquisition date calculated through equity method should be transferred to
current investment income of the acquisition period excluding other comprehensive income resulted from the
remeasurement of the net assets or net liabilities under defined benefit plan. The Company shall disclose
acquisition-date fair value of the equity interest held prior to the acquisition date and the related gains or losses
due to the remeasurement based on fair value.(iii) Disposal of investment in subsidiaries without a loss of control
For partial disposal of the long-term equity investment in the subsidiaries without a loss of control when the
Company prepares consolidated financial statements difference between consideration received from the disposal
and the corresponding share of subsidiary’s net assets cumulatively calculated from the acquisition date or
combination date shall be adjusted into capital reserve (capital premium or share premium). If the capital reserve
is not enough to absorb the difference any excess shall be offset against retained earnings.(iv) Disposal of investment in subsidiaries with a loss of control
Disposal through one transaction
If the Company loses control in an investee through partial disposal of the equity investment when the
consolidated financial statements are prepared the retained equity interest should be re-measured at fair value at
the date of loss of control. The difference between i) the fair value of consideration received from the disposal
plus non-controlling interest retained; ii) share of the former subsidiary’s net assets cumulatively calculated from
the acquisition date or combination date according to the original proportion of equity interest shall be recognised
in current investment income when control is lost.Moreover other comprehensive income and other changes in equity related to the equity investment in the former
subsidiary shall be transferred into current investment income when control is lost excluding other
comprehensive income resulted from the remeasurement of the movement of net assets or net liabilities under
defined benefit plan.Disposal in stages
In the consolidated financial statements whether the transactions should be accounted for as “a single transaction”
needs to be decided firstly.If the disposal in stages should not be classified as “a single transaction” in the separate financial statements for
~ 43 ~
transactions prior of the date of loss of control carrying amount of each disposal of long-term equity investment
need to be recognized and the difference between consideration received and the carrying amount of long-term
equity investment corresponding to the equity interest disposed should be recognized in current investment
income; in the consolidated financial statements the disposal transaction should be accounted for according to
related policy in “Disposal of long-term equity investment in subsidiaries without a loss of control”.If the disposal in stages should be classified as “a single transaction” these transactions should be accounted for
as a single transaction of disposal of subsidiary resulting in loss of control. In the separate financial statements for
each transaction prior of the date of loss of control difference between consideration received and the carrying
amount of long-term equity investment corresponding to the equity interest disposed should be recognised as
other comprehensive income firstly and transferred to profit or loss as a whole when control is lost; in the
consolidated financial statements for each transaction prior of the date of loss of control difference between
consideration received and proportion of the subsidiary’s net assets corresponding to the equity interest disposed
should be recognised in profit or loss as a whole when control is lost.In considering of the terms and conditions of the transactions as well as their economic impact the presence of
one or more of the following indicators may lead to account for multiple transactions as a single transaction:
(a) The transactions are entered into simultaneously or in contemplation of one another.(b) The transactions form a single transaction designed to achieve an overall commercial effect.(c) The occurrence of one transaction depends on the occurrence of at least one other transaction.(d) One transaction when considered on its own merits does not make economic sense but when considered
together with the other transaction or transactions would be considered economically justifiable.(v) Diluting equity share of parent company in its subsidiaries due to additional capital injection by the
subsidiaries’ minority shareholders.Other shareholders (minority shareholders) of the subsidiaries inject additional capital in the subsidiaries which
resulted in the dilution of equity interest of parent company in these subsidiaries. In the consolidated financial
statements difference between share of the corresponding subsidiaries’ net assets calculated based on the parent’s
equity interest before and after the capital injection shall be adjusted into capital reserve (capital premium or share
premium). If the capital reserve is not enough to absorb the difference any excess shall be adjusted against
retained earnings.3.7 Classification of Joint Arrangements and Accounting for Joint Operation
A joint arrangement is an arrangement of which two or more parties have joint control. Joint arrangement of the
Company is classified as either a joint operation or a joint venture.(a) Joint operation
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights
to the assets and obligations for the liabilities relating to the arrangement.~ 44 ~
The Company shall recognise the following items in relation to shared interest in a joint operation and account
for them in accordance with relevant accounting standards of the Accounting Standards for Business Enterprises:
(i) its assets including its share of any assets held jointly;
(ii) its liabilities including its share of any liabilities incurred jointly;
(iii) its revenue from the sale of its share of the output arising from the joint operation;
(iv) its share of the revenue from the sale of the output by the joint operation; and
(v) its expenses including its share of any expenses incurred jointly.(b) Joint venture
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to
the net assets of the arrangement.The Company accounts for its investment in the joint venture by applying the equity method of long-term equity
investment.3.8 Cash and Cash Equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents include
short-term (generally within three months of maturity at acquisition) highly liquid investments that are readily
convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.3.9 Foreign Currency Transactions and Translation of Foreign Currency Financial Statements
(a) Determination of the exchange rate for foreign currency transactions
At the time of initial recognition of a foreign currency transaction the amount in the foreign currency shall be
translated into the amount in the functional currency at the spot exchange rate of the transaction date or at an
exchange rate which is determined through a systematic and reasonable method and is approximate to the spot
exchange rate of the transaction date (hereinafter referred to as the approximate exchange rate).(b) Translation of monetary items denominated in foreign currency on the balance sheet date
The foreign currency monetary items shall be translated at the spot exchange rate on the balance sheet date. The
balance of exchange arising from the difference between the spot exchange rate on the balance sheet date and the
spot exchange rate at the time of initial recognition or prior to the balance sheet date shall be recorded into the
profits and losses at the current period. The foreign currency non-monetary items measured at the historical cost
shall still be translated at the spot exchange rate on the transaction date; for the foreign currency non-monetary
items restated to a fair value measurement shall be translated into the at the spot exchange rate at the date when
the fair value was determined the difference between the restated functional currency amount and the original
functional currency amount shall be recorded into the profits and losses at the current period.(c) Translation of foreign currency financial statements
Before translating the financial statements of foreign operations the accounting period and accounting policy
shall be adjusted so as to conform to the Company. The adjusted foreign operation financial statements
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denominated in foreign currency (other than functional currency) shall be translated in accordance with the
following method:
(i) The asset and liability items in the statement of financial position shall be translated at the spot exchange rates
at the date of that statement of financial position. The owners’ equity items except undistributed profit shall be
translated at the spot exchange rates when they are incurred.(ii) The income and expense items in the statement of profit and other comprehensive income shall be translated at
the spot exchange rates or approximate exchange rate at the date of transaction.(iii)Foreign currency cash flows and cash flows of foreign subsidiaries shall be translated at the spot exchange rate
or approximate exchange rate when the cash flows are incurred. The effect of exchange rate changes on cash is
presented separately in the statement of cash flows as an adjustment item.(iv) The differences arising from the translation of foreign currency financial statements shall be presented
separately as “other comprehensive income” under the owners’ equity items of the consolidated statement of
financial position.When disposing a foreign operation involving loss of control the cumulative amount of the exchange differences
relating to that foreign operation recognised under other comprehensive income in the statement of financial
position shall be reclassified into current profit or loss according to the proportion disposed.3.10 Financial Instruments
Financial instrument is any contract which gives rise to both a financial asset of one entity and a financial liability
or equity instrument of another entity.(a) Recognition and derecognition of financial instrument
A financial asset or a financial liability should be recognised in the statement of financial position when and only
when an entity becomes party to the contractual provisions of the instrument.A financial asset can only be derecognised when meets one of the following conditions:
(i) The rights to the contractual cash flows from a financial asset expire
(ii) The financial asset has been transferred and meets one of the following derecognition conditions:
Financial liabilities (or part thereof) are derecognised only when the liability is extinguished—i.e. when the
obligation specified in the contract is discharged or cancelled or expires. An exchange of the Company (borrower)
and lender of debt instruments that carry significantly different terms or a substantial modification of the terms of
an existing liability are both accounted for as an extinguishment of the original financial liability and the
recognition of a new financial liability.Purchase or sale of financial assets in a regular-way shall be recognised and derecognised using trade date
accounting. A regular-way purchase or sale of financial assets is a transaction under a contract whose terms
require delivery of the asset within the time frame established generally by regulations or convention in the
market place concerned. Trade date is the date at which the entity commits itself to purchase or sell an asset.~ 46 ~
(b) Classification and measurement of financial assets
At initial recognition the Company classified its financial asset based on both the business model for managing
the financial asset and the contractual cash flow characteristics of the financial asset: financial asset at amortised
cost financial asset at fair value through profit or loss (FVTPL) and financial asset at fair value through other
comprehensive income (FVTOCI). Reclassification of financial assets is permitted if and only if the objective of
the entity’s business model for managing those financial assets changes. In this circumstance all affected
financial assets shall be reclassified on the first day of the first reporting period after the changes in business
model; otherwise the financial assets cannot be reclassified after initial recognition.Financial assets shall be measured at initial recognition at fair value. For financial assets measured at FVTPL
transaction costs are recognised in current profit or loss. For financial assets not measured at FVTPL transaction
costs should be included in the initial measurement. Notes receivable or accounts receivable that arise from sales
of goods or rendering of services are initially measured at the transaction price defined in the accounting standard
of revenue where the transaction does not include a significant financing component.Subsequent measurement of financial assets will be based on their categories:
(i)Financial asset at amortised cost
The financial asset at amortised cost category of classification applies when both the following conditions are met:
the financial asset is held within the business model whose objective is to hold financial assets in order to collect
contractual cash flows and the contractual term of the financial asset gives rise on specified dates to cash flows
that are solely payment of principal and interest on the principal amount outstanding. These financial assets are
subsequently measured at amortised cost by adopting the effective interest rate method. Any gain or loss arising
from derecognition according to the amortization under effective interest rate method or impairment are
recognised in current profit or loss.(ii)Financial asset at fair value through other comprehensive income (FVTOCI)
The financial asset at FVTOCI category of classification applies when both the following conditions are met: the
financial asset is held within the business model whose objective is achieved by both collecting contractual cash
flows and selling financial assets and the contractual term of the financial asset gives rise on specified dates to
cash flows that are solely payment of principle and interest on the principal amount outstanding. All changes in
fair value are recognised in other comprehensive income except for gain or loss arising from impairment or
exchange differences which should be recognised in current profit or loss. At derecognition cumulative gain or
loss previously recognised under OCI is reclassified to current profit or loss. However interest income calculated
based on the effective interest rate is included in current profit or loss.The Company make an irrevocable decision to designate part of non-trading equity instrument investments as
measured through FVTOCI. All changes in fair value are recognised in other comprehensive income except for
dividend income recognised in current profit or loss. At derecognition cumulative gain or loss are reclassified to
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retained earnings.(iii)Financial asset at fair value through profit or loss (FVTPL)
Financial asset except for above mentioned financial asset at amortised cost or financial asset at fair value through
other comprehensive income (FVTOCI) should be classified as financial asset at fair value through profit or loss
(FVTPL). These financial assets should be subsequently measured at fair value. All the changes in fair value are
included in current profit or loss.(c) Classification and measurement of financial liabilities
The Company classified the financial liabilities as financial liabilities at fair value through profit or loss (FVTPL)
loan commitments at a below-market interest rate and financial guarantee contracts and financial asset at
amortised cost.Subsequent measurement of financial assets will be based on the classification:
(i)Financial liabilities at fair value through profit or loss (FVTPL)
Held-for-trading financial liabilities (including derivatives that are financial liabilities) and financial liabilities
designated at FVTPL are classified as financial liabilities at FVTP. After initial recognition any gain or loss
(including interest expense) are recognised in current profit or loss except for those hedge accounting is applied.For financial liability that is designated as at FVTPL changes in the fair value of the financial liability that is
attributable to changes in the own credit risk of the issuer shall be presented in other comprehensive income. At
derecognition cumulative gain or loss previously recognised under OCI is reclassified to retained earnings.(ii)Loan commitments and financial guarantee contracts
Loan commitment is a commitment by the Company to provide a loan to customer under specified contract terms.The provision of impairment losses of loan commitments shall be recognised based on expected credit losses
model.Financial guarantee contract is a contract that requires the Company to make specified payments to reimburse the
holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the
original or modified terms of a debt instrument. Financial guarantee contracts liability shall be subsequently
measured at the higher of: The amount of the loss allowance recognised according to the impairment principles of
financial instruments; and the amount initially recognised less the cumulative amount of income recognised in
accordance with the revenue principles.(iii)Financial liabilities at amortised cost
After initial recognition the Company measured other financial liabilities at amortised cost using the effective
interest method.Except for special situation financial liabilities and equity instrument should be classified in accordance with the
following principles:
(i) If the Company has no unconditional right to avoid delivering cash or another financial instrument to fulfill a
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contractual obligation this contractual obligation meet the definition of financial liabilities. Some financial
instruments do not comprise terms and conditions related to obligations of delivering cash or another financial
instrument explicitly they may include contractual obligation indirectly through other terms and conditions.(ii) If a financial instrument must or may be settled in the Company's own equity instruments it should be
considered that the Company’s own equity instruments are alternatives of cash or another financial instrument or
to entitle the holder of the equity instruments to sharing the remaining rights over the net assets of the issuer. If the
former is the case the instrument is a liability of the issuer; otherwise it is an equity instrument of the issuer.Under some circumstances it is regulated in the contract that the financial instrument must or may be settled in
the Company's own equity instruments where amount of contractual rights and obligations are calculated by
multiplying the number of the equity instruments to be available or delivered by its fair value upon settlement.Such contracts shall be classified as financial liabilities regardless that the amount of contractual rights and
liabilities is fixed or fluctuate totally or partially with variables other than market price of the entity’s own equity
instruments
(d) Derivatives and embedded derivatives
At initial recognition derivatives shall be measured at fair value at the date of derivative contracts are signed and
subsequently measured at fair value. The derivative with a positive fair value shall be recognized as an asset and
with a negative fair value shall be recognised as a liability.Gains or losses arising from the changes in fair value of derivatives shall be recognised directly into current profit
or loss except for the effective portion of cash flow hedges which shall be recognised in other comprehensive
income and reclassified into current profit or loss when the hedged items affect profit or loss.An embedded derivative is a component of a hybrid contract with a financial asset as a host the Company shall
apply the requirements of financial asset classification to the entire hybrid contract. If a host that is not a financial
asset and the hybrid contract is not measured at fair value with changes in fair value recognised in profit or loss
and the economic characteristics and risks of the embedded derivative are not closely related to the economic
characteristics and risks of the host and a separate instrument with the same terms as the embedded derivative
would meet the definition of a derivative the embedded derivative shall be separated from the hybrid instrument
and accounted for as a separate derivative instrument. If the Company is unable to measure the fair value of the
embedded derivative at the acquisition date or subsequently at the balance sheet date the entire hybrid contract is
designated as financial assets or financial liabilities at fair value through profit or loss.(e) Impairment of financial instrument
The Company shall recognise a loss allowance based on expected credit losses on a financial asset that is
measured at amortised cost a debt investment at fair value through other comprehensive income a contract asset
a lease receivable a loan commitment and a financial guarantee contract.(i) Measurement of expected credit losses
~ 49 ~
Expected credit losses are the weighted average of credit losses of the financial instruments with the respective
risks of a default occurring as the weights. Credit loss is the difference between all contractual cash flows that are
due to the Company in accordance with the contract and all the cash flows that the Company expects to receive
discounted at the original effective interest rate or credit- adjusted effective interest rate for purchased or
originated credit-impaired financial assets.Lifetime expected credit losses are the expected credit losses that result from all possible default events over the
expected life of a financial instrument.12-month expected credit losses are the portion of lifetime expected credit losses that represent the expected credit
losses that result from default events on a financial instrument that are possible within the 12 months after the
reporting date (or the expected lifetime if the expected life of a financial instrument is less than 12 months).At each reporting date the Company classifies financial instruments into three stages and makes provisions for
expected credit losses accordingly. A financial instrument of which the credit risk has not significantly increased
since initial recognition is at stage 1. The Company shall measure the loss allowance for that financial instrument
at an amount equal to 12-month expected credit losses. A financial instrument with a significant increase in credit
risk since initial recognition but is not considered to be credit-impaired is at stage 2. The Company shall measure
the loss allowance for that financial instrument at an amount equal to the lifetime expected credit losses. A
financial instrument is considered to be credit-impaired as at the end of the reporting period is at stage 3. The
Company shall measure the loss allowance for that financial instrument at an amount equal to the lifetime
expected credit losses.The Company may assume that the credit risk on a financial instrument has not increased significantly since initial
recognition if the financial instrument is determined to have low credit risk at the reporting date and measure the
loss allowance for that financial instrument at an amount equal to 12-month expected credit losses.For financial instrument at stage 1 stage 2 and those have low credit risk the interest revenue shall be calculated
by applying the effective interest rate to the gross carrying amount of a financial asset. For financial instrument at
stage 3 interest revenue shall be calculated by applying the effective interest rate to the amortised cost after
deducting of impairment loss.For notes receivable accounts receivable and accounts receivable financing no matter it contains a significant
financing component or not the Company shall measure the loss allowance at an amount equal to the lifetime
expected credit losses.Receivables
For the notes receivable accounts receivable other receivables accounts receivable financing and long-term
receivables which are demonstrated to be impaired by any objective evidence or applicable for individual
assessment the Company shall individually assess for impairment and recognise the loss allowance for expected
credit losses. If the Company determines that no objective evidence of impairment exists for notes receivable
~ 50 ~
accounts receivable other receivables accounts receivable financing and long-term receivables or the expected
credit loss of a single financial asset cannot be assessed at reasonable cost such notes receivable accounts
receivable other receivables accounts receivable financing and long-term receivables shall be divided into
several groups with similar credit risk characteristics and collectively calculated the expected credit loss. The
determination basis of groups is as following:
Determination basis of notes receivable is as following:
Group 1: Commercial acceptance bills
Group 2: Bank acceptance bills
For each group the Company calculates expected credit losses through default exposure and the lifetime expected
credit losses rate taking reference to historical experience for credit losses and considering current condition and
expectation for the future economic situation.Determination basis of accounts receivable is as following:
Group 1: Accounts receivables due from the company within the scope of consolidation
Group 2: Accounts receivables due from other customers
For each group the Company calculates expected credit losses through preparing an aging analysis schedule with
the lifetime expected credit losses rate taking reference to historical experience for credit losses and considering
current condition and expectation for the future economic situation.Determination basis of other receivables is as following:
Group 1: Other receivables due from the company within the scope of consolidation
Group 2: Other receivables due from others
For each group the Company calculates expected credit losses through default exposure and the 12-months or
lifetime expected credit losses rate taking reference to historical experience for credit losses and considering
current condition and expectation for the future economic situation.Debt investment and other debt investment
For debt investment and other debt investment the Company shall calculate the expected credit loss through the
default exposure and the 12-month or lifetime expected credit loss rate based on the nature of the investment
counterparty and the type of risk exposure.(ii) Low credit risk
If the financial instrument has a low risk of default the borrower has a strong capacity to meet its contractual cash
flow obligations in the near term and adverse changes in economic and business conditions in the longer term may
but will not necessarily reduce the ability of the borrower to fulfill its contractual cash flow obligations.(iii) Significant increase in credit risk
The Company shall assess whether the credit risk on a financial instrument has increased significantly since initial
recognition using the change in the risk of a default occurring over the expected life of the financial instrument
~ 51 ~
through the comparison of the risk of a default occurring on the financial instrument as at the reporting date with
the risk of a default occurring on the financial instrument as at the date of initial recognition.To make that assessment the Company shall consider reasonable and supportable information that is available
without undue cost or effort and that is indicative of significant increases in credit risk since initial recognition
including forward-looking information. The information considered by the Company are as following:
? Significant changes in internal price indicators of credit risk as a result of a change in credit risk since
inception
? Existing or forecast adverse change in the business financial or economic conditions of the borrower that
results in a significant change in the borrower’s ability to meet its debt obligations；
? An actual or expected significant change in the operating results of the borrower; An actual or expected
significant adverse change in the regulatory economic or technological environment of the borrower；
? Significant changes in the value of the collateral supporting the obligation or in the quality of third-party
guarantees or credit enhancements which are expected to reduce the borrower’s economic incentive to make
scheduled contractual payments or to otherwise have an effect on the probability of a default occurring;
? Significant change that are expected to reduce the borrower’s economic incentive to make scheduled
contractual payments;
? Expected changes in the loan documentation including an expected breach of contract that may lead to
covenant waivers or amendments interest payment holidays interest rate step-ups requiring additional
collateral or guarantees or other changes to the contractual framework of the instrument；
? Significant changes in the expected performance and behaviour of the borrower；
? Contractual payments are more than 30 days past due.Depending on the nature of the financial instruments the Company shall assess whether the credit risk has
increased significantly since initial recognition on an individual financial instrument or a group of financial
instruments. When assessed based on a group of financial instruments the Company can group financial
instruments on the basis of shared credit risk characteristics for example past due information and credit risk
rating.Generally the Company shall determine the credit risk on a financial asset has increased significantly since initial
recognition when contractual payments are more than 30 days past due. The Company can only rebut this
presumption if the Company has reasonable and supportable information that is available without undue cost or
effort that demonstrates that the credit risk has not increased significantly since initial recognition even though
the contractual payments are more than 30 days past due.(iv) Credit-impaired financial asset
The Company shall assess at each reporting date whether the credit impairment has occurred for financial asset at
amortised cost and debt investment at fair value through other comprehensive income. A financial asset is
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credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that
financial asset have occurred. Evidences that a financial asset is credit-impaired include observable data about the
following events:
Significant financial difficulty of the issuer or the borrower；a breach of contract such as a default or past due
event; the lender(s) of the borrower for economic or contractual reasons relating to the borrower’s financial
difficulty having granted to the borrower a concession(s) that the lender(s) would not otherwise consider；it is
becoming probable that the borrower will enter bankruptcy or other financial reorganisation；the disappearance of
an active market for that financial asset because of financial difficulties；the purchase or origination of a financial
asset at a deep discount that reflects the incurred credit losses.(v) Presentation of impairment of expected credit loss
In order to reflect the changes of credit risk of financial instrument since initial recognition the Company shall at
each reporting date remeasure the expected credit loss and recognise in profit or loss as an impairment gain or
loss the amount of expected credit losses addition (or reversal). For financial asset at amortised cost the loss
allowance shall reduce the carrying amount of the financial asset in the statement of financial position; for debt
investment at fair value through other comprehensive income the loss allowance shall be recognised in other
comprehensive income and shall not reduce the carrying amount of the financial asset in the statement of financial
position.(vi) Write-off
The Company shall directly reduce the gross carrying amount of a financial asset when the Company has no
reasonable expectations of recovering the contractual cash flow of a financial asset in its entirety or a portion
thereof. Such write-off constitutes a derecognition of the financial asset. This circumstance usually occurs when
the Company determines that the debtor has no assets or sources of income that could generate sufficient cash
flow to repay the write-off amount.Recovery of financial asset written off shall be recognised in profit or loss as reversal of impairment loss.(f) Transfer of financial assets
Transfer of financial assets refers to following two situations:
? Transfers the contractual rights to receive the cash flows of the financial asset;
? Transfers the entire or a part of a financial asset and retains the contractual rights to receive the cash flows of
the financial asset but assumes a contractual obligation to pay the cash flows to one or more recipients.(i) Derecognition of transferred assets
If the Company transfers substantially all the risks and rewards of ownership of the financial asset or neither
transfers nor retains substantially all the risks and rewards of ownership of the financial asset but has not retained
control of the financial asset the financial asset shall be derecognised.Whether the Company has retained control of the transferred asset depends on the transferee’s ability to sell the
~ 53 ~
asset. If the transferee has the practical ability to sell the asset in its entirety to an unrelated third party and is able
to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer the
Company has not retained control.The Company judges whether the transfer of financial asset qualifies for derecognition based on the substance of
the transfer.If the transfer of financial asset qualifies for derecognition in its entirety the difference between the following
shall be recognised in profit or loss:
? The carrying amount of transferred financial asset;
? The sum of consideration received and the part derecognised of the cumulative changes in fair value
previously recognised in other comprehensive income (The financial assets involved in the transfer are
classified as financial assets at fair value through other comprehensive income in accordance with Article 18
of the Accounting Standards for Business Enterprises No.22 - Recognition and Measurement of Financial
Instruments).If the transferred asset is a part of a larger financial asset and the part transferred qualifies for derecognition the
previous carrying amount of the larger financial asset shall be allocated between the part that continues to be
recognised (For this purpose a retained servicing asset shall be treated as a part that continues to be recognised)
and the part that is derecognised based on the relative fair values of those parts on the date of the transfer. The
difference between following two amounts shall be recognised in profit or loss:
? The carrying amount (measured at the date of derecognition) allocated to the part derecognised；
? The sum of the consideration received for the part derecognised and part derecognised of the cumulative
changes in fair value previously recognised in other comprehensive income (The financial assets involved in
the transfer are classified as financial assets at fair value through other comprehensive income in accordance
with Article 18 of the Accounting Standards for Business Enterprises No.22 - Recognition and Measurement
of Financial Instruments).(ii) Continuing involvement in transferred assets
If the Company neither transfers nor retains substantially all the risks and rewards of ownership of a transferred
asset and retains control of the transferred asset the Company shall continue to recognise the transferred asset to
the extent of its continuing involvement and also recognise an associated liability.The extent of the Company’s continuing involvement in the transferred asset is the extent to which it is exposed to
changes in the value of the transferred asset
(iii) Continue to recognise the transferred assets
If the Company retains substantially all the risks and rewards of ownership of the transferred financial asset the
Company shall continue to recognise the transferred asset in its entirety and the consideration received shall be
recognised as a financial liability.~ 54 ~
The financial asset and the associated financial liability shall not be offset. In subsequent accounting period the
Company shall continuously recognise any income (gain) arising from the transferred asset and any expense (loss)
incurred on the associated liability.(g) Offsetting financial assets and financial liabilities
Financial assets and financial liabilities shall be presented separately in the statement of financial position and
shall not be offset. When meets the following conditions financial assets and financial liabilities shall be offset
and the net amount presented in the statement of financial position:
The Company currently has a legally enforceable right to set off the recognised amounts; The Company intends
either to settle on a net basis or to realise the asset and settle the liability simultaneously.In accounting for a transfer of a financial asset that does not qualify for derecognition the Company shall not
offset the transferred asset and the associated liability.(h) Determination of fair value of financial instruments
Determination of financial assets and financial liabilities please refer to Note 3.11
3.11 Fair Value Measurement
Fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.The Company determines fair value of the related assets and liabilities based on market value in the principal
market or in the absence of a principal market in the most advantageous market price for the related asset or
liability. The fair value of an asset or a liability is measured using the assumptions that market participants would
use when pricing the asset or liability assuming that market participants act in their economic best interest.The principal market is the market in which transactions for an asset or liability take place with the greatest
volume and frequency. The most advantageous market is the market which maximizes the value that could be
received from selling the asset and minimizes the value which is needed to be paid in order to transfer a liability
considering the effect of transport costs and transaction costs both.If the active market of the financial asset or financial liability exists the Company shall measure the fair value
using the quoted price in the active market. If the active market of the financial instrument is not available the
Company shall measure the fair value using valuation techniques.A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant that
would use the asset in its highest and best use.? Valuation techniques
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value including the market approach the income approach and the cost approach. The
Company shall use valuation techniques consistent with one or more of those approaches to measure fair value. If
~ 55 ~
multiple valuation techniques are used to measure fair value the results shall be evaluated considering the
reasonableness of the range of values indicated by those results. A fair value measurement is the point within that
range that is most representative of fair value in the circumstances.When using the valuation technique the Company shall give the priority to relevant observable inputs. The
unobservable inputs can only be used when relevant observable inputs is not available or practically would not be
obtained. Observable inputs refer to the information which is available from market and reflects the assumptions
that market participants would use when pricing the asset or liability. Unobservable Inputs refer to the information
which is not available from market and it has to be developed using the best information available in the
circumstances from the assumptions that market participants would use when pricing the asset or liability.? Fair value hierarchy
To Company establishes a fair value hierarchy that categorises into three levels the inputs to valuation techniques
used to measure fair value. The fair value hierarchy gives the highest priority to Level 1 inputs and second to the
Level 2 inputs and the lowest priority to Level 3 inputs. Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can access at the measurement date. Level 2 inputs are
inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly
or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.3.12 Inventories
(a) Classification of inventories
Inventories are finished goods or products held for sale in the ordinary course of business in the process of
production for such sale or in the form of materials or supplies to be consumed in the production process or in the
rendering of services including raw materials work in progress semi-finished goods finished goods goods in
stock turnover material etc.(b) Measurement method of cost of inventories sold or used
Inventories are initially measured at the actual cost. Cost of inventories includes purchase cost processing cost
and other costs. Cost of the issue is measured using the weighted average method.(c) Inventory system
The perpetual inventory system is adopted. The inventories should be counted at least once a year and surplus or
losses of inventory stocktaking shall be included in current profit and loss.(d) Provision for impairment of inventory
Inventories are stated at the lower of cost and net realizable value. The excess of cost over net realizable value of
the inventories is recognised as provision for impairment of inventory and recognised in current profit or loss.Net realizable value of the inventory should be determined on the basis of reliable evidence obtained and factors
such as purpose of holding the inventory and impact of post balance sheet event shall be considered.(i) In normal operation process finished goods products and materials for direct sale their net realizable values
~ 56 ~
are determined at estimated selling prices less estimated selling expenses and relevant taxes and surcharges; for
inventories held to execute sales contract or service contract their net realizable values are calculated on the basis
of contract price. If the quantities of inventories specified in sales contracts are less than the quantities held by the
Company the net realizable value of the excess portion of inventories shall be based on general selling prices. Net
realizable value of materials held for sale shall be measured based on market price.(ii) For materials in stock need to be processed in the ordinary course of production and business net realisable
value is determined at the estimated selling price less the estimated costs of completion the estimated selling
expenses and relevant taxes. If the net realisable value of the finished products produced by such materials is
higher than the cost the materials shall be measured at cost; if a decline in the price of materials indicates that the
cost of the finished products exceeds its net realisable value the materials are measured at net realisable value and
differences shall be recognised at the provision for impairment.(iii) Provisions for inventory impairment are generally determined on an individual basis. For inventories with
large quantity and low unit price the provisions for inventory impairment are determined on a category basis.(iv) If any factor rendering write-downs of the inventories has been eliminated at the reporting date the amounts
written down are recovered and reversed to the extent of the inventory impairment which has been provided for.The reversal shall be included in profit or loss.(e) Amortization method of low-value consumables
Low-value consumables: One-off writing off method is adopted
Package material: One-off writing off method is adopted
3.13 Contract assets and contract liabilities
Effective from 1 January 2020
Contract assets and contract liabilities are reocgnised on the basis of fulfilment of performance obligations and
payment received from clients. A right to receive a promised consideration from a client resulting from goods
transferred to or services provided to the client (where the right to consideration is dependent on factors other than
the passage of time) is reocgnised a contract asset. A payment received from a client for which goods shall be
transferred to or services shall be provided to the client is recognised as a contract liability.See Note 3.10 for the determination method and accounting treatment method of impairment of contract assets.Contract assets and contract liabilities are presentd as line items on the statement of financial position. A contract
asset and contract liability arising from one contract are presented in net; while the net amount is a debit balance
it is presented in contract assets or other non-current assets depending on liquidity; while the net amount is a
credit balance it is presented in contract liabilities or other non-current liabilities depending on liquidity. Contract
assets and contract liabilities arising form different contracts are not be offset.3.14 Contract costs
~ 57 ~
Effective at 1 January 2020
Costs for a contract include costs to fulfill the contract and costs to obtain the contract.An asset is recognised for the costs incurred to fulfill a contract on if those costs meet all of the following criteria:
I. the costs are directly associated with a contract or an anticipated contract explicitly chargeable to the client
under the contract incurred only for the contract;
II. the costs generate or enhance resouces of the Company that will be used in satisfying performance
obligations in the future; and
III. the costs are expected to be recovered.An asset is recognised for the costs incurred to obtained a contract with a client if those costs are expected to be
recovered.An asset recognised for the costs of a contract are amortised on a systematic basis that is consistent with
recognition of revenue arising from the contract. Where the costs incurred to obtain a contract would be amortised
for a period less than one year should they be recognised as an asset the costs are recognised in the current profit
or loss as incurred.An impairment is recognised for an asset recognised for the costs of a contract to the extent that the carrying
amount of the asset exceeds:
I. the remaining amount of consideration that is expected to be received in exchange for the goods or services
to which the asset relates; less
II. the costs that relate directly to providing those goods or services and that have not been recognised as
expenses.Upon recognition of the impairment further consideration is given for provision for an onerous contract in
necessary.A reversal of some or all of an impairment loss previously recognised for an asset for the costs of a contract when
the impairment conditions no longer exist or have improved. The increased carrying amount of the asset is
cappted by the amount that would have been determined (net of amortisation) if no impairment loss had been
recognised previously.An asset recognised for the costs to fulfill a contract is presented in inventories if its amortisation is not longer
than 1 year or an operating cycle upon initial recognition; otherwise it is presented in other non-current assets.An asset recognised for the costs to obtain a contract is presented in other current assets if its amortisation is not
longer than 1 year or an operating cycle upon initial recognition; otherwise it is presented in other non-current
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assets.3.15 Long-term Equity Investments
Long-term equity investments refer to equity investments where an investor has control of or significant influence
over an investee as well as equity investments in joint ventures. Associates of the Company are those entities
over which the Company has significant influence.(a) Determination basis of joint control or significant influence over the investee
Joint control is the relevant agreed sharing of control over an arrangement and the arranged relevant activity must
be decided under unanimous consent of the parties sharing control. In assessing whether the Company has joint
control of an arrangement the Company shall assess first whether all the parties or a group of the parties control
the arrangement. When all the parties or a group of the parties considered collectively are able to direct the
activities of the arrangement the parties control the arrangement collectively. Then the Company shall assess
whether decisions about the relevant activities require the unanimous consent of the parties that collectively
control the arrangement. If two or more groups of the parties could control the arrangement collectively it shall
not be assessed as have joint control of the arrangement. When assessing the joint control the protective rights are
not considered.Significant influence is the power to participate in the financial and operating policy decisions of the investee but
is not control or joint control of those policies. In determination of significant influence over an investee the
Company should consider not only the existing voting rights directly or indirectly held but also the effect of
potential voting rights held by the Company and other entities that could be currently exercised or converted
including the effect of share warrants share options and convertible corporate bonds that issued by the investee
and could be converted in current period.If the Company holds directly or indirectly 20% or more but less than 50% of the voting power of the investee it
is presumed that the Company has significant influence of the investee unless it can be clearly demonstrated that
in such circumstance the Company cannot participate in the decision-making in the production and operating of
the investee.(b) Determination of initial investment cost
(i) Long-term equity investments generated in business combinations
For a business combination involving enterprises under common control if the Company makes payment in cash
transfers non-cash assets or bears liabilities as the consideration for the business combination the share of
carrying amount of the owners’ equity of the acquiree in the consolidated financial statements of the ultimate
controlling party is recognised as the initial cost of the long-term equity investment on the combination date. The
difference between the initial investment cost and the carrying amount of cash paid non-cash assets transferred
and liabilities assumed shall be adjusted against the capital reserve; if capital reserve is not enough to be offset
undistributed profit shall be offset in turn.~ 59 ~
For a business combination involving enterprises under common control if the Company issues equity securities
as the consideration for the business combination the share of carrying amount of the owners’ equity of the
acquiree in the consolidated financial statements of the ultimate controlling party is recognised as the initial cost
of the long-term equity investment on the combination date. The total par value of the shares issued is recognised
as the share capital. The difference between the initial investment cost and the carrying amount of the total par
value of the shares issued shall be adjusted against the capital reserve; if capital reserve is not enough to be offset
undistributed profit shall be offset in turn.For business combination not under common control the assets paid liabilities incurred or assumed and the fair
value of equity securities issued to obtain the control of the acquiree at the acquisition date shall be determined as
the cost of the business combination and recognised as the initial cost of the long-term equity investment. The
audit legal valuation and advisory fees other intermediary fees and other relevant general administrative costs
incurred for the business combination shall be recognised in profit or loss as incurred.(ii) Long-term equity investments acquired not through the business combination the investment cost shall be
determined based on the following requirements:
For long-term equity investments acquired by payments in cash the initial cost is the actually paid purchase cost
including the expenses taxes and other necessary expenditures directly related to the acquisition of long-term
equity investments.For long-term equity investments acquired through issuance of equity securities the initial cost is the fair value of
the issued equity securities.For the long-term equity investments obtained through exchange of non-monetary assets if the exchange has
commercial substance and the fair values of assets traded out and traded in can be measured reliably the initial
cost of long-term equity investment traded in with non-monetary assets are determined based on the fair values of
the assets traded out together with relevant taxes. Difference between fair value and book value of the assets
traded out is recorded in current profit or loss. If the exchange of non-monetary assets does not meet the above
criterion the book value of the assets traded out and relevant taxes are recognised as the initial investment cost.For long-term equity investment acquired through debt restructuring the initial cost is determined based on the
fair value of the equity obtained and the difference between initial investment cost and carrying amount of debts
shall be recorded in current profit or loss.(c) Subsequent measurement and recognition of profit or loss
Long-term equity investment to an entity over which the Company has ability of control shall be accounted for at
cost method. Long-term equity investment to a joint venture or an associate shall be accounted for at equity
method.(i) Cost method
For Long-term equity investment at cost method cost of the long-term equity investment shall be adjusted when
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additional amount is invested or a part of it is withdrawn. The Company recognises its share of cash dividends or
profits which have been declared to distribute by the investee as current investment income.(ii) Equity method
If the initial cost of the investment is in excess of the share of the fair value of the net identifiable assets in the
investee at the date of investment the difference shall not be adjusted to the initial cost of long-term equity
investment; if the initial cost of the investment is in short of the share of the fair value of the net identifiable assets
in the investee at the date investment the difference shall be included in the current profit or loss and the initial
cost of the long-term equity investment shall be adjusted accordingly.The Company recognises the share of the investee’s net profits or losses as well as its share of the investee’s
other comprehensive income as investment income or losses and other comprehensive income respectively and
adjusts the carrying amount of the investment accordingly. The carrying amount of the investment shall be
reduced by the share of any profit or cash dividends declared to distribute by the investee. The investor’s share of
the investee’s owners’ equity changes other than those arising from the investee’s net profit or loss other
comprehensive income or profit distribution shall be recognised in the investor’s equity and the carrying amount
of the long-term equity investment shall be adjusted accordingly. The Company recognises its share of the
investee’s net profits or losses after making appropriate adjustments of investee’s net profit based on the fair
values of the investee’s identifiable net assets at the investment date. If the accounting policy and accounting
period adopted by the investee is not in consistency with the Company the financial statements of the investee
shall be adjusted according to the Company’s accounting policies and accounting period based on which
investment income or loss and other comprehensive income etc. shall be adjusted. The unrealized profits or
losses resulting from inter-company transactions between the company and its associate or joint venture are
eliminated in proportion to the company’s equity interest in the investee based on which investment income or
losses shall be recognised. Any losses resulting from inter-company transactions between the investor and the
investee which belong to asset impairment shall be recognised in full.Where the Company obtains the power of joint control or significant influence but not control over the investee
due to additional investment or other reason the relevant long-term equity investment shall be accounted for by
using the equity method initial cost of which shall be the fair value of the original investment plus the additional
investment. Where the original investment is classified as investments in other equity instrument difference
between its fair value and the carrying value in addition to the cumulative gains or losses previously recorded in
other comprehensive income shall be transferred from other comprehensive income and recorded in retained
earnings during the current period using equity method.If the Company loses the joint control or significant influence of the investee for some reasons such as disposal of
equity investment the retained interest shall be measured at fair value and the difference between the carrying
amount and the fair value at the date of loss the joint control or significant influence shall be recognised in profit
~ 61 ~
or loss. When the Company discontinues the use of the equity method the Company shall account for all amounts
previously recognised in other comprehensive income under equity method in relation to that investment on the
same basis as would have been required if the investee had directly disposed of the related assets or liabilities.(d) Equity investment classified as held for sale
Any retained interest in the equity investment not classified as held for sale shall be accounted for using equity
method.When an equity investment in an associate or a joint venture previously classified as held for sale no longer meets
the criteria to be so classified it shall be accounted for using the equity method retrospectively as from the date of
its classification as held for sale. Financial statements for the periods since classification as held for sale shall be
amended accordingly.(f) Impairment testing and provision for impairment loss
For investment in subsidiaries associates or a joint venture provision for impairment loss please refer to Note
3.21.3.16 Investment Properties
(a) Classification of investment properties
Investment properties are properties to earn rentals or for capital appreciation or both including:
(i)Land use right leased out
(ii)Land held for transfer upon appreciation
(iii)Buildings leased out
(b) The measurement model of investment property
The Company adopts the cost model for subsequent measurement of investment properties. For provision for
impairment please refer to Note 3.21.The Company calculates the depreciation or amortization based on the net amount of investment property cost less
the accumulated impairment and the net residual value using straight-line method.3.17 Fixed Assets
Fixed assets refer to the tangible assets with higher unit price held for the purpose of producing commodities
rendering services renting or business management with useful lives exceeding one year.(a) Recognition criteria of fixed assets
Fixed assets will only be recognised at the actual cost paid when obtaining as all the following criteria are
satisfied:
(i) It is probable that the economic benefits relating to the fixed assets will flow into the Company;
(ii) The costs of the fixed assets can be measured reliably.Subsequent expenditure for fixed assets shall be recorded in cost of fixed assets if recognition criteria of fixed
assets are satisfied otherwise the expenditure shall be recorded in current profit or loss when incurred.~ 62 ~
(b) Depreciation methods of fixed assets
The Company begins to depreciate the fixed asset from the next month after it is available for intended use using
the straight-line-method. The estimated useful life and annual depreciation rates which are determined according
to the categories estimated economic useful lives and estimated net residual rates of fixed assets are listed as
followings:
Depreciation Estimated useful life Residual Annual depreciation rates
Category
method (year) rates (%) (%)
Buildings and constructions straight-line-method 8.00-35.00 3.00-5.00 2.70-12.10
Machinery equipment straight-line-method 5.00-10.00 3.00-5.00 9.50-19.40
Vehicles straight-line-method 4.00 3.00 24.25
Office equipment and others straight-line-method 3.00 3.00 32.33
For the fixed assets with impairment provided the impairment provision should be excluded from the cost when
calculating depreciation.At the end of reporting period the Company shall review the useful life estimated net residual value and
depreciation method of the fixed assets. Estimated useful life of the fixed assets shall be adjusted if it is changed
compared to the original estimation.(c) Recognition criteria valuation and depreciation methods of fixed assets obtained through a finance
lease
If the entire risk and rewards related to the leased assets have been substantially transferred the Company shall
recognise the lease as a finance lease. The cost of the fixed assets obtained through a finance lease is determined
at the lower of the fair value of the leased assets and the present value of the minimum lease payment on the date
of the lease. The fixed assets obtained by a finance lease are depreciated in the method which is consistent with
the self-owned fixed assets of the Company. For fixed assets obtained through a finance lease if it is reasonably
certain that the ownership of the leased assets will be transferred to the lessee by the end of the lease term they
shall be depreciated over their remaining useful lives; otherwise the leased assets shall be depreciated over the
shorter of the lease terms or their remaining useful lives.3.18 Construction in Progress
(a) Classification of construction in progress
Construction in progress is measured on an individual project basis.(b) Recognition criteria and timing of transfer from construction in progress to fixed assets
The initial book values of the fixed assets are stated at total expenditures incurred before they are ready for their
intended use including construction costs original price of machinery equipment other necessary expenses
incurred to bring the construction in progress to get ready for its intended use and borrowing costs of the specific
~ 63 ~
loan for the construction or the proportion of the general loan used for the constructions incurred before they are
ready for their intended use. The construction in progress shall be transferred to fixed asset when the installation
or construction is ready for the intended use. For construction in progress that has been ready for their intended
use but relevant budgets for the completion of projects have not been completed the estimated values of project
budgets prices or actual costs should be included in the costs of relevant fixed assets and depreciation should be
provided according to relevant policies of the Company when the fixed assets are ready for intended use. After the
completion of budgets needed for the completion of projects the estimated values should be substituted by actual
costs but depreciation already provided is not adjusted.3.19 Right-of-use assets
The Company initially measures right-of-use assets at cost which includes:
(1) The initial measurement amount of the lease obligation.
(2) If a lease incentive exists for lease payments made on or before the commencement date of the lease term the
amount related to the lease incentive already taken is deducted.
(3) Initial direct costs incurred by the Company.
(4) Costs expected to be incurred by the Company to disassemble and remove the leasehold property restore the
site where the leasehold property is located or restore the leasehold property to the condition agreed upon under
the terms of the lease (excluding costs incurred to produce inventory). Subsequent to the commencement date of
the lease term the Company uses the cost model for subsequent measurement of right-of-use assets.If it is reasonably certain that ownership of the leasehold property will be obtained at the end of the lease term the
Company depreciates the leasehold property over its remaining service life.If it may not be reasonably ascertained that ownership of the leasehold property can be obtained at the end of the
lease term the Company will depreciate the leasehold property over the shorter of
the lease term or the remaining service life of the leasehold property. Right-of-use assets for which depreciation
reserves have been made are depreciated in future periods at their carrying amounts net of depreciation reserves
with reference to the above principles.3.20 Borrowing Costs
(a) Recognition criteria and period for capitalization of borrowing costs
The Company shall capitalize the borrowing costs that are directly attributable to the acquisition construction or
production of qualifying assets when meet the following conditions:
(i) Expenditures for the asset are being incurred;
(ii) Borrowing costs are being incurred and;
(iii) Acquisition construction or production activities that are necessary to prepare the assets for their intended use
~ 64 ~
or sale are in progress.Other borrowing cost discounts or premiums on borrowings and exchange differences on foreign currency
borrowings shall be recognized into current profit or loss when incurred.Capitalization of borrowing costs is suspended during periods in which the acquisition construction or production
of a qualifying asset is interrupted abnormally and the interruption is for a continuous period of more than 3
months.Capitalization of such borrowing costs ceases when the qualifying assets being acquired constructed or produced
become ready for their intended use or sale. The expenditure incurred subsequently shall be recognised as
expenses when incurred.(b) Capitalization rate and measurement of capitalized amounts of borrowing costs
When funds are borrowed specifically for purchase construction or manufacturing of assets eligible for
capitalization the Company shall determine the amount of borrowing costs eligible for capitalisation as the actual
borrowing costs incurred on that borrowing during the period less any interest income on bank deposit or
investment income on the temporary investment of those borrowings.Where funds allocated for purchase construction or manufacturing of assets eligible for capitalization are part of a
general borrowing the eligible amounts are determined by the weighted-average of the cumulative capital
expenditures in excess of the specific borrowing multiplied by the general borrowing capitalization rate. The
capitalization rate will be the weighted average of the borrowing costs applicable to the general borrowing.3.21 Intangible Assets
(a) Measurement method of intangible assets
Intangible assets are recognised at actual cost at acquisition.(b) The useful life and amortisation of intangible assets
(i) The estimated useful lives of the intangible assets with finite useful lives are as follows:
Category Estimated useful life Basis
Land use right 50 years Legal life
The service life is determined by reference to the period that
Patent right 10 years
can bring economic benefits to the Company
The service life is determined by reference to the period that
Software 3-5 years
can bring economic benefits to the Company
The service life is determined by reference to the period that
Trademark 10 years
can bring economic benefits to the Company
For intangible assets with finite useful life the estimated useful life and amortisation method are reviewed
annually at the end of each reporting period and adjusted when necessary. No change incurred in current year in
the estimated useful life and amortisation method upon review.~ 65 ~
(ii) Assets of which the period to bring economic benefits to the Company are unforeseeable are regarded as
intangible assets with indefinite useful lives. The Company reassesses the useful lives of those assets at every year
end. If the useful lives of those assets are still indefinite impairment test should be performed on those assets at
the balance sheet date.(iii) Amortisation of the intangible assets
For intangible assets with finite useful lives their useful lives should be determined upon their acquisition and
systematically amortised on a straight-line basis over the useful life. The amortisation amount shall be recognized
into current profit or loss according to the beneficial items. The amount to be amortised is cost deducting residual
value. For intangible assets which has impaired the cumulative impairment provision shall be deducted as well.The residual value of an intangible asset with a finite useful life shall be assumed to be zero unless: there is a
commitment by a third party to purchase the asset at the end of its useful life; or there is an active market for the
asset and residual value can be determined by reference to that market; and it is probable that such a market will
exist at the end of the asset’s useful life.Intangible assets with indefinite useful lives shall not be amortised. The Company reassesses the useful lives of
those assets at every year end. If there is evidence to indicate that the useful lives of those assets become finite
the useful lives shall be estimated and the intangible assets shall be amortised systematically and reasonably
within the estimated useful lives.(c) Criteria of classifying expenditures on internal research and development projects into research phase
and development phase
Preparation activities related to materials and other relevant aspects undertaken by the Company for the purpose
of further development shall be treated as research phase. Expenditures incurred during the research phase of
internal research and development projects shall be recognised in profit or loss when incurred.Development activities after the research phase of the Company shall be treated as development phase.(d) Criteria for capitalization of qualifying expenditures during the development phase
Expenditures arising from development phase on internal research and development projects shall be recognised
as intangible assets only if all of the following conditions have been met:
(i) Technical feasibility of completing the intangible assets so that they will be available for use or sale;
(ii) Its intention to complete the intangible asset and use or sell it;
(iii) The method that the intangible assets generate economic benefits including the Company can demonstrate
the existence of a market for the output of the intangible assets or the intangible assets themselves or if it is to be
used internally the usefulness of the intangible assets;
(iv) The availability of adequate technical financial and other resources to complete the development and to use
or sell the intangible asset; and
(v) Its ability to measure reliably the expenditure attributable to the intangible asset.~ 66 ~
3.22 Impairment of Long-Term Assets
Impairment loss of long-term equity investment in subsidiaries associates and joint ventures investment
properties fixed assets and constructions in progress subsequently measured at cost intangible assets shall be
determined according to following method:
The Company shall assess at the end of each reporting period whether there is any indication that an asset may be
impaired. If any such indication exists the Company shall estimate the recoverable amount of the asset and test
for impairment. Irrespective of whether there is any indication of impairment the Company shall test for
impairment of goodwill acquired in a business combination intangible assets with an indefinite useful life or
intangible assets not yet available for use annually.The recoverable amounts of the long-term assets are the higher of their fair values less costs to dispose and the
present values of the estimated future cash flows of the long-term assets. The Company estimate the recoverable
amounts on an individual basis. If it is difficult to estimate the recoverable amount of the individual asset the
Company estimates the recoverable amount of the groups of assets that the individual asset belongs to.Identification of an group of asset is based on whether the cash inflows from it are largely independent of the cash
inflows from other assets or groups of assets.If and only if the recoverable amount of an asset or a group of assets is less than its carrying amount the carrying
amount of the asset shall be reduced to its recoverable amount and the provision for impairment loss shall be
recognised accordingly.For the purpose of impairment testing goodwill acquired in a business combination shall from the acquisition
date be allocated to relevant group of assets based on reasonable method; if it is difficult to allocate to relevant
group of assets good will shall be allocated to relevant combination of asset groups. The relevant group of assets
or combination of asset groups is a group of assets or combination of asset groups that is benefit from the
synergies of the business combination and is not larger than the reporting segment determined by the Company.When test for impairment if there is an indication that relevant group of assets or combination of asset groups
may be impaired impairment testing for group of assets or combination of asset groups excluding goodwill shall
be conducted first and calculate the recoverable amount and recognize the impairment loss. Then the group of
assets or combination of asset groups including goodwill shall be tested for impairment by comparing the
carrying amount with its recoverable amount. If the recoverable amount is less than the carrying amount the
Company shall recognise the impairment loss.The mentioned impairment loss will not be reversed in subsequent accounting period once it had been recognised.3.23 Long-term Deferred Expenses
Long-term deferred expenses are various expenses already incurred which shall be amortised over current and
subsequent periods with the amortisation period exceeding one year. Long-term deferred expenses are evenly
amortised over the beneficial period
~ 67 ~
3.24 Employee Benefits
Employee benefits refer to all forms of consideration or compensation given by the Company in exchange for
service rendered by employees or for the termination of employment relationship. Employee benefits include
short-term employee benefits post-employment benefits termination benefits and other long-term employee
benefits. Benefits provided to an employee's spouse children dependents family members of decreased
employees or other beneficiaries are also employee benefits.According to liquidity employee benefits are presented in the statement of financial position as “Employeebenefits payable” and “Long-term employee benefits payable”.(a) Short-term employee benefits
(i) Employee basic salary (salary bonus allowance subsidy)
The Company recognises in the accounting period in which an employee provides service actually occurred
short-term employee benefits as a liability with a corresponding charge to current profit except for those
recognised as capital expenditure based on the requirement of accounting standards.(ii) Employee welfare
The Company shall recognise the employee welfare based on actual amount when incurred into current profit or
loss or related capital expenditure. Employee welfare shall be measured at fair value as it is a non-monetary
benefit.(iii) Social insurance such as medical insurance and work injury insurance housing funds labor union fund and
employee education fund
Payments made by the Company of social insurance for employees such as medical insurance and work injury
insurance payments of housing funds and labor union fund and employee education fund accrued in accordance
with relevant requirements in the accounting period in which employees provide services is calculated according
to required accrual bases and accrual ratio in determining the amount of employee benefits and the related
liabilities which shall be recognised in current profit or loss or the cost of relevant asset.(iv) Short-term paid absences
The company shall recognise the related employee benefits arising from accumulating paid absences when the
employees render service that increases their entitlement to future paid absences. The additional payable amounts
shall be measured at the expected additional payments as a result of the unused entitlement that has accumulated.The Company shall recognise relevant employee benefit of non-accumulating paid absences when the absences
actually occurred.(v) Short-term profit-sharing plan
The Company shall recognise the related employee benefits payable under a profit-sharing plan when all of the
following conditions are satisfied:
(i) The Company has a present legal or constructive obligation to make such payments as a result of past events;
~ 68 ~
and
(ii) A reliable estimate of the amounts of employee benefits obligation arising from the profit- sharing plan can be
made.(b) Post-employment benefits
(i) Defined contribution plans
The Company shall recognise in the accounting period in which an employee provides service the contribution
payable to a defined contribution plan as a liability with a corresponding charge to the current profit or loss or the
cost of a relevant asset.When contributions to a defined contribution plan are not expected to be settled wholly before twelve months
after the end of the annual reporting period in which the employees render the related service they shall be
discounted using relevant discount rate (market yields at the end of the reporting period on high quality corporate
bonds in active market or government bonds with the currency and term which shall be consistent with the
currency and estimated term of the defined contribution obligations) to measure employee benefits payable.(ii) Defined benefit plan
The present value of defined benefit obligation and current service costs
Based on the expected accumulative welfare unit method the Company shall make estimates about demographic
variables and financial variables in adopting the unbiased and consistent actuarial assumptions and measure
defined benefit obligation and determine the obligation period. The Company shall discount the obligation arising
from defined benefit plan using relevant discount rate (market yields at the end of the reporting period on high
quality corporate bonds in active market or government bonds with the currency and term which shall be
consistent with the currency and estimated term of the defined benefit obligations) in order to determine the
present value of the defined benefit obligation and the current service cost.The net defined benefit liability or asset
The net defined benefit liability (asset) is the deficit or surplus recognised as the present value of the defined
benefit obligation less the fair value of plan assets (if any).When the Company has a surplus in a defined benefit plan it shall measure the net defined benefit asset at the
lower of the surplus in the defined benefit plan and the asset ceiling.The amount recognised in the cost of asset or current profit or loss
Service cost comprises current service cost past service cost and any gain or loss on settlement. Other service cost
shall be recognised in profit or loss unless accounting standards require or allow the inclusion of current service
cost within the cost of assets.Net interest on the net defined benefit liability (asset) comprising interest income on plan assets interest cost on
the defined benefit obligation and interest on the effect of the asset ceiling shall be included in profit or loss.The amount recognised in other comprehensive income
~ 69 ~
Changes in the net liability or asset of the defined benefit plan resulting from the remeasurements including:
? Actuarial gains and losses the changes in the present value of the defined benefit obligation resulting from
experience adjustments or the effects of changes in actuarial assumptions;
? Return on plan assets excluding amounts included in net interest on the net defined benefit liability or asset;
? Any change in the effect of the asset ceiling excluding amounts included in net interest on the net defined
benefit liability (asset).Remeasurements of the net defined benefit liability (asset) recognised in other comprehensive income shall not be
reclassified to profit or loss in a subsequent period. However the Company may transfer those amounts
recognised in other comprehensive income within equity.(c) Termination benefits
The Company providing termination benefits to employees shall recognise an employee benefits liability for
termination benefits with a corresponding charge to the profit or loss of the reporting period at the earlier of the
following dates:
(i) When the Company cannot unilaterally withdraw the offer of termination benefits because of an employment
termination plan or a curtailment proposal.(ii) When the Company recognises costs or expenses related to a restructuring that involves the payment of
termination benefits.If the termination benefits are not expected to be settled wholly before twelve months after the end of the annual
reporting period the Company shall discount the termination benefits using relevant discount rate (market yields
at the end of the reporting period on high quality corporate bonds in active market or government bonds with the
currency and term which shall be consistent with the currency and estimated term of the defined benefit
obligations) to measure the employee benefits.(d) Other long-term employee benefits
(i) Meet the conditions of the defined contribution plan
When other long-term employee benefits provided by the Company to the employees satisfies the conditions for
classifying as a defined contribution plan all those benefits payable shall be accounted for as employee benefits
payable at their discounted value.(ii) Meet the conditions of the defined benefit plan
At the end of the reporting period the Company recognised the cost of employee benefit from other long-term
employee benefits as the following components:
? Service costs;
? Net interest cost for net liability or asset of other long-term employee benefits
? Changes resulting from the remeasurements of the net liability or asset of other long-term employee benefits
In order to simplify the accounting treatment the net amount of above items shall be recognised in profit or loss
~ 70 ~
or relevant cost of assets.3.25 Lease Liabilities
The Company initially measures the lease obligation at the present value of the lease payments outstanding at the
commencement date of the lease term. When calculating the present value of lease payments
the Company uses the interest rate implicit in lease as the rate of discount. If the interest rate implicit in lease
cannot be determined the Company's incremental lending rate is used as the rate of discount. Lease payments
include:
(1) The amount of fixed payments net of amounts related to lease incentives and the amount of substantive fixed
payments.
(2) Variable lease payments that depend on indexation or ratio.
(3) The lease payment amount includes the exercise price of the purchase option if the Company is reasonably
certain that the option will be exercised.
(4) Where the lease term reflects that the Company will exercise the option to terminate the lease the lease
payment amount includes the amount required to be paid to exercise the option to terminate the lease.
(5) Estimated amount payable based on the residual value of the guarantee provided by the Company.
The Company calculates the interest expense on the lease obligation for each period of the lease term at a fixed
rate of discount and includes it in the current profit or loss or cost of the related assets. Variable lease payments
that are not included in the measurement of the lease obligation should be charged to current profit or loss or the
cost of the related assets when they are actually incurred.3.26 Estimated Liabilities
(a) Recognition criteria of estimated liabilities
The Company recognises the estimated liabilities when obligations related to contingencies satisfy all the
following conditions:
(i) That obligation is a current obligation of the Company;
(ii) It is likely to cause any economic benefit to flow out of the Company as a result of performance of the
obligation; and
(iii) The amount of the obligation can be measured reliably.(b) Measurement method of estimated liabilities
The estimated liabilities of the Company are initially measured at the best estimate of expenses required for the
performance of relevant present obligations. The Company when determining the best estimate has had a
comprehensive consideration of risks with respect to contingencies uncertainties and the time value of money.The carrying amount of the estimated liabilities shall be reviewed at the end of every reporting period. If
conclusive evidences indicate that the carrying amount fails to be the best estimate of the estimated liabilities the
~ 71 ~
carrying amount shall be adjusted based on the updated best estimate.3.27 Revenue Recognition Principle and Measurement
3.25.1 General principle
Revenue is the total inflow of economic benefits formed in the company's daily activities that will increase
shareholders' equity and does not relate to the capital invested by shareholders.The Company has fulfilled the performance obligation in the contract that is the revenue is recognised when the
customer obtains the control right of relevant goods. To obtain the control right of the relevant commodity means
to be able to dominate the use of the commodity and obtain almost all the economic benefits from it.If there are two or more performance obligations in the contract the Company will allocate the transaction price
to each performance obligation based on the relative proportion of the separate selling price of the goods or
services promised by each performance obligation on the start date of the contract and measure the income based
on the transaction price allocated to each single performance obligation.The transaction price refers to the amount of consideration that the Company is expected to be entitled to receive
due to the transfer of goods or services to customers excluding payments collected on behalf of third parties.When determining the transaction price of the contract the Company determines the transaction price according
to the terms of the contract and in combination with its historical practices. When determining the transaction
price the Company takes into account the influence of variable considerations significant financing elements in
the contract the non-cash considerations the considerations payable to customers and other factors. The
Company determines the transaction price including variable consideration at an amount that does not exceed the
amount at which the accumulated recognized income is unlikely to have a significant reversal when the relevant
uncertainty is eliminated. If there is a significant financing component in the contract the Company will
determine the transaction price based on the amount payable in cash when the customer obtains the control right
of the commodity. The difference between the transaction price and the contract consideration will be amortised
by the effective interest method during the contract period. If the interval between the control right transfer and
the customer's payment is less than one year the company will not consider the financing component.If one of the following conditions is met the performance obligation shall be fulfilled within a certain period of
time; otherwise the performance obligation shall be fulfilled at a certain point of time:
(a) The customer obtains and consumes the economic benefits brought by the Company's fulfillment of contract
when the Company performs the obligations;
(b) The customer can control the commodities under construction during the Company's execution of the
contract;
~ 72 ~
(c) The commodities produced by the Company during the performance of the contract have irreplaceable uses
and the Company has the right to collect payment for the cumulative performance part that has been completed
so far during the entire contract period.For performance obligations fulfilled within a certain period of time the Company recognises revenue in
accordance with the performance progress during that period except where the performance progress cannot be
reasonably determined. The Company determines the progress of the performance of services in accordance with
the input method (or output method). When the progress of the contract performance cannot be reasonably
determined if the cost incurred by the Company is expected to be compensated the revenue shall be recognised
according to the amount of the cost incurred until the progress of the contract performance can be reasonably
determined.For performance obligations fulfilled at a certain point in time the Company recognises revenue at the point when
the customer obtains control of the relevant commodities. The Company considers the following signs when
judging whether a customer has obtained control of goods or services:
(a)The Company has the current right to receive payment for the goods or services that is the customer has the
current obligation to pay for the goods;
(b) The Company has transferred the legal ownership of the goods to the customer that is the customer has the
legal ownership of the goods;
(c) The Company has transferred the goods in kind to the customer that is the customer has possessed the
goods in kind;
(d) The company has transferred the main risks and rewards of the ownership of the goods to the customers that
is the customers have obtained the main risks and rewards of the ownership of the goods;
(e) The customer has accepted the goods or services.(f) Other indications that the customer has obtained control of the product
3.25.2 Specific methods
The specific methods of the Company's revenue recognition are as follows:
(a) Revenue from sale of goods
Revenue from sale of goods shall be recognised when the following criteria are satisfied:
(i) Significant risks and rewards related to ownership of the goods have been transferred to the buyer;
(ii) The Company retains neither continuous management rights associated with ownership of the goods sold nor
effective control over the goods sold;
~ 73 ~
(iii) Relevant amount of revenue can be measured reliably;
(iv) It is probable that the economic benefits associated with the transaction will flow into the Company; and
(v) Relevant amount of cost incurred or to be incurred can be measured reliably.Revenue arising from domestic sales of goods is recognized when goods are dispatched and delivered to the buyer
when significant risks and rewards attached to the ownership of the goods sold are passed to the buyer when
neither continual involvement in the rights normally associated with the ownership of the goods sold nor effective
control over the goods controls are retained when revenue arising from the goods sold is reliably measurable
when inflow of future economic benefits is probable and when cost incurred or to be incurred associated with the
goods sold is reliably measurable. Revenue arising from non-domestic sales of goods is recognized when goods
are loaded on board and when the export clearance with the custom is completed.(b) Revenue from rendering of services
When the outcome of rendering of services can be estimated reliably at the balance sheet date revenue associated
with the transaction is recognised using the percentage of completion method. Percentage of completion is
determined based on the measurement of the work completed
The outcome of rendering of services can be estimated reliably when all of the following conditions are satisfied: i)
the amount of revenue can be measured reliably; ii) it is probable that the associated economic benefits will flow
to the Company; iii) the percentage of completion of the transaction can be measured reliably; iv) the costs
incurred and to be incurred for the transaction can be measured reliably.The Company shall determine the total revenue from rendering of services based on the received or receivable
price stipulated in the contract or agreement unless the received or receivable amount as stipulated in the contract
or agreement is unfair. At the end of the reporting period the Company shall recognise the revenue from
rendering of the services in current period based on the amount of multiplying the total amount of revenues from
rendering of the services by the percentage of completion then deducting the accumulative revenues from
rendering of the services that have been recognised in the previous accounting periods. At the same time the
Company shall recognise the current cost incurred for rendering of the services based on the amount of
multiplying the total estimated cost for rendering of the services by the percentage of completion and then
deducting the accumulative costs from rendering of the services that have been recognised in the previous
accounting periods.If the outcome of rendering of services cannot be estimated reliably at the balance sheet date the accounting
treatment shall be based on the following circumstances respectively:
(i) When the costs incurred are expected to be recovered revenue shall be recognised to the extent of costs
~ 74 ~
incurred and charge an equivalent amount of cost to the profit and loss;
(ii) When the costs incurred are not expected to be recovered revenue shall not be recognised and the costs
incurred are recognised into current profit or loss
(c) Revenue from alienating the right to use assets
When it is probable that the economic benefits associated with the transaction will flow into the Company and
amount of revenue can be measured reliably the Company shall recognise the amount of revenue from the
alienating of right to use assets based on the following circumstances respectively:
(i) Interest revenue should be calculated in accordance with the period for which the enterprise's cash is used by
others and the effective interest rate; or
(ii) The amount of royalty revenue should be calculated in accordance with the period and method of charging as
stipulated in the relevant contract or agreement.3.28 Government Grants
(a) Recognition of government grants
A government grant shall not be recgonised until there is reasonable assurance that:
(i) The Company will comply with the conditions attaching to them; and
(ii) The grants will be received.(b) Measurement of government grants
Monetary grants from the government shall be measured at amount received or receivable and non-monetary
grants from the government shall be measured at their fair value or at a nominal value of RMB 1.00 when reliable
fair value is not available.(c) Accounting for government grants
(i) Government grants related to assets
Government grants pertinent to assets mean the government grants that are obtained by the Company used for
purchase or construction or forming the long-term assets by other ways. Government grants pertinent to assets
shall be recognised as deferred income and should be recognised in profit or loss on a systematic basis over the
useful lives of the relevant assets. Grants measured at their nominal value shall be directly recognised in profit or
loss of the period when the grants are received. When the relevant assets are sold transferred written off or
damaged before the assets are terminated the remaining deferred income shall be transferred into profit or loss of
the period of disposing relevant assets.(ii) Government grants related to income
Government grants other than related to assets are classified as government grants related to income. Government
grants related to income are accounted for in accordance with the following principles:
~ 75 ~
If the government grants related to income are used to compensate the enterprise’s relevant expenses or losses in
future periods such government grants shall be recognised as deferred income and included into profit or loss in
the same period as the relevant expenses or losses are recognised;
If the government grants related to income are used to compensate the enterprise’s relevant expenses or losses
incurred such government grants are directly recognised into current profit or loss
For government grants comprised of part related to assets as well as part related to income each part is accounted
for separately; if it is difficult to identify different part the government grants are accounted for as government
grants related to income as a whole.Government grants related to daily operation activities are recognised in other income in accordance with the
nature of the activities and government grants irrelevant to daily operation activities are recognised in
non-operating income.(iii) Loan interest subsidy
When loan interest subsidy is allocated to the bank and the bank provides a loan at lower-market rate of interest
to the Company the loan is recognised at the actual received amount and the interest expense is calculated based
on the principal of the loan and the lower-market rate of interest.When loan interest subsidy is directly allocated to the Company the subsidy shall be recognised as offsetting the
relevant borrowing cost.(iv) Repayment of the government grants
Repayment of the government grants shall be recorded by increasing the carrying amount of the asset if the book
value of the asset has been written down or reducing the balance of relevant deferred income if deferred income
balance exists any excess will be recognised into current profit or loss; or directly recognised into current profit
or loss for other circumstances.3.29 Deferred Tax Assets and Deferred Tax Liabilities
Temporary differences are differences between the carrying amount of an asset or liability in the statement of
financial position and its tax base at the balance sheet date. The Company recognise and measure the effect of
taxable temporary differences and deductible temporary differences on income tax as deferred tax liabilities or
deferred tax assets using liability method. Deferred tax assets and deferred tax liabilities shall not be discounted.(a) Recognition of deferred tax assets
Deferred tax assets should be recognised for deductible temporary differences the carryforward of unused tax
losses and the carryforward of unused tax credits to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences the carryforward of unused tax losses and the
carryforward of unused tax credits can be utilised at the tax rates that are expected to apply to the period when the
asset is realised unless the deferred tax asset arises from the initial recognition of an asset or liability in a
~ 76 ~
transaction that:
(i) Is not a business combination; and
(ii) At the time of the transaction affects neither accounting profit nor taxable profit (tax loss)
The Company shall recognise a deferred tax asset for all deductible temporary differences arising from
investments in subsidiaries associates and joint ventures only to the extent that it is probable that:
(i) The temporary difference will reverse in the foreseeable future; and
(ii) Taxable profit will be available against which the deductible temporary difference can be utilised.At the end of each reporting period if there is sufficient evidence that it is probable that taxable profit will be
available against which the deductible temporary difference can be utilized the Company recognises a previously
unrecognised deferred tax asset.The carrying amount of a deferred tax asset shall be reviewed at the end of each reporting period. The Company
shall reduce the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient
taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised. Any such
reduction shall be reversed to the extent that it becomes probable that sufficient taxable profit will be available.(b) Recognition of deferred tax liabilities
A deferred tax liability shall be recognised for all taxable temporary differences at the tax rate that are expected to
apply to the period when the liability is settled.(i) No deferred tax liability shall be recognised for taxable temporary differences arising from:
? The initial recognition of goodwill; or
? The initial recognition of an asset or liability in a transaction which: is not a business combination; and at the
time of the transaction affects neither accounting profit nor taxable profit (tax loss)
(ii) An entity shall recognise a deferred tax liability for all taxable temporary differences associated with
investments in subsidiaries associates and joint ventures except to the extent that both of the following
conditions are satisfied:
? The Company is able to control the timing of the reversal of the temporary difference; and
? It is probable that the temporary difference will not reverse in the foreseeable future.(c) Recognition of deferred tax liabilities or assets involved in special transactions or events
(i) Deferred tax liabilities or assets related to business combination
For the taxable temporary difference or deductible temporary difference arising from a business combination not
under common control a deferred tax liability or a deferred tax asset shall be recognised and simultaneously
goodwill recognised in the business combination shall be adjusted based on relevant deferred tax expense
(income).(ii) Items directly recognised in equity
Current tax and deferred tax related to items that are recognised directly in equity shall be recognised in equity.~ 77 ~
Such items include: other comprehensive income generated from fair value fluctuation of investments in other
debt obligations; an adjustment to the opening balance of retained earnings resulting from either a change in
accounting policy that is applied retrospectively or the correction of a prior period (significant) error; amounts
arising on initial recognition of the equity component of a compound financial instrument that contains both
liability and equity component.(iii) Unused tax losses and unused tax credits
Unsused tax losses and unused tax credits generated from daily operation of the Company itself
Deductible loss refers to the loss calculated and permitted according to the requirement of tax law that can be
offset against taxable income in future periods. The criteria for recognising deferred tax assets arising from the
carryforward of unused tax losses and tax credits are the same as the criteria for recognising deferred tax assets
arising from deductible temporary differences. The Company recognises a deferred tax asset arising from unused
tax losses or tax credits only to the extent that there is convincing other evidence that sufficient taxable profit will
be available against which the unused tax losses or unused tax credits can be utilised by the Company. Income
taxes in current profit or loss shall be deducted as well.Unsused tax losses and unused tax credits arising from a business combination
Under a business combination the acquiree’s deductible temporary differences which do not satisfy the criteria at
the acquisition date for recognition of deferred tax asset shall not be recognised. Within 12 months after the
acquisition date if new information regarding the facts and circumstances exists at the acquisition date and the
economic benefit of the acquiree’s deductible temporary differences at the acquisition is expected to be realised
the Company shall recognise acquired deferred tax benefits and reduce the carrying amount of any goodwill
related to this acquisition. If goodwill is reduced to zero any remaining deferred tax benefits shall be recognised
in profit or loss. All other acquired deferred tax benefits realised shall be recognised in profit or loss.(iv) Temporary difference generated in consolidation elimination
When preparing consolidated financial statements if temporary difference between carrying value of the assets
and liabilities in the consolidated financial statements and their taxable bases is generated from elimination of
inter-company unrealized profit or loss deferred tax assets or deferred tax liabilities shall be recognised in the
consolidated financial statements and income taxes expense in current profit or loss shall be adjusted as well
except for deferred tax related to transactions or events recognised directly in equity and business combination.(v) Share-based payment settled by equity
If tax authority permits tax deduction that relates to share-based payment during the period in which the expenses
are recognised according to the accounting standards the Company estimates the tax base in accordance with
available information at the end of the accounting period and the temporary difference arising from it. Deferred
tax shall be recognised when criteria of recognition are satisfied. If the amount of estimated future tax deduction
~ 78 ~
exceeds the amount of the cumulative expenses related to share-based payment recognised according to the
accounting standards the tax effect of the excess amount shall be recognised directly in equity.3.30 Leases
(1) Accounting treatment of operating leases
a) When the Company acts as a lessee under an operating lease the rental expense of the operating lease is
charged to current profit or loss on a straight-line basis or based on the usage of the leasehold property in each
period of the lease term. If the lessor provides a rent-free period the Company apportions the total rent on a
straight-line basis or by other reasonable method over the entire lease term without deducting the rent-free period
and recognizes the rental expense and the corresponding liability during the rent-free period. If the lessor bears
certain expenses of the lessee the Company apportions the balance of the rental expense over the lease term after
such expenses are deducted from the total rental expense.The initial direct costs are included in current profit or loss. If the agreement agrees to contingent rentals they are
included in current profit or loss when they are actually incurred.b) When the Company acts as a lessor under an operating lease the rent received is recognized as income over the
lease term using the straight-line method. If the lessor provides a rent-free period the lessor allocates the total
rentals over the entire lease term without deducting the rent-free period by the straight-line method or other
reasonable method and the lessor also recognizes rental income during the rent-free period. If certain expenses of
the lessee are borne the Company allocates the balance of rental income over the lease term after such expenses
are deducted from the gross rental income.The initial direct costs are included in current profit or loss. Larger amounts are capitalized and recognized in
current profit or loss on the same basis as rental income throughout the term of the operating lease. Contingent
rentals if agreed are recognized in current income when they are actually incurred.
(2) Accounting treatment of finance leases
a) When the Company is a lessee under a finance lease the lower of the fair value of the leasehold property and
the present value of the minimum lease payments at the commencement date of the lease is recorded as the value
of the leasehold property and the minimum lease payments are recorded as the value of the long-term account
payable and the difference is recorded as unrecognized financing expense. The effective interest rate method is
used to apportion the amount over each period of the lease term and is recognized as current financing expenses
which are included in financial expenses.The initial direct costs incurred are included in the value of the leasehold property.When depreciating financing leasehold property the Company adopts a depreciation policy consistent with that of
its own depreciable assets and the depreciation period is determined by the lease contract. If it may be reasonably
ascertained that the Company will obtain ownership of the leasehold property at the end of the lease term the life
of the leasehold property at the commencement date of the lease term is used as the depreciation period; if it is not
~ 79 ~
reasonably certain that the Company will obtain ownership of the leasehold property at the end of the lease term
the shorter of the lease term and the life of the leasehold property is used as the depreciation period.b) When the Company acts as a financing lessor the sum of the minimum lease receivable and the initial direct
costs as of the lease commencement date is recorded as the recorded value of the finance lease receivable in the
long-term receivables on the balance sheet and the unguaranteed residual value is also recorded. The difference
between the sum of the minimum lease receivable the initial direct costs and the unguaranteed residual value and
the sum of their present values is recognized as unrealized financing income and recognized as rental receipt using
the effective interest method in each period of the lease term.3.31 Changes in Significant Accounting Policies and Accounting Estimates
(1) Changes in accounting polices
√ Applicable □ Not applicable
Contents of changes in accounting policies
Approval procedures Note
and reasons thereof
On 7 December 2018 the Ministry of
Finance revised and issued the Accounting
Standards for Business Enterprises
No.21-Leases (CK(2018)No.35)
(hereinafter referred to as the new
standards governing leases) and required
those enterprises both listed in domestic For details please refer to the
and aboard and those enterprises overseas Reviewed and approved on the 7th Meeting announcement on changes in accounting
listed with International Financial of the 9th Board of Directors and the 5th policies disclosed on
Reporting Standards or Accounting Meeting of the 9th Supervisory Committee http://www.cninfo.com.cn dated 30 April
Standards for Business Enterprises for 2021.preparation of financial statements to
implement it since 1 January 2019
required other enterprises carrying out the
Accounting Standards for Business
Enterprises to implement it since 1 January
2021.
(2) Changes in Accounting Estimates
□Applicable √Not applicable
(3) Adjustments to the Financial Statements at the Beginning of the First Execution Year of any New
Standards Governing Leases since 2021
Applicable
Whether items of balance sheets at the beginning of the year need adjustment
√ Yes □ No
~ 80 ~
Consolidated Balance Sheet
Unit: RMB
Item 31 December 2020 1 January 2021 Adjusted
Current assets:
Monetary assets 5971212569.66 5971212569.66
Settlement reserve
Interbank loans granted
Held-for-trading financial
203877915.51 203877915.51
assets
Derivative financial assets
Notes receivable
Accounts receivable 67933735.91 67933735.91
Accounts receivable
1673510794.51 1673510794.51
financing
Prepayments 55575543.21 51399808.11 -4175735.10
Premiums receivable
Reinsurance receivables
Receivable reinsurance
contract reserve
Other receivables 33451121.48 33451121.48
Including: Interest
receivable
Dividends
receivable
Financial assets purchased
under resale agreements
Inventories 3416880808.96 3416880808.96
Contract assets
Assets held for sale
Current portion of
non-current assets
Other current assets 97412681.26 97412681.26
Total current assets 11519855170.50 11515679435.40 -4175735.10
Non-current assets:
Loans and advances to
customers
Investments in debt
~ 81 ~
obligations
Investments in other debt
obligations
Long-term receivables
Long-term equity
4915575.83 4915575.83
investments
Investments in other equity
instruments
Other non-current financial
assets
Investment property 4392943.54 4392943.54
Fixed assets 1797789271.62 1797789271.62
Construction in progress 279169201.60 279169201.60
Productive living assets
Oil and gas assets
Right-of-use assets 0.00 57402412.53 57402412.53
Intangible assets 934711977.79 934711977.79
Development costs
Goodwill 478283495.29 478283495.29
Long-term prepaid
64591933.65 64591933.65
expense
Deferred income tax assets 96972421.95 96972421.95
Other non-current assets 5943717.02 5943717.02
Total non-current assets 3666770538.29 3724172950.82 57402412.53
Total assets 15186625708.79 15239852386.22 53226677.43
Current liabilities:
Short-term borrowings 70665500.00 70665500.00
Borrowings from the
central bank
Interbank loans obtained
Held-for-trading financial
liabilities
Derivative financial
liabilities
Notes payable 140614535.60 140614535.60
Accounts payable 505206561.86 505206561.86
Advances from customers
~ 82 ~
Contract liabilities 1206573886.26 1206573886.26
Financial assets sold under
repurchase agreements
Customer deposits and
interbank deposits
Payables for acting trading
of securities
Payables for underwriting
of securities
Employee benefits payable 498129114.76 498129114.76
Taxes payable 349142692.10 349142692.10
Other payables 1396599161.14 1396599161.14
Including: Interest
payable
Dividends
payable
Handling charges and
commissions payable
Reinsurance payables
Liabilities directly
associated with assets held
for sale
Current portion of
non-current liabilities
Other current liabilities 320792383.03 320792383.03
Total current liabilities 4487723834.75 4487723834.75
Non-current liabilities:
Insurance contract reserve
Long-term borrowings 60117638.89 60117638.89
Bonds payable
Including: Preferred
shares
Perpetual
bonds
Lease liabilities 0.00 53226677.43 53226677.43
Long-term payables
Long-term employee
benefits payable
Provisions
~ 83 ~
Deferred income 75111997.53 75111997.53
Deferred income tax
114821451.24 114821451.24
liabilities
Other non-current
liabilities
Total non-current liabilities 250051087.66 303277765.09 53226677.43
Total liabilities 4737774922.41 4791001599.84 53226677.43
Owners’ equity:
Share capital 503600000.00 503600000.00
Other equity instruments
Including: Preferred
shares
Perpetual
bonds
Capital reserves 1295405592.25 1295405592.25
Less: Treasury stock
Other comprehensive
income
Specific reserve
Surplus reserves 256902260.27 256902260.27
General reserve
Retained earnings 7987380161.21 7987380161.21
Total equity attributable to
owners of the Company as 10043288013.73 10043288013.73
the parent
Non-controlling interests 405562772.65 405562772.65
Total owners’ equity 10448850786.38 10448850786.38
Total liabilities and owners’
15186625708.79 15239852386.22 53226677.43
equity
Note
The Ministry of Finance issued the Accounting Standard for Business Enterprises No. 21 - Leases (C.K. [2018] No. 35) in 2018 and
the Company implemented the new leasing standard since 1 January 2021 and adjusted the amounts of relevant items in the financial
statements at the beginning of the year of first implementation based on the cumulative effect of the first implementation of the new
leasing standard without adjusting the information of the comparable period. The above policy change increased right-of-use assets
by RMB57402412.53 increased lease liabilities by RMB53226677.43 and decreased prepayments by RMB4175735.10.Balance Sheet of the Company as the Parent
Unit: RMB
Item 31 December 2020 1 January 2021 Adjusted
Current assets:
~ 84 ~
Monetary assets 4287808756.66 4287808756.66
Held-for-trading financial
203877915.51 203877915.51
assets
Derivative financial assets
Notes receivable
Accounts receivable 494976.27 494976.27
Accounts receivable
1399214331.97 1399214331.97
financing
Prepayments 11737580.47 7561845.37 -4175735.10
Other receivables 141378010.40 141378010.40
Including: Interest
receivable
Dividends
receivable
Inventories 2976360208.66 2976360208.66
Contract assets
Assets held for sale
Current portion of
non-current assets
Other current assets 9734249.41 9734249.41
Total current assets 9030606029.35 9026430294.25 -4175735.10
Non-current assets:
Investments in debt
obligations
Investments in other debt
obligations
Long-term receivables
Long-term equity
1118213665.32 1118213665.32
investments
Investments in other equity
instruments
Other non-current financial
assets
Investment property 4392943.54 4392943.54
Fixed assets 1322818855.86 1322818855.86
Construction in progress 139865487.21 139865487.21
Productive living assets
~ 85 ~
Oil and gas assets
Right-of-use assets 0.00 52729370.65 52729370.65
Intangible assets 369163089.18 369163089.18
Development costs
Goodwill
Long-term prepaid
44072241.78 44072241.78
expense
Deferred income tax assets 30716488.80 30716488.80
Other non-current assets 75999.80 75999.80
Total non-current assets 3029318771.49 3082048142.14 52729370.65
Total assets 12059924800.84 12108478436.39 48553635.55
Current liabilities:
Short-term borrowings
Held-for-trading financial
liabilities
Derivative financial
liabilities
Notes payable 74535.60 74535.60
Accounts payable 397554006.51 397554006.51
Advances from customers
Contract liabilities 1130074436.39 1130074436.39
Employee benefits payable 127974331.78 127974331.78
Taxes payable 200876134.49 200876134.49
Other payables 524000730.59 524000730.59
Including: Interest
payable
Dividends
payable
Liabilities directly
associated with assets held
for sale
Current portion of
non-current liabilities
Other current liabilities 160738917.51 160738917.51
Total current liabilities 2541293092.87 2541293092.87
Non-current liabilities:
Long-term borrowings
~ 86 ~
Bonds payable
Including: Preferred
shares
Perpetual
bonds
Lease liabilities 0.00 48553635.55 48553635.55
Long-term payables
Long-term employee
benefits payable
Provisions
Deferred income 31601732.51 31601732.51
Deferred income tax
19407895.89 19407895.89
liabilities
Other non-current
liabilities
Total non-current liabilities 51009628.40 99563263.95 48553635.55
Total liabilities 2592302721.27 2640856356.82 48553635.55
Owners’ equity:
Share capital 503600000.00 503600000.00
Other equity instruments
Including: Preferred
shares
Perpetual
bonds
Capital reserves 1247162107.35 1247162107.35
Less: Treasury stock
Other comprehensive
income
Specific reserve
Surplus reserves 251800000.00 251800000.00
Retained earnings 7465059972.22 7465059972.22
Total owners’ equity 9467622079.57 9467622079.57
Total liabilities and owners’
12059924800.84 12108478436.39 48553635.55
equity
Note
The Ministry of Finance issued the Accounting Standard for Business Enterprises No. 21 - Leases (C.K. [2018] No. 35) in 2018 and
the Company implemented the new leasing standard since 1 January 2021 and adjusted the amounts of relevant items in the financial
statements at the beginning of the year of first implementation based on the cumulative effect of the first implementation of the new
leasing standard without adjusting the information of the comparable period. The above policy change increased right-of-use assets
~ 87 ~
by RMB52729370.65 increased lease liabilities by RMB48553635.55 and decreased prepayments by RMB4175735.10.
(4) Retroactive Adjustments to Comparative Data of Prior Years when First Execution of any New
Standards Governing Leases since 2021
□ Applicable √ Not applicable
4. Taxation
4.1 Main Taxes and Tax Rate
Category of taxes Basis of tax assessment Tax rate
VAT are paid on added value of
VAT 13% 9% 6%
product sales
Consumption taxes are paid Sales of wine RMB1 per 1000 ml or per kg to calculate the amount of
Consumption tax onsales volume of taxable consumption tax a flat rate 20% of the annual turnover to calculate the
consumer goods amount of consumption tax at valorem.Urban maintenance and
Urban maintenance and
construction taxes are paid on 7%、5%construction tax
turnover taxes
Education expenses Educational surcharges are paid
3%
surcharge on turnover taxes
Local education Local educational surcharges are
2%
surcharge paid on turnover taxes
Business taxes are calculated
Enterprise income tax 25%
and paid on taxable revenues
The basic income tax rate of the company is 25% and the effective income tax rate of some subsidiaries is other
tax rates as shown in the table below:
Name of the entities Income tax rate
Anhui Longrui Glass Co. Ltd 15%
Anhui Ruisiweier Technology Co. Ltd 15%
Wuhan Yashibo Technology Co. Ltd 2.5%
Bozhou Gujing hotel Co. Ltd 2.5%
The portion of the taxable income which does
not exceed RMB1 million: 2.5%
Hubei Junlou Cultural Tourism Co. Ltd. The portion of the taxable income which is more
than RMB1 million but not more than RMB3
million: 10%
Hubei Yellow Crane Tower Beverage Co. Ltd. 2.5%
~ 88 ~
The portion of the taxable income which does
not exceed RMB1 million: 2.5%
Hubei Xinjia Testing Technology Co. Ltd. The portion of the taxable income which is more
than RMB1 million but not more than RMB3
million: 10%
4.2 Tax Preference
(1) According to Response Letter for the First Batch of High-tech Enterprises to be put on record in Anhui
Province for 2019 (guokehuozi [2019] No.216) issued by Department of Science and Technology of Anhui
province Department of Finance of Anhui province and Anhui Provincial Taxation Bureau of State
Administration of Taxation the subsidiary Longrui Glass was identified as a high-tech enterprise in 2019
therefore was given High-tech Enterprise Certificate (Certificate Number: GR201934001625) which is valid for 3
years. According to Enterprise Income Tax Law and other relevant regulations the company is subject to a
national high-tech enterprise income tax rate at 15% for three years from 1 January 2019 to 31 December 2021.
(2) According to Response Letter for the First Batch of High-tech Enterprises to be put on record in Anhui
Province for 2019 (guokehuozi [2019] No.216) issued by Department of Science and Technology of Anhui
province Department of Finance of Anhui province and Anhui Provincial Taxation Bureau of State
Administration of Taxation the subsidiary Ruisiweier was identified as a high-tech enterprise in 2019 therefore
was given High-tech Enterprise Certificate (Certificate Number: GR201934000355) which is valid for 3 years.According to Enterprise Income Tax Law and other relevant regulations the company is subject to a national
high-tech enterprise income tax rate at 15% for three years from 1 January 2019 to 31 December 2021.
(3) According to the Announcement of the State Taxation Administration and the Ministry of Finance on the
Implementation of Preferential Income Tax Policies for Small- and Micro-sized Enterprises and Individual
Industrial and Commercial Entities (No. 12 of 2021) from 1 January 2021 to 31 December 2022 the portion of
the annual taxable income of small- and micro-sized enterprises not exceeding RMB1 million the taxable income
shall be reduced by 12.5% and subject to enterprise income tax at a rate of 20%. For the portion of annual taxable
income exceeding RMB1 million but not exceeding RMB3 million the taxable income shall be reduced by 50%
and subject to enterprise income tax at a rate of 20%. Subsidiaries Gujing Hotel Junlou Culture Yellow Crane
Tower Beverage Xinjia Testing and Yashibo shall observe the relevant provisions of the preferential income tax
policy for small micro-profit enterprises.5. Notes to Major Items in the Consolidated Financial Statements of the Company
5.1 Monetary Assets
Item Ending balance Beginning balance
Cash on hand 175509.59 178127.77
Cash in bank 12139953541.32 5936406199.84
~ 89 ~
Item Ending balance Beginning balance
Other monetary assets 4175438.94 34628242.05
Total 12144304489.85 5971212569.66
At 30 June 2021 the structural deposits that cannot be withdrawn in advance amounted to RMB2498.00 million
and security deposit that cannot be withdrawn in advance in other monetary funds amounted to RMB3.9154
million. Except for that no other monetary funds are restricted to use or in some potential risks of recovery due to
the mortgage pledge or freezing.Liquor manufacturing enterprises shall disclose whether there exists special interest arrangements such as establishing a joint fund
account with related parties
□ Applicable √ Not applicable
5.2 Trading Financial Assets
Item Ending balance Beginning balance
Financial assets at fair value through profit or
209115157.91 203877915.51
loss
Including: bank financial products -
Fund investment 209115157.91 203877915.51
Total 209115157.91 203877915.51
The ending balance as of 30 June 2021 has increased RMB5237200 compared with that as of 1 January 2021
mainly due to the increase in the market value of the Company's fund investments.5.3 Accounts Receivable
(1) Disclosure by aging
Aging Ending balance Beginning balance
Within one year 65490049.59 64157166.51
Of which:1-6 months 53061182.15 61367773.81
7-12 months 12428867.44 2789392.70
1-2 years 876218.55 4953687.55
2-3 years 445069.62 142796.00
Over 3 years 980982.55 -
Subtotal 67792320.31 69253650.06
Less: Bad debt provision 2443194.41 1319914.15
~ 90 ~
Aging Ending balance Beginning balance
Total 65349125.90 67933735.91
(2) Disclosure by withdrawal method of bad debt provision
①Ending balance
Ending balance
Carrying amount Bad debt provision
Category
Withdrawal Carrying value
Amount Proportion (%) Amount
proportion (%)
Bad debt provision withdrawn
separately
Bad debt provision withdrawn by
67792320.31 100.00 2443194.41 3.60
group 65349125.90
Of which: Group 1
Group 2 67792320.31 100.00 2443194.41 3.60 65349125.90
Total 67792320.31 100.00 2443194.41 3.60 65349125.90
②Beginning balance
Beginning balance
Carrying amount Bad debt provision
Category
Withdrawal Carrying value
Amount Proportion (%) Amount
proportion (%)
Bad debt provision withdrawn
- - - - -
separately
Bad debt provision withdrawn by
69253650.06 100.00 1319914.15 1.91 67933735.91
group
Of which: Group 1 - - - - -
Group 2 69253650.06 100.00 1319914.15 1.91 67933735.91
Total 69253650.06 100.00 1319914.15 1.91 67933735.91
On 30 June 2021 Accounts receivable with bad debt provision withdrawn by group 2
Ending balance
Aging Withdrawal proportion
Carrying amount Bad debt provision
(%)
Within one year 65490049.59 1152055.19 1.76
Of which:1-6 months 53061182.15 530611.82 1.00
~ 91 ~
Ending balance
Aging Withdrawal proportion
Carrying amount Bad debt provision
(%)
7-12 months 12428867.44 621443.37 5.00
1-2 years 876218.55 87621.86 10.00
2-3 years 445069.62 222534.81 50.00
Over 3 years 980982.55 980982.55 100.00
Total 67792320.31 2443194.41 3.60
On 31 December 2020 Accounts receivable with bad debt provision withdrawn by group 2
Beginning balance
Aging Withdrawal proportion
Carrying amount Bad debt provision
(%)
Within one year 64157166.51 753147.38 1.17
Of which:1-6 months 61367773.81 613677.74 1.00
7-12 months 2789392.70 139469.64 5.00
1-2 years 4953687.55 495368.77 10.00
2-3 years 142796.00 71398.00 50.00
Over 3 years - - -
Total 69253650.06 1319914.15 1.91
(3) Changes of bad debt provision during the Reporting Period
Changes in the Reporting Period
Beginning
Category Business Recovery or Ending balance
amount Withdrawal Write-off
combination reversal
Accounts receivable with
insignificant amount but bad
- - - - - -
debt provision withdrawn
separately
Group 2: Bad debt provision
1319914.15 1166733.53 43453.27 2443194.41
withdrawn by aging group
Total 1319914.15 1166733.53 43453.27 2443194.41
(4) Top five ending balances by entity
Proportion to total ending balance Ending balance of
Entity name Ending balance
of accounts receivable (%) bad debt provision
~ 92 ~
Proportion to total ending balance Ending balance of
Entity name Ending balance
of accounts receivable (%) bad debt provision
No. 1 11747565.00 17.33 117475.65
No. 2 10243957.73 15.11 493138.43
No. 3 4766144.95 7.03 47661.45
No. 4 2784090.69 4.11 27840.91
No. 5 2498381.20 3.69 24983.81
Total 32040139.57 47.27 711100.25
(5) The ending balance has decreased by 3.80% compared to the beginning balance mainly due to the decline of
accounts receivable of the subsidiary Gujing Yunshang.5.4 Accounts Receivable Financing
Ending balance Beginning balance
Category Bad debt Bad debt
Carrying amount Carrying value Carrying amount Carrying value
provision provision
Bank acceptance
2003302090.64 2003302090.64 1673510794.51 - 1673510794.51
bills
Commercial
- - -
acceptance bills
Total 2003302090.64 2003302090.64 1673510794.51 - 1673510794.51
(1) The Company's pledged notes receivable as of 31 December 2021
Items Pledged amount
Bank acceptance bills 24300000.00
Total 24300000.00
(2) The Company’s notes receivable discounted or endorsed to third parties but not yet matured as of 31
December 2021
Items Amount of derecognition Amount of recognition
1348049640.36
Bank acceptance bills -
1348049640.36
Total -
The issuing bank of the bank acceptance bill of the Company for endorsement or discount are commercial banks
with higher credit. Therefore when the bank acceptance bills are mature they are likely to get paid. The interest
rate risk related to the bill has been transferred to the bank so it can be judged that the main risks and rewards of
~ 93 ~
the bill ownership have been transferred so need to be derecogised.
(3) The company has no notes receivable transferred to accounts receivable due to drawers’ inability of fulfillment
at 31 December 2021
(4) Notes receivable by bad debt provision method
Ending balance
Carrying amount Bad debt provision
Category
Withdrawal Carrying value
Amount Proportion (%) Amount
proportion (%)
Bad debt provision
- - - - -
withdrawn separately
Bad debt provision
2003302090.64 100.00 2003302090.64
withdrawn by group
Of which: Group 1
Group 2 2003302090.64 100.00 2003302090.64
Total 2003302090.64 100.00 2003302090.64
①On 30 June 2021 notes receivable with provision for bad debt recognised by group 1
None.②Notes receivable with provision for bad debt recognised by group 2
On 30 June 2021 the Company measured provision for bad debt of bank acceptance bill according to the lifetime
expected credit loss. The Company believes that no significant credit risk exists in the bank acceptance bills and
no significant losses arise from default risk of banks or other issuer’ failure of fulfillment.
(5) Changes of bad debt provision during the Reporting Period
None.5.5 Prepayment
(1) Disclosure by aging
Ending balance Beginning balance
Aging
Amount Proportion (%) Amount Proportion (%)
Within one year 112456597.78 99.19 50894162.75 99.02
1 to 2 years 912996.56 0.80 505645.36 0.98
2 to 3 years 6000.00 0.01 - -
Over 3 years - - - -
~ 94 ~
Ending balance Beginning balance
Aging
Amount Proportion (%) Amount Proportion (%)
Total 113375594.34 100.00 51399808.11 100.00
(2) Top five ending balances by entity
Proportion of the balance to the
Entity name Ending balance
total prepayment (%)
No. 1 24114779.80 21.27
No. 2 8655660.98 7.63
No. 3 5336595.80 4.71
No. 4 4342303.58 3.83
No. 5 3700289.11 3.26
Total 46149629.27 40.70
5.6 Other Receivables
(1) Listed by category
Item Ending balance Beginning balance
Interest receivable - -
Dividends receivable - -
Other receivables 86173732.22 33451121.48
Total 86173732.22 33451121.48
(2) Other Receivables
①Disclosure by aging
Aging Ending balance Beginning balance
Within one year 83426906.55 31014800.18
Of which:1-6 months 76350461.06 29186461.60
7-12 months 7076445.49 1828338.58
1-2 years 3406781.00 2842287.06
2-3 years 1596075.56 523089.00
Over 3 years 43189137.94 42535188.41
Subtotal 131618901.05 76915364.65
Less: Bad debt provision 45445168.83 43464243.17
~ 95 ~
Aging Ending balance Beginning balance
Total 86173732.22 33451121.48
②Disclosure by nature
Nature Ending balance Beginning balance
Investment in securities 38857584.88 40807394.41
Deposit and guarantee 47596554.26 5266477.91
Borrowing for business trip expenses 300260.03 795646.51
Rent utilities and gasoline charges 8820226.93 8962876.17
Other 36044274.95 21082969.65
Subtotal 131618901.05 76915364.65
Less: Bad debt provision 45445168.83 43464243.17
Total 86173732.22 33451121.48
③Disclosure by withdrawal method of bad debt provision
A. As of 30 June 2021 bad debt provision withdrawn based on three stages model:
Stage Carrying amount Bad debt provision Carrying value
Stage 1 92761316.17 6587583.95 86173732.22
Stage 2
Stage 3 38857584.88 38857584.88 -
Total 131618901.05 45445168.83 86173732.22
A1. As of 30 June 2021 bad debt provision at stage 1:
12-month expected
Category Carrying amount credit losses rate Bad debt provision Carrying value
(%)
Bad debt provision withdrawn separately
Bad debt provision withdrawn by group 92761316.17 7.10 6587583.95 86173732.22
Of which: Group 1
Group 2 92761316.17 7.10 6587583.95 86173732.22
Total 92761316.17 7.10 6587583.95 86173732.22
On 30 June 2021 other receivables with bad debt provision withdrawn by group 2
Aging Ending balance
~ 96 ~
Withdrawal proportion
Carrying amount Bad debt provision
(%)
Within one year 83426906.55 1117315.00 1.34
Of which:1-6 months 76350461.06 763492.73 1.00
7-12 months 7076445.49 353822.27 5.00
1-2 years 3406781.00 340678.10 10.00
2-3 years 1596075.56 798037.79 50.00
Over 3 years 4331553.06 4331553.06 100.00
Total 92761316.17 6587583.95 7.10
A2. As of 30 June 2021 bad debt provision at stage 3:
12-month expected
Category Carrying amount credit losses rate Bad debt provision Carrying value
(%)
Bad debt provision withdrawn separately 38857584.88 100.00 38857584.88 -
Bad debt provision withdrawn by group -
Of which: Group 1 -
Group 2 -
Total 38857584.88 100.00 38857584.88 -
On 30 June 2021 other receivables with bad debt provision withdrawn separately:
Ending balance
Name Withdrawal
Carrying amount Bad debt provision Withdrawal reason
proportion (%)
Hengxin Securities Co. Ltd. The enterprise enters the
28966894.41 28966894.41 100.00 bankruptcy liquidation
procedure
100.00
Jianqiao Securities Co. Ltd. The enterprise enters the
9890690.47 9890690.47 bankruptcy liquidation
procedure
Total 38857584.88 38857584.88 100.00 --
B. As of 31 December 2020 bad debt provision withdrawn based on three stages model:
Stage Carrying amount Bad debt provision Carrying value
~ 97 ~
Stage 1 36107970.24 2656848.76 33451121.48
Stage 2 - - -
Stage 3 40807394.41 40807394.41 -
Total 76915364.65 43464243.17 33451121.48
B1. On 31 December 2020 bad debt provision at stage 1:
12-month expected
Category Carrying amount credit losses rate Bad debt provision Carrying value
(%)
Bad debt provision withdrawn separately
Bad debt provision withdrawn by group 36107970.24 7.36 2656848.76 33451121.48
Of which: Group 1
Group 2 36107970.24 7.36 2656848.76 33451121.48
Total 36107970.24 7.36 2656848.76 33451121.48
On 31 December 2020 other receivables with bad debt provision withdrawn by group 2
Beginning balance
Aging Withdrawal proportion
Carrying amount Bad debt provision
(%)
Within one year 31014800.18 383281.55 1.24
Of which:1-6 months 29186461.60 291864.62 1.00
7-12 months 1828338.58 91416.93 5.00
1-2 years 2842287.06 284228.71 10.00
2-3 years 523089.00 261544.50 50.00
Over 3 years 1727794.00 1727794.00 100.00
Total 36107970.24 2656848.76 7.36
B2. As of 31 December 2020 bad debt provision at stage 3:
12-month expected
Category Carrying amount credit losses rate Bad debt provision Carrying value
(%)
Bad debt provision withdrawn separately 40807394.41 100.00 40807394.41 -
Bad debt provision withdrawn by group - - - -
Of which: Group 1 - - - -
~ 98 ~
12-month expected
Category Carrying amount credit losses rate Bad debt provision Carrying value
(%)
Group 2 - - - -
Total 40807394.41 100.00 40807394.41 -
On 31 December 2020 other receivables with bad debt provision withdrawn separately:
Beginning balance
Name Withdrawal
Carrying amount Bad debt provision Withdrawal reason
proportion (%)
Hengxin Securities Co. Ltd. The enterprise enters the
28966894.41 28966894.41 100.00 bankruptcy liquidation
procedure
Jianqiao Securities Co. Ltd. The enterprise enters the
11840500.00 11840500.00 100.00 bankruptcy liquidation
procedure
Total 40807394.41 40807394.41 100.00 --
④Changes of bad debt provision during the Reporting Period
Changes in the Reporting Period
Category Beginning balance Recovery or Ending balance
Withdrawal Write-off
reversal
Bad debt provision
40807394.41 - 1949809.53 38857584.88
withdrawn separately
Bad debt provision
2656848.76 3930735.19 6587583.95
withdrawn by group
Total 43464243.17 3930735.19 1949809.53 45445168.83
⑤Top five ending balances by entity
Proportion of the
balance to the total
Entity name Nature Ending balance Aging Bad debt provision
other receivables
(%)
Deposit 42020000.00 Within 6 31.93 420200.00
No. 1
months
Securities 28966894.41 22.01 28966894.41 No. 2
Over 3 years
investment
~ 99 ~
Proportion of the
balance to the total
Entity name Nature Ending balance Aging Bad debt provision
other receivables
(%)
No. 3 Securities
9890690.47 7.51 9890690.47
Over 3 years
investment
Other 6534593.50 4.96 65345.94
No. 4 Within 6
months
Other 6147036.14 4.67 61470.36
No. 5 Within 6
months
Total -- 93559214.52 71.08 39404601.18
(1) The ending balance of other receivables has increased by 157.61% compared to the beginning balance which
was mainly due to the increase in prepaid land deposit for smart part.5.7 Inventories
(1) Category of inventories
Ending balance
Item
Carrying amount Falling price reserves Carrying value
Raw materials and package
154374930.07 18882888.72 135492041.35
materials
Semi-finished goods and work
3310434002.43 - 3310434002.43
in process
Finished goods 534600583.37 10594276.72 524006306.65
Total 3999409515.87 29477165.44 3969932350.43
(Continued)
Beginning balance
Item
Carrying amount Falling price reserves Carrying value
Raw materials and package
191873650.49 13274081.73 178599568.76
materials
Semi-finished goods and work
2861343683.53 - 2861343683.53
in process
Finished goods 387506042.80 10568486.13 376937556.67
~ 100 ~
Total 3440723376.82 23842567.86 3416880808.96
(2) Falling price reserves of inventories
Increase Decrease
Items Beginning balance Ending balance
Business Reversal or
Withdrawal Other
combination recovery
8134202.39
Raw materials and
13274081.73 2525395.40 18882888.72
package materials
23183.00 2607.59
Finished goods 10568486.13 10594276.72
23842567.86 23183.00 8136809.98 Total 2525395.40 29477165.44
5.8 Other Current Assets
Item Ending balance Beginning balance
Pledge-style repo of treasury bonds 10000000.00 -
Deductible tax 35885171.92 77848744.83
Accrued Interests on deposits 10584824.30 19563936.43
Total 56469996.22 97412681.26
The ending balance of other current assets has decreased by 42.03% compared to the beginning balance which
was mainly due to the decrease of deductible tax.5.9 Long-term Equity Investment
Changes in the Reporting Period
Profit and loss on Adjustment of
Investees Beginning balance Additional Reduced investments other Changes in
investments investments confirmed according comprehensive other equity
to equity law income
I. Associated enterprises
Beijing Guge Trading
4915575.83 - - 60287.04 - -
Co. Ltd.Total 4915575.83 - - 60287.04 - -
(Continued)
Investees Changes in the Reporting Period Ending balance Balance of
~ 101 ~
impairment
Declaration of cash Withdrawal of
provision
dividends or impairment Other
distribution of profit provision
I. Associated enterprises
Beijing Guge Trading
- - - 4975862.87 -
Co. Ltd.Total - - - 4975862.87 -
5.10 Other Equity Instrument Investment
Item Ending balance Beginning balance
Anhui Mingguang Rural Commercial Bank Co.54910856.74 -
Ltd.Total 54910856.74 -
Disclosure of non-trading equity instrument investment by items
Unit: RMB
Reason for
assigning to
Amount of other Reason for other
measure in fair
comprehensive comprehensive
Dividend income Accumulative Accumulative value and the
Item income income
recognized gains losses changes included
transferred to transferred to
in other
retained earnings retained earnings
comprehensive
income
Assigned to
measure in fair
value and the
Anhui changes included
Mingguang Rural in other
809860.62 809860.62
Commercial comprehensive
Bank Co. Ltd. income according
to the holding
purpose of the
management
5.11 Investment Property
(1) Investment property adopting cost measurement mode
Items Building and plants Land use rights Total
I. Original carrying value
~ 102 ~
Items Building and plants Land use rights Total
1. Beginning balance 8680555.75 2644592.00 11325147.75
2. Increase during the Reporting Period - - -
3. Decrease during the Reporting Period - - -
4. Ending balance 8680555.75 2644592.00 11325147.75
II. Accumulated depreciation and amortization:
1. Beginning balance 6176477.79 755726.42 6932204.21
2. Increase during the Reporting Period 130557.96 28013.28 158571.24
(1) Withdrawal or amortization 130557.96 28013.28 158571.24
3. Decrease during the Reporting Period
4. Ending balance 6307035.75 783739.70 7090775.45
III. Impairment provision
1. Beginning balance - - -
2. Increase during the Reporting Period - - -
3. Decrease during the Reporting Period - - -
4. Ending balance - - -
IV. Carrying value
1. Ending carrying value 2373520.00 1860852.30 4234372.30
2. Beginning carrying value 2504077.96 1888865.58 4392943.54
5.12 Fixed Assets
(1) Listed by category
Item Ending balance Beginning balance
Fixed assets 1829551984.09 1797789271.62
Disposal of fixed assets -
Total 1829551984.09 1797789271.62
(2) Fixed assets
①General information of fixed assets
Buildings and Machinery Office equipment
Items Vehicles Total
constructions equipments and other
I. Original carrying value
1. Beginning balance 2110023036.54 1137831234.61 63055889.31 202211609.80 3513121770.26
2. Increase during the 106966334.19 67167821.39 10037666.02 40438838.52 224610660.12
Reporting Period
~ 103 ~
Buildings and Machinery Office equipment
Items Vehicles Total
constructions equipments and other
(1) Acquisition 395492.59 12587735.69 1687942.42 7692169.96 22363340.66
(2) Transfer from
0.00 7829813.95 0.00 7611275.72 15441089.67
construction in progress
(3) Enterprise
106180428.27 41102879.77 8269210.78 7457866.91 163010385.73
combination increase
(4) Other increase 390413.33 5647391.98 80512.82 17677525.93 23795844.06
3. Decrease during the 49046254.38 24000847.17 2070578.87 7298861.18 82416541.60
Reporting Period
(1) Disposal or scrap 37622502.94 12586744.17 2070578.87 1200943.05 53480769.03
(2) Other decrease 11423751.44 11414103.00 0.00 6097918.13 28935772.57
4. Ending balance 2167943116.35 1180998208.83 71022976.46 235351587.14 3655315888.78
II. Accumulated
depreciation
1. Beginning balance 887885451.17 652893081.63 54246302.02 115239124.54 1710263959.36
2. Increase during the 58432549.95 74926291.05 9315451.02 35157392.56 177831684.58
Reporting Period
(1) Withdrawal 40853347.04 54410088.52 2991694.26 17872169.15 116127298.97
(2) Enterprise
17200513.98 15123646.39 6249135.23 4805171.31 43378466.91
combination increase
(3) Other increase 378688.93 5392556.14 74621.53 12480052.10 18325918.70
3. Decrease during the 39415962.42 18989073.56 1766170.03 6954931.84 67126137.85
Reporting Period
(1) Disposal or scrap 35345372.01 10573387.77 1766170.03 1115289.34 48800219.15
(2) Other decrease 4070590.41 8415685.79 0.00 5839642.50 18325918.70
4. Ending balance 906902038.70 708830299.12 61795583.01 143441585.26 1820969506.09
III. Impairment provision
1. Beginning balance 2804324.86 1674420.09 7047.07 582747.26 5068539.28
2. Increase during the
0.00 0.00 0.00 0.00 0.00
Reporting Period
(1) Withdrawal 0.00 0.00 0.00 0.00 0.00
3. Decrease during the
0.00 232441.13 7047.07 34652.48 274140.68
Reporting Period
(1) Disposal or scrap 0.00 232441.13 7047.07 34652.48 274140.68
4. Ending balance 2804324.86 1441978.96 0.00 548094.78 4794398.60
~ 104 ~
Buildings and Machinery Office equipment
Items Vehicles Total
constructions equipments and other
IV. Carrying value
1. Ending carrying value 1258236752.79 470725930.75 9227393.45 91361907.10 1829551984.09
2. Beginning carrying
1219333260.51 483263732.89 8802540.22 86389738.00 1797789271.62
value
②Idle fixed assets
Original carrying Accumulated
Item Impairment provision Carrying value Note
value depreciation
Buildings and
8137031.10 5246394.21 2804324.86 86312.03
constructions
Machinery equipments 9269447.36 7694093.44 1441978.96 133374.96
Vehicles 0.00 0.00 0.00 0.00
Office equipment and
791758.54 216525.51 548094.78 27138.25
others
Total 18198237.00 13157013.16 4794398.60 246825.24
③Fixed assets without certificate of title
Items Carrying value Reason
Buildings and constructions 649916416.61 In process
Total 649916416.61 --
④There are no fixed assets with limited on use such as mortgage at the end of the reporting period.5.13 Construction in Progress
(1) Listed by category
Item Ending balance Beginning balance
425876594.64 279169201.60
Construction in progress
-
Engineering materials
425876594.64 279169201.60
Total
(2) Construction in progress
①General information of construction in progress
Ending balance Beginning balance
Item Depreciation Depreciation
Carrying amount Carrying value Carrying amount Carrying value
reserve reserve
~ 105 ~
Suizhou new plant project 211480987.42 - 211480987.42 135930812.66 - 135930812.66
Smart park project 98042609.99 - 98042609.99 54494827.90 - 54494827.90
Brewing automatization -
technological
66427530.42 - 66427530.42 42832649.99 42832649.99
improvement
project
Liquid filling -
line renovation 14835486.72 - 14835486.72 14835486.72 14835486.72
project
Gujing plant -
area 11# 19382788.21 - 19382788.21 11166144.14 11166144.14
liquor warehouse
Experience -
2219508.43 - 2219508.43 8064287.27 8064287.27
center project
Gujing academy project 6441931.82 - 6441931.82 5538005.31 - 5538005.31
Other individual project 7045751.63 - 7045751.63 6306987.61 - 6306987.61
Total 425876594.64 - 425876594.64 279169201.60 - 279169201.60
②Changes in significant projects of construction in progress
Decrease
Increase during
Budget Amount transferred during the
Project Beginning balance the Reporting Ending balance
(RMB’0000) to fixed asset Reporting
Period
Period
Suizhou new plant project 60000.00 135930812.66 75550174.76 0.00 0.00 2 11480987.42
Smart park project 828965.74 54494827.90 44923928.88 1376146.79 0.00 98042609.99
Brewing automatization
technological
27430.00 42832649.99 31294651.73 7699771.30 0.00 66427530.42
improvement
project
Liquid filling
line renovation 4000.00 14835486.72 0.00 0.00 0.00 14835486.72
project
Gujing plant
area 11# 9000.00 11166144.14 8216644.07 0.00 0.00 19382788.21
liquor warehouse
Experience
2950.00 8064287.27 7123208.78 0.00 1 2967987.62 2219508.43
center project
~ 106 ~
Gujing academy project 49900.00 5538005.31 903926.51 0.00 0.00 6441931.82
Other individual project 2994.65 6306987.61 8214735.67 6365171.58 1110800.07 7045751.63
Total 985240.39 279169201.60 1 76227270.40 15441089.67 1 4078787.69 4 25876594.64
(Continued)
Interest
Cumulative Of which: Interest
Proportion of capitalization
amount of capitalized during
Project project input to Schedule (%) during the Source of funds
interest the reporting
budgets (%) Reporting
capitalization period
Period (%)
Self-owned
Suizhou new plant project 35.25 35.25 833750.01 833750.01 3.45- fund and
borrowings
Self-owned
Smart park project 1.20 5.00 - - - fund and raised
fund
Brewing automatization
technological Self-owned
82.27 97.00 - - -
improvement fund
project
Liquid filling
Self-owned
line renovation 38.83 95.00 - - -
fund
project
Gujing plant
Self-owned
area 11# 21.54 97.00 - - -
fund
liquor warehouse
Experience Self-owned
66.96 91.00 - - -
center project fund
Self-owned
Gujing academy project 1.29 2.00 - - -
fund
Self-owned
Other individual project 88.00 88.00 - - -
fund
Total -- -- -- -- -- --
(3) The carrying amount of construction in progress on 30 June 2021 has increased by 52.55% compared to that
on 1 January 2021 which was mainly due to the increasing investment in Suizhou new plant project Smart park
project and brewing automatization technological improvement project.~ 107 ~
5.14 Right-of-use Assets
Items Buildings and constructions Machinery equipments Total
I. Original carrying value
1. Beginning balance 56071482.96 1330929.57 57402412.53
2. Increase during the Reporting
Period
3. Decrease during the
Reporting Period
4. Ending balance 56071482.96 1330929.57 57402412.53
II. Accumulated depreciation
1. Beginning balance
2. Increase during the Reporting
6999510.76 221821.48 7221332.24
Period
(1) Withdrawal 6999510.76 221821.48 7221332.24
3. Decrease during the
Reporting Period
(1) Disposal
4. Ending balance 6999510.76 221821.48 7221332.24
III. Impairment provision
1. Beginning balance
2. Increase during the Reporting
Period
(1) Withdrawal
3. Decrease during the
Reporting Period
(1) Disposal
4. Ending balance
IV. Carrying value
1. Ending carrying value 49071972.20 1109108.09 50181080.29
2. Beginning carrying value 56071482.96 1330929.57 57402412.53
5.15 Intangible Assets
(1) General information of intangible assets
Patents and
Item Land use rights Software Total
trademark
~ 108 ~
Patents and
Item Land use rights Software Total
trademark
I. Original carrying value
1. Beginning balance 846743730.35 125206832.57 215006066.19 1186956629.11
2. Increase during the Reporting 98580103.19 2468867.94 38039080.00 139088051.13
Period
(1) Acquisition 53623208.85 2468867.94 - 56092076.79
(2) Transfer from construction in
progress
(3) Enterprise combination increase 44956894.34 - 38039080.00 82995974.34
3. Decrease during the Reporting 2640707.04 - 2640707.04
Period
(1) Disposal - - -
(2) Other decrease 2640707.04 - 2640707.04
4. Ending balance 945323833.54 125034993.47 253045146.19 1323403973.20
II. Accumulated amortization:
1. Beginning balance 158016689.40 48008475.16 46219486.76 252244651.32
2. Increase during the Reporting 13291667.01 11529765.44 23320984.35 48142416.80
Period
(1) Withdrawal 9959352.12 11529765.44 31904.35 21521021.91
(2) Enterprise combination increase 3332314.89 - 23289080.00 26621394.89
3. Decrease during the Reporting - -
Period
(1) Disposal
4. Ending balance 171308356.41 59538240.60 69540471.11 300387068.12
III. Impairment provision
1. Beginning balance - - - -
2. Increase during the Reporting
- - - -
Period
3. Decrease during the Reporting
- - - -
Period
4. Ending balance - - - -
IV. Carrying value
1. Ending carrying value 774015477.13 65496752.87 183504675.08 1023016905.08
2. Beginning carrying value 688727040.95 77198357.41 168786579.43 934711977.79
~ 109 ~
(2) No Intangible Assets used for mortgage or guarantee at 30 June 2021
(3) No Land use rights without certificate of title at 30 June 2021
5.16 Goodwill
(1) Original carrying value of goodwill
Increase Decrease
Investees or matters that
Formed by
goodwill arising from Beginning balance Ending balance
business Other Disposal Other
combination
Yellow Crane Tower Distillery
478283495.29 - - - - 478283495.29
Co. Ltd.Anhui Mingguang Distillery Co.60686182.07 60686182.07
Ltd.Total 478283495.29 60686182.07 - - - 538969677.36
5.17 Long-term Deferred Expenses
Beginning Decrease
Item Increase Ending balance
balance
Amortization Other decrease
Experience center 25368080.45 12967987.62 5672214.27 317922.04 32345931.76
Sewage treatment project 2844754.10 461311.48 - 2383442.62
Yellow Crane Tower chateau and 1709659.36 - 6227619.36
7937278.72
museum
Gujing party building cultural 590909.09 - 2954545.46
3545454.55
center
Yantai wine museum project 937109.64 244463.38 - 692646.26
Other individual project with 6945396.06 - 21177051.11
23959256.19 4163190.98
insignificant amounts
Total 64591933.65 17131178.60 15623953.64 317922.04 65781236.57
5.18 Deferred Tax Assets and Deferred Tax Liabilities
(1) Deferred tax assets before offsetting
Ending balance Beginning balance
Item Deductible temporary Deductible temporary
Deferred tax assets Deferred tax assets
differences differences
Asset impairment provision 34271564.04 8567891.01 28911107.14 7211407.41
Credit impairment provision 47888363.24 11972177.58 44784157.32 11179541.79
~ 110 ~
Ending balance Beginning balance
Item Deductible temporary Deductible temporary
Deferred tax assets Deferred tax assets
differences differences
Unrealized intergroup profit 38407786.77 9601946.69 31616173.72 7904043.43
Deferred income 95344263.32 23836065.83 75111997.53 18270618.94
Deductible losses 23924111.57 5981027.89 43272801.87 10777899.23
Carry-over of payroll
payables deductible during 21874338.70 5468584.68
the next period
Accrued expenses 267449330.17 66862332.54 144731955.22 36160326.47
Total 507285419.11 126821441.54 390302531.50 96972421.95
(2) Deferred tax liabilities before offsetting
Ending balance Beginning balance
Item Taxable temporary Taxable temporary
Deferred tax liabilities Deferred tax liabilities
differences differences
Difference in accelerated
depreciation of fixed 64071828.33 16017957.08 73753668.04 18438417.01
assets
Assets appreciation
arising from business
563136495.64 140784123.91 381654221.40 95413555.35
combination not under
the same control
Changes in fair value of
investments in other 1062158.94 265539.74
equity instruments
Changes in fair value of
9115157.91 2278789.48 3877915.51 969478.88
trading financial assets
Total 637385640.82 159346410.21 459285804.95 114821451.24
3.19 Other Non-current Assets
Item Ending balance Beginning balance
Prepayments for equipment and constructions 2007300.00 5943717.02
Total 2007300.00 5943717.02
3.20 Short-term Borrowings
Category Ending balance Beginning balance
~ 111 ~
Category Ending balance Beginning balance
Credit borrowings 70665500.00
Mortgage borrowings 72000000.00
Accrued interest 231000.00
Total 72231000.00 70665500.00
3.21 Notes Payable
(1) Listed by nature
Category Ending balance Beginning balance
Bank acceptance bills 17730000.00 140540000.00
Commercial acceptance bills - 74535.60
Total 17730000.00 140614535.60
(2) At the end of the reporting period there is no notes payable matured but not yet paid.
(2) The ending balance of notes payable has decreased by 87.39% compared with that the beginning balance
which was mainly due to the payment for bank acceptance bills at maturity.5.22 Accounts Payable
(1) Listed by nature
Item Ending balance Beginning balance
Payments for goods 324028348.71 299936875.62
Payments for constructions and equipment 95487400.59 135720442.04
Other 49722843.32 69549244.20
Total 469238592.62 505206561.86
(2) Significant accounts payable aging over one year
Item Ending balance Reason
No. 1 2902005.29 Final payment
No. 2 2252093.02 Final payment
No. 3 2116587.78 Final payment
No. 4 490485.32 Quality guarantee deposit
No. 5 244551.74 Payment for equipment
Total 8005723.15 --
5.23 Contract Liabilities
(1) General information of contract liabilities
~ 112 ~
Item Ending balance Beginning balance
Payment for goods 2213592055.02 1206573886.26
Total 2213592055.02 1206573886.26
5.24 Employee Benefits Payable
(1) List of employee benefits payable
Item Beginning balance Increase Decrease Ending balance
496473581.57 1353623407.43 1488413900.62 361683088.38 I. Short-term employee benefits
62083389.53 63249314.47 489608.25
II. Post-employment
1655533.19
benefits-defined contribution plans
III. Termination benefits -
IV. Other benefits due within one
-
year
Total 498129114.76 1415706796.96 1551663215.09 362172696.63
(2) List of short-term employee benefits
Item Beginning balance Increase Decrease Ending balance
I. Salaries bonuses allowances and
418034813.69 1185787528.46 1322087726.77 281734615.38
subsidies
II. Employee benefits - 48058819.80 48058819.80 0.00
III. Social insurance 486019.58 27203382.29 27186976.35 502425.52
Of which: Health insurance 486019.58 26186276.42 26173119.43 499176.57
Injury insurance - 1017105.87 1013856.92 3248.95
IV. Housing accumulation fund 4342621.32 41362968.43 41031668.65 4673921.10
V. Labor union funds and employee
70812311.30 16128670.23 14960192.03 71980789.50
education funds
VI. Enterprise annuity 2797815.68 35082038.22 35088517.02 2791336.88
Total 496473581.57 1353623407.43 1488413900.62 361683088.38
(3) Defined contribution plans
Item Beginning balance Increase Decrease Ending balance
1. Basic endowment insurance 1655533.19 60103063.02 61303035.87 455560.34
~ 113 ~
Item Beginning balance Increase Decrease Ending balance
2. Unemployment insurance - 1980326.51 1946278.60 34047.91
Total 1655533.19 62083389.53 63249314.47 489608.25
5.25 Taxes Payable
Item Ending balance Beginning balance
VAT 142144490.50 93836793.23
Consumption tax 180631030.63 144069975.35
Enterprise income tax 173355594.61 78334425.91
Individual income tax 6960546.44 2966503.37
Urban maintenance and construction tax 16625998.59 12449531.95
Stamp duty 3381966.09 909983.20
Educational surcharge 16137203.65 11829108.81
Other 10598549.68 4746370.28
Total 549835380.19 349142692.10
5.26 Other Payables
(1) Listed by category
Item Ending balance Beginning balance
Interest payable - -
Dividends payable - -
Other payables 1794127565.68 1396599161.14
Total 1794127565.68 1396599161.14
(2) Other payables
①Listed by nature
Item Ending balance Beginning balance
Security deposit and guarantee 1672608979.39 1280042883.26
Warranty 44076391.82 41210694.26
Personal housing fund paid by company 4673921.10 4342621.32
Other 72768273.37 71002962.30
Total 1794127565.68 1396599161.14
②Significant other payables aging over one year
~ 114 ~
Other payables balance aging over one year are mainly security deposit and warranty not yet matured.5.27 Other Current Liabilities
Item Ending balance Beginning balance
Accrued expenses 387541979.94 164008324.26
The VAT tax liability has not yet occurred and 287677808.45
needs to be recognized as the value-added tax of 156784058.77
the output tax in the subsequent periods
Total 675219788.39 320792383.03
5.28 Long-term Borrowings
Item Ending balance Beginning balance
Credit Loan 80000000.00 60000000.00
Accrued interest 125972.22 117638.89
Guarantee loan 70000000.00 -
Total 150125972.22 60117638.89
5.29 Lease Liabilities
Item Ending balance Beginning balance
Lease liabilities 47677911.46 53226677.43
Total 47677911.46 53226677.43
5.30 Deferred Income
(1) General information of deferred income
Item Beginning balance Increase Decrease Ending balance Reason
Government 2839284.13 95344263.32 Grants received from
75111997.53 23071549.92
grants government
Total 75111997.53 23071549.92 2839284.13 95344263.32 --
(2) Items involved with government grants:
Recognized in
Increase during other income Related to
Beginning Other
Item the Reporting during the Ending balance assets/related to
balance changes
income
Period Reporting
Period
Subsidy for Suizhou new factory 35338000.00 35338000.00
Related to assets
infrastructure
Refund of Land payment 22032186.60 22208000.00 265135.86 43975050.74 R elated to assets
~ 115 ~
Funds for strategic emerging industry 2375360.02 311359.98 2064000.04
Related to assets
agglomeration development base
Comprehensive subsidy fund for air 2379469.47 145928.39 2233541.08
Related to assets
pollution prevention and control
Instrument subsidy 1681178.20 119531.68 1561646.52 R elated to assets
Subsidy funds for strong 1558837.69 155581.14 1403256.55
manufacturing province and private
Related to assets
economy development projects in2019
Anhui province subsidy of innovative 1217575.00 365272.50 852302.50
province construction capacity for Related to assets
independent innovation
Funds for research projects of 1130000.00 - 1130000.00
Related to assets
koji-making Technology
Subsidy for technical transformation 981481.48 111111.12 870370.36
Related to assets
of No.2 boiler
Equipment subsidy 795911.83 144706.83 651205.00 R elated to assets
Gujing Zhangji wine cellar 787708.47 23749.98 763958.49
optimization and reconstruction Related to assets
project
Subsidy for key technical cooperation 600000.00 600000.00 -
project on the authenticity of Related to assets
important food isotopes
Subsidy for food safety improvement 551724.25 68965.50 482758.75
Related to assets
project
Anhui province development of 502439.24 146341.44 356097.80
Related to assets
direct funds of service industry
Specific funds for side management 372000.00 72000.00 300000.00
Related to assets
of power demand
Automation of check and storage 171875.00 46875.00 125000.00
Related to assets
on-line monitoring of product quality
Motor and boiler energy-saving 137500.28 68749.98 68750.30
Related to assets
technical transformation project
Wine production system technical 2410208.51 114743.94 2295464.57
Related to assets
transformation
Intelligent solid brewing technology 88541.49 15625.02 72916.47
Related to assets
innovation project
Specific funds for transformation of 232500.00 20000.00 212500.00 R elated to assets
~ 116 ~
gas-fired boilers in 2017
Recognition awards for Industrial 631049.92 43605.77 587444.15
enterprise technical transformation Related to assets
investments
Total 75111997.53 23071549.92 2839284.13 - 9 5344263.32 ——
5.31 Share Capital
Changes during the Reporting Period (+-)
Item Beginning balance Bonus Capitalization Ending balance
New issues Others Subtotal
issues of reserves
The sum of
503600000.00 25000000.00 - - - - 528600000.00
shares
5.32 Capital Reserves
Item Beginning balance Increase Decrease Ending balance
Capital premium (share
1262552456.05 4929342074.85 - 6191894530.90
premium)
Other capital reserves 32853136.20 - - 32853136.20
Total 1295405592.25 4929342074.85 - 6224747667.10
5.33 Other Comprehensive Income
Reporting Period
Less: Less:
Recorded in Recorded in
other other Attributable
Income comprehensive comprehensive to owners
Attributable to
Beginning before income in income in Less: of the Ending
Item non-controlling
balance taxation in prior period prior period Income tax Company balance
interests after
the Current and transferred and transferred expense as the
tax
Period to profit or to retained parent after
loss in the earnings in the tax
Current Current
Period Period
I. Other comprehensive
income that may not
subsequently be 1062158.94 265539.74 477971.52 318647.68 477971.52
reclassified to profit or
loss
Of which: Changes
~ 117 ~
caused by
remeasurements on
defined benefit
schemes
Other
comprehensive income
that will not be
reclassified to profit or
loss under the equity
method
Changes in
fair value of other
1062158.94 265539.74 477971.52 318647.68 477971.52
equity instrument
investment
Changes in
the fair value arising
from changes in own
credit risk
II. Other
comprehensive income
that may subsequently
be reclassified to profit
or loss
Of which: Other
comprehensive income
that will be reclassified
to profit or loss under
the equity method
Changes in
the fair value of
investments in other
debt obligations
Other
comprehensive income
arising from the
reclassification of
financial assets
Credit
impairment allowance
for investments in
other debt obligations
Reserve for
~ 118 ~
cash flow hedges
Differences
arising from translation
of foreign
currency-denominated
financial statements
Total of other
1062158.94 265539.74 477971.52 318647.68 477971.52
comprehensive income
5.34 Surplus Reserves
Item Beginning balance Increase Decrease Ending balance
Statutory surplus reserve 256902260.27 - - 256902260.27
Total 256902260.27 - - 256902260.27
5.35 Retained Earnings
Item Reporting Period Same period of last year
Beginning balance of retained earnings before adjustments 7987380161.21 6888203911.92
Total beginning balance of retained earnings before
-
adjustment (increase+ decrease-)
Beginning balance of retained earnings after adjustments 7987380161.21 6888203911.92
Add: Net profit attributable to owners of the Company as the
1378803828.46 1854576249.29
parent
Dividend of ordinary shares payable 755400000.00 755400000.00
Ending retained earnings 8610783989.67 7987380161.21
5.36 Operating Revenue and Cost of Sales
Reporting Period Same period of last year
Item
Operating revenue Costs of sales Operating revenue Costs of sales
Main operations 6962693789.52 1637770675.38 5495370627.67 1301529714.81
Other operations 44802678.22 16047671.93 24250372.95 12395877.67
Total 7007496467.74 1653818347.31 5519621000.62 1313925592.48
5.37 Taxes and Surcharges
Item Reporting Period Same period of last year
Consumption tax 879116923.82 731743604.96
Urban maintenance and construction tax and 159895059.56
129960286.58
educational surcharge
Land use tax 9091340.70 6984861.27
~ 119 ~
Item Reporting Period Same period of last year
Property tax 9172552.52 8847804.72
Stamp duty 5877488.03 4724705.33
Other 6657887.42 5735777.86
Total 1069811252.05 887997040.72
5.38 Selling Expense
Item Reporting Period Same period of last year
Employment benefits 385703329.21 269309951.20
Travel fees 79727177.78 55722038.26
Advertisement fees 467467773.39 453767973.19
Transportation charges 0.00 24048795.64
Comprehensive promotion costs 685618164.57 475881977.13
Service fees 359748787.06 299367311.62
Other 50000363.92 39951590.23
Total 2028265595.93 1618049637.27
5.39 Administrative Expenses
Item Reporting Period Same period of last year
Employee benefits 284582789.99 253062668.21
Office fees 25800540.36 22537545.08
Maintenance expenses 33180815.29 26618712.24
Depreciation 41487748.11 36411144.00
Amortization of intangible assets 17277135.76 12940993.85
Pollution discharge 10238085.66 7786943.40
Travel expenses 5959737.83 3183652.98
Water and electricity charges 3949046.33 3790246.91
Other 45251494.37 29355766.48
Total 467727393.70 395687673.15
5.40 Development Costs
Item Reporting Period Same period of last year
Labor cost 13713853.14 11741116.01
Direct input costs 2156217.53 383301.13
~ 120 ~
Item Reporting Period Same period of last year
Depreciation expense 1666681.97 1658315.10
Other 2424593.62 1471650.74
Total 19961346.26 15254382.98
5.41 Finance Costs
Item Reporting Period Same period of last year
4457905.49
Interest expenses 28973275.97
72689006.99
Less: Interest income 96891173.45
-68231101.50
Net interest expenses -67917897.48
-171646.25
Net foreign exchange losses 13095.11
-287369.98
Bank charges and others -303665.57
-68690117.73
Total -68208467.94
5.42 Other Income
Same period of last
Item Reporting Period Related to assets /income
year
I. Government grants recorded to other income
Of which: Government grant related to deferred 2839284.13
2264012.84 Related to assets
income
Government grant recorded to current 31862128.69
12710340.82 Related to income
profit or loss
Total 34701412.82 14974353.66 --
5.43 Investment Income
Item Reporting Period Same period of last year
Investment income from long-term equity 60287.04 -53631.34
investments under equity method
Dividend income from holding of other equity
809860.62
instrument investments
Investment income from disposal of financial
assets at fair value through other -6415106.49
comprehensive income
Investment income from holding of trading
1625.42
financial assets
Other 421221.91 18539603.54
~ 121 ~
Total -5122111.50 18485972.20
5.44 Gains on Changes in Fair Values
Sources Reporting Period Same period of last year
Trading financial assets
Of which: Changes in fair value of designated as trading 5237242.40
-3596160.61
financial assets
Total 5237242.40 -3596160.61
5.45 Credit Impairment Loss
Item Reporting Period Same period of last year
Bad debt of notes receivable -14753.46
Bad debt of accounts receivable 34837.84 -414861.96
Bad debt of other receivables 1911127.85 41170.85
Total 1945965.69 -388444.57
5.46 Asset Impairment Loss
Item Reporting Period Same period of last year
I. Inventory falling price loss 2464519.26 -5693185.77
II. Impairment loss of fixed assets
Total 2464519.26 -5693185.77
5.47 Gains on Disposal of Assets
Item Reporting Period Same period of last year
Gains/losses from disposal of fixed assets construction in
progress productive biological assets and intangible assets not 1014902.90 77867.25
classified as held for sale
Of which: Fixed assets 1014902.90 77867.25
Total 1014902.90 77867.25
5.48 Non-operating Income
(1) Details of non-operating income
Recognized in current
Item Reporting Period Same period of last year non-recurring profit or
loss
Gains from damage or scrapping of
588.35
non-current asset
~ 122 ~
Recognized in current
Item Reporting Period Same period of last year non-recurring profit or
loss
Government grants irrelevant to daily 14857.64 14857.64
6377.80
operation activities
Income from penalties and compensation 17701583.38 14641373.42 17701583.38
Sales of wastes 3289554.24 3144859.28 3289554.24
Other 4701120.05 2781962.69 4701120.05
Total 25707115.31 20575161.54 25707115.31
(2) Government grants irrelevant to daily operation activities
Related to assets/related to
Item Reporting Period Same period of last year
income
Other rewards 14857.64 6377.80 Related to income
Total 14857.64 6377.80 --
5.49 Non-operating Expenses
Recognized in current
Item Reporting Period Same period of last year
non-recurring profit or loss
Loss from damage or scrapping of
3132257.94 2296765.56 3132257.94
non-current assets
Other 122820.97 21976890.93 122820.97
Total 3255078.91 24273656.49 3255078.91
5.50 Income Tax Expenses
(1) Details of income tax expenses
Item Reporting Period Same period of last year
Current tax expenses 464320327.02 405227638.33
Deferred tax expenses 14410399.64 -34592116.09
Total 478730726.66 370635522.24
(2) Reconciliation of accounting profit and income tax expenses
Item Reporting Period
Profit before taxation 1899296618.19
Current income tax expense accounted at applicable tax rate of the 474824154.55
Company as the parent
Influence of applying different tax rates by subsidiaries -4370924.92
~ 123 ~
Influence of income tax before adjustment 10929022.12
Influence of non-taxable income
Influence of non-deductable costs expenses and losses 1183384.24
Influence of deductable losses of unrecognized deferred income
tax at the beginning of the Reporting Period
Influence of deductable temporary difference or deductable
losses of unrecognized deferred income tax in the Reporting
Period
Influence of development expense deduction -3834909.33
Tax rate adjustment to the beginning balance of deferred income
tax assets/liabilities
Income tax credits
Total 478730726.66
5.51 Notes to the Statement of Cash Flows
(1) Other cash received relating to operating activities
Item Reporting Period Same period of last year
Security deposit guarantee and warranty 101445152.98 118873747.83
Government grants 51606278.86 11109436.15
Interest income 81668119.12 88199155.94
Release of restricted monetary assets 1331277878.92 1085000000.00
Other 32873232.20 20568195.39
Total 1598870662.08 1323750535.31
(2) Other cash payments relating to operating activities
Item Reporting Period Same period of last year
Cash paid in sales and distribution expenses and
856443548.71 1031070499.98
general and administrative expense
Security deposit guarantee and warranty 90125562.91
Time deposits or deposits pledged for the
884394.71 30000000.00
issuance of notes payable
Structured time deposits that cannot be
3498000000.00 400000000.00
withdrawn in advance
Others 70912886.51 23665514.20
Total 4516366392.84 1484736014.18
(3) Other cash payments relating to financing activities
~ 124 ~
Item Reporting Period Same period of last year
Rental fee 8235784.88
Total 8235784.88
5.52 Supplementary Information to the Statement of Cash Flows
(1) Supplementary information to the statement of cash flows
Supplementary information Reporting Period Same period of last year
1. Reconciliation of net profit to net cash flows generated from
operating activities:
Net profit 1420565891.53 1006441526.93
Add: Provisions for impairment of assets -4410484.95 6081630.34
Depreciation of fixed assets investment properties oil and gas assets
116285870.21 107774202.21
and productive biological assets
Depreciation of right-of-use assets 7221332.24
Amortization of intangible assets 21521021.91 17144478.37
Amortization of long-term deferred expenses 15623953.64 12662778.88
Losses from disposal of fixed assets intangible assets and other
-1014902.90 -77867.25
long-term assets (gains: negative)
Losses on scrapping of fixed assets (gains: negative) 3132257.94 2296177.21
Losses on changes in fair value (gains: negative) -5237242.40 3596160.61
Finance costs (gains: negative) -171646.25 290708.33
Investment losses (gains: negative) 5122111.50 -18485972.20
Decreases in deferred tax assets (increase: negative) -29849019.59 -31454590.26
Increases in deferred tax liabilities (decrease: negative) 44524958.97 -3137525.83
Decreases in inventories (increase: negative) -553051541.47 88585890.97
Decreases in operating receivables (increase: negative) -437729347.99 -350818607.86
Increases in operating payables (decrease: negative) 1829040435.66 415739110.19
Amortization of deferred income
Other*1 -2167606515.79 1085000000.00
Net cash flows from operating activities 263967132.26 2341638100.64
2. Significant investing and financing activities without involvement of
cash receipts and payments
~ 125 ~
Supplementary information Reporting Period Same period of last year
Conversion of debt into capital -
Current portion of convertible corporate bonds -
Fixed assets acquired under finance leases -
3. Net increase/decrease of cash and cash equivalents:
Ending balance of cash 9642389098.14 5398187475.71
Less: Beginning balance of cash 5636903693.74 2944749918.09
Add: Ending balance of cash equivalents
Less: Beginning balance of cash equivalents
Net increase in cash and cash equivalents 4005485404.40 2453437557.62
*1: Refer to impact of restricted funds on net cash flow generated from operating activities of the reporting period.
(2) Net cash paid for acquisition of subsidiaries
Amount
Cash or cash equivalents paid during the Reporting Period for the
200200000.00
business combination occurring during the Reporting Period
Including: --
Less: Cash and cash equivalents held by subsidiaries on the
135013666.90
purchase date
Including: --
Add: Cash or cash equivalents paid during the Reporting Period for
the business combination occurring during previous period
Including: --
Net cash paid for acquisition of subsidiaries 65186333.10
(3) The components of cash and cash equivalents
Item Reporting Period Same period of last year
I. Cash 9642389098.14 5398187475.71
Including: Cash on hand 175509.59 254747.79
Bank deposit on demand 9641953541.32 5397660747.68
Other monetary assets on demand 260047.23 271980.24
II. Cash equivalents
Of which: Bond investments maturing within three months
III. Ending balance of cash and cash equivalents 9642389098.14 5398187475.71
Of which: cash and cash equivalents with restriction to use in the - -
~ 126 ~
Item Reporting Period Same period of last year
subsidies of the Company as the parent or Group
5.53 Assets with Restricted Ownership or Right of Use
Item Ending carrying value Reason
Structured deposit which cannot be
Cash and cash equivalents 2501915391.71 withdrawn in advance as well as security
deposit
Pledged for issuance of bank acceptance
Accounts receivable financing 24300000.00
bills
Total 2526215391.71 --
5.54 Government Grants
(1) Government grants related to assets
Item Recognized in current profit or loss or as
Presented item
presented in deduct of related cost
recorded to current
the
Item Amount profit or loss or as
statement of
Reporting Period Same period of last year deduct of related
financial
cost
position
Suizhou new plant infrastructure 35338000.00 Deferred - -
Other income
subsidy income
43975050.74 Deferred 265135.86 275103.09
Refund for land payment Other income
income
Funds for strategic emerging 2064000.04 311359.98 111360.00
Deferred
industry agglomeration Other income
income
development base
Comprehensive subsidy fund for 2232287.08 145928.39 131500.02
Deferred
air pollution prevention and Other income
income
control
1561646.52 Deferred 119531.68 76329.89
Equipment subsidy Other income
income
Subsidy funds for strong
manufacturing province and Deferred
1404510.55 155581.14 156208.20 Other income
private economy development income
projects in 2019
Subsidy for the construction of
Deferred
independent innovation capacity 852302.50 365272.50 365272.50 Other income
income
of Anhui Province
~ 127 ~
Research funds of intelligent koji 1130000.00 Deferred - -
Other income
making technology income
Subsidy for technical 870370.36 Deferred 111111.12 -
Other income
transformation of No.2 boiler income
651205.00 Deferred 144706.83 102807.24
Equipment subsidy Other income
income
Optimization and reconstruction 763958.49 23749.98 23749.98
Deferred
project of Gujing Zhangji liquor Other income
income
store
Subsidy for key technology
Deferred
cooperation project of important - 600000.00 - Other income
income
food isotope authenticity
Subsidy for food safety 482758.75 Deferred 68965.50 68965.50
Other income
improvement project income
Anhui province development of 356097.80 Deferred 146341.44 146341.44
Other income
direct funds of service industry income
Specific funds for side 300000.00 Deferred 72000.00 72000.00
Other income
management of power demand income
Whole process online monitoring
Deferred
of hook and store automation and 125000.00 46875.00 46875.00 Other income
income
product quality
Electric motor and boiler energy 68750.30 68749.98 68749.98
Deferred
saving technology transformation Other income
income
project
Wine production system technical 2295464.57 Deferred 114743.94 31249.98
Other income
transformation income
Intelligent solid brewing 72916.47 Deferred 15625.02 15625.02
Other income
technology innovation project income
- Deferred 15000.00
Enterprise development funds Other income
income
Internet of things traceability - Deferred 556875.00
Other income
system project income
Specific fund for transformation 212500.00 Deferred 20000.00 -
Other income
of gas-fired boilers in 2017 income
Recognition awards for industrial 587444.15 Deferred 43605.77 -
enterprise technical income Other income
transformation investments
Total 95344263.32 - 2839284.13 2264012.84 --
(2) Government grants related to income
~ 128 ~
Recognized in current profit or loss or Presented item
as deduct of related cost recorded to
Item presented in the
current profit
Item Amount statement of
Same period of or loss or as
financial position Reporting Period
last year deduct of
related cost
Tax refund 4775517.47 Other income 4775517.47 2937700.91 Other income
Hubei University of
Science and Technology 9541000.00 Other income 9541000.00 - Other income
Industrialization Funds
Manufacturing Power
Province Construction
Fund and Digital Economy 1000000.00 Other income 1000000.00 - Other income
Development Policy
Incentives
2020 Provincial
Manufacturing
High-Quality 1000000.00 Other income 1000000.00 - Other income
Development Projects
Special Fund of Suizhou
Relocation Project Tax
Incentives of State
Treasury Section of
6946300.00 Other income 6946300.00 - Other income
Finance Bureau of the
High-tech Industrial Park
of Suizhou
Wuhan Financial Special
Fund to Work for Training 664500.00 Other income 664500.00 - Other income
Subsidies
Financial Contribution
500000.00 Other income 500000.00 - Other income
Progress Award
2021 Standardization
Incentives of Bozhou
Municipal Market 400000.00 Other income 400000.00 - Other income
Supervision and
Administration Bureau
Wuhan 2021 Special
Funds for Technological
400000.00 Other income 400000.00 - Other income
Transformation of Science
and Technology and
~ 129 ~
Economic Information
Bureau of Hanyang
District
VAT add-on deduction 2615664.17 Other income 2615664.17 2539581.56 Other income
Financial Support from the
State Treasury Collection
- Other income - 2364000.00 Other income
and Payment Center in
Hanyang District Wuhan
Unemployment Insurance
Other income 2314709.05 Other income
Premium Refunds
Subsidy from the Social
Security Bureau for - Other income - 910749.30 Other income
Stabilization of Jobs
2019 Manufacturing
Power Province and
Private Economic - Other income - 600000.00 Other income
Development Policy
Award Funds
Others 4019147.05 Other income 4019147.05 1043600.00 Other income
Other not related to daily Non operating Non operating
14857.64 14857.64 -
operation income income
Finance
Discounted loans 94491.13 Finance expense 94491.13 -
expense
Total 31971477.46 -- 31971477.46 12710340.82 --
6. Changes of Consolidation Scope
6.1 Business Combination Not under the Same Control
(1) Business Combination Not under the Same Control in the Reporting Period
Unit: RMB
Net profits of
Time and Income of
Recognition acquiree from
Name of place of Cost of gaining Proportion Way to gain Purchase acquiree from
basis of the purchase
acquiree gaining the the equity of equity the equity date the purchase date
purchase date date to
equity to period-end
period-end
Payment
Anhui transfer of share
Mingguang ownership
2021.1.10 200200000.00 60% Purchase 2021.1.10 137448767.50 6887903.80
Distillery transfer of right
Co. Ltd. to administer
properties
~ 130 ~
(2) Combination Cost and Goodwill
Unit: RMB
Combination cost Anhui Mingguang Distillery Co. Ltd.Combination cost
—Cash 200200000.00
Total combination cost 200200000.00
Less: share of fair value of gained identifiable net assets 139513817.93
Amount that the goodwill/combination cost is lower than the share
60686182.07
of fair value of gained identifiable net assets
(3) The Identifiable Assets and Liabilities of Acquiree on Purchase Date
Unit: RMB
Anhui Mingguang Distillery Co. Ltd.Item
Fair value on purchase date Carrying value on purchase date
Monetary assets 135013666.90 135013666.90
Accounts receivable 10711363.41 10711363.41
Prepayments 1596899.47 1596899.47
Other receivables 6122501.16 6122501.16
Inventories 281633786.01 211852592.58
Other current assets 2546.37 2546.37
Investments in other equity instruments 53848697.80 14530000.00
Fixed assets 119631918.83 72638969.35
Construction in progress 557987.45 557987.45
Intangible assets 56327165.76 9123081.42
Long-term prepaid expense 2929439.00 2929439.00
Deferred income tax assets 3498516.13 3498516.13
Short-term borrowings 94000000.00 94000000.00
Accounts payable 43654530.85 43654530.85
Advances from customers 53061162.81 53061162.81
Employee benefits payable 4147589.59 4147589.59
Taxes payable 38825770.24 38825770.24
Other payables 141767461.40 141767461.40
Other current liabilities 12000000.00 12000000.00
Deferred income 807082.92 807082.92
Deferred income tax liabilities 50824231.26 0.00
~ 131 ~
Net assets 232786659.22 80313965.43
Non-controlling interests 93272841.29 32283763.77
Gained net assets 139513817.93 48030201.66
6.2 Changes in Combination Scope for Other Reasons
Compared with the previous period the Company added subsidiaries Anhui Jiuhao China Railway Construction
Engineering Co. Ltd. and Anhui Jiuan Mechanical Electrical Equipment Co. Ltd. and cancelled one subsidiary
Bozhou Gujing Waste Reclamation Co. Ltd.7. Equity in Other Entities
7.1 Equity in Subsidiaries
(1) Composition of corporate group
Main operating Registration Nature of Holding percentage (%)
Name Way of gaining
place place business Directly Indirectly
Commercial Investment
Bozhou Gujing Sales Co. Ltd. Anhui Bozhou Anhui Bozhou 100.00 -
trade establishment
Investment
Anhui Longrui Glass Co. Ltd Anhui Bozhou Anhui Bozhou Manufacture 100.00 -
establishment
Bozhou Gujing Waste Reclamation Investment
Anhui Bozhou Anhui Bozhou Waste recycle 100.00 -
Co. Ltd. (Cancelled) establishment
Anhui Jinyunlai Culture & Media Advertisement Investment
Anhui Hefei Anhui Hefei 100.00 -
Co. Ltd. marketing establishment
Anhui Ruisiweier Technology Co. Technical Investment
Anhui Bozhou Anhui Bozhou 100.00 -
Ltd. research establishment
Business
Shanghai Gujing Jinhao Hotel Hotel combination
Shanghai Shanghai 100.00 -
Management Co. Ltd. management under common
control
Business
combination
Bozhou Gujing Hotel Co. Ltd Anhui Bozhou Anhui Bozhou Hotel operating 100.00 -
under common
control
Anhui Yuanqing Environmental Sewage Investment
Anhui Bozhou Anhui Bozhou 100.00 -
Protection Co. Ltd. treatment establishment
Anhui Gujing Yunshang Electronic Investment
Anhui Hefei Anhui Hefei 100.00 -
E-commerce Co. Ltd commerce establishment
Anhui Zhenrui Construction Investment
Anhui Bozhou Anhui Bozhou Construction 52.00
Engineering Co. Ltd establishment
~ 132 ~
Main operating Registration Nature of Holding percentage (%)
Name Way of gaining
place place business Directly Indirectly
Anhui RunAnXinKe Testing Investment
Anhui Bozhou Anhui Bozhou Food testing 100.00 -
Technology Co. Ltd. establishment
Anhui Jiudao Culture Media Co. Advertisement Investment
Anhui Hefei Anhui Hefei 100.00 -
Ltd. marketing establishment
Anhui Jiuan Mechanical Electrical Construction Investment
Anhui Bozhou Anhui Bozhou 100.00
Equipment Co. Ltd. installation establishment
Anhui Jiuhao China Railway Investment
Anhui Bozhou Anhui Bozhou Construction 52.00
Construction Engineering Co. Ltd. establishment
Business
Anhui Mingguang Distillery Co. Anhui Anhui combination not
Manufacture 60.00
Ltd. Chuzhou Mingguang under common
control
Business
Mingguang Tiancheng Ming Wine Anhui Anhui Commercial combination not
60.00
Sales Co. Ltd. Chuzhou Mingguang trade under common
control
Business
Fengyang Xiaogang Village Ming Anhui Anhui combination not
Manufacture 42.00
Wine Distillery Co. Ltd. Chuzhou Fengyang under common
control
Business
Yellow Crane Tower Distillery combination not
Hubei Wuhan Hubei Wuhan Manufacture 51.00 -
under common
Co. Ltd.control
Business
Yellow Crane Tower Distillery Hubei Hubei combination not
Manufacture - 51.00
(Xianning) Co. Ltd. Xianning Xianning under common
control
Business
Yellow Crane Tower Distillery combination not
Hubei Suizhou Hubei Suizhou Manufacture - 51.00
(Suizhou) Co. Ltd. under common
control
Business
Hubei Junlou Cultural Tourism Hubei Hubei Advertising combination not
- 51.00
Co. Ltd. Wuhan Wuhan marketing under common
control
Hubei Yellow Crane Tower Hubei Hubei Investment
Manufacture - 51.00
Beverage Co. Ltd Xianning Xianning establishment
~ 133 ~
Main operating Registration Nature of Holding percentage (%)
Name Way of gaining
place place business Directly Indirectly
Wuhan Yashibo Technology Co. Technology - Investment
Hubei Wuhan Hubei Wuhan 51.00
Ltd. development establishment
Hubei Xinjia Testing Technology Hubei Hubei - Investment
Food testing 51.00
Co. Ltd. Xianning Xianning establishment
Business
Wuhan Tianlong Jindi Technology Commercial combination not
Hubei Wuhan Hubei Wuhan - 51.00
Development Co. Ltd trade under common
control
Business
Hubei Hubei Commercial combination not
Xianning Junhe Sales Co. Ltd - 51.00
Xianning Xianning trade under common
control
Commercial - Investment
Wuhan Junya Sales Co. Ltd Hubei Wuhan Hubei Wuhan 51.00
trade establishment
Suizhou Junhe Commercial Co. Commercial - Investment
Hubei Suizhou Hubei Suizhou 51.00
Ltd. trade establishment
(2) Significant non-wholly owned subsidiaries
Shareholding
The profit or loss Declaring dividends Balance of
proportion of
Name attributable to the distributed to non-controlling interests
non-controlling
non-controlling interests non-controlling interests at the period-end
interests
Yellow Crane Tower
49.00 44387465.24 449950237.89
Distillery Co. Ltd.
(3) Main financial information of significant non-wholly owned subsidiaries
Ending balance
Name Non-current Current Non-current
Current assets Total assets Total liabilities
assets liabilities liability
Yellow Crane
Tower Distillery 750411154.65 924490280.52 1674901435.17 449940812.14 306694831.42 756635643.56
Co. Ltd.
(Continued)
Beginning balance
Name Non-current Current Non-current
Current assets Total assets Total liabilities
assets liabilities liability
~ 134 ~
Beginning balance
Name Non-current Current Non-current
Current assets Total assets Total liabilities
assets liabilities liability
Yellow Crane Tower
633542317.24 868332173.16 1501874490.40 482603067.57 191592294.97 674195362.54
Distillery Co. Ltd.
(Continued)
Reporting Period
Name Total comprehensive Cash flows from operating
Operating revenue Net profit
income activities
Yellow Crane Tower Distillery
690959858.06 90586663.75 90586663.75 196719144.40
Co. Ltd.
(Continued)
Same period of last year
Name Total comprehensive Cash flows from
Operating revenue Net profit
income operating activities
Yellow Crane Tower Distillery
181381939.34 -37745055.98 -37745055.98 -107245907.79
Co. Ltd.7.2 Equity in joint ventures or associated enterprises
There was no significant joint venture or associated enterprise.8. The Risk Related to Financial Instruments
Risks related to the financial instruments of the Company arise from the recognition of various financial assets
and financial liabilities during its operation including credit risk liquidity risk and market risk.Management of the Company is responsible for determining risk management objectives and policies related to
financial instruments. Operational management is responsible for the daily risk management through functional
departments. Internal audit department is responsible for the daily supervision of implementation of the risk
management policies and procedures and report their findings to the audit committee in a timely manner.Overall risk management objective of the Company is to establish risk management policies to minimize the risks
without unduly affecting the competitiveness and resilience of the Company.8.1 Credit Risk
Credit risk is the risk of one party of the financial instrument face to a financial loss because the other party of the
financial instrument fails to fulfill its obligation. The credit risk of the Company is related to cash and equivalent
notes receivable accounts receivables other receivables and long-term receivables. Credit risk of these financial
~ 135 ~
assets is derived from the counterparty’s breach of contract. The maximum risk exposure is equal to the carrying
amount of these financial instruments.Cash and cash equivalent of the Company has lower credit risk as they are mainly deposited in such financial
institutions as commercial bank of which the Company thinks with higher reputation and financial position.Notes receivable held by the Company are mainly bank acceptance bills which have strong liquidity. The
Company has formulated corresponding bill management and control procedures and has been effectively
implemented which greatly ensures the safety of bill storage and use to ensure the low credit risks. The Company
only conducts business with customers with good credit rating and will continue to monitor the balance of
accounts receivable to ensure that the Company avoids the risk of major bad debt losses. The company's largest
credit risk exposure is the book value of each financial asset (including derivative financial instruments) in the
balance sheet and the overall credit risk evaluation is low.8.2 Liquidity Risk
Liquidity risk is the risk of shortage of funds when fulfilling the obligation of settlement by delivering cash or
other financial assets. The Company is responsible for the capital management of all of its subsidiaries including
short-term investment of cash surplus and dealing with forecasted cash demand by raising loans. The Company’s
policy is to monitor the demand for short-term and long-term floating capital and whether the requirement of loan
contracts is satisfied so as to ensure to maintain adequate cash and cash equivalents.8.3 Market Risk
The market risk of financial instruments refers to the risk that the fair value or future cash flows of financial
instruments will fluctuate due to changes in market prices. Market risks mainly include foreign exchange risk and
interest rate risk.
(1) Foreign currency risk
Foreign exchange risk refers to the risk of loss due to exchange rate fluctuations generally. The core business of
the Company is on the mainland of China and trading with CNY. Foreign exchange risk is minimal.
(2) Interest rate risk
Interest rate risk refers to the risk that the fair value of financial instruments or future cash flows will fluctuate due
to changes in market interest rates. The Company's interest rate risk mainly comes from long-term and short-term
bank borrowings. As of 30 June 2021 the Company has no liabilities calculated with floating interest rates.
(3) Other price risk
~ 136 ~
The Held-for-trading financial assets of the Company are measured by fair value. As a result of that the Company
bears the risk of the change of security market. To decrease the risk the management decided that the Company
held a combination of several equities and securities.9. The Disclosure of Fair Value
The inputs used in the fair value measurement in its entirety are to be classified in the level of the hierarchy in
which the lowest level input that is significant to the measurement is classified:
Level 1: Inputs consist of unadjusted quoted prices in active markets for identical assets or liabilities
Level 2: Inputs for the assets or liabilities (other than those included in Level 1) that are either directly or
indirectly observable.Level 3: Inputs are unobservable inputs for the assets or liabilities
1. Assets and liabilities measured at fair value on 30 June 2021
Fair value on 30 June 2021
Item
Level 1 Level 2 Level 3 合计
一、Recurring fair value
-- -- -- --
measurements
（一）Held-for-trading
financial assets
1. Financial assets at fair
value through profit or 209115157.91 209115157.91
loss
（1）Debt instruments
（2）Bank financial
products
（3）Fund investment 209115157.91 209115157.91
2. Financial assets
designated to be measured
at fair value through profit
or loss
（1）Debt instruments
（2）Equity instrument
investment
（二）Receivables
- - 2003302090.64 2003302090.64
financing
（三）Investment in other
54910856.74 54910856.74
equity instruments
~ 137 ~
Total assets measured at
fair value on a recurring - 264026014.65 2003302090.64 2267328105.29
basis
The fair value of financial instruments traded in an active market is based on quoted market prices at the reporting
date. The fair value of financial instruments not traded in an active market is determined by using valuation
techniques. Specific valuation techniques used to value the above financial instruments include discounted cash
flow and market approach to comparable company model. Inputs in the valuation technique include risk-free
interest rates benchmark interest rates exchange rates credit spreads liquidity premiums discount for lack of
liquidity.9.2 Valuation Technique(s) Qualitative and Quantitative Information about the Significant Inputs Used for
Fair Value Measurement in Level 2 on a Recurring or Nonrecurring Basis
The second level fair value measurement items of the company are mainly fund investment and other equity
instrument investment. For fund investment the company shall recognize the corresponding profit and loss from
changes in fair value and the value of trading financial assets according to the securities investment fund valuation
statement provided by the asset management company; For other equity instrument investment the company
recognizes the corresponding fair value of other comprehensive income and other equity instrument investment
according to the book net assets provided by the invested company.9.3 Valuation Technique(s) Qualitative and Quantitative Information about the Significant Inputs Used for
Fair Value Measurement in Level 3 on a Recurring or Nonrecurring Basis
The items of fair value measurement in Level 2 of the Company are mainly about received notes. Since the
maturity of the received notes is mostly shorter than one year and the cash is expected to be recovered at the
denomination when due we determine its fair value based on the denomination.10. Related Party and Related-party Transactions
Recognition of related parties: The Company has control or joint control of or exercise significant influence over
another party; or the Company is controlled or jointly controlled or significant influenced by another party.10.1 General Information of the Parent Company
Proportion of
Proportion of share
voting rights
held by the
Registration owned by the
Name Nature of business Registered capital Company as the
place Company as the
parent against the
parent against the
Company (%)
Company (%)
~ 138 ~
Proportion of
Proportion of share
voting rights
held by the
Registration owned by the
Name Nature of business Registered capital Company as the
place Company as the
parent against the
parent against the
Company (%)
Company (%)
Beverages construction
Anhui Gujing Group Anhui
materials manufacturing 1000000000.00 53.89 53.89
Co. Ltd.Bozhou
plastic production
The ultimate controller of the Company: The ultimate controller is State-owned Assets Supervision and
Administration Commission of the Government of Bozhou City Anhui Province.10.2 General Information of Subsidiaries
Refer to Note 7.1 Equity in joint ventures or associated enterprises for details.10.3 Joint ventures and associated enterprises of the Company
(1) General information of significant joint ventures and associates
Refer to Note 7.2 Equity in joint ventures or associated enterprises for details.10.4 Other Related Parties of the Company
Name Relationship with the Company
An affiliate of the actual controller and controlling
Anhui Hengxin Pawn Co. Ltd.shareholder
An affiliate of the actual controller and controlling
Anhui Gujing Hotel Development Co. Ltd.shareholder
An affiliate of the actual controller and controlling
Anhui Haochidian Catering Co. Ltd.shareholder
An affiliate of the actual controller and controlling
Anhui Huixin Finance Investment Group Co. Ltd
shareholder
An affiliate of the actual controller and controlling
Anhui Ruijing Business Travel (Group) Co. Ltd.shareholder
An affiliate of the actual controller and controlling
Bozhou Hotel Co. Ltd.shareholder
An affiliate of the actual controller and controlling
Anhui Jiuan Engineering Management Consulting Co. Ltd.shareholder
Anhui Ruijing Business Travel (Group) Co. Ltd.Hefei Gujing An affiliate of the actual controller and controlling
Holiday Hotel shareholder
An affiliate of the actual controller and controlling
Anhui Gujing International Development Co. Ltd.shareholder
An affiliate of the actual controller and controlling
Anhui Lejiu Home Tourism Management Co. Ltd.shareholder
~ 139 ~
An affiliate of the actual controller and controlling
Anhui Gujing Health Industry Co. Ltd.shareholder
An affiliate of the actual controller and controlling
Anhui Ruixin Pawn Co. Ltd.shareholder
An affiliate of the actual controller and controlling
Anhui Shenglong Commercial Co. Ltd.shareholder
An affiliate of the actual controller and controlling
Anhui Youxin Financing Guarantee Co. Ltd.shareholder
An affiliate of the actual controller and controlling
Anhui Zhongxin Finance Leasing Co. Ltd.shareholder
An affiliate of the actual controller and controlling
Bozhou Anxin Micro Finance Co. Ltd.shareholder
An affiliate of the actual controller and controlling
Anhui Gujing Huishenglou Catering Co. Ltd.shareholder
An affiliate of the actual controller and controlling
Hefei Longxin Business Management Consulting Co. Ltd.shareholder
An affiliate of the actual controller and controlling
Anhui Lixin E-commerce Co. Ltd.shareholder
Dazhongyuan Wine Valley Culture Tourism Development Co. An affiliate of the actual controller and controlling
Ltd. shareholder
An affiliate of the actual controller and controlling
Shanghai Beihai Hotel Co. Ltd
shareholder
Enterprise controlled by Zhang Guiping who is an
Nanjing Suning Real Estate Development Co. Ltd.independent director of the Company
10.5 Related Party Transactions
(1) Purchases or sales of goods rendering or receiving of services
Purchases of goods receiving of services:
Reporting Same period of
Related party Content
Period last year
Catering and accommodation 526809.78
Anhui Gujing Hotel Development Co. Ltd. 121508.00
service
13998153.7
Anhui Haochidian Catering Co. Ltd. Purchase of materials 8757860.854
Anhui Haochidian Catering Co. Ltd. Purchase of assets 135398.23
Catering and accommodation
Anhui Haochidian Catering Co. Ltd. 272361.80 884017.40
service
Anhui Haochidian Catering Co. Ltd. Labor service 1252375.80 991145.50
Anhui Jiuan Engineering Management Consulting Co. Ltd. Consultation and assurance 1762765.33
Catering and accommodation
Anhui Ruijing Business Travel (Group) Co. Ltd. 251426.22
service
Anhui Ruijing Business Travel (Group) Co. Ltd. Purchase of materials 46390.00 525535.82
~ 140 ~
Catering and accommodation
Bozhou Hotel Co. Ltd. 2767466.43 1439005.95
service
Catering and accommodation
Bozhou Gujing Huishenglou Catering Co. Ltd. 1016638.00 416771.00
service
Anhui Ruijing Business Travel (Group) Co. Ltd.Hefei
Purchase of materials 511520.21 149618.90
Gujing Holiday Hotel
Anhui Ruijing Business Travel (Group) Co. Ltd.Hefei Catering and accommodation
79499.36 63570.78
Gujing Holiday Hotel service
Anhui Gujing International Development Co. Ltd. Labor service 103773.58
Anhui Gujing Group Co. Ltd. Purchase of materials 56952.00
Anhui Gujing Health Industry Co. Ltd. Purchase of materials 191893.81
Anhui Gujing Hotel Development Co. Ltd. Labor service 3413.21
Dazhongyuan Wine Valley Culture Tourism Development Purchase of materials and
201143.63
Co. Ltd. labor service
Purchase of materials and
Anhui Lejiu Home Tourism Management Co. Ltd. 99546.43
labor service
22620804.9
Total -- 14005756.860
Sales of goods and rendering of services:
Same period of last
Related party Content Reporting Period
year
Catering and
Anhui Gujing Group Co. Ltd. accommodatio 64573.00 28125.00
n service
Sales of small
Anhui Gujing Group Co. Ltd. 17892.09 35549.10
materials
Anhui Gujing Health Industry Co. Ltd. Sales of liquor -690974.69 5738435.24
Catering and
Anhui Gujing Health Industry Co. Ltd. accommodatio 1250.00
n service
Anhui Gujing Hotel Development Co. Ltd. Sales of liquor 104830.09 94938.00
Anhui Gujing Hotel Development Co. Ltd. Utilities 117827.75
Anhui Haochidian Catering Co. Ltd. Sales of liquor 19115.04 48584.08
Anhui Hengxin Pawn Co. Ltd. Sales of liquor 5925.67 6244.25
Anhui Huixin Finance Investment Group Co. Ltd Sales of liquor 20692.03 21225.67
Catering and
Anhui Jiuan Engineering Management Consulting Co. Ltd. accommodatio
630.00
n service
Anhui Jiuan Engineering Management Consulting Co. Ltd. Sales of liquor 3568.14
Anhui Lejiu Home Tourism Management Co. Ltd. Utilities 3433.85 51180.85
Anhui Lejiu Home Tourism Management Co. Ltd. Sales of liquor 4890.26 4539.82
Anhui Ruijing Business Travel (Group) Co. Ltd. Catering and 38145.75
~ 141 ~
accommodatio 600.00
n service
Anhui Ruijing Business Travel (Group) Co. Ltd. Sales of liquor 587517.41 251495.58
Anhui Ruixin Pawn Co. Ltd. Sales of liquor 3703.54 3512.39
Catering and
Anhui Shenglong Commercial Co. Ltd. accommodatio 2470.00 3800.00
n service
Anhui Shenglong Commercial Co. Ltd. Sales of liquor 624187.6 1450295.22
Anhui Youxin Financing Guarantee Co. Ltd. Sales of liquor 1712.39 3122.12
Anhui Zhongxin Finance Leasing Co. Ltd. Sales of liquor 8147.79 8115.92
Bozhou Anxin Micro Finance Co. Ltd. Sales of liquor 7407.08 8506.19
Bozhou Hotel Co. Ltd. Sales of liquor 32973.46 50575.23
Bozhou Gujing Huishenglou Catering Co. Ltd. Sales of liquor 30106.20 68654.87
Hefei Gujing Holiday Hotel Co. Ltd. Sales of liquor 44442.47 14336.28
Hefei Longxin Business Management Consulting Co. Ltd Sales of liquor 509.73
Anhui Gujing Health Industry Co. Ltd. Labor service 232430.19
Sales of small
Anhui Gujing Health Industry Co. Ltd. 1314.60
materials
Anhui Lejiu Home Tourism Management Co. Ltd. Labor service 7620.00
Anhui Lixin E-commerce Co. Ltd. Sales of liquor 7461.93
Bozhou Ruineng Thermal Power Co. Ltd. Sales of liquor 74150.45
Dazhongyuan Wine Valley Culture Tourism Development Co. Sales of small
2631.13
Ltd. materials
Catering and
Dazhongyuan Wine Valley Culture Tourism Development Co.accommodatio 420.00
Ltd.n service
Dazhongyuan Wine Valley Culture Tourism Development Co.Labor service 2889.91
Ltd.Dazhongyuan Wine Valley Culture Tourism Development Co.Sales of liquor 88799.29
Ltd.Shanghai Beihai Hotel Co. Ltd Sales of liquor 8601.77
Sales of small
Anhui Gujing International Development Co. Ltd. 5437.89
materials
Catering and
Anhui Gujing International Development Co. Ltd. accommodatio 2820.00
n service
Anhui Gujing International Development Co. Ltd. Sales of liquor 1700563.88
Total -- 1053726.65 10028226.85
(2) Related-party leases
The Company as lessor:
Category of leased The lease income confirmed in The lease income confirmed in
Name of lessee
assets the Reporting Period the same period of last year
~ 142 ~
Anhui Gujing Hotel Development Co. Ltd. Houses and buildings 543941.93 417153.83
Total -- 543941.93 417153.83
The Company as lessee:
Category of leased The lease fee confirmed in the The lease fee confirmed in
Name of lessor
assets Reporting Period the same period of last year
Anhui Gujing Group Co. Ltd. Houses and buildings 594333.78 749786.08
Nanjing Suning Real Estate Development Co. Ltd. Houses and buildings 1290102.21 -
Total -- 1884435.99 749786.08
10.6 Receivables and Payables with Related Parties
(1) Payables
Item Related party Ending balance Beginning balance
Contract
Anhui Gujing Health Industry Co. Ltd. 608339.50 658339.50
liabilities
Contract
Anhui Ruijing Business Travel (Group) Co. Ltd. 600828.67 342484.96
liabilities
Contract
Anhui Gujing International Development Co. Ltd. 186083.60 186083.60
liabilities
Contract
Bozhou Gujing Huishenglou Catering Co. Ltd. 15300.00
liabilities
Accounts
Anhui Gujing Group Co. Ltd. 4804012.50
payable
Accounts
Anhui Haochidian Catering Co. Ltd. 2723533.27 2479131.69
payable
Accounts payable Anhui Ruijing Business Travel (Group) Co. Ltd. 86129.55 -
Other payables Anhui Gujing Group Co. Ltd. 98817.71 1050004.75
Other payables Anhui Ruijing Business Travel (Group) Co. Ltd. 115533.60 114660.00
Other payables Anhui Gujing Hotel Development Co. Ltd. 100000.00 100000.00
11. Commitments and Contingency
11.1 Significant Commitments
As of June 30 2021 the company has no important commitments to be disclosed.11.2 Contingencies
As of 30 June 2021 The Company has no contingencies need to be disclosed.12. Events after Balance Sheet Date
Approved by the China Securities Regulatory Commission under CSRC Permit [2021] No. 1422 the Company
~ 143 ~
issued RMB25000000 ordinary shares (A shares) to specific targets on 23 June 2021 at an issuing price of
RMB200.00 per share raising total proceeds of RMB5000000000.00. After deducting the expenses related to
the issue of RMB45657925.15 (excluding VAT) the actual net proceeds raised were RMB4954342074.85.RSM (special ordinary partnership) has audited the availability of the funds raised from the non-public offering of
shares of the Company on 29 June 2021 and issued Capital Verification Report R.C.Y.Z [2021] No. 518Z0050.The above shares were registered with the Shenzhen Branch of CSDC on 12 July 2021 and listed on the Shenzhen
Stock Exchange on 22 July 2021.13. Other Significant Events
Segment Information
The Company did not determine the operating segment in accordance with the internal organizational structure
management requirements and internal reporting system so there was no need to disclose segment information
report based on the operating segments.14. Notes of Main Items in the Financial Statements of the Company as the Parent
14.1 Accounts Receivable
(1) Disclosure by aging
Aging Ending balance Beginning balance
Within one year 1179822.50 494976.27
Of which:1-6 months 1179822.50 494976.27
7-12 months -
1-2 years -
2-3 years -
Over 3 years -
Subtotal 1179822.50 494976.27
Less: Bad debt provision 0.00
Total 1179822.50 494976.27
(2) Disclosure by withdrawal method of bad debt provision
Ending balance
Carrying amount Bad debt provision
Item
Withdrawal
Carrying value
Amount Proportion (%) Amount proportion
(%)
~ 144 ~
Bad debt provision withdrawn
- - - - -
separately
Bad debt provision withdrawn 1179822.50 1179822.50
100.00
by group
Of which: Group 1 1179822.50 100.00 1179822.50
Group 2
Total 1179822.50 100.00 1179822.50
(Continued)
Beginning balance
Carrying amount Bad debt provision
Item
Withdrawal
Carrying value
Amount Proportion (%) Amount proportion
(%)
Bad debt provision withdrawn
- - - - -
separately
Bad debt provision withdrawn
494976.27 100.00 - - 494976.27
by group
Of which: Group 1 494976.27 100.00 - - 494976.27
Group 2 - - - - -
Total 494976.27 100.00 - - 494976.27
On 30 June 2021 accounts receivable with bad debt provision withdrawn by group 1
Ending balance
Aging Withdrawal proportion
Carrying amount Bad debt provision
(%)
Related parties within the scope of
1179822.50 - -
consolidation
Total 1179822.50 - -
On 31 December 2020 accounts receivable with bad debt provision withdrawn by group 1
Beginning balance
Aging Withdrawal proportion
Carrying amount Bad debt provision
(%)
Related parties within the scope of
494976.27 - -
consolidation
Total 494976.27 - -
~ 145 ~
On 30 June 2021 there was no account receivable with bad debt provision withdrawn by group 2.On 31 December 2020 there was no account receivable with bad debt provision withdrawn by group 2.
(3) Changes of bad debt provision during the Reporting Period
On 30 June 2021 there was no change of bad debt provision.
(4) On 30 June 2021 top five ending balances by entity
Proportion of the balance to the total
Entity name Balance Bad debt provision
accounts receivable (%)
No. 1 1179822.50 100.00 -
No. 2 -
No. 3 -
No. 4 -
No. 5 -
Total 1179822.50 100.00 -
14.2 Other Receivables
(1) Listed by category
Item Ending balance Beginning balance
Interest receivable - -
Dividends receivable - -
Other receivables 278778850.21 141378010.40
Total 278778850.21 141378010.40
(2) Other receivables
①Disclosure by aging
Aging Ending balance Beginning balance
Within one year 278055345.82 140143887.64
Of which:1-6 months 275854845.98 139805782.01
7-12 months 2200499.84 338105.63
1-2 years 1060089.23 1322306.20
2-3 years 650079.20 244089.00
Over 3 years 38863584.88 41333188.41
Subtotal 318629099.13 183043471.25
~ 146 ~
Aging Ending balance Beginning balance
Less: Bad debt provision 39850248.92 41665460.85
Total 278778850.21 141378010.40
②Disclosure by nature
Nature Ending balance Beginning balance
Related parties within the scope of consolidation 231295793.74 133696578.89
Security investment 38857584.88 40807394.41
Security deposit and guarantee 43727658.09 1879230.29
Rent water electricity and gas 1363672.14 1275238.93
Other 3384390.28 5385028.73
Total 318629099.13 183043471.25
③Disclosure by withdrawal method of bad debt provision
A. As of 30 June 2021 bad debt provision withdrawn based on three stages model:
Stage Carrying amount Bad debt provision Carrying value
279771514.25 992664.04 278778850.21
Stage 1
Stage 2
Stage 3 38857584.88 38857584.88
318629099.13 39850248.92 278778850.21
Total
A1. As of 30 June 2021 bad debt provision at stage 1:
12-month expected credit
Category Carrying amount Bad debt provision Carrying value
losses rate (%)
Bad debt provision withdrawn
- - - -
separately
Bad debt provision withdrawn
279771514.25 0.35 992664.04 278778850.21
by group
Of which: Group 1 231295793.74 231295793.74
Group 2 48475720.51 2.05 992664.04 47483056.47
Total 279771514.25 0.35 992664.04 278778850.21
On 30 June 2021 other receivables with bad debt provision withdrawn by group 2
Aging Ending balance
~ 147 ~
Withdrawal proportion
Carrying amount Bad debt provision
(%)
Within one year 46759552.08 555615.51 1.19
Of which:1-6 months 44559052.24 445590.52 1.00
7-12 months 2200499.84 110024.99 5.00
1-2 years 1060089.23 106008.93 10.00
2-3 years 650079.20 325039.60 50.00
Over 3 years 6000.00 6000.00 100.00
Total 48475720.51 992664.04 2.05
A2. As of 30 June 2021 bad debt provision at stage 3:
12-month expected credit
Category Carrying amount Bad debt provision Carrying value
losses rate (%)
Bad debt provision withdrawn
38857584.88 100.00 38857584.88 -
separately
Bad debt provision withdrawn -
by group
Of which: Group 1 -
Group 2 -
Total 38857584.88 100.00 38857584.88 -
On 30 June 2021 other receivables with bad debt provision withdrawn separately:
Ending balance
Withdrawal
Name
Carrying amount Bad debt provision proportion Withdrawal reason
(%)
The enterprise enters the
Hengxin Securities Co. Ltd. 28966894.41 28966894.41 100.00
bankruptcy liquidation procedure
100.00
The enterprise enters the
Jianqiao Securities Co. Ltd. 9890690.47 9890690.47
bankruptcy liquidation procedure
Total 38857584.88 38857584.88 100.00 --
B. As of 31 December 2020 bad debt provision withdrawn based on three stages model:
Stage Carrying amount Bad debt provision Carrying value
142236076.84 858066.44 141378010.40
Stage 1
~ 148 ~
Stage Carrying amount Bad debt provision Carrying value
- - -
Stage 2
40807394.41 40807394.41 -
Stage 3
183043471.25 41665460.85 141378010.40
Total
B1. On 31 December 2020 bad debt provision at stage 1:
12-month expected credit
Category Carrying amount Bad debt provision Carrying value
losses rate (%)
Bad debt provision withdrawn
- - - -
separately
Bad debt provision withdrawn
142236076.84 0.60 858066.44 141378010.40
by group
Of which: Group 1 133696578.89 - - 133696578.89
Group 2 8539497.95 10.05 858066.44 7681431.51
Total 142236076.84 0.60 858066.44 141378010.40
On 31 December 2020 other receivables with bad debt provision withdrawn by group 2
Beginning balance
Aging Withdrawal proportion
Carrying amount Bad debt provision
(%)
Within one year 6447308.75 77997.31 1.21
Of which:1-6 months 6109203.12 61092.03 1.00
7-12 months 338105.63 16905.28 5.00
1-2 years 1322306.20 132230.63 10.00
2-3 years 244089.00 122044.50 50.00
Over 3 years 525794.00 525794.00 100.00
Total 8539497.95 858066.44 10.05
B2. As of 31 December 2020 bad debt provision at stage 3:
12-month expected credit
Category Carrying amount Bad debt provision Carrying value
losses rate (%)
Bad debt provision withdrawn
40807394.41 100.00 40807394.41 -
separately
Bad debt provision withdrawn - - - -
~ 149 ~
12-month expected credit
Category Carrying amount Bad debt provision Carrying value
losses rate (%)
by group
Of which: Group 1 - - - -
Group 2 - - - -
Total 40807394.41 100.00 40807394.41 -
On 31 December 2020 other receivables with bad debt provision withdrawn separately:
Beginning balance
Withdrawal
Name
Carrying amount Bad debt provision proportion Withdrawal reason
(%)
Hengxin Securities Co. Ltd. The enterprise enters the
28966894.41 28966894.41 100.00 bankruptcy liquidation
procedure
Jianqiao Securities Co. Ltd. The enterprise enters the
11840500.00 11840500.00 100.00 bankruptcy liquidation
procedure
Total 40807394.41 40807394.41 100.00 --
④Changes of bad debt provision during the Reporting Period
Changes in the Reporting Period
Category Beginning balance Reversal or Ending balance
Withdrawal Write-off
recovery
Bad debt provision withdrawn 40807394.41 - 1949809.53 38857584.88
separately
Bad debt provision withdrawn by 858066.44 134597.60 992664.04
group
Total 41665460.85 134597.60 1949809.53 39850248.92
⑤ On 30 June 2021 top five ending balance by entity
Proportion of
the balance to
Bad debt
No. Nature Ending balance Aging the total other
provision
receivables
(%)
No. 1 Related party within the 90000000.00 Within 6 months 28.25 -
~ 150 ~
Proportion of
the balance to
Bad debt
No. Nature Ending balance Aging the total other
provision
receivables
(%)
scope of consolidation
Related party within the
No. 2 79101073.03 Within 6 months 24.83 -
scope of consolidation
Related party within the
No. 3 50469478.21 Within 6 months 15.84 -
scope of consolidation
No. 4 Cash deposit 42020000.00 Within 6 months 13.19 420200.00
No. 5 Securities Investment 28966894.41 Over 3 years 9.09 28966894.41
Total -- 290557445.65 91.20 29387094.41
14.3 Long-term Equity Investments
Ending balance Beginning balance
Item Depreciation Depreciation
Carrying amount Carrying value Carrying amount Carrying value
reserve reserve
Investment in
1312692241.38 1312692241.38 1118213665.32 - 1118213665.32
subsidiaries
Total 1312692241.38 1312692241.38 1118213665.32 - 1118213665.32
(1) Investments in subsidiaries
Impairment
Decrease
Increase during provision Provision for
Beginning during the
Investees the Reporting Ending balance during the impairment at 30
balance Reporting
Period Reporting June 2021
Period
Period
-
Bozhou Gujing Sales Co.68949286.89 - - 68949286.89
Ltd.-
Anhui Longrui Glass Co.85267453.06 - - 85267453.06
Ltd.-
Shanghai Gujing Jinhao
Hotel Management Co. 49906854.63 - - 49906854.63
Ltd.~ 151 ~
Impairment
Decrease
Increase during provision Provision for
Beginning during the
Investees the Reporting Ending balance during the impairment at 30
balance Reporting
Period Reporting June 2021
Period
Period
-
BozhouGujing Hotel Co.648646.80 - - 648646.80
Ltd.-
Anhui Ruisiweier
40000000.00 - - 40000000.00
Technology Co. Ltd.-
Anhui Yuanqing
Environmental Protection 16000000.00 - - 16000000.00
Co. Ltd.-
Anhui Gujing Yunshang
5000000.00 - - 5000000.00
E-commerce Co. Ltd.Anhui Zhenrui
Construction Engineering 10000000.00 - 10000000.00 - -
Co. Ltd.Yellow Crane Tower
816000000.00 - - 816000000.00 -
Distillery Co. Ltd.Anhui Jinyunnlai Cultural
15000000.00 - - 15000000.00 -
Media Co. Ltd.Bozhou Gujing Waste
1441423.94 - 1441423.94 - -
Recycling Co. Ltd.Anhui RunanXinke Testing
10000000.00 - 10000000.00 -
Technology Co. Ltd.Anhui Mingguang
- 200200000.00 - 200200000.00 -
Distillery Co. Ltd.Anhui Jiuhao China
Railway Construction - 5720000.00 - 5720000.00 -
Engineering Co. Ltd.Total 1118213665.32 205920000.00 11441423.94 1312692241.38 -
14.4 Operating Revenue and Cost of Sales
Item Reporting Period Same period of last year
~ 152 ~
Operating revenue Cost of sales Operating revenue Cost of sales
3545448721.46 1360995592.21
Main operations 3264418953.05 1298189995.07
50784414.00 27316859.36
Other operations 32698219.44 18869268.55
Total 3596233135.46 1388312451.57 3297117172.49 1317059263.62
14.5 Investment Income
Item Reporting Period Same period of last year
Investment income from long-term equity investments under cost
2228838.58
method
Gains on disposal of financial assets at fair value through other
-6415106.49 -
comprehensive income
Investment income from trading financial assets during the holding
1625.42
period
Other investment income 411771.02 12434590.21
Total -3772871.47 12434590.21
15. Supplementary Materials
15.1 Items and Amounts of Non-recurring Profit or Loss
Item Amount Note
Gains/losses on the disposal of non-current
-2117355.04
assets
Government grants recognised in current
34716270.46
profit or loss
Gain/loss from change of fair value of
trading financial assets and liabilities and
derivative financial assets and liabilities and
investment gains from disposal of trading
financial assets and liabilities and derivative 6470100.21
financial assets and liabilities and
investment in other debt obligations other
than valid hedging related to the Company’s
common businesses
Depreciation reserves returns of receivables
and contract assets with separate 1949809.53
depreciation test
Other non-operating income and expense
25569436.70
other than the above
Less: Income tax effects 16593381.40
~ 153 ~
Non-controlling interests effects 9476312.99
Total 40518567.47 --
15.2 Return on Net Assets and Earnings Per Share
Weighted average ROE EPS (Yuan/share)
Profit as of Reporting Period
(%) EPS-basic EPS-diluted
Net profit attributable to ordinary shareholders of the
12.85 2.74 2.74
Company
Net profit attributable to ordinary shareholders of the
Company after deduction of non-recurring profit and 12.47 2.66 2.66
loss
Chairman of the Board: (Liang Jinhui)
Anhui Gujing Distillery Company Limited
27 August 2021
~ 154 ~
