Anhui Gujing Distillery Company Limited
Annual Report 2021
April 2022Annual Report 2021
Part I Important Notes Table of Contents and Definitions
The Board of Directors (or the “Board”) the Supervisory Committee as well as the
directors supervisors and senior management of Anhui Gujing Distillery Company
Limited (hereinafter referred to as the “Company”) hereby guarantee the factuality
accuracy and completeness of the contents of this Report and its summary and shall
be jointly and severally liable for any misrepresentations misleading statements or
material omissions therein.Liang Jinhui the legal representative and Zhu Jiafeng the Deputy Chief Accountant
and Board Secretary hereby guarantee that the financial statements carried in this
Report are factual accurate and complete.All the Company’s directors have attended the Board meeting for the review of this
Report and its summary.Any plans for the future and other forward-looking statements mentioned in this
Report shall NOT be considered as absolute promises of the Company to investors.Investors among others shall be sufficiently aware of the risk and shall differentiate
between plans/forecasts and promises. Again investors are kindly reminded to pay
attention to possible investment risks.Investors’ attention is kindly directed to the detailed description of possible risks in
the Company’s operations in “XI Prospects” under “Part III Management Discussionand Analysis”.The Board has approved a final dividend plan as follows: based on the Company’s
total share capital of 528600000 shares a cash dividend of RMB22.00 (tax inclusive)
per 10 shares is to be distributed to the shareholders with no bonus issue from either
profit or capital reserves.This Report and its summary have been prepared in both Chinese and English.Should there be any discrepancies or misunderstandings between the two versions
the Chinese versions shall prevail.~ 2 ~Annual Report 2021
Table of Contents
Part I Important Notes Table of Contents and Definitions 2
Part II Corporate Information and Key Financial Information 6
Part III Management Discussion and Analysis 11
Part IV Corporate Governance 38
Part V Environmental and Social Responsibility 59
Part VI Significant Events 64
Part VII Share Changes and Shareholder Information 71
Part VIII Preferred Shares 81
Part IX Corporate Bonds 82
Part X Financial Statements 83
~ 3 ~Annual Report 2021
Documents Available for Reference
(I) Financial statements signed and sealed by the Company’s legal representative the
Company’s Chief Accountant and the head of the Company’s financial department
(equivalent to financial manager);
(II) The original copy of the Independent Auditor's Report stamped by the CPA firm
as well as signed and stamped by the engagement certified public accountants;
(III) All originals of the Company’s documents and announcements that have been
publicly disclosed in the Reporting Period on the media designated by the China
Securities Regulatory Commission; and
(IV) This Report disclosed in other securities markets.~ 4 ~Annual Report 2021
Definitions
Term Definition
Anhui Gujing Distillery Company Limited inclusive of its consolidated
The “Company” “ Gu Jing” or “we”
subsidiaries except where the context otherwise requires
Gujing Sales Bozhou Gujing Sales Co. Ltd.Anhui Gujing Distillery Company Limited exclusive of subsidiaries
The Company as the parent
except where the context otherwise requires
Gujing Group Anhui Gujing Group Co. Ltd.Yellow Crane Tower Yellow Crane Tower Distillery Co. Ltd.Mingguang Anhui Mingguang Distillery Co. Ltd.~ 5 ~Annual Report 2021
Part II Corporate Information and Key Financial Information
I Corporate Information
Stock name Gujing Distillery Gujing Distillery-B Stock code 000596 200596
Changed stock name (if any)
Stock exchange for stock
Shenzhen Stock Exchange
listing
Company name in Chinese 安徽古井贡酒股份有限公司
Abbr. 古井
Company name in English (if ANHUI GUJING DISTILLERY COMPANY LIMITED
any)
Abbr. (if any) GU JING
Legal representative Liang Jinhui
Registered address Gujing Town Bozhou City Anhui Province P.R.China
Zip code 236820
Change of registered address N/A
Office address Gujing Industrial Park Gujing Town Bozhou City Anhui Province P.R.China
Zip code 236820
Company website http://www.gujing.com
Email address gjzqb@gujing.com.cn
II Contact Information
Board Secretary Securities Representative
Name Zhu Jiafeng Mei Jia
Gujing Town Bozhou City Anhui Gujing Town Bozhou City Anhui
Address
Province P.R.China Province P.R.China
Tel. （0558）5712231 （0558）5710057
Fax （0558）5710099 （0558）5710099
Email address gjzqb@gujing.com.cn gjzqb@gujing.com.cn
III Media for Information Disclosure and Place where this Report Is Lodged
Newspapers designated by the Company for China Securities Journal Shanghai Securities News Ta Kung Pao (HK)
~ 6 ~Annual Report 2021
information disclosure
Website designated by CSRC for publication of this http://www.cninfo.com.cn
Report
Place where this Report is lodged The Board Secretary’s Office
IV Change to Company Registered Information
Unified social credit code 913400001519400083
Change to principal activity of the Company
No change
since going public (if any)
Every change of controlling shareholder since
No change
incorporation (if any)
V Other Information
The independent audit firm hired by the Company:
Name RSM China
Suite 901-22 to 901-26 Wai Jing Mao Building (Tower 1) No. 22 Fuchengmen Wai Street
Office address
Xicheng District Beijing China
Accountants writing signatures Zhang Liping and Han Songliang
The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
√ Applicable □ Not applicable
Sponsor Office address Representatives Supervision period
27-28/F China World Office 2
China International Capital
No. 1 Jianguomenwai Avenue Fang Lei and Chen Jingjing 2021.7.22-2022.12.31
Corporation Limited
Chaoyang District Beijing
The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
√ Applicable □ Not applicable
Financial Advisor Office address Representatives Supervision period
27-28/F China World Office 2
China International Capital
No. 1 Jianguomenwai Avenue Fang Lei and Chen Jingjing 2021.7.22-2022.12.31
Corporation Limited
Chaoyang District Beijing
VI Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.□ Yes √ No
2021 2020 2021-over-2020 2019
~ 7 ~Annual Report 2021
change (%)
Operating revenue (RMB) 13269826266.04 10292064534.41 28.93% 10416961584.23
Net profit attributable to the listed
2297894413.251854576249.2923.90%2097527739.86
company’s shareholders (RMB)
Net profit attributable to the listed
company’s shareholders before 2186239468.68 1773011307.05 23.31% 1891097157.37
exceptional gains and losses (RMB)
Net cash generated from/used in
5254308127.793624543525.5344.96%192447063.45
operating activities (RMB)
Basic earnings per share
4.453.6820.92%4.17
(RMB/share)
Diluted earnings per share
4.453.6820.92%4.17
(RMB/share)
Weighted average return on equity
21.25%19.53%1.72%25.55%
(%)
Change of 31
31 December 2021 31 December 2020 December 2021 over 31 December 2019
31 December 2020 (%)
Total assets (RMB) 25418086447.80 15186625708.79 67.37% 13871297363.16
Equity attributable to the listed
16537389443.6410043288013.7364.66%8944111764.44
company’s shareholders (RMB)
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptional
gains and losses was negative for the last three accounting years and the latest independent auditor’s report indicated that there was
uncertainty about the Company’s ability to continue as a going concern.□ Yes √ No
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptional
gains and losses was negative.□ Yes √ No
VII Accounting Data Differences under China’s Accounting Standards for Business
Enterprises (CAS) and International Financial Reporting Standards (IFRS) and Foreign
Accounting Standards
1. Net Profit and Equity under CAS and IFRS
□ Applicable √ Not applicable
No difference for the Reporting Period.~ 8 ~Annual Report 2021
2. Net Profit and Equity under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
No difference for the Reporting Period.
3. Reasons for Accounting Data Differences Above
□ Applicable √ Not applicable
VIII Key Financial Information by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Operating revenue 4130015502.32 2877480965.42 3094775914.80 3167553883.50
Net profit attributable to the listed
814470363.67564333464.79590128559.28328962025.51
company’s shareholders
Net profit attributable to the listed
company’s shareholders before 801677741.93 536607519.06 563373758.33 284580449.36
exceptional gains and losses
Net cash generated from/used in
-1373645850.021637612982.283688705129.871301635865.66
operating activities
Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differs materially from what
have been disclosed in the Company’s quarterly or interim reports.□ Yes √ No
IX Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
Item 2021 2020 2019 Note
Gain or loss on disposal of non-current
assets (inclusive of impairment allowance -5976856.98 -3692640.09 -7615741.56
write-offs)
Government subsidies charged to current
profit or loss (exclusive of government
subsidies consistently given in the
55274502.4248617479.3798293177.32
Company’s ordinary course of business at
fixed quotas or amounts as per governmental
policies or standards)
Gain or loss on fair-value changes in trading 34792433.45 21490043.05 144234319.52
~ 9 ~Annual Report 2021
financial assets and liabilities & investment
income from disposal of trading financial
assets and liabilities and available-for-sale
financial assets (exclusive of effective
portion of hedges that arise in the
Company’s ordinary course of business)
Reversed portion of impairment allowance
for receivables which are tested individually 1949809.53 43554.94 0.00
for impairment
Non-operating income and expense other
77025619.7644100616.6157215092.96
than the above
Less: Income tax effects 40243159.73 27033395.22 71418613.38
Non-controlling interests effects (net
11167403.881960716.4214277652.37
of tax)
Total 111654944.57 81564942.24 206430582.49 --
Particulars about other items that meet the definition of exceptional gain/loss:
□ Applicable √ Not applicable
No such cases for the Reporting Period.Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item listed in the Explanatory Announcement No.
1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss Items:
□ Applicable √ Not applicable
No such cases for the Reporting Period.~ 10 ~Annual Report 2021
Part III Management Discussion and Analysis
I Industry Overview for the Reporting Period
(I) Principal Activity of the Company
The Company primarily produces and markets liquor and spirits. According to the Industry Categorization Guide for ListedCompanies (Revised in 2012) issued by the CSRC liquor and spirits making belongs to the “liquor beverage and refined tea makingindustry" (C15). The Company’s principal operations remained unchanged in the Reporting Period.(II) Status of the Industry and Position of the Company in the Industry
1. Status of the Liquor and Spirits Industry
Since the beginning of the 21st century China's liquor and spirits industry has experienced three development stages. Before 2012
with rapid economic growth the income of urban and rural residents rose fast and the demand for liquor and spirits continued to
increase while production and sales of liquor and spirits continuously expanded at a fast pace. As a result the liquor and spirits
industry witnessed booming supply and demand. During that period national liquor and spirits brands and local regional renowned
liquor enterprises achieved rapid development. In the context of the rise in both the demand and price of liquor and spirits the sales
income and total profits of liquor enterprises increased quickly.From the second half of 2012 to 2016 China's economy once again entered a period of adjustment as the Chinese government
introduced a string of policies to restrict the spending on official overseas visits official vehicles and official hospitality such as the
"Eight-point Decision" and "Six Prohibitions" which include restrictions on the consumption of high-end alcohol with public funds.Consumption scenarios such as commercial consumption and government consumption were limited leading to a drop in consumer
demand in a short time. Moreover liquor prices were under huge pressure. China's liquor and spirits industry entered a period of
profound adjustment. After 2012 both the output growth and income growth of China's liquor and spirits industry slowed down.The liquor and spirits industry began to recover in the second half of 2016 with a rise in consumption demand by end-users
propelling the growth of the overall income and profits of the industry. Since 2017 the overall demand and price of liquor and spirits
have increased and the recovery of mid- and high-end liquor and spirits has picked up. In the future benefiting from the
consumption upgrade and the change of consumption concept the growth of sub-high-end liquor and spirits will be the key driver for
the development of the liquor and spirits industry. The consumption upgrade is the major driving force for the development of the
liquor and spirits industry. Liquor enterprises need to fully grasp the great opportunities from the extensive consumption upgrade and
strive to better meet the consumption needs of the market through quality improvement market segmentation and product innovation
and other means so as to advance the transformation and upgrade of the product structure.From January to December 2021 in China the total output of alcoholic beverage made and brewed by the enterprises above the
designated size in the alcoholic beverages industry was 54068500 kiloliter increased by 3.95% year on year of which the output of
liquor and spirits was 7156300 kiloliter decreased by 0.59% year on year. With the acceleration of consumption upgrading among
Chinese residents it gradually shows such a trend of consumption upgrading that "you should drink less liquor but you should drink
better liquor". During the period of the 14th Five-year Plan the consumption growth of sub-high-end liquor and spirits will bring
more fierce competition in the sector of high-end liquor and spirits.
2. Position of the Company in the Industry
China has a long history of liquor. There are a large number of liquor production enterprises in the country but the regional
distribution of liquor consumers is particularly evident. The liquor and spirits industry is characterized by full competition with a
high degree of marketization. The market competition is fierce and the industry adjustments are constantly deepening. In the national
market the competitive edges of the enterprises come from their brand influence product style and marketing & operation models. In
~ 11 ~Annual Report 2021
a single regional market the competitive strengths of the enterprises depend on their brand influence in the region the recognition of
the companies by regional consumers and comprehensive marketing capacity.As one of China’s traditional top eight liquor brands the Company is the first listed liquor and spirits company with both A and B
stocks. It is located in Bozhou City Anhui Province in China the hometown of historic figures Cao Cao and Hua Tuo as well as one
of the world’s top 10 liquor-producing areas. No changes have occurred to the main business of the Company in the Reporting Period.As the main product of the Company the Gujing spirit originated as a “JiuYunChun Spirit” together with its making secrets being
presented as a hometown specialty by Cao Cao a famous warlord in China’s history to Emperor Han Xiandi (name: Liu Xie) in A.D.
196 and was continually presented to the royal house since then. With crystalline liquid rich aroma a fine flavor and a lingering
aftertaste the Gujing spirit has helped the Company win four national distilled spirit golden awards a golden award at the 13th SIAL
Paris the title of China’s “Geographical Indication Product” the recognition as a “Key Cultural Relics Site under the StateProtection” the recognition with a “National Intangible Cultural Heritage Protection Project” a Quality Award from the Anhui
provincial government a title of “National Quality Benchmark” among other honors. In 2021 Gujing Distillery ranked fourth in
China's liquor and spirits industry with a brand value of RMB200.672 billion in the 13th "Hua Liquor Cup" (list of Chinese liquor
brands by value).In April 2016 Gujing Distillery signed a strategic cooperation agreement with Huanghelou Liquor Co. Ltd. opening a new era of
cooperation in China's famous liquor industry. Yellow Crane Tower Baijiu is the only famous Chinese liquor in Hubei. Its unique
style is "soft mellow elegant and cool and has a long lingering fragrance". It won the two China gold medal in liquor appreciation in
1984 and 1989. At present Huanghelou liquor industry has three bases: Wuhan Xianning and Suizhou. Among them Huanghelou
Liquor Culture Expo Park in Wuhan base has been approved as national AAA scenic spot and Huanghelou forest wine town in
Xianning base has been approved as national AAA scenic spot.In January 2021 Gujing Distillery and Mingguang signed a strategic cooperation agreement. The unique mung bean flavor adds to
the famous liquor family of Gujing. Anhui Mingguang Distillery Co. Ltd. has such representative products as Mingguang Jianiang
Mingguang Daqu Mingguang Youye Mingguang Tequ and 53% alcohol Minglueye. In December the ancient Mingguang
liquor-making technique was selected into the six batch of provincial intangible cultural heritage list.II Principal Activity of the Company in the Reporting Period
The Company is subject to the Guideline No. 14 of the Shenzhen Stock Exchange on Information Disclosure by Industry—for Listed
Companies Engaging in Food and Liquor & Wine Production.Main sales model
The Company's key sales model is dealer model. Under the dealer model the Company will select one or more dealers for sales of a
product brand (or product sub-brand) according to the market capacity.Distribution model:
√ Applicable □ Not applicable
1. Operating Performance by Distribution Channel and Product Category
Unit: RMB
YoY
YoY
YoY change in
change in
change in gross
By Operating revenue Cost of sales Gross profit margin operating
cost of profit
revenue
sales (%) margin
(%)
(%)
Channel
~ 12 ~Annual Report 2021
Online 531343420.84 121945000.89 77.05% 41.43% 32.58% 1.53%
Offline 12738482845.20 3182132011.03 75.02% 28.46% 29.47% -0.19%
Total 13269826266.04 3304077011.92 75.10% 28.93% 29.58% -0.13%
YoY
YoY
YoY change in
change in
change in gross
By Operating revenue Cost of sales Gross profit margin operating
cost of profit
revenue
sales (%) margin
(%)
(%)
Product series
Aged Original Liquor 9307819185.05 1563365943.45 83.20% 18.81% 7.86% 1.70%
Gujinggong Liquor 1609244106.16 666012511.39 58.61% 16.62% 21.39% -1.63%
Yellow Crane Tower 1133924525.09 282351666.86 75.10% 168.69% 112.94% 6.52%
Total 12050987816.30 2511730121.70 79.16% 25.06% 17.88% 1.27%
2. Number of Distributors by Geographical Segment
Segment Increase Decrease Ending number
North China 307 148 1005
South China 163 91 452
Central China 799 418 2538
International 4 0 12
Total 1273 657 4007
Proportion of store sales terminal exceeds 10%
□ Applicable √ Not applicable
Online direct sales
√ Applicable □ Not applicable
The major product varieties sold online are Aged Original Liquor Series and Gujinggong Liquor Series among others. The main
online sales platforms are Gujing Distillery platform Tmall JD.com and Suning.com.Any over 30% YoY movements in the selling price of main products contributing over 10% of current total operating revenue
□ Applicable √ Not applicable
Model and contents of purchase
The Company primarily adopts the bidding and strategic cooperation models. It also adopts the base planting model in order to
ensure the quality of some raw materials.Major suppliers:
Purchase contents
Purchase contents Purchase model Amount (RMB’0000)
Strategic purchasing 62982.75
1 Raw materials
Tendering purchasing 89722.26
~ 13 ~Annual Report 2021
2 Packing materials Tendering purchasing 215928.61
Total 368633.62
The proportion of raw materials purchased from cooperations or farmers to total purchase amount exceeds 30%
□ Applicable √ Not applicable
Any over 30% YoY movements in prices of main purchased raw materials
□ Applicable √ Not applicable
Main production model
The Company's existing production model is sales-based production. Specifically the Logistics Control Center is responsible for
coordinating the implementation of production plans release of material production plans and delivery and tracking of products and
prepares balanced production plans on a quarterly basis according to the product inventory. The logistics distribution system is
coordinated according to the production schedule and inventory with a view to ensuring timely delivery of products.Commissioned production
□ Applicable √ Not applicable
Breakdown of cost of sales
20212020
Change
Item As % of total cost of As % of total cost of
Cost of sales (RMB) Cost of sales (RMB) (%)
sales sales
Direct
2321320105.4770.26%1857491476.9372.85%24.97%
materials
Direct labor
285205229.638.63%261553817.0210.26%9.04%
cost
Manufacturing
210507603.206.37%201171173.257.89%4.64%
expenses
Fuels 91709296.08 2.78% 89428707.39 3.51% 2.55%
Total 2908742234.38 88.04% 2409645174.59 94.51% 20.71%
Output and inventory
1. Output sales volume and inventory of main products for the Reporting Period and respective YoY changes thereof
Unit: ton
YoY changes
YoY changes YoY changes
Main product Output Sales volume inventory of sales
of output of inventory
volume
Aged Original Liquor Series 50488.82 43216.05 13809.65 26.84% 1.40% 111.26%
Gujinggong Liquor Series 29066.16 28269.08 2875.28 30.19% 24.93% 38.35%
Yellow Crane Tower Liquor
8350.529183.42782.0452.89%100.52%-51.57%
Series
Other series 22042.26 20386.15 2151.69 37.11% 19.21% 334.18%
2. Ending inventory of finished liquor and semi-product
~ 14 ~Annual Report 2021
Category Ending quantity (ton)
Finished liquor 19618.66
Semi-product (including base liquor) 183264.17
3. Capacity
Unit: ton
Main product Designed capacity Actual capacity Capacity in progress
Finished liquor 115000 109948 130000
III Core Competitiveness Analysis
No significant changes occurred to the Company’s core competitiveness in the Reporting Period.IV Analysis of Core Businesses
1. Overview
The year 2021 marks the beginning of the "14th Five-Year Plan" and the normalization of the prevention and control of COVID-19.In the face of complex external environment and all the more fierce competition in the industry the Company continued to follow the
guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era thoroughly implemented the guiding
principle of the 19th CPC National Congress and the various plenary sessions of the 19th CPC Central Committee the guiding
principle of the Central Economic Work Conference and the guiding principle of the provincial and municipal Party congresses
implemented the new concept for development centered on the annual objectives of the Company and adhered to long-term
perspective mindset the concept of excellence and the awareness of high-quality products to successfully complete various
objectives and tasks throughout the year.For 2021 the Company recorded operating revenue of RMB13.27billion up 28.93% compared to the prior year; a net profit
attributable to the Company as the parent of RMB2.298billion increasing 23.90% from the year earlier; earnings per share of
RMB4.45 20.92% higher than last year; and net cash generated from operating activities of RMB5.254 billion going up 44.96% on
a year-on-year basis. In the 13th "Hua Zun Cup" Chinese liquor brand valuation the brand value of "Gujinggong" reached a record
high of RMB200.672 billion.The overall operating performance of the Company in the Reporting Period
(I) The Company rapidly promoted the “nationwide sub-high-end” strategy and reached a new high of brand value
The Company adhered to the nationwide sub-high-end and "Gu 20+" development strategy and continuously intensified "Three
Ones Project". It continuously intensified efforts for brand building adhered to the brand orientation of "liquor made in China is
favored in the world" and grandly held the activities of the Corporate Day of Gujinggong Liquor in Expo 2020 Dubai. The brand
influence of "liquor made in China is favored in the world" was continuously increased.(II) Higher efficiency and higher quality
The Company continuously optimized its liquor-making process comprehensively promoted liquor-making standardized production
and steadily improved the quality of its original liquor. Quality was improved and efficiency was increased for filling production of
finished liquor products and the project of automatic filling was steadily promoted.(III) The Company continuously intensified research and development and further increased strength for research and
development
~ 15 ~Annual Report 2021
The Company carried out experiments and research for liquor-making further optimized and improved production process. It was
granted three patents of invention and 55 patents of utility models; it successively and honorably won the "Prize for Outstanding
Contribution in Science and Technology of China's Liquor and Spirits industry" and the "Second Prize of Anhui Science and
Technology Progress Award" which was a breakthrough in provincial major special projects. Once again the Company won "Anhui
Provincial People's Government Quality Award".(IV) The Company accelerated promotion of digital construction and new accomplishment was displayed with integration of
“information technology and industrialization”
The Company intensified efforts to promote and apply systems comprehensively empowered digital marketing scenario-based
applications intelligent parks and informationized procedures so as to boost comprehensive management efficacy. In 2021 Gujing's
digital construction achievements were successfully selected into the industry-level platform of industrial Internet of things.(V) The Company continuously promoted mechanism innovation and enhanced organizing vitality
The Company continuously optimized and vitalized appraisal mechanism and delegated more power to grassroots level for making
self-decisions on appraisal. Besides it realized the match of remuneration with performance in market-oriented pilot units. It
established a normalized exit mechanism of personnel adhered to the practice that the person ranking the last place in appraisal will
be laid off and that positions will be rotated for improving multiple skills. Thus it further stimulated management vitality and
promoted the cultivation of comprehensive talents.(VI) The Company maintained the integrity of thoughts to vitalize the driving force of Party building
The Company promoted its high-quality development with high-quality Party-building. Its staff members at various levels solidlycarried out the learning and education of Party history earnestly implemented the guiding principle of the important "July 1” remarks
made by General Secretary Xi Jinping and that of the Sixth Plenary Session of the 19th CPC Central Committee made in-depthunderstanding of the decisive significance of the “Two Establishments" enhanced the "Four Consciousnesses" firmly believed in the"Four Self-confidences" and implemented the "Two Maintenances". The Company carried forward the great spirit of Party-building
and used it into the whole process of corporate operation and management. As a result work style in the Company was continuously
improved and ideological and political awareness and the self-consciousness for actions constantly became better.(VII) In the Reporting Period the Company was still under pressure and had deficiencies as follows.
(1) Brand driving force was not strong enough and nationwide promotion was yet to be intensified.
(2) The internal management system of the Company was not excellent the mechanism was not vigorous and its internal power was
yet to be stimulated.
(3) The supply chain management was not fully modernized its service was not sound and its efficiency was not high.
2. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
20212020
As % of total As % of total
Change (%)
Operating revenue operating revenue Operating revenue operating revenue
(%)(%)
Total 13269826266.04 100% 10292064534.41 100% 28.93%
By operating division
~ 16 ~Annual Report 2021
Manufacturing 13269826266.04 100.00% 10292064534.41 100.00% 28.93%
By product category
Distilled spirits 12760915418.70 96.16% 10074148990.37 97.88% 26.67%
Hotel services 75349826.75 0.57% 63321699.07 0.62% 19.00%
Other 433561020.59 3.27% 154593844.97 1.50% 180.45%
By operating segment
North China 1070574558.72 8.07% 692953553.05 6.73% 54.49%
Central China 11311204419.40 85.24% 9015585004.98 87.60% 25.46%
South China 877937089.22 6.62% 579972219.24 5.64% 51.38%
Overseas 10110198.70 0.08% 3553757.14 0.03% 184.49%
By sales model
Online 531343420.84 4.00% 375683415.01 3.65% 41.43%
Offline 12738482845.20 96.00% 9916381119.40 96.35% 28.46%
(2) Operating Division Product Category Operating Segment or Sales Model Contributing over 10% of
Operating Revenue or Operating Profit
√ Applicable □ Not applicable
Unit: RMB
YoY change in YoY change in
Gross profit YoY change in
Operating revenue Cost of sales operating revenue gross profit
margin cost of sales (%)
(%) margin (%)
By operating division
Manufacturing 13269826266.04 3304077011.92 75.10% 28.93% 29.58% -0.13%
By product category
Distilled spirits 12760915418.70 2908742234.38 77.21% 26.67% 20.71% 1.13%
Hotel services 75349826.75 41333869.68 45.14% 19.00% 24.38% -2.38%
Other 433561020.59 354000907.86 18.35% 180.45% 231.04% -12.48%
By operating segment
North China 1070574558.72 269682095.69 74.81% 54.49% 42.47% 2.13%
Central China 11311204419.40 2836727062.69 74.92% 25.46% 28.39% -0.57%
South China 877937089.22 194916297.30 77.80% 51.38% 30.67% 3.52%
Overseas 10110198.70 2751556.24 72.78% 184.49% 39.87% 28.14%
By sales model
Online 531343420.84 121945000.89 77.05% 41.43% 32.58% 1.53%
Offline 12738482845.20 3182132011.03 75.02% 28.46% 29.47% -0.19%
~ 17 ~Annual Report 2021
Core business data of the prior year restated according to the changed statistical caliber for the Reporting Period:
□ Applicable √ Not applicable
(3) Whether Revenue from Physical Sales is Higher than Service Revenue
√ Yes □ No
Operating division Item Unit 2021 2020 Change (%)
Sales volume Ton 101054.70 86930.68 16.25%
Distilled spirits
Output Ton 109947.76 83668.45 31.41%
brewage
Inventory Ton 19618.66 10725.60 82.91%
Any over 30% YoY movements in the data above and why:
√ Applicable □ Not applicable
Output increased 31.41% compared to 2020 primarily driven by the increased inventories prepared for the Spring Festival.Inventory increased 82.91% compared to 2020 primarily driven by the increased inventories prepared for the Spring Festival.
(4) Execution Progress of Major Signed Sales and Purchase Contracts in the Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Cost of Sales
By operating division
Unit: RMB
20212020
Operating
Item As % of total cost As % of total cost Change (%)
division Cost of sales Cost of sales
of sales (%) of sales (%)
Food
Direct materials 2321320105.47 70.26% 1857491476.93 72.85% 24.97%
manufacturing
Food
Direct labor cost 285205229.63 8.63% 261553817.02 10.26% 9.04%
manufacturing
Food Manufacturing
210507603.206.37%201171173.257.89%4.64%
manufacturing expenses
Food
Fuels 91709296.08 2.78% 89428707.39 3.51% 2.55%
manufacturing
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
√Yes □ No
Compared with the prior year the following subsidiaries were added to the consolidated financial statements of the Reporting Period:
Anhui Mingguang Distillery Co. Ltd. Renhuai Maotai Town Zhencang Winery Industry Co. Ltd. Mingguang Tiancheng Ming
~ 18 ~Annual Report 2021
Wine Sales Co. Ltd. Fengyang Xiaogang Village Ming Wine Distillery Co. Ltd. Anhui Jiuhao China Railway Construction
Engineering Co. Ltd. and Anhui Jiuan Mechanical Electrical Equipment Co. Ltd. Meanwhile Bozhou Gujing Waste Recycling Co.Ltd. has been de-registered during the Reporting Period.
(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
□ Applicable √ Not applicable
(8) Major Customers and Suppliers
Major customers:
Total sales to top five customers (RMB) 1845323034.24
Total sales to top five customers as % of total sales of the
13.91%
Reporting Period (%)
Total sales to related parties among top five customers as % of
0.00%
total sales of the Reporting Period (%)
Information about top five customers:
Sales revenue contributed for
No. Customer As % of total sales revenue (%)
the Reporting Period (RMB)
1 Distributor A 658146119.50 4.96%
2 Distributor B 496463500.64 3.74%
3 Distributor C 319902346.49 2.41%
4 Distributor D 194693089.35 1.47%
5 Distributor E 176117978.26 1.33%
Total -- 1845323034.24 13.91%
Other information about major customers:
□ Applicable √ Not applicable
Major suppliers:
Total purchases from top five suppliers (RMB) 1089038984.77
Total purchases from top five suppliers as % of total purchases
29.55%
of the Reporting Period (%)
Total purchases from related parties among top five suppliers
0.00%
as % of total purchases of the Reporting Period (%)
Information about top five suppliers:
Purchase in the Reporting
No. Supplier As % of total purchases (%)
Period (RMB)
1 Supplier A 297710603.31 8.08%
2 Supplier B 290714378.92 7.89%
~ 19 ~Annual Report 2021
3 Supplier C 215756887.60 5.85%
4 Supplier D 161148582.38 4.37%
5 Supplier E 123708532.56 3.36%
Total -- 1089038984.77 29.55%
Other information about major suppliers:
□ Applicable √ Not applicable
3. Expense
Unit: RMB
2021 2020 Change (%) Reason for any significant change
Selling expense 4008075483.08 3120977163.32 28.42%
Administrative expense 1022181419.74 802201580.48 27.42%
Finance costs -204055657.06 -260836456.07 21.77%
R&D expense 51449475.36 40590136.46 26.75%
The Company is subject to the Guideline No. 14 of the Shenzhen Stock Exchange on Information Disclosure by Industry—for Listed
Companies Engaging in Food and Liquor & Wine Production.Breakdown of selling expense:
Unit: RMB
Item 2021 2020 Change (%) Reason
Employment
863583183.40723874977.0519.30%
benefits
Travel fees 161091812.25 133511390.56 20.66%
Advertisement
900546437.33840407171.967.16%
fees
Comprehensive
1268396513.56 755941972.88 67.79% More sales promotion activities
promotion costs
Service fees 705368563.00 578401082.92 21.95%
Others 109088973.54 88840567.95 22.79%
Total 4008075483.08 3120977163.32 28.42%
Details about advertisement
No. Main way Amount (RMB’0000)
1 TV 41466.82
2 Offline 36967.85
3 Online 11619.97
Total 90054.64
~ 20 ~Annual Report 2021
4. R&D Investments
√ Applicable □ Not applicable
Names of main Expected impact on the future
Project objectives Project progress Objectives to be achieved
R&D projects development of the Company
Aiming at different types
The experimental research on
of raw materials the
liquor making with different
process and experiments The process of liquor-making
Research of process types of original grain will
of liquor making are with different types of
and experiments on Promoted and play an important role in
conducted to provide the original grain is explored to
original grain for applied. optimized selection of
Company with data expand the scope of using
liquor distillation original grain and
support for the selection original grain.improvement of quality of
of original grain for
original liquor.liquor-making.The experiments
systematically optimize The process and
Theoretically and practically
Research and the production process of experiments have
the various parameters of the The quality of Gujinggong
application of making strongly fragrant been carried out for
strongly fragrant liquor are liquor will be steadily
process and liquor improve the many times and part
revealed to be scientific and improved to maintain the
experiments for sensory quality of of the experimental
reasonable and the continuously improving
making strongly Gujinggong liquor achievements have
self-consciousness of process quality of the brand.fragrant liquor making the product No. 1 been promoted and
performance is improved.in China in terms of applied.strongly fragrant liquor.The exploring of the
production process of
The process of producing
The high-quality flavoring compound fragrant liquor will
Research on and compound fragrant liquor
liquor with unique flavor is enable the production of the
application of the is explored to prepare for
Promoted and produced to prepare for the high-quality flavoring liquor
process of making the development of new
applied. development of new products with unique flavor further
compound fragrant products and the design
and the design of liquor body enrich the product system of
liquor of liquor body of the
of the Company. Gujinggong Liquor and
Company.strengthen its
competitiveness.The production process
The parameters of the Standardized documents for
of high-temperature Qu
Optimization and production process of operation and process will be
liquor is standardized to
regularization of the high-temperature Qu liquor provided for the Company to
form standard operation Promoted and
production process are determined the quality of improve the production
documents and further applied.of high-temperature the liquor is improved and quality of high-temperature
improve the quality of
Qu liquor the richness of original liquor Qu liquor and to stabilize the
high-temperature Qu
is increased. quality of the liquor.liquor.Research with
optimized
The taste and quality of
experiments on the Part of the The taste of liquor body is
original liquor is The quality of the original
method of achievements of the enriched to provide the
improved to enhance the liquor on the high level of a
collecting scums project have been Company with an exploration
overall quality of liquor liquor pit is improved
floated in liquid in a promoted. on optimizing process.samples.micro-recirculation
way
Research on the Different means to add The impact on the quality of The technical and operational
means to add syrup syrup is comprehensively Promoted and original liquor caused by foundation will be laid for the
to strongly fragrant assessed to provide applied. different means to add syrup improvement of quality of
liquor technical support for the is judged to choose relatively original liquor.Company regarding the
~ 21 ~Annual Report 2021
usage of adding syrup to better syrup adding way.liquor-making process.Details about R&D personnel:
2021 2020 Change (%)
Number of R&D personnel 978 1014 -3.35%
R&D personnel as % of total
9.10%10.21%-1.11%
employees
Educational background of
——————
R&D personnel
Bachelor’s degree 211 228 -7.46%
Master’s degree 41 43 -4.65%
Other 726 743 -2.29%
Age structure of R&D
——————
personnel
Below 30 164 168 -2.38%
30~40321391-17.90%
Over 40 493 455 8.35%
Details about R&D investments:
2021 2020 Change (%)
R&D investments (RMB) 300602964.92 300404769.73 0.07%
R&D investments as % of
2.27%2.92%-0.65%
operating revenue
Capitalized R&D investments
0.000.000.00%
(RMB)
Capitalized R&D investments
0.00%0.00%0.00%
as % of total R&D investments
Reasons for any significant change to the composition of R&D personnel and the impact:
□ Applicable √ Not applicable
Reasons for any significant YoY change in the percentage of R&D investments in operating revenue:
□ Applicable √ Not applicable
Reasons for any sharp variation in the percentage of capitalized R&D investments and rationale:
□ Applicable √ Not applicable
5. Cash Flows
Unit: RMB
Item 2021 2020 Change (%)
Subtotal of cash generated from
16698641516.8313919228342.4719.97%
operating activities
Subtotal of cash used in operating
11444333389.0410294684816.9411.17%
activities
~ 22 ~Annual Report 2021
Net cash generated from/used in
5254308127.793624543525.5344.96%
operating activities
Subtotal of cash generated from
721528559.15372197845.6393.86%
investing activities
Subtotal of cash used in investing
9582979679.33603414750.961488.12%
activities
Net cash generated from/used in
-8861451120.18-231216905.33-3732.53%
investing activities
Subtotal of cash generated from
5165337169.81130665500.003853.10%
financing activities
Subtotal of cash used in financing
1137547692.56831838344.5536.75%
activities
Net cash generated from/used in
4027789477.25-701172844.55674.44%
financing activities
Net increase in cash and cash
420646484.862692153775.65-84.38%
equivalents
Explanation of why any of the data above varies significantly:
√ Applicable □ Not applicable
(1) Net cash generated from operating activities stood at RMB5254308127.79 in the Reporting Period up 44.96% year-on-year
primarily driven by the increased sales revenue.
(2) Subtotal of cash used in investing activities stood at RMB9582979679.33 in the Reporting Period up 1488.12% year-on-year
the main reason is the impact of purchasing financial products.
(3) Net cash generated from financing activities stood at RMB4027789477.25 in the Reporting Period up 674.44% year-on-year
primarily driven by the arrival of funds raised through a private placement.
(4) Net increase in cash and cash equivalents stood at RMB420646484.86 in the Reporting Period down 84.38% year-on-year the
main reason is the impact of purchasing financial products.Reasons for any big difference between the net operating cash flow and the net profit for this Reporting Period
□ Applicable √ Not applicable
V Analysis of Non-Core Businesses
□ Applicable √ Not applicable
VI Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
31 December 2021 31 December 2020 Change in
Reason for any significant
As % of total As % of total percentage
Amount Amount change
assets assets (%)
~ 23 ~Annual Report 2021
Monetary assets 1 1924922771.76 46.92% 5971212569.66 39.18% 7.74%
Accounts
89005804.170.35%67933735.910.45%-0.10%
receivable
Inventories 4663456672.30 18.35% 3416880808.96 22.42% -4.07%
Investment
4075801.060.02%4392943.540.03%-0.01%
property
Long-term
equity 5312600.78 0.02% 4915575.83 0.03% -0.01%
investments
Fixed assets 1984063975.87 7.81% 1797789271.62 11.80% -3.99%
Construction in
1064134904.214.19%279169201.601.83%2.36%
progress
Right-of-use
43927228.970.17%57402412.530.38%-0.21%
assets
Short-term
30035138.890.12%70665500.000.46%-0.34%
borrowings
Contract
1825447705.857.18%1206573886.267.92%-0.74%
liabilities
Long-term
172356255.830.68%60117638.890.39%0.29%
borrowings
Lease liabilities 28107223.18 0.11% 53226677.43 0.35% -0.24%
Indicate whether overseas account for a larger proportion in the total assets.□ Applicable √ Not applicable
2. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
Gain/loss on
Cumulative Impairment
fair-value
fair-value allowance Sold in the
Beginning changes in Purchased in the Other
Item changes for the Reporting Ending amount
amount the Reporting Period changes
charged to Reporting Period
Reporting
equity Period
Period
Financial assets
~ 24 ~Annual Report 2021
1.Held-for-trading
financial assets
(excluding 203877915.51 7 225961.17 0.00 2 450000000.00 2 661103876.68
derivative
financial assets)
2. Investment in
other equity 0.00 0.00 69 3720.70 53848697.80 54542418.50
instruments
Subtotal of
203877915.517225961.17693720.702503848697.802715646295.18
financial assets
Total of the above 2 03877915.51 7225961.17 693720.70 2503848697.80 2715646295.18
Financial
0.000.000.000.000.00
liabilities
Significant changes to the measurement attributes of the major assets in the Reporting Period:
□ Yes √ No
3. Restricted Asset Rights as at the Period-End
Item Ending carrying value (RMB) Reason for restriction
Structured deposits and time deposits
that cannot be withdrawn in advance and
Monetary assets 5867372593.16
time deposits that are pledged for issuing
bank acceptance drafts
Fixed assets 4225738.45 Mortgage secured borrowing.Intangible assets 2780644.18 Mortgage secured borrowing.Total 5874378975.79 --
VII Investments Made
1. Total Investment Amount
□ Applicable √ Not applicable
~ 25 ~Annual Report 2021
2. Major Equity Investments Made in the Reporting Period
□ Applicable √ Not applicable
3. Major Non-Equity Investments Ongoing in the Reporting Period
√ Applicable □ Not applicable
Unit: RMB
Reason for
Accumulative
Input amount Accumulative not reaching
Fixed assets Estimated realized
Way of Industry in the actual input Capital the schedule Disclosure Disclosure
Item investment Progress return on revenues as
investment involved Reporting amount as of the resources and date (if any) index (if any)
or not investment of the
Period period-end anticipated
period-end
income
For details
please refer to
the
Announcement
on Investment
The smart
in the Smart
technology
Self-owned Technology
transformation Liquor 3 March
Self-built Yes 841790505.09 1001582020.44 funds and 11.22% N/A N/A N/A Transformation
project for production 2020
raised funds Project for
liquor
Liquor
production
Production
disclosed by
the Company
on the website
of Cninfo
~ 26 ~Annual Report 2021
dated 3 March
2020.
Total -- -- -- 841790505.09 1001582020.44 -- -- N/A N/A -- -- --
4. Financial Investments
√ Applicable □ Not applicable
Unit: RMB
Gain/loss
on fair Cumulative
Variety Purchased in
Code of Name of Initial Accounting Beginning value fair value Sold in the Gain/loss in the Ending Source of
of measurement changes in changes Reporting the Reporting Accounting title
securities securities investment cost Reporting model carrying value the charged to Period Period
funds
securities Period carrying value
Reporting equity
Period
DAPU Asset Fair value Held-for-trading Self-owned
Fund 200000000.00 203877915.51 - 339271.15 14 393316.21 2 03538644.36
Management method financial assets funds
Other ending holding securities
----
investments
Total 200000000.00 -- 203877915.51 - 339271.15 14 393316.21 2 03538644.36 -- --
Disclosure date of the
announcement about the board’s The Company held the 8th Meeting of the 9th Board of Directors on 27 August 2021 reviewed and approved the proposal on carrying out securities investment
consent for the securities business.investment
Disclosure date of the
announcement about the general
N/A
meeting’s consent for the
securities investment (if any)
~ 27 ~Annual Report 2021
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable
Unit: RMB’0000
Proportion
of closing
Actual
Purchased in investment
Relationship Initial Beginning Sold in the Impairment Ending gain/loss in
Connected Type of the amount in
Operator with the investment Starting date Ending date investment Reporting provision (if investment the
transaction derivative Reporting the
Company amount amount Period any) amount Reporting
Period Company’s
Period
ending net
assets
Reverse
Reverse
repurchase 27 January 5 January
Naught No repurchase of 0.00 0.00 60970.20 53349.70 7620.50 0.44% 67.35
of national 2021 2022
national debt
debt
Total 0.00 -- -- 0.00 60970.20 53349.70 7620.50 0.44% 67.35
Capital source for derivative investment Company’s own funds
Lawsuits involved (if applicable) N/A
Disclosure date of board announcement approving
30 August 2013
derivative investment (if any)
Disclosure date of shareholders’ meeting
announcement approving derivative investment (if
any)
Analysis of risks and control measures associated with
derivative investments held in the Reporting Period The Company had controlled the relevant risks strictly according to the Derivatives Investment Management System.(including but not limited to market risk liquidity risk
~ 28 ~Annual Report 2021
credit risk operational risk legal risk etc.)
Changes in market prices or fair value of derivative
investments during the Reporting Period (fair value
Naught
analysis should include measurement method and
related assumptions and parameters)
Significant changes in accounting policies and specific
accounting principles adopted for derivative
Naught
investments in the Reporting Period compared to
previous reporting period
Based on the sustainable development of the main business and the sufficient free idle money the Company increased the profits through
investing in the reasonable financial derivative instruments which was in favor of improving the service efficiency of the idle funds; in
order to reduce the investment risks of the financial derivative instruments the Company had set up corresponding supervision
Opinion of independent directors on derivative mechanism for the financial derivative instrument business and formulated reasonable accounting policy as well as specific principles of
investments and risk control financial accounting; the derivative Investment business developed separately took national debts as mortgage object which was met
with the cautious and steady risks management principle and the interest of the Company and shareholders. Therefore agreed the
Company to develop the derivative Investment business of reverse repurchase of national debt not more than the limit of RMB0.3
billion.
5. Use of Funds Raised
√ Applicable □ Not applicable
(1) Overall Usage of Funds Raised
√ Applicable □ Not applicable
Unit: RMB’0000
Total funds Total funds used Accumulative Total funds with Accumulative Proportion of Total unused The usage and Amount of
Year Way of raising
raised in the Current fund used usage changed funds with accumulative funds destination of funds raised idle
~ 29 ~Annual Report 2021
Period usage changed funds with unused funds for over two
usage changed years
Deposited in
Private fund raising
2021 placement of 495434.21 43076.74 43076.74 0.00 0.00 0.00% 452357.47 account and 0.00
stocks cash
management
Total -- 495434.21 43076.74 43076.74 0.00 0.00 0.00% 452357.47 -- 0.00
Explanation of overall usage of funds raised
Through this issuance the Company raised total proceeds of RMB5000000000.00. After deducting the expenses related to the issuance of RMB45657925.15 (excluding VAT) the actual net
proceeds raised were RMB4954342074.85 the actual amount of funds received is RMB 4957547169.81.During 2021 the Company used raised funds of RMB430.7674 million in total paid issuance costs of RMB1.2514 million received income revenue of RMB16.6838 million in the raised funds
account (deducting the issuance costs and used raised funds) and used temporarily idle raised funds to purchase structured deposits of RMB4420 million. At 31 December 2021 the balance of t
he raised funds account stood at RMB4542.2122 million.
(2) Commitment Projects of Fund Raised
√ Applicable □ Not applicable
Unit: RMB’0000
Whether
Accumulative Investment
Changed or Investment Date of Realized Whether occurred
Committed Investment investment schedule as
Committed investment project not (including amount in the reaching income in the reached significant
investment amount after amount as of the
and super raise fund arrangement partial Reporting intended use Reporting anticipated changes in
amount adjustment (1) the period-end period-end
changes) Period of the project Period income project
(2)(3)＝(2)/(1)
feasibility
Committed investment project
The smart technology Not 495434.21 495434.21 43076.74 43076.74 8.69% 31 December N/A Not
~ 30 ~Annual Report 2021
transformation project for liquor 2024
production
Subtotal of committed investment
--495434.21495434.2143076.7443076.74--------
project
Total -- 495434.21 495434.21 43076.74 43076.74 -- -- -- --
Condition and reason for not
reaching the schedule and
N/A
anticipated income (by specific
items)
Notes of condition of significant
changes occurred in project N/A
feasibility
Amount usage and schedule of
N/A
super raise fund
Changes in implementation
N/A
address of investment project
Adjustment of implementation
N/A
mode of investment project
Advance investments in projects
financed with raised funds and
swaps of such advance N/A
investments with subsequent
raised funds
Idle fund supplementing the
N/A
current capital temporarily
~ 31 ~Annual Report 2021
Amount of surplus in project
N/A
implementation and the reasons
Usage and destination of unused As of December 31 2021 the unused raised funds and interest were stored in the special account the idle raised funds were used for cash management and
funds the purchase of financial products had not been redeemed by 44.20 million yuan.Problems incurred in fund using
N/A
and disclosure or other condition
(3) Changes in Items of Funds Raised
□ Applicable √ Not applicable
No such cases in the Reporting Period.VIII Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Interests
□ Applicable √ Not applicable
IX Principal Subsidiaries and Joint Stock Companies
√ Applicable □ Not applicable
Principal subsidiaries and joint stock companies with an over 10% effect on the consolidated net profit:
Unit: RMB
~ 32 ~Annual Report 2021
Relationship with the Main business
Company name scope Registered capital Total assets Net assets Operating revenues Operating profit Net profit Company
Wholesales of
distilled spirit
Bozhou Gujing
Subsidiary construction 84864497.89 4809706779.15 127377019.76 11364553622.12 840739673.81 625815758.69
Sales Co. Ltd
materials feeds and
assistant materials
Manufacture and
Anhui Longrui
Subsidiary sale of glass 86660268.98 427785997.39 357183946.32 321096222.99 46908148.94 40890221.16
Glass Co. Ltd
products
Yellow Crane Tower Production and
Wine Industry Co. Subsidiary sales of distilled 400000000.00 1735601365.26 712095045.65 1458982962.92 221500064.26 171059692.48
Ltd spirit
Shanghai Gujing
Jinhao Hotel Hotel management
Subsidiary 54000000.00 194348147.99 77011449.84 67349141.24 21002505.46 19134556.66
Management Co. and house lease
Ltd.Subsidiaries obtained or disposed in the Reporting Period:
√Applicable □Not applicable
Acquisition and disposal of subsidiaries during the reporting The impact on the overall production operation and
The name of the company
period performance
Strengthen the development of the Company’s main business
of liquor accelerate the national layout of the product market
Anhui Mingguang Distillery Co. Ltd. Business combination not under the same control
and enhance the Company’s brand influence and business
scale
Mingguang Tiancheng Ming Wine Sales Co. Ltd. Business combination not under the same control Strengthen the development of the Company’s main business
~ 33 ~Annual Report 2021
of liquor accelerate the national layout of the product market
and enhance the Company’s brand influence and business
scale
Strengthen the development of the Company’s main business
of liquor accelerate the national layout of the product market
Fengyang Xiaogang Village Ming Wine Distillery Co. Ltd. Business combination not under the same control
and enhance the Company’s brand influence and business
scale
Strengthen the development of the Company’s main business
of liquor accelerate the national layout of the product market
Renhuai Maotai Town Zhencang Winery Industry Co. Ltd. Business combination not under the same control
and enhance the Company’s brand influence and business
scale
Optimize the internal management structure and enhance the
Anhui Jiuan Mechanical Electrical Equipment Co. Ltd. Set up
internal driving force.Anhui Jiuhao China Railway Construction Engineering Co. Optimize the internal management structure and enhance the
Set up
Ltd. internal driving force.Bozhou Gujing Waste Recycling Co. Ltd. Cancel
Other information on principal subsidiaries and joint stock companies:
N/A
X Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
~ 34 ~Annual Report 2021
XI Prospects
(I) Development Prospect of the Industry the Company is in
1. The tightening regulation has promoted the sound development of the liquor and spirits industry
Since the National Development and Reform Commission issued the Catalogue for Guiding Industry Restructuring in 2019 "the
product line of liquor and spirits" has been deleted from "restricted" items. This has released the "trammels" besetting the
development of this industry for many years and has brought a period of rapid development for the liquor and spirits industry. In
2021 the regulatory authorities intensified the regulation on the liquor and spirits industry. The government and relevant departments
successively issued a number of policies and the State Administration for Market Regulation regulated and guided the development
of the industry through multiple channels all of which have promoted the sound development of the liquor and spirits industry.
2. The exacerbating differentiation has further increased the brand concentration among liquor enterprises
China's liquor and spirits industry is moving faster to transform from an expanding market to a competitive market and as a result
the strong have become stronger and the weak have become weaker. The "Matthew Effect" has become intensified. The market
shares of leading liquor enterprises above the designated size have kept rising but the overall number of liquor enterprises has kept
declining. Meanwhile the consumption philosophies of rational drinking and healthy drinking have been gradually deeply rooted in
people's hearts and when making choices of consuming liquor and spirits consumers have gradually strengthened their brand
awareness.
3. Channel transformation particularly digital transformation has enabled liquor enterprises to enhance their core
competitiveness
Due to the pandemic channel transformation has been intensified digital trend has emerged the online and offline closed-loop flow
has offered all-channel shopping experience to consumers and the penetration rate in such digital channels as E-commerce O2O
live streaming and community group purchasing has been increased. Thus the concentration in the liquor and spirits industry has
been further strengthened and the enterprises in order to enhance their core competitiveness have relied on digital platforms to
refine the management of supply side internal procedures of enterprises and customer operations in the whole process of operations
which enables the enterprises to reduce their operation costs and improve their operation efficiency.
4. The alternating pattern of the consumer groups of the liquor and spirits industry is being transformed
Young consumer groups constitute the future main consumption force of the liquor and spirits industry and the future new growth
points in the sector of China's liquor and spirits. In consideration of the alternation toward younger consumers in which the
consumption of liquor and spirits is being more rapidly transformed toward the new generation of consumers many renowned liquor
enterprises have made their overall arrangements for their brand promotion and the packing and appearance of products with the
symbols and expression of a younger and more fashionable orientation. In such manners as online marketing and offline branding
brand promotion has redefined the cognition of younger consumption groups to the brands and products of liquor and spirits which
has realized the market education to young consumer groups through brand promotion of liquor and spirits.(II) Development Strategy of the Company
1. Firmly boost "Strategy 5.0 Five-Star Operation” Strategy
Comprehensively fulfill Strategy 5.0 and have the "User-Centered" thought fully and deeply implemented in the Company. Solidly
create the "Five-Star Operation" enhance competitive force improve quality and efficiency optimize services and promote healthy
and efficient operation of the enterprise.
2. Firmly boost reform and innovation strategy
Deeply boost marketing innovation technological innovation and mechanism innovation and generate endogenous power of the
enterprise.
3. Firmly create “Talent Highland” strategy
Intensify talent recruitment and attraction and establish flexible talent attraction and wisdom experience borrowing mechanism.Innovate talent training mode and promote independent cultivation & development and absorption & attraction simultaneously.~ 35 ~Annual Report 2021
(III) Operating Revenue Plan of the Company in 2022
In 2022 the Company plans to achieve the operating revenue of RMB15.3 billion rising 15.30% compared with that of last year; and
achieve a total profit of RMB3.55 billion rising 11.94% compared with that of last year.(IV) Operating Risk of the Company
1. The adverse effect of the systematic risk in the macro-economic environment on the development of the industry and the
Company.
2. The strengthened concentration intensified polarization and continuously escalated competition in the liquor and spirits industry
3. The normalization of the COVID-19 pandemic and the more complex severe and uncertain external environment.
(V) Operating Measures
1. Marketing
The Company made all efforts to push forward market and brand building optimized the supply of resources intensified the
dissemination via Internet and new media upgraded its brand IP and increased the influence of Gujinggong brand. It was determined
to carry out unswervingly its "nationwide sub-high-end and Gu 20+" strategy and to push forward the re-optimization of its product
structure and market structure.
2. Product Management
The Company strictly kept carrying out its production processes continuously optimized its production operations further explored
the improvement of its key processes and constantly improved the quality of its original liquor. It established a sound management
system standard for planting of grain bases prevented and controlled bio-safety risks carried out an exploratory reformation for
management mode of quality check and intensified the control and supervision on production processes so that the quality of
original grain can be controlled well from the source.
3. Engineering Construction
The Company accelerated the construction of the smart technology transformation project (smart park) for liquor production and
adhered to high standards and high quality to promote the construction of smart park projects.
4. Informatization Construction
The Company intensified digital construction. Aided by modern technological means the Company centered on smart manufacturing
and green liquor making set up an Internet platform for the liquor and spirits industry and built a lighthouse factory of Gujing "5G+
industrial Internet" to comprehensively promote the digital transformation of Gujing. It proactively pushed forward big data building
strengthened business data analysis promoted procedure optimization and improved the Company's operation efficiency and
management standard.
5. Safety and Environmental Protection
The Company comprehensively consolidated safety responsibility system and continuously made great efforts to investigate and
control hazards identify dangerous sources and conduct safety education; it intensified fire-fighting management by specifying the
spot checks of facilities monitoring precautions and fire control drills; it broadened thinking of safety work to build a steady safety
defense line with the aid of the information system of safety prevention. Under the premise of ensuring up-to-standard pollutant
discharge and compliant waste disposal the Company explored ways to comprehensively utilize the by-product of liquor-making to
improve energy service efficiency increase the proportion of new energy further conserve energy and reduce carbon emission and
pursue green development.
6. Internal Management
The Company improved its incentive mechanism and continuously promoted "separate legal entity system" and "creating platforms
for innovation and entrepreneurship". It delegated powers to lower levels to stimulate vitality and balanced powers with
responsibilities thus gradually realizing market-oriented distribution of such key factors as personnel expenses and remuneration.The measures also further vitalized the operation mechanism of grass-roots units and stimulated the motivation and creativity of staff
members. The Company also comprehensively sorted out such risk matters as its business operating model and financial
management optimizing its internal control system. Meanwhile it deepened the internal control assessment and effectively
~ 36 ~Annual Report 2021
integrated internal control assessment with performance auditing and special auditing thus intensifying the supervision on internal
control.
7. Corporate Culture Construction
The Company adhered to the principle that "Party-building helps build vitalize and stabilize the enterprise" and increased its
cohesion through high-quality Party-building and cultural work thus providing a strong political assurance for its high-quality
development and forming a firm ideological front line that helped build revitalize and strengthen the enterprise. The Company
deepened and promoted the learning and education of Party history. It focused on the in-depth integration and mutual promotion of
Party-building and production and operation normally carried out the activities of "I do practical things for the masses" conducted
"Party-building brand" creation activities deepened co-built Party-building consolidated the building achievements of
standardization within Party branches and optimized the Party-building training system. The Company strictly implemented the
spirit of Eight-point Decision issued by the CPC Central Committee and constantly improved the supervision and governance
efficiency. It continuously integrated the Gujing Values into each aspect of the Company including production operation and
management.In 2022 the Company will continue to be guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era
thoroughly implement the spirit of the 19th CPC National Congress and the various plenary sessions of the 19th CPC Central
Committee enhance the "Four Consciousnesses" firmly believe in the "Four Self-confidences" implement the "Two Maintenances"
carry forward the great Party-building spirit and adhere to the general principle of pursuing progress while ensuring stability. Under
the strong leadership of the municipal CPC committee and the municipal government the Company will implement the spirit of the
provincial and municipal Party congresses adhere to "three Stricts and Three Honests" and "do things immediately genuinely and
solidly" gather strength to build "China Liquor Town" continuously implement long-term perspective mindset the concept of
excellence and the awareness of high-quality products maintain integrity and innovation pursue progress while ensuring stability
and once again build a new "Gujing" an enterprise with digital and global operations and law-based management enabling the
Company to boast excellent achievements to celebrate the 20th CPC National Congress to be successfully held.XII Communications with the Investment Community such as Researches Inquiries and
Interviews
□ Applicable √ Not applicable
~ 37 ~Annual Report 2021
Part IV Corporate Governance
I General Information of Corporate Governance
Indicate by tick market whether there is any material in-compliance with laws administrative regulations and the regulatory
documents issued by the CSRC governing the governance of listed companies.□ Yes √ No
The Company has enabled the General Meeting the Board of Directors the Board of Supervisors and the management to form a
standardized and scientific decision-making mechanism of operation to sufficiently protect the rights and interests of investors and
small and medium investors in particular and to intensify the standardized operation of the Company in strict accordance with
relevant laws and regulations such as the Company Law the Securities Law the Code of Corporate Governance for Listed
Companies the Rules for Stock Listing of Shenzhen Stock Exchange and the Guidelines of the Shenzhen Stock Exchange for the
Standard Operation of Listed Companies. During the Reporting Period the Company's actual situation of corporate governance met
the relevant requirements of the normative documents on the governance of listed companies issued by the China Securities
Regulatory Commission. In strict accordance with the relevant laws and regulations and the Company's requirements on internal
rules regulations and management system each of the directors supervisors and senior managers of the Company executed his or
her rights and obligations to ensure transparent disclosure of the Company's information its operation according to law and honesty
and trustworthiness.
1. Shareholders and General Meeting of Shareholders
The Company regulates the convening holding and voting procedures of the general meeting of shareholders in strict accordance
with the provisions and requirements of the Company Law the Articles of Association and the Rules of Procedure of the General
Meeting. During the Reporting Period the convening and holding procedures of general meetings of shareholders the qualifications
of attendants to the meetings and the voting procedures of the meetings all met the provisions of the Company Law Rules of
Procedure of the General Meeting and other laws and regulations. The Company equally treated all of its shareholders and small
and medium shareholders in particular to ensure full execution of rights of all shareholders.
2. The Company and Controlling Shareholders
The Company's controlling shareholders are able to strictly regulate their own behaviors without any violation of provisions of
relevant laws regulations and the Company's Articles of Association. They have not directly or indirectly interfered with the
Company's decision-making and production and operation activities nor have they occupied the Company's funds; the Company has
not provided its controlling shareholders with any form of guarantee.
3. Directors and Board of Directors
The Company's Board of Directors consists of nine directors three of whom are independent directors. The number of directors and
the personnel composition of the Board of Directors comply with the requirements of laws regulations and the Articles of
Association. All directors act in accordance with the Articles of Association Rules of Procedure of the Board of Directors and the
Work Policy for Independent Directors etc. attend the meetings of the Board of Directors and general meetings of shareholders
diligently and faithfully perform their duties and obligations. Meanwhile they actively participate in relevant training and get
familiar with relevant laws and legislations. Under the Board of Directors there are four special committees i.e. the Audit
Committee the Nominating Committee the Remuneration and Appraisal Committee and the Strategy Committee which perform
their normal duties to provide scientific and professional comments and references for decision-making of the Board of Directors.
4. Supervisors and Board of Supervisors
There are five supervisors in the Company's Board of Supervisors including two employee supervisors. The number and
~ 38 ~Annual Report 2021
composition of the Board of Supervisors are in compliance with the requirements of laws and regulations. All supervisors are able to
conscientiously perform their duties in accordance with the requirements of the Rules of Procedure of the Board of Supervisors
earnestly perform their duties and supervise the major events related-party transactions financial status law-and-regulation
compliance of performance of duties of directors and senior managers of the Company.
5. The Mechanism of Performance Appraisal and Incentive and Constraint
The procedures for appointment and removal of directors supervisors and senior managers of the Company shall be open and
transparent and in line with the relevant provisions of laws regulations and the Articles of Association; the Company's remuneration
appraisal scheme shall specifically stipulate the evaluation to the Company's management team. The Company shall constantly
improve the performance evaluation standard and incentive and constraint mechanism of directors supervisors and senior managers.
6. Fulfillment of Social Responsibilities and Stakeholders
The Company is able to fully respect and protect the legitimate rights and interests of relevant stakeholders achieve a balance of
interests between the society shareholders the Company suppliers customers employees and other relevant parties to promote the
sustainable stable and healthy development of the Company.
7. Information Disclosure and Transparency
The Company faithfully performs the obligation of information disclosure in strict accordance with the Articles of Association of the
Company Listing Rules of Shenzhen Stock Exchange Self-Regulatory Guidelines No. 1 for Companies Listed on Shenzhen Stock
Exchange - Standard Operation of Listed Companies on the Main Board Self-regulatory Guidelines No. 5 for Companies Listed on
Shenzhen Stock Exchange - Management of Information Disclosure Affairs and the relevant laws and regulations of China's
Securities Regulatory Commission and Shenzhen Stock Exchange. The Company designates China Securities Journal Shanghai
Securities News Ta Kung Pao and Cninfo (http://www.cninfo.com.cn) as its information disclosure media and website to guarantee
investors' right to know and to ensure that all shareholders of the Company have a fair opportunity to obtain information of the
Company. Meanwhile the Company has established diversified communication channels for investors including special telephone
line exclusive mailbox and interactive platform for investors and many other forms to fully guarantee the right of a large number
of investors to know.
8. The formulation and implementation of the registration and management system on inside information and insiders
In accordance with the requirements of regulatory authorities the Company and all of its controlling shareholders have formulated
the system for registration and record on inside information and insiders regulated the acts of managing inside information of the
Company and its controlling shareholder strengthened the classification of inside information and safeguarded the principle of
fairness for information disclosure. During the Reporting Period in strict accordance with the Management System on Inside
Information and Insiders the Company has made well classification of inside information and registration and record on insiders.II The Company’s Independence from Its Controlling Shareholder and Actual Controller in
Business Personnel Asset Organization and Financial Affairs
The Company and the controlling shareholder Anhui Gujing Group Co. Ltd. realized five independences in terms of business
personnel assets organizations and financial affairs with separate independent calculation independent and complete business
independent operation ability and independent responsibilities and risks. Majority shareholders cannot surpass the shareholders’
general meeting to directly or indirectly interfere with the Company’s decisions and legal production as well as operation activities
and there is no same trade competition state of the same products between the company and majority shareholders.
1. Independence of Business
The Company is mainly engaged in the production and sale of liquor and spirits and the Company's business is mutually independent
of its controlling shareholder Gujing Group and other enterprises controlled by the Group. The issuer owns independent research and
development system purchasing system production system and sale system forming a complete business chain all of which do not
rely on its shareholders and their subordinate enterprises. Therefore the issuer's business is independent of its controlling
~ 39 ~Annual Report 2021
shareholders.
2. Independence of Personnel
The Company has independent management systems of labor personnel salary etc. and independent staff teams in which the salary
payment and welfare expenditure of the Company are strictly independent of those of its shareholders and related parties. The
directors supervisors and senior managers of the Company are all selected in strict accordance with the relevant provisions of the
Company Law and the Company's Articles of Association. All senior managers do not take other positions than directors or
supervisors in any of other entities controlled by the controlling shareholders or actual controllers of the Company nor do they
receive salary from any other entities controlled by the controlling shareholders or actual controllers of the Company. None of the
financial staff members of the Company takes part-time positions in any of other entities controlled by the controlling shareholders or
actual controllers of the Company.
3. Independence of Assets
The Company has its production system auxiliary production system and supporting facilities related to its production and operation;
and legally has the ownership or use rights of the land plants machines trademarks and patents in relation to its production and
operation. Therefore there is not any damage to the Company's interests in such a way that the assets and funds of the Company are
occupied by the Company's controlling shareholders and their related parties.
4. Independence of Organization
The Company has established a sound and integral governance structure of general meeting of shareholders the Board of Directors
and the Board of Supervisors and formulated the corresponding internal control management system. The Company independently
exercises the duties and rights of operation and management in which the Company's units of production operation and office are
completely separated from the shareholding entities. Therefore the Company does not make mixed operation and has mixed office
with its shareholding entities; the Company's shareholding entities and their related entities or persons do not interfere with the
Company's structural setup; there is not any subordinate relationship between the Company and its controlling shareholders or
between their functional departments.
5. Independence of Finance
The Company has set up an independent finance department with full-time personnel; and established an independent accounting
system and financial management system independently making financial decisions and implementing a strict internal audit system.An independent bank account has been opened for the Company without sharing the account with the Company's shareholding
entities or any other entity or person. The Company as an independent taxpayer declares taxes and fulfills tax payment obligations
independently according to law and does not pay taxes together with its shareholding entities.III Horizontal Competition
□ Applicable √ Not applicable
IV Annual and Extraordinary General Meetings Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
Investor Index to disclosed
Meeting Type Date of the meeting Disclosure date
participation ratio information
Announcement on
The 2020 Annual Annual General
59.34% 25 May 2021 26 May 2021 Resolutions of the
General Meeting Meeting
2020 Annual
~ 40 ~Annual Report 2021
General Meeting
disclosed on
www.cninfo.com.cn
2. Extraordinary General Meetings Convened at the Request of Preferred Shareholders with Resumed
Voting Rights
□ Applicable √ Not applicable
V Directors Supervisors and Senior Management
1. Basic Information
Increase Decrease
End Beginning in the in the Other Ending
Incumbent/Form Gende Ag Start of of
Name Office title shareholdin Reportin Reportin increase/decreas shareholdin
er r e tenure tenur
e g (share) g Period g Period e (share) g (share)
(share) (share)
Chairman 19 18
Liang
of the Incumbent Male 56 June June
Jinhui
Board 2020 2023
1918
Li Peihui Director Incumbent Male 49 June June
20202023
1918
Zhou Director
Incumbent Male 48 June June
Qingwu GM
20202023
Director
1918
Executive
Yan Lijun Incumbent Male 49 June June
Deputy
20202023
GM
Director 19 18
Xu Peng Deputy Incumbent Male 52 June June
GM 2020 2023
Ye 19 18
Changqin Director Incumbent Male 48 June June
g 2020 2023
1918
Zhang Independen
Incumbent Male 71 June June
Guiping t director
20202023
Wang Independen 19 18
Incumbent Male 60
Ruihua t director June June
~ 41 ~Annual Report 2021
20202023
1918
Xu Independen
Incumbent Male 46 June June
Zhihao t director
20202023
Chairman
of 19 18
Sun
Supervisor Incumbent Male 57 June June
Wanhua
y 2020 2023
Committee
1918
Yang
Supervisor Incumbent Male 55 June June
Xiaofan
20202023
10
19
Wang Employee Marc
Incumbent Male 52 June
Zibin supervisor h
2020
2022
1918
Lu
Supervisor Incumbent Male 42 June June
Duicang
20202023
1918
Employee
Zhang Bo Incumbent Male 57 June June
supervisor
20202023
1918
Zhang Deputy
Incumbent Male 54 June June
Lihong GM
20202023
Zhu 19 18
Deputy
Xianghon Incumbent Male 48 June June
GM
g 2020 2023
1918
Gao Deputy
Incumbent Male 52 June June
Jiakun GM
20202023
2818
Deputy
Li Anjun Incumbent Male 52 August June
GM
20202023
2818
GM
Kang Lei Incumbent Male 44 August June
assistant
20202023
GM 28 18
Zhu
assistant Incumbent Male 45 August June
Jiafeng
Deputy 2020 2023
~ 42 ~Annual Report 2021
Chief
Accountant
Secretary 29 18
Zhu
of the Incumbent Male 45 Octobe June
Jiafeng
Board r 2021 2023
Total -- -- -- -- -- --
Indicate by tick mark whether any directors or supervisors left or any senior management were disengaged during the Reporting
Period
□ Yes √ No
Change of Directors Supervisors and Senior Management
√Applicable □ Not applicable
Name Office title Type of change Date of change Reason for change
Deputy GM
Chief
Ye Changqing Accountant Left 13 August 2021 Job change
Secretary of the
Board
Secretary of the
Zhu Jiafeng Appointed 29 October 2021 Appointment
Board
2. Biographical Information
Professional backgrounds major work experience and current duties in the Company of the incumbent directors supervisors and
senior management:
1. Mr. Liang Jinhui male born in October 1966 member of CPC is Political Engineer and a deputy to the 13th National People’s
Congress with MBA degree incumbent Secretary of CPC and president of the Company and president and Secretary of CPC of
Gujing Group. He ever took the post of MD GM Deputy GM GM of Bozhou Gujing Sales Co. Ltd. Supervisor of Third
Supervisory Committee Director of the 4th 5th and 6th Board of Directors and Chairman of the 7th and 8th Board of Directors of the
Company.
2. Mr. Li Peihui male born in July 1973 member of CPC is a holder of master degree. He is a senior accountant CPA and member
of national leading accounting talents. At present he acts as the Company’s Vice Secretary of CPC and president of Gujing Group.He had ever served as deputy GM and GM of Financial Department deputy chief accountant chief accountant Secretary of Board of
Directors and Director of the Company; Chairman of the Board of Anhui Ruijing Business Travel Group Co. and Anhui Huixin
Financial Investment Group; executive vice president and CFO of Gujing Group; and director of the 7th and 8th Board of Directors.
3. Mr. Zhou Qingwu male born in February 1974 member of CPC is a senior engineer and China Chief Liquor and Spirits Taster
with educational experience of graduate student. At present he is Vice Secretary of CPC Director and General Manager of the
Company Vice Secretary of CPC of Gujing Group. He had ever acted as Deputy GM and deputy executive GM of the Company and
Director of the 5th 6th 7th and 8th Board of Directors of the Company.
4. Mr. Yan Lijun male June 1973 member of CPC is a holder of master degree with Senior Taster. Now he is Vice Secretary of
CPC Director Executive Deputy GM of the Company member of CPC Committee of Gujing Group Chairman of the Board and
GM of Bozhou Gujing Sales Co. Ltd. He once worked as a salesman of Sale Company District Manager Director of Market
~ 43 ~Annual Report 2021
Research Vice Manager of Planning Department Director of Hefei Strategic Operations Center Vice GM and director of the 7th and
8th Board of Directors of the Company.
5. Mr. Xu Peng male born in September 1970 member of CPC has educational experience of undergraduate college. He is the
member of CPC Committee Director and Deputy GM of the Company member of CPC Committee of Gujing Group and Chairman
of the Board of Yellow Crane Tower Liquor Industry Co. Ltd. He had ever acted as Deputy Director and Director of Finance Second
Office of Finance Department of the Company Manager of Finance Department of Anhui Laobada Co. Ltd. Vice Manager and
Manager of Finance Department of the Company Deputy General Manager and Chief Supervisor of Market Supervision Department
of Bozhou Gujing Sales Company Chairman of the 7th Supervisory Committee and Director of the 7th and 8th Board of Directors of
the Company.
6. Mr. Ye Changqing male born in October 1974 member of CPC is a member of national leading accounting talents with master
degree and International Certified Internal Auditor. He is the incumbent Director of the Company and CFO of Gujing Group. He had
ever acted as Chief Auditor of Audit Department Vice Manager of Audit Department and Vice Supervisor and Supervisor of
Auditing& Supervision Department; and Supervisor of the 4th Supervisory Committee of the Company; Director and Secretary of the
5th 6th 7th and 8th Board of Directors and Chief Accountant of the Company.
7. Zhang Guiping male born in August 1951 is a member of the Revolutionary Committee of the Chinese Kuomintang and a
bachelor's degree holder. He is currently a member of the 13th CPPCC National Committee Chairman of Sunning Global Chairman
of Suning Universal Co. Ltd. Independent Director of the Company President of Commercial Culture Association of China
Director of Anhui International Huishang Exchange Association Director of Southeast University Director and Professor at NanjingNormal University and other social positions. Many awards have been bestowed upon him including “Excellent Contributor toBuilding of Socialism with Chinese Characteristics” “China Outstanding Private Entrepreneur” “China Most Influential BusinessLeader” “Chinese Talent with Great Integrity” “Top Ten Influential People in China Real Estate Industry” and “OutstandingIndividual Contributor to China Charity”.
8. Wang Ruihua male born in January 1962 member of CPC is a non-practicing Chinese CPA with a doctor’s degree in
management. Now he acts as a professor and doctoral advisor in the Business School of Central University of Finance and
Economics the independent director in the Company BCEG Environmental Remediation Co. Ltd. and Bank Of Beijing Co. Ltd.member of Independent Director Committee of China Association for Public Companies.
9. Xu Zhihao male born in June 1976 is a senior engineer who graduated from Renmin University of China. He also holds a
master's degree from the PBC School of Finance Tsinghua University and is studying for a doctorate at Zhejiang University and
Singapore Management University. He possesses the professional qualifications to engage in fund and securities businesses. He is
currently Independent Director of the Company CEO of Geely Technology Group Co. Ltd. Chairman of QJMOTOR and Chairman
of Lifan Technology.
10. Sun Wanhua male was born in October 1965 member of CPC with a bachelor degree. Now he acts as the Chairman of the
Supervisory Committee of the Company member of the Party Committee and vice president in Gujing Group. He once held the posts
of the member of Standing Committee of CPC County Committee the Party Secretary of People’s Armed Forces Department and
political commissar in Minquan County Henan Province member of Standing Committee of Discipline Inspection Committee in
Bozhou Deputy Director of Bozhou Supervision Bureau and Deputy Secretary of Bozhou Discipline Inspection Committee
Chairman of the 8th Supervisory Committee of the Company.
11. Mr. Yang Xiaofan male born in April 1967 member of CPC is a holder of master degree. At present he is Supervisor of the
Company and Vice President and member of CPC Committee of Gujing Group. He once acted as Vice President and General
Manager of Anhui Gujing Real Estates Group Co. Ltd. Assistant to President of Gujing Group; Director of the 5 th 6th and 7th Board
of Directors of the Company and Supervisor of the 7th and 8th Supervisory Committee of the Company.
12. Wang Zibin male born in August 1970 member of CPC a senior auditor certified internal auditor and CPA with a college
degree. Now he acts as the Employee Supervisor of the Company member of the Party Committee in Gujing Group. He once held
~ 44 ~Annual Report 2021
the posts of the GM of Audit Department in Gujing Group Assistant GM in Bozhou Construction Investment Real Estate
Development Co. Ltd. CFO and Deputy GM in Hefei Marketing Center of Bozhou Gujing Sales Company the Supervisor of the 7th
and 8th Supervisory Committee of the Company and Director in Audit Supervision Center and Secretary of the Discipline Inspection
Committee in Gujing Group.
13. Lu Duicang male born in March 1980 member of CPC a senior accountant with a master degree. Now he serves as the
supervisor of the Company the Chairman of Anhui Longrui Glass Co. Ltd. and director of Mengcheng Rural Commercial Bank Co.Ltd. He once acted as the accountant deputy director and director of No.1 Center of Finance Department factory director of the
Liquor and Spirits Bottling Branch and Manager of Finished Product Department in the Company Controller of the Financial
Management Center in Gujing Group GM of Anhui Huixin Finance Investment Group Co. Ltd. Assistant Financial Controller in
Gujing Group and the Supervisor of the 5th 6th 7th and 8th Supervisory Committee of the Company.
14. Mr. Zhang Bo male born in July 1965 member of CPC is an economist with bachelor degree. Now he serves as Employee
Supervisor of the Company and director of 5A Management Committee (preparatory). He once worked as Chairman of the board and
GM of Bozhou Gujing Printing Co. Ltd. and Bozhou Gujing Glassware Manufacturing Co. Ltd. as well as Chairman of the Board of
Bozhou Ruineng Heat and Power Co. Ltd. Supervisor of the 7th and 8th Supervisory Committee of the Company Chairman of the
Labor Union of Gujing Group and Chairman of the Board & GM of Anhui Mingguang Distillery Co. Ltd.
15. Mr. Zhang Lihong male born in October 1968 member of CPC is an economist with bachelor degree. He is incumbent Vice
Secretary of CPC and Deputy GM of the Company and member of CPC Committee and deputy secretary of Commission for
Discipline and Inspection of Gujing Group. He once acted as clerk Secretary of Operation Department and Market Development
Department Deputy GM Director of General Office Director of Service Centre of Bozhou Gujing Sales Co. Ltd. Director of HR
Department and Administrative Service Center and GM Assistant of the Company.
16. Mr. Zhu Xianghong male born in September 1974 member of CPC is a senior Wine Taster with bachelor degree. He is
incumbent Deputy GM of Company GM of Yellow Crane Tower Liquor Industry Co. Ltd. He once acted as GM of Product
Department of Bozhou Gujing Sales Co. Ltd. GM of Hefei Office regional GM of Northern Anhui Province GM of Anhui
Operating Centre standing Deputy GM of Sales Company and assistant to GM of the Company.
17. Mr. Gao Jiakun male born in November 1970 member of CPC is a holder of bachelor degree. He is incumbent member of the
CPC and Deputy GM of the Company. He once served as GM of Production Management Department Vice Director of Production
Management Centre Chairman of the Board and GM of Bozhou Pairuite Packing Products Co. Ltd. Director of Finished Products
Filling Centre and Production Management Centre and assistant to GM of the Company.
18. Li Anjun male born in May 1970 is a member of CPC with a master's degree. He is currently a member of the Party Committee
Deputy General Manager Chief Engineer and Director of the Technical Quality Center of the Company. He served as the Deputy
Director of the Company's Technical Quality Center.
19. Kang Lei male born in July 1978 is a member of CPC with a college degree. He is currently Assistant to General Manager and
Director of the Enterprise Management Center of the Company. He served as Deputy Director of the Financial Management Center
of Bozhou Gujing Sales Company Director of the Company's Administrative Service Center and Deputy Director of the President's
Executive Office of Gujing Group.
20. Zhu Jiafeng male born in August 1977 is a member of CPC with a college degree. He is currently assistant to General Manager
Deputy Chief Accountant Secretary of the Board and Director of the Financial Management Center of the Company. He served as
the Manager and Deputy Director of the Financial Management Center of the Company.Offices held concurrently in shareholding entities:
√Applicable □Not applicable
Office held in
Remuneration or
the
Name Shareholding entity Start of tenure End of tenure allowance from the
shareholding
shareholding entity
entity
~ 45 ~Annual Report 2021
Chairman of
Liang Jinhui Anhui Gujing Group Co. Ltd. the Board of 1 May 2014 Yes
Directors
31 October
Li Peihui Anhui Gujing Group Co. Ltd. President Yes
2017
Vice 31 October
Sun Wanhua Anhui Gujing Group Co. Ltd. Yes
President 2017
Vice 1 November
Yang Xiaofan Anhui Gujing Group Co. Ltd. Yes
President 2009
Ye Changqing Anhui Gujing Group Co. Ltd. CFO 13 August 2021 Yes
The above-mentioned personnel though they take posts in shareholders’ entities comply with the relevant
Notes employment requirements of Company Law Securities Law and never disciplined by CSRC other relevant
departments and the Stock Exchange.Offices held concurrently in other entities:
√Applicable □Not applicable
Remuneration or
Office held in
Name Other entity Start of tenure End of tenure allowance from
other entity
other entity
Chairman of
Suning Universal Group Co.Ltd December 2005 No
the Board
Zhang Guiping Chairman of
Suning Universal Co.Ltd the Board October 2017 October 2023 Yes
President
Geely Technology Group Co. Ltd. CEO January 2018 Yes
Chairman of
Zhejiang Qjiang Motorcycle Co.Ltd. February 2020 May 2024 No
the Board
Xu Zhihao Chairman of
Lifan Technology (Group) Co.Ltd. January 2021 January 2024 No
the Board
Mingtai Investment Development Group Chairman of
August 2021 No
Co. Ltd the Board
Central University of Finance and
Professor July 1983 Yes
Economics
Independent
Wang Ruihua Bank Of Beijing Co. Ltd. December 2019 December 2022 Yes
director
BCEG Environmental Remediation Co. Independent
March 2020 March 2023 Yes
Ltd. director
Mengcheng Rural Commercial Bank Co.Lu Duicang Director March 2018 No
Ltd.Notes Zhang Guiping Wang Ruihua and Xu Zhihua are independent directors of the Company.~ 46 ~Annual Report 2021
Punishments imposed in the recent three years by the securities regulator on the incumbent directors supervisors and senior
management as well as those who left in the Reporting Period:
□ Applicable √ Not applicable
3. Remuneration of Directors Supervisors and Senior Management
Decision-making procedure determination basis and actual payments of remuneration for directors supervisors and senior
management:
(I) Decision-making procedure of remuneration for Directors Supervisors and Executive Officers
The remuneration of independent directors is decided through the general meeting of shareholders and the remuneration of the
directors supervisors and senior managers assuming positions in the Company is defined in accordance with the relevant regulations
of the State-owned Assets Supervision and Administration Commission (the "SASAC") of Haozhou Municipal People's Government
and the relevant policies of the Company.(II) Determination basis of remuneration for Directors Supervisors and Executive Officers
The remuneration is determined based on the annual performance of the Company and the appraisal result in accordance with the
spirits in the Implementation Opinion on Deepening the System Reform of Remuneration of Chargers in Provincial Enterprises
(WF[2015] No. 28) and the Interim Procedures of Remuneration Management of Chargers in Municipal Enterprises (GZG[2017] No.
21) issued by the CPC Anhui Provincial Committee and the People’s Government of Anhui.
(III) Actual Payment of remuneration for Directors Supervisors and Executive Officers
Part of basic remuneration is paid on a monthly basis and according to appraisal performance-based remuneration is paid at the end
of the year.Remuneration of directors supervisors and senior management for the Reporting Period
Unit: RMB'0000
Total before-tax
Any
Incumbent/Forme remuneration
Name Office title Gender Age remuneration
r from the
from related party
Company
Chairman of the
Liang Jinhui Male 56 Incumbent Yes
Board
Li Peihui Director Male 49 Incumbent Yes
Zhou Qingwu Director GM Male 48 Incumbent 183.13 N o
Director
Yan Lijun Executive Deputy Male 49 Incumbent 348.47 No
GM
Director Deputy
Xu Peng Male 52 Incumbent 134.24 No
GM
Ye Changqing Director Male 48 Incumbent 107.38 Yes
Independent
Zhang Guiping Male 71 Incumbent 7.5 No
director
Wang Ruihua Independent Male 60 Incumbent 7.5 No
~ 47 ~Annual Report 2021
director
Independent
Xu Zhihao Male 46 Incumbent 7.5 No
director
Chairman of
Sun Wanhua Supervisory Male 57 Incumbent Yes
Committee
Yang Xiaofan Supervisor Male 55 Incumbent Yes
Employee
Wang Zibin Male 52 Incumbent Yes
supervisor
Lu Duicang Supervisor Male 42 Incumbent 64.60 No
Employee
Zhang Bo Male 57 Incumbent Yes
supervisor
Zhang Lihong Deputy GM Male 54 Incumbent 163.61 No
Zhu Xianghong Deputy GM Male 48 Incumbent 278.18 No
Gao Jiakun Deputy GM Male 52 Incumbent 139.86 No
Li Anjun Deputy GM Male 52 Incumbent 146.76 No
Kang Lei GM assistant Male 44 Incumbent 143.93 No
GM assistant
Deputy Chief
Zhu Jiafeng Accountant Male 45 Incumbent 142.81 No
Secretary of the
Board
Total -- -- -- -- 1875.47 --
VI Performance of Duty by Directors in the Reporting Period
1. Board Meeting Convened during the Reporting Period
Meeting Date of the meeting Disclosure date Meeting resolutions
Announcement on Resolutions
of the 7th Meeting of the 9th
Board of Directors of Anhui
The 7th Meeting of the 9th Board
29 April 2021 30 April 2021 Gujing Distillery Company
of Directors
Limited (No.: 2021-012)
disclosed on the website of
Cninfo (www.cninfo.com.cn).Announcement on Resolutions
The 8th Meeting of the 9th Board
27 August 2021 28 August 2021 of the 8th Meeting of the 9th
of Directors
Board of Directors of Anhui
~ 48 ~Annual Report 2021
Gujing Distillery Company
Limited (No.: 2021-026)
disclosed on the website of
Cninfo (www.cninfo.com.cn).Announcement on Resolutions
of the 9th Meeting of the 9th
Board of Directors of Anhui
The 9th Meeting of the 9th Board
29 October 2021 30 October 2021 Gujing Distillery Company
of Directors
Limited (No.: 2021-035)
disclosed on the website of
Cninfo (www.cninfo.com.cn).
2. Attendance of Directors at Board Meetings and General Meetings
Attendance of directors at board meetings and general meetings
The director
Total number
Board failed to attend
of board Board Board
Board meetings meetings two General
meetings the meetings meetings the
Director attended by way of attended consecutive meetings
director was attended on director failed
telecommunication through a board attended
eligible to site to attend
proxy meetings
attend
(yes/no)
Liang Jinhui 3 1 2 0 0 No 1
Li Peihui 3 1 2 0 0 No 1
Zhou Qingwu 3 1 2 0 0 No 1
Yan Lijun 3 1 2 0 0 No 1
Xu Peng 3 1 2 0 0 No 1
Ye Changqing 3 1 2 0 0 No 1
Zhang Guiping 3 0 3 0 0 No 0
Wang Ruihua 3 0 3 0 0 No 1
Xu Zhihao 3 1 2 0 0 No 0
3. Objections Raised by Directors on Matters of the Company
Indicate by tick mark whether any independent directors raised any objections on any matter of the Company.□ Yes √ No
No such cases in the Reporting Period.~ 49 ~Annual Report 2021
4. Other Information about the Performance of Duty by Directors
Indicate by tick mark whether any suggestions from directors were adopted by the Company.√ Yes □ No
Suggestions from directors adopted or not adopted by the Company
During the Reporting Period the directors of the Company carried out their work diligently and conscientiously in strict accordance
with the Company Law the Securities Law the Code of Corporate Governance for Listed Companies the Guidelines of the
Shenzhen Stock Exchange for the Standard Operation of Listed Companies the Articles of Association and Rules of Procedure of the
Board of Directors. Based on the Company's reality they put forward relevant opinions on the Company's major governance and
operation decisions and reached consensus through full communication and discussion. They resolutely supervised and promoted the
implementation of the resolutions of the Board of Directors to ensure scientific timely and efficient decision-making and safeguard
the legitimate rights and interests of the Company and all of its shareholders.VII Performance of Duty by Specialized Committees under the Board in the Reporting Period
Other
informat Details
ion about
Number of
Convene Important opinions and about issues
Committee Members meetings Content
d date suggestions raised the with
convened
perform objections
ance of (if any)
duty
The Audit Committee
carried out its work
diligently and
conscientiously in strict
accordance with the
Company Law the
regulations of the China
Zhang Guiping
The Audit Securities Regulatory
Wang Ruihua 26 Review the Audit Plan
Committee Commission the Articles of
Xu Zhihao Xu 1 March for Annual Report 2020
under the Association and the Rules
Peng Ye 2021 of the Company
Board of Procedure of the Board
Changqing
of Directors. It put forward
relevant opinions based on
the reality of the Company.Upon full communication
and discussion all
proposals were
unanimously approved.The Audit Zhang Guiping 26 April Review the Company’s The Audit Committee
Committee Wang Ruihua 2021 Financial Report for carried out its work
~ 50 ~Annual Report 2021
under the Xu Zhihao Xu 2020 and Auditor’s diligently and
Board Peng Ye Report the Internal conscientiously in strict
Changqing Control Evaluation accordance with the
Report for 2020 the Company Law the
Proposal on Contract regulations of the China
Renewal of the CPAs Securities Regulatory
Firm and the First Commission the Articles of
Quarterly Report 2021 Association and the Rules
of Procedure of the Board
of Directors. It put forward
relevant opinions based on
the reality of the Company.Upon full communication
and discussion all
proposals were
unanimously approved.The Audit Committee
carried out its work
diligently and
conscientiously in strict
accordance with the
Company Law the
regulations of the China
Zhang Guiping
The Audit Securities Regulatory
Wang Ruihua 25 Review the Interim
Committee Commission the Articles of
Xu Zhihao Xu 1 August Report 2021 of the
under the Association and the Rules
Peng Ye 2021 Company
Board of Procedure of the Board
Changqing
of Directors. It put forward
relevant opinions based on
the reality of the Company.Upon full communication
and discussion all
proposals were
unanimously approved.The Audit Committee
carried out its work
Zhang Guiping diligently and
The Audit Review the Third
Wang Ruihua 25 conscientiously in strict
Committee Quarterly Report 2021
Xu Zhihao Xu 1 October accordance with the
under the and the Usage of Raised
Peng Ye 2021 Company Law the
Board Funds of the Company
Changqing regulations of the China
Securities Regulatory
Commission the Articles of
~ 51 ~Annual Report 2021
Association and the Rules
of Procedure of the Board
of Directors. It put forward
relevant opinions based on
the reality of the Company.Upon full communication
and discussion all
proposals were
unanimously approved.The Nomination
Committee carried out its
work diligently and
conscientiously in strict
accordance with the
Company Law the
regulations of the China
The Zhang Guiping
Review the Proposal on Securities Regulatory
Nomination Wang Ruihua 25
the Nomination of the Commission the Articles of
Committee Xu Zhihao 1 October
Company’s Secretary of Association and the Rules
under the Liang Jinhui Li 2021
the Board of Procedure of the Board
Board Peihui
of Directors. It put forward
relevant opinions based on
the reality of the Company.Upon full communication
and discussion all
proposals were
unanimously approved.VIII Performance of Duty by the Supervisory Committee
Indicate by tick mark whether the Supervisory Committee found any risk to the Company during its supervision in the Reporting
Period.□ Yes √ No
The Supervisory Committee raised no objections in the Reporting Period.IX Employees
1. Number Functions and Educational Backgrounds of Employees
Number of in-service employees of the Company as the parent at
5671
the period-end
Number of in-service employees of major subsidiaries at the
5074
period-end
~ 52 ~Annual Report 2021
Total number of in-service employees 10745
Total number of paid employees in the Reporting Period 10745
Number of retirees to whom the Company as the parent or its
1370
major subsidiaries need to pay retirement pensions
Functions
Function Employees
Production 5387
Sales 2911
Technical 586
Financial 217
Administrative 966
Other 678
Total 10745
Educational backgrounds
Educational background Employees
Master or above 99
Bachelor 2663
Junior college 2355
High school or below 5628
Total 10745
2. Employee Remuneration Policy
The remuneration policy was conducted strictly in line with the related law and regulations of the state and the plan of operation
performance and profits of the Company and the relevant remuneration policy management.
3. Employee Training Plans
Employee training is significant in the Human resource management. The Company always pay high attention to the employee
training and development the Company sets up effective training plan combining with the current situation of the Company annual
plan nature of the post and the demand of employee learning which includes new employee induction training on-job training
front-line employee operating skills training management improvement training and part-time study. Continuously improve the
whole quality of the employees realized a win-win situation and progress between the Company and the employees.
4. Labor Outsourcing
√ Applicable □ Not applicable
Total man-hours (hour) 3005548
~ 53 ~Annual Report 2021
Total remuneration paid (RMB) 54929711.75
X Profit Distributions (in the Form of Cash and/or Stock)
How the profit distribution policy especially the cash dividend policy was formulated executed or revised in the Reporting Period:
√ Applicable □ Not applicable
The 2020 Annual General Meeting held on 25 May 2021 reviewed and approved the Company’s Interest Distribution Scheme in
2020 that based on the total shares of 503600000 of the Company on 31 December 2020 cash dividends was distributed at
RMB15.00 per 10 shares (tax inclusive) and the total cash dividends distributed was RMB755400000.00 (tax inclusive) which has
been carried out completely in June 2021.Special statement about the cash dividend policy
In compliance with the Company’s Articles of Association and
Yes
resolution of general meeting
Specific and clear dividend standard and ratio Yes
Complete decision-making procedure and mechanism Yes
Independent directors faithfully performed their duties and
Yes
played their due role
Non-controlling interests are able to fully express their opinion
Yes
and desire and their legal rights and interests are fully protected
In case of adjusting or changing the cash dividend policy the
conditions and procedures involved are in compliance with No adjustments or changes
applicable regulations and transparent
Indicate by tick mark whether the Company fails to put forward a cash dividend proposal for shareholders despite the facts that the
Company has made profits in the Reporting Period and the profits of the Company as the parent distributable to shareholders are
positive.□ Applicable √ Not applicable
Final dividend plan for the Reporting Period
√ Applicable □ Not applicable
Bonus issue from capital reserves for every 10
0
shares (share)
Dividend for every 10 shares (RMB) (tax inclusive) 22.00
Bonus issue from profit for every 10 shares (share) 0
Total shares as the basis for the final dividend plan
528600000
(share)
Total cash dividends (RMB) (tax inclusive) 1162920000.00
Cash dividends in other ways (such as share
0.00
repurchase) (RMB)
Total cash bonus (including other methods) (RMB) 1162920000.00
~ 54 ~Annual Report 2021
Distributable profits (RMB) 8904467073.30
Percentage of cash dividends (including other 100.00%
methods) to the total distributed profits
Particulars about the cash dividends
If the Company is in a mature development stage and has plans for any significant expenditure in profit allocation the ratio of cash
dividends in the profit allocation shall be 40% or above.Details of final dividend plan for the Reporting Period
The Company intends to distribute RMB22.00 (tax included) per 10 shares based on the total shares of 528600000 at the end of
the year totaling RMB1162920000.00. This year does not send bonus does not transfer to increase capital stock with
accumulation fund.XI Equity Incentive Plans Employee Stock Ownership Plans or Other Incentive Measures for
Employees
□ Applicable √ Not applicable
No such cases in the Reporting Period.XII Establishment and Execution of the Internal Control System for the Reporting Period
1. Establishment and Execution of the Internal Control System
In accordance with the provisions of the Basic Code for Internal Control of Enterprises and its supporting guidelines the Company
has set up a complete procedure system for internal control system in which the assessment incorporates the entities business
matters and high risk fields covering all major aspects of the Company's operation and management without material omissions.The Company's internal control is designed soundly and reasonably and basically implemented effectively without material
omissions. Through the operation analysis and assessment of the internal control system the Company has effectively prevented
risks in operation and management and promoted the realization of internal control objectives.
2. Material Internal Control Weaknesses Identified for the Reporting Period
□ Yes √ No
XIII Management and Control over Subsidiaries by the Company for the Reporting Period
During the Reporting Period In accordance with the relevant requirements for standard operation of listed companies and the
relevant internal control system of the Company and by dispatching directors and supervisors to subsidiary companies the Company
participated in the daily operation of the Board of Directors and the Board of Supervisors thus realized the effective management
and supervision on such matters as overseas investment related-party transactions development planning compliant operation and
human resources of subsidiary companies specified the reporting system and deliberation procedure of major events and in a timely
manner followed up such major events as financial status business operation and investment operation of subsidiary companies.~ 55 ~Annual Report 2021
XIV Internal Control Self-Evaluation Report or Independent Auditor’s Report on Internal
Control
1. Internal Control Self-Evaluation Report
Disclosure date of the internal control
30 April 2022
self-evaluation report
Index to the disclosed internal control See www.cninfo.com.cn for the Anhui Gujing Distillery Company Limited
self-evaluation report Self-assessment Report of Internal Control
Evaluated entities’ combined assets as % of
95.36%
consolidated total assets
Evaluated entities’ combined operating
revenue as % of consolidated operating 99.87%
revenue
Identification standards for internal control weaknesses
Weaknesses in internal control over financial Weaknesses in internal control not related
Type
reporting to financial reporting
Critical defect: Separate defect or other
defects that result in failure in preventing
finding out and correcting major wrong
reporting in financial report in time. The
following circumstances are deemed as Any of the following circumstances shall
critical defects: (1) Ineffective in controlling be deemed as a critical defect and other
the environment; (2) Malpractice of directors circumstances shall be deemed as major
supervisors and senior management officers; or minor defects according to their degree
(3) According to external auditing there’s of impact.
major wrong reporting in current financial (1) Violate national laws regulations or
report which fails to be found by the standardized documents;
company in its operating process; (4) Major
(2) Major decision making procedure is
Nature standard defects found and reported to the top
not scientific;
management fail to be corrected within a
(3) Lack of systems results in systematic
reasonable period of time; (5) The
failure;
supervision of audit committee of the
(4) Critical or major defects fail to be
company and its internal audit department for
rectified;
internal control is ineffective;
(5) Other circumstances that have major
(6) Other defects that may affect correct
impact on the company.judgment of users of statements. Major
defect: Separate defect or other defects that
result in failure in preventing finding out and
correcting wrong reporting in financial report
in time which shall be noted by the top
management despite of not attaining or
~ 56 ~Annual Report 2021
exceeding critical level. Minor defect: Other
internal control defects not constituting
critical or major defects.Critical defect:
(1) Wrong reporting ≥0.5% of total operating
revenue;
Critical defect: The defect with direct
(2) Wrong reporting ≥5% of total profit;
property loss amounting to over RMB10
(3) Wrong reporting ≥0.5% of total assets;
million has great negative impact on the
(4) Wrong reporting ≥0.5% of total owner’s company and is disclosed in public in the
equity. form of announcement.Major defect: Major defect: The defect with direct
(1) Wrong reporting ≥0.2% but ＜0.5% of property loss amounting to RMB1
total operating revenue; million to RMB10 million (included) or
(2) Wrong reporting ≥2% but ＜5% of total is penalized by governmental authority of
Quantitative standard profit; the country but has not resulted in
(3) Wrong reporting ≥0.2% but ＜0.5% of negative impact on the company.
total assets; Minor defect: The defect with direct
(4) Wrong reporting ≥0.2% but ＜0.5% of property loss no more than RMB1 million
total owner’s equity. (included) or is penalized by
governmental authority of the
Minor defect:
provincial-level or below but has not
(1) Wrong reporting＜0.2% of total operating
resulted in negative impact on the
revenue;
company.
(2) Wrong reporting＜2% of total profit;
(3) Wrong reporting＜0.2% of total assets;
(4) Wrong reporting＜0.2% of total owner’s
equity.Number of material weaknesses in internal
0
control over financial reporting
Number of material weaknesses in internal
0
control not related to financial reporting
Number of serious weaknesses in internal
0
control over financial reporting
Number of serious weaknesses in internal
0
control not related to financial reporting
2. Independent Auditor’s Report on Internal Control
√ Applicable □ Not applicable
Opinion paragraph in the independent auditor’s report on internal control
We believe that the Company has maintained effective internal control on financial report in all significant respects according to the
Basic Rules for Enterprise Internal Control and relevant regulations on 31 December 2021.~ 57 ~Annual Report 2021
Independent auditor’s report on
Disclosed
internal control disclosed or not
Disclosure date 30 April 2022
Index to such report disclosed See www.cninfo.com.cn for Audit Report of Internal Control
Type of the auditor’s opinion Unmodified unqualified opinion
Material weaknesses in internal
control not related to financial None
reporting
Indicate by tick mark whether any modified opinion is expressed in the independent auditor’s report on the Company’s internal
control.□ Yes √ No
Indicate by tick mark whether the independent auditor’s report on the Company’s internal control is consistent with the internal
control self-evaluation report issued by the Company’s Board.√ Yes □ No
XV Rectifications of Problems Identified by Self-inspection in the Special Action for Listed
Company Governance
On 10 December 2020 the China Securities Regulatory Commission issued Announcement on Launching a Special Campaign to
Improve the Governance of Listed Companies; and to implement the requirements of the Opinions of the State Council on Further
Improving the Quality of Listed Companies in 2021 the Company organized and carried out self-inspection on the special actions of
corporate governance of the Company from 2018 to 2020. The self-inspection list involves the Company in regard to its basic
information the operation and decision-making of organization structure controlling shareholders actual controllers and their related
parties the system construction for standardizing internal control information disclosure and transparency institutional and overseas
investors and other issues which are the matters of a total of seven aspects. The conclusion of the self-inspection is as follows:
Through comprehensive self-inspection of the Company's self-governance it is not identified that there is any violation of relevant
laws and regulations and such internal system as the Articles of Association.~ 58 ~Annual Report 2021
Part V Environmental and Social Responsibility
I Major Environmental Issues
Indicate by tick mark whether the Company or any of its subsidiaries is a heavily polluting business identified by the environmental
protection authorities of China.Yes
Numbe
Discharge
Name of r of Distribution Discharge
Name of Way of standards Total Approved total Excessive
major dischar of discharge concentratio
polluter discharge implemente discharge discharge discharge
pollutants ge outlets n
d
outlets
Gujing
plant≦50m Gujing Gujing plant:
Anbui Gujing plant g/L plant: 23.39t 105.916t
24.93mg/L
Gujing Directly Zhangji plant Zhangji Zhangji Zhangji plant:
COD 3 33.31mg/L Naught
Distillery discharge Headquarter plant、 plant: 6.64t 26.504t
25.60mg/L
Co. Ltd. plant Headquarter Headquarter Headquarter
plant≦100 plant: 40.74t plant: 116.0596t
mg/L
Gujing
plant≦5mg/ Gujing Gujing plant:
Anbui Gujing plant L plant: 0.48t 10.5916t
0.51mg/L
Gujing Directly Zhangji plant Zhangji Zhangji Zhangji plant:
NH3-N 3 0.63mg/L Naught
Distillery discharge Headquarter plant、 plant: 0.13t 2.6504t
0.48mg/L
Co. Ltd. plant Headquarter Headquarter Headquarter
plant≦10m plant: 0.76t plant: 11.60596t
g/L
Gujing
plant、 Gujing
Organize Gujing plant:
Anbui Gujing plant Headquarter plant: 0.22t
d 0.79mg/m3 4.301t
Gujing Zhangji plant plant≦10m Zhangji
Smoke discharge 3 1.58mg/m3 Zhangji plant: / Naught
Distillery g/m3Headquarter plant: 0.04t
through 1.16mg/m3 Headquarter
Co. Ltd. plant Zhangji Headquarter
chimney plant: 5.01t
plant≦20m plant: 0.64t
g/ m3
Anbui Organize Gujing plant Gujing Gujing Gujing plant:
3.41mg/m3
Gujing Sulfur Diox d Zhangji plant plant、 plant: 0.96t 15.055t
3 0.84mg/m3 Naught
Distillery ide discharge Headquarter Headquarter Zhangji Zhangji plant: /
8.01mg/m3
Co. Ltd. through plant plant≦35m plant: 0.02t Headquarter
~ 59 ~Annual Report 2021
chimney g/m3 Headquarter plant: 17.536t
Zhangji plant: 4.45t
plant≦50m
g/ m3
Gujing
plant、 Gujing Gujing plant:
Organize
Anbui Gujing plant Headquarter plant: 3.10t 21.056t
d 10.95mg/m3
Gujing Nitrogen Zhangji plant plant≦50m Zhangji Zhangji plant:
discharge 3 24.21mg/m3 Naught
Distillery oxide 3Headquarter g/m plant: 0.63t 10.318t
through 23.30mg/m3
Co. Ltd. plant Zhangji Headquarter Headquarter
chimney
plant≦150 plant: 12.95t plant: 25.051t
mg/ m3
Organize
Anhui 1# furnace：
d
Longrui 1# furnace 0.74mg/m3 0.244t
Smoke discharge 2 ≦10mg/m3 / Naught
Glass Co. 2# furnace 0.81mg/m3 2# furnace：
through
Ltd 0.38t
chimney
Organize
Anhui 1# furnace：
d
Longrui Sulfur Diox 1# furnace 9.63mg/m3 3.158t
discharge 2 ≦50mg/m3 / Naught
Glass Co. ide 2# furnace 14mg/m3 2# furnace：
through
Ltd 6.535t
chimney
Organize
Anhui 1# furnace：
d
Longrui Nitrogen 1# furnace 56mg/m3 18.357t
discharge 2 ≦200mg/m3 / Naught
Glass Co. oxide 2# furnace 49mg/m3 2# furnace：
through
Ltd 22.847t
chimney
Construction and operation of facilities for preventing pollution:
1. Construction and operation of the sewage control facilities of the listed Company and its subsidiary companies
(1) The sewage treatment capacity of the sewage treatment station of Zhangji plant of Anhui Gujing Distillery Co. Ltd is about 550
tons per day. IC anaerobic jar improved A2/O and in-depth treatment process has been adopted. The sewage is discharged after
treatment and up to the standard and discharge of sewage is in compliance with the direct discharge requirements in GB27631-2011
Discharge Standard of Water Pollutants for Fermentation Alcohol and Distilled Spirits Industry.
(2) The sewage treatment capacity of the sewage treatment station of the headquarters of Anhui Gujing Distillery Co. Ltd is about
4300 tons per day. IC anaerobic jar A2/O and in-depth treatment process has been adopted. The sewage is discharged after treatment
and up to the standard and discharge of sewage is in compliance with the direct discharge requirements in GB27631-2011 Discharge
Standard of Water Pollutants for Fermentation Alcohol and Distilled Spirits Industry.
(3) The sewage treatment capacity of the sewage treatment station of Gujing Subsidiary under Anhui Gujing Distillery Co. Ltd is
about 2600 tons per day. IC anaerobic jar A2/O and in-depth treatment process is adopted. The sewage is discharged after treatment
and up to the standard and discharge of sewage is in compliance with the direct discharge requirements in GB27631-2011 Discharge
Standard of Water Pollutants for Fermentation Alcohol and Distilled Spirits Industry.
(4) The production and living sewage of Anhui Longrui Glass Co. Ltd is discharged into the sewage treatment station of Zhangji
~ 60 ~Annual Report 2021
Plant under Anhui Gujing Distillery Company Limited and it is discharged after treatment and up to the standard.
2. Construction and operation situation of waste gas control facilities of the listed Company and its subsidiaries
(1) The flue gas control facilities of thermal power stations of the Headquarters and Gujing Subsidiary of Anhui Gujing Distillery
Company Limited run well and waste gas is discharged through the 65-meter-tall exhaust funnel after the waste gas treatment is up
to the standard adopting the process of cloth-bag dust removal + Limestone - Wet flue gas Desulfurization+ SNCR Denitrification by
non-catalytic reduction + SCR Denitrification by catalytic reduction + Wet electrostatic precipitator and discharge of flue gas meets
the super-low discharge requirements (smoke ≤10mg/m3 SO2≤35mg/m3 NOx≤50mg/m3).
(2) The gas-fired boilers at Zhangji Plant under Anhui Gujing Distillery Company Limited operate in a steady manner and waste gas
is discharged through the 20-meter-tall exhaust funnel of which and discharge of flue gas meets the requirements for gas-fired boiler
in GB13271-2014 Emission Standard of Air Pollutants for Industrial Kiln and Furnace.
(3) 1# 2# furnace flue gas treatment facilities of Anhui Longrui Glass Co. Ltd. are operating well. For 1# furnace the company uses
bag dust removal + dry desulfurization + SCR catalytic reduction denitrification process. After it meets the standard the exhaust gas
will be discharged through a 48-meter high exhaust pipe. The flue gas emission is in line with the glass industry A-class enterprise
emission requirements as set out in Technical Guide for the Development of Emergency Emission Reduction Measures for Key
Industries in Heavy Pollution Weather (soot ≤ 10 mg/m3 SO2 ≤ 50 mg/m3 NOx ≤ 200 mg/m3). For 2# furnace the company adopts
bag dust removal + desulfurization tank + SCR low-temperature denitrification process and the exhaust gas is discharged through a
50-meter high exhaust pipe after it meets the standard. The flue gas emission meets the glass industry A-class enterprise emission
requirements as set out in Technical Guide for the Development of Emergency Emission Reduction Measures for Key Industries in
Heavy Pollution Weather (soot ≤ 10 mg/m3 SO2 ≤ 50mg/m3 NOx ≤ 200 mg/m3).
(4) The Headquarter of Anhui Gujing Distillery Company Limited and Gujing Branch finished product coding machine exhaust gas
treatment facilities are operating well. By adopting photocatalytic oxidation technology the Company’s flue gas emissions comply
with the Table 1 standard requirements of DB12/524-2014 Emission Standard for Industrial Enterprises Volatile Organic Compounds.
(5) The Headquarters of Anhui Gujing Distillery Company Limited and the odor treatment facilities of Zhangji Sewage Station are
operating well. By adopting technologies like photocatalytic oxidation and activated carbon adsorption and the Company’s emission
of exhaust gas meets the requirements of Table 2 of the Standard for Emission of Pollutants.In 2021 the environment protection facilities of the Company and its subsidiaries ran normally in general main pollutants can
achieve up-to-standard discharge environment information is opened to the public normally and they have performed their social
responsibilities properly.Environmental impact assessment of construction project and other administrative license situation in respect of
environmental protection
EIA approval (filing)
No. Item Category of EIA EIA approval (filing) number
time
Intelligent Technical
Transformation Project of Liquor Environment
1 2 February 2021 BHS【2021】No. 4
Production of Anhui Gujing affection report
Distillery Co. Ltd.
12# Intelligent Integrated Storage
Environment
2 Center Construction Project of 17 March 2021 BHB【2021】No. 5
affection form
Anhui Gujing Distillery Co. Ltd.VOCs Advanced Treatment Project Environment
3 14 April 2021 20213416000100000018
of Anhui Longrui Glass Co. Ltd affection form
Emergency plan for sudden environment affairs
~ 61 ~Annual Report 2021
The Company has formulated the Emergency Plan of Anhui Gujing Distillery Company Limited for Sudden Environmental Pollution
Accident which has been filed with Bureau of Ecology and Environment of Bozhou (File No. 341602-2021-006-H). Emergency plan
drills have been carried out as planned.Anhui Longrui Glass Co. Ltd has formulated the Emergency Plan of Anhui Longrui Glass Co. Ltd for Sudden Environmental
Pollution Accident which has been filed with Bureau of Ecology and Environment of Bozhou (File No. 341602-2021-006-M).Emergency plan drills have been carried out as planned.Environmental self-monitoring scheme
Anhui Gujing Distillery Co. Ltd. has formulated the Self-Monitoring Scheme of Anhui Gujing Distillery Company Limited and
published it on the relevant website of Anhui Province.Anhui Longrui Glass Co. Ltd has formulated the Self-Monitoring Scheme of Anhui Longrui Glass Co. Ltd and published it on the
relevant website of Anhui Province.Administrative punishments received with respect to environmental issues in the Reporting Period
Naught
Other environment information that should be disclosed
Naught
Measures taken to reduce carbon emission and effects during the Reporting Period
√ Applicable □ Not applicable
1. Balanced production of thermal power plant: In order to improve the operation efficiency of a boiler and reduce carbon emission
in September 2021 balanced production was first conducted in Gujing plant area. After the execution of balanced production the
efficiency of coal burning was increased by 13% year on year. Calculated on the basis of the coal consumption from September to
December fire coal was conserved by approximately 1500 tons year on year converted to the standard coal of 1070 tons and
carbon dioxide emission was reduced by approximately 2900 tons.
2. Intensified power conservation of the Company: (1) The Company organized 440 battery-driven vehicles of various types and
various entities for peak-shifting charge. (2) The Company conserved power in offices sufficiently utilized natural light and
prohibited lamps from shining all the time replaced lamps in passageways with sound-controlled types and strictly implemented the
requirements of temperature setting on air-conditioners. (3) The Company conserved power used by street lamps and strictly
specified turn-off and turn-on time; through the above-mentioned measures power wasted in offices has been greatly reduced which
has played an active role in the energy conservation and carbon reduction of the Company.Other related environment protection information
Naught
II Social Responsibility
For details please refer to the Corporate Social Responsibility Report for 2021 disclosed by the Company on the website Cninfo
dated 30 April 2022.III Consolidation and Expansion of Poverty Alleviation Outcomes and Rural Revitalization
The Company organized and carried out the activities tackling difficulties in poverty alleviation activities with the theme of
"Appreciating CPC and Striding toward New Times" visited and conveyed greetings to the appointed cadres and poverty-stricken
households and their children; organized Party members and management personnel to go to Wuma Town to express regards to the
financially difficult households of the three villages under the assistance and sent medicines clinical thermometers and masks to
~ 62 ~Annual Report 2021
give aid for fighting pandemic. The goods for poverty alleviation were bought. The Company helped the poverty-stricken villages in
Xingyuan Subdistrict in Woyang to sell tomatoes and celery; helped poverty-stricken households in Wuma to promote peaches; and
helped Pishan County in Khotan Prefecture Xinjiang to sell walnuts and Chinese dates.~ 63 ~Annual Report 2021
Part VI Significant Events
I Fulfillment of Commitments
1. Commitments of the Company’s Actual Controller Shareholders Related Parties and Acquirers as well
as the Company Itself and other Entities Fulfilled in the Reporting Period or Ongoing at the Period-end
√ Applicable □ Not applicable
Date of
Type of Details of Term of
Commitment Promisor commitment Fulfillment
commitment commitment commitment
making
The Company
promised that
Yellow Crane
Tower
Distillery Co.Ltd. would Complete the
realize the performance
Anhui Gujing
Commitments made in acquisition operating commitment
Distillery Performance
documents or shareholding alteration revenue of 29 April 2016 Y2017-Y2021 of the
Company commitment
documents RMB1700.56 supplementar
Limited
25 million (tax y agreement
inclusive) and in 2021.the net profit
margin would
be not lower
than 11.00%
in 2021.Fulfilled on time Yes
Before and after the Spring Festival in 2020 the COVID-19 pandemic occurred and spread
to many places across China (hereinafter referred to as the "pandemic") and all provinces
and municipalities successively launched the highest level of response for major public
health emergencies. Hubei Province where Yellow Crane Tower locates was materially
Specific reasons for failing to fulfill adversely affected by the pandemic. Annual performance: Revenue stood at
commitments on time and plans for RMB583131800 down 55.27% year on year. Due to the force majeure of the COVID-19
next step (if any) pandemic market trading activities were seriously affected resulting in part of the terms of
the original agreement unable to be fulfilled on schedule. To this end upon consultation by
all parties the Supplementary Agreement on Equity Transfer was entered into. For the
commitments in respect of net sales interest rate net sales profit and expected distributable
profit of Yellow Crane Tower the assessment period has been extended by one year from
~ 64 ~Annual Report 2021
the execution date of the Supplementary Agreement. In other words the year 2020 will not
be regarded as the assessment year and 2021 will be taken as the fourth assessment year
and 2022 as the fifth assessment year.
2. Where there had been an earnings forecast for an asset or project and the Reporting Period was still
within the forecast period explain why the forecast has been reached for the Reporting Period.□ Applicable √ Not applicable
II Occupation of the Company’s Capital by the Controlling Shareholder or any of Its Related
Parties for Non-Operating Purposes
□ Applicable √ Not applicable
III Irregularities in the Provision of Guarantees
□ Applicable √ Not applicable
IV Explanations Given by the Board of Directors Regarding the Latest “Modified Opinion”
on the Financial Statements
□ Applicable √ Not applicable
V Explanations Given by the Board of Directors the Supervisory Board and the Independent
Directors (if any) Regarding the Independent Auditor's “Modified Opinion” on the Financial
Statements of the Reporting Period
□ Applicable √ Not applicable
VI YoY Changes to Accounting Policies Estimates or Correction of Material Accounting
Errors
√ 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 For details please refer to the
No.21-Leases (CK(2018)No.35) Reviewed and approved on the 7th Meeting announcement on changes in accounting
(hereinafter referred to as the new of the 9th Board of Directors and the 5th policies disclosed on
standards governing leases) and required Meeting of the 9th Supervisory Committee http://www.cninfo.com.cn dated 30 April
those enterprises both listed in domestic 2021.and aboard and those enterprises overseas
listed with International Financial
~ 65 ~Annual Report 2021
Reporting Standards or Accounting
Standards for Business Enterprises for
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.
VII YoY Changes to the Scope of the Consolidated Financial Statements
√ Applicable □ Not applicable
Principal Stake（%）
Registered Nature of the
Name of subsidiary place of Make way
place business Directly Indirect
business
Business
Chuzhou Mingguang combination not
Anhui Mingguang Distillery Co. Ltd. Manufacturing 60.00
Anhui Anhui under the same
control
Business
Mingguang Tiancheng Ming Wine Chuzhou Mingguang Trade and combination not
60.00
Sales Co. Ltd. Anhui Anhui business under the same
control
Business
Fengyang Xiaogang Village Ming Chuzhou Fengyang combination not
Manufacturing 42.00
Wine Distillery Co. Ltd. Anhui Anhui under the same
control
Incorporation
Anhui Jiuhao China Railway Bozhou Bozhou Engineering
52.00 through
Construction Engineering Co. Ltd. Anhui Anhui construction investment
Incorporation
Anhui Jiuan Mechanical Electrical Bozhou Bozhou Engineering
100.00 through
Equipment Co. Ltd. Anhui Anhui construction investment
Business
Renhuai Maotai Town Zhencang Renhuai Renhuai combination not
Manufacturing 60.00
Winery Industry Co. Ltd. Guizhou Guizhou under the same
control
~ 66 ~Annual Report 2021
VIII Engagement and Disengagement of Independent Auditor
Current independent auditor
Name of the domestic independent auditor RSM Certified Public Accountants (LLP)
The Company’s payment to the domestic independent
200.00
auditor (RMB’0000)
How many consecutive years the domestic independent
3
auditor has provided audit service for the Company
Names of the certified public accountants from the
domestic independent auditor writing signatures on the Zhang Liping Han Songliang
auditor’s report
How many consecutive years the certified public
accountants have provided audit service for the 1
Company
Indicate by tick mark whether the independent auditor was changed for the Reporting Period.□Yes √ No
Independent auditor financial advisor or sponsor engaged for the audit of internal controls:
√ Applicable □ Not applicable
In 2021 the Company engaged RSM Certified Public Accountants (LLP) as the internal control auditor and China International
Capital Corporation Limited as the sponsor for the Company’s private placement of stocks with the payment of RMB1 million (tax
inclusive).IX Possibility of Delisting after Disclosure of this Report
□ Applicable √ Not applicable
X Insolvency and Reorganization
□ Applicable √ Not applicable
XI Major Legal Matters
□ Applicable √ Not applicable
XII Punishments and Rectifications
□ Applicable √ Not applicable
XIII Credit Quality of the Company as well as Its Controlling Shareholder and Actual
Controller
□ Applicable √ Not applicable
~ 67 ~Annual Report 2021
XIV Major Related-Party Transactions
1. Continuing Related-Party Transactions
□ Applicable √ Not applicable
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable √ Not applicable
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
4. Credits and Liabilities with Related Parties
□ Applicable √ Not applicable
5. Transactions with Related Finance Companies
□ Applicable √ Not applicable
6. Transactions with Related Parties by Finance Companies Controlled by the Company
□ Applicable √ Not applicable
7. Other Major Related-Party Transactions
□ Applicable √ Not applicable
XV Major Contracts and Execution thereof
1. Entrustment Contracting and Leases
(1) Entrustment
□ Applicable √ Not applicable
(2) Contracting
□ Applicable √ Not applicable
(3) Leases
□ Applicable √ Not applicable
~ 68 ~Annual Report 2021
2. Major Guarantees
□ Applicable √ Not applicable
3. Cash Entrusted for Wealth Management
(1) Cash Entrusted for Wealth Management
√ Applicable □ Not applicable
Overviews of cash entrusted for wealth management during the Reporting Period
Unit: RMB'0000
Unrecovered
Unrecovered overdue amount
Specific type Capital resources Amount incurred Undue balance
overdue amount with provision for
impairment
Bank financial
Raised funds 442000.00 442000.00 0.00 0.00
products
Others Self-owned funds 20000.00 20000.00 0.00 0.00
Total 462000.00 462000.00 0.00 0.00
Particulars of cash entrusted for wealth management with single significant amount or low security bad liquidity and no capital
preservation
Unit: RMB’0000
Amou Actual
Plan for
nt of recover Overvi
entrusted
Type Determin Annua Estim actual y of Allowa ews of
Type Sta En Legal asset
Name of of ation l yield ate profit profit nce for events
of the Amo Capital rt d Use of proced manage
the the method of for profit or loss or loss impair and
truste unt resource d at da fund ures or ment in
trustee prod remunerat refere (if in in ment (if query
e e te not the
uct ion nce any) Report Reporti any) index
future or
ing ng (if any
not
Period Period
Purchas
ing new
shares 1.2% of
Privat
DAPU offline products’
e
Asset 2000 Self-fun product net value 1439. Recove
fund Fund 7.00% Yes Yes
Manage 0 ded s with and 20% 33 red
mana
ment fixed of excess
ger
earning earnings
s
reverse
~ 69 ~Annual Report 2021
repurch
ase of
nationa
l debt
and etc.
20001439.
Total -- -- -- -- -- -- -- -- -- --
033
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment for cash
entrusted for wealth management
□ Applicable √ Not applicable
(2) Entrusted Loans
□ Applicable √ Not applicable
4. Other Major Contracts
□ Applicable √ Not applicable
XVI Other Significant Events
□ Applicable √ Not applicable
XVII Significant Events of Subsidiaries
□ Applicable √ Not applicable
~ 70 ~Annual Report 2021
Part VII Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
Before Increase/decrease in the Reporting Period (+/-) After
Shares as
Shares as
dividend
Percentage dividend Percentag
Shares New issues converted Other Subtotal Shares
(%) converted e (%)
from capital
from profit
reserves
I. Restricted shares 25000000 25000000 25000000 4.73%
1. Shares held by the state
2. Shares held by state-owned
1900000190000019000000.36%
corporations
3. Shares held by other domestic
2160000021600000216000004.09%
investors
Among which: Shares held by
2160000021600000216000004.09%
domestic corporations
Shares held by
domestic individuals
4. Shares held by foreign investors 1500000 1500000 1500000 0.28%
Among which: Shares held by
1500000150000015000000.28%
foreign corporations
Shares held by
foreign individuals
503600000100.00%50360000095.27%
II. Non-restricted shares
38360000076.17%38360000072.57%
1. RMB ordinary shares
2. Domestically listed foreign
12000000023.83%12000000022.70%
shares
3. Overseas listed foreign shares
4. Other
~ 71 ~Annual Report 2021
III. Total shares 503600000 100.00% 25000000 25000000 528600000 100.00%
Reasons for share changes:
√ Applicable □ Not applicable
On 23 June 2021 the Company issued 25000000 ordinary shares (A shares) denominated in Renminbi to specific targets in a
non-public manner.Approval of share changes:
√ Applicable □ Not applicable
Approved by the China Securities Regulatory Commission under CSRC Permit [2021] No. 1422 the Company issued
RMB25000000 ordinary shares (A shares) to specific targets on 23 June 2021. 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.Transfer of share ownership:
√ Applicable □ Not applicable
The relevant matters of the 25000000 shares of the Company issued in a non-public manner were audited and confirmed with the
Shenzhen Branch of China Securities Depository and Clearing Corporation Limited registered with the Branch on 12 July 2021 and
listed on the Shenzhen Stock Exchange on 22 July 2021. Upon completion of this share issuance in a non-public manner the total
shares of the Company were changed from 503600000 shares to 528600000 shares.Effects of share changes on the basic and diluted earnings per share equity per share attributable to the Company’s ordinary
shareholders and other financial indicators of the prior year and the prior accounting period respectively:
√ Applicable □ Not applicable
During the Reporting Period the total share capital of the Company was changed from 503600000 shares at the beginning of the
period to 528600000 shares at the end of the period which has diluted to a certain degree the earnings per share and the net asset
per share owned by the shareholders of ordinary shares of the Company.Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
√ Applicable □ Not applicable
Unit: Share
Restricted shares Restricted shares Restricted shares Restricted shares
Name of the Restricted Restricted shares
amount at the increased of the relieved of the amount at the
shareholders reasons relieved date
period-begin period period period-end
JPMorgan Chase
Private
Bank National 0 750000 0 750000 22 January 2022
placement
Association
Guotai Junan Private
0 1125000 0 1125000 22 January 2022
Securities Co. Ltd. placement
E Fund Private
0 12750000 0 12750000 22 January 2022
Management Co. placement
~ 72 ~Annual Report 2021
Ltd.Caitong Fund
Private
Management Co. 0 1130000 0 1130000 22 January 2022
placement
Ltd.Taiping Fund
Private
Management 0 750000 0 750000 22 January 2022
placement
Company Limited
Fullgoal Fund
Private
Management Co. 0 1275000 0 1275000 22 January 2022
placement
Ltd.Huatai Securities Private
0 775000 0 775000 22 January 2022
Co. Ltd. placement
Huatai Securities
Private
Asset Management 0 750000 0 750000 22 January 2022
placement
Co. Ltd.ICBC Credit Suisse
Private
Asset Management 0 2150000 0 2150000 22 January 2022
placement
Co. Ltd.Morgan Stanley &
Private
Co. International 0 750000 0 750000 22 January 2022
placement
Plc
China Life Asset
Private
Management Co. 0 750000 0 750000 22 January 2022
placement
Ltd.China Merchants
Private
Fund Management 0 2000000 0 2000000 22 January 2022
placement
Co. Ltd.China Universal
Private
Asset Management 0 45000 0 45000 22 January 2022
placement
Co. Ltd.Total 0 25000000 0 25000000 -- --
II. Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period
√ Applicable □ Not applicable
Name of Issue price Number Termination Index to
Issued Disclosure
stock and its Issue date (or interest Listing date a pproved for date of disclosed
number date
derivative rate) public trading transaction information
~ 73 ~Annual Report 2021
securities
Stocks
For details
see the
Report on the
Issuance of
the Private
Placement of
A-shares &
Private RMB200/sha Announceme
23 June 2021 25000000 22 July 2021 25000000 21 July 2021
placement re nt on the
Listing of
These Shares
disclosed by
the Company
on
www.cninfo.com.cn
Particulars about the securities (exclusive of preferred shares) issued in the Reporting Period:
Approved by the China Securities Regulatory Commission under CSRC Permit [2021] No. 1422 the Company 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.
2. Changes to Total Shares Shareholder Structure and Asset and Liability Structures
√ Applicable □ Not applicable
Upon completion of this share issuance of the Company in a non-public manner the total share capital of the Company was changed
from 503600000 shares to 528600000 shares with the total assets increased and the asset-liability ratio decreased accordingly.
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Shareholders and Their Shareholdings at the Period-End
Unit: share
Number of 31645 Number of 35931 Number of 0 Number of 0
~ 74 ~Annual Report 2021
ordinary ordinary preferred preferred
shareholders shareholders at shareholders with shareholders
the month-end resumed voting with resumed
prior to the rights (if any) (see voting rights at
disclosure of this note 8) the month-end
Report prior to the
disclosure of this
Report (if any)
(see note 8)
5% or greater shareholders or top 10 shareholders
Increas Shares in pledge marked or
e/decre frozen
Shareholdi Total shares ase in Restricted
Name of Nature of Non-restricte
ng held at the the shares
shareholder shareholder d shares held
percentage period-end Reporti held Status Shares
ng
Period
ANHUI GUJING
GROUP State-owned
51.12% 270234022 270234022 In pledge 114000000
COMPANY legal person
LIMITED
GAOLING Foreign legal
2.35%1244640812446408
FUNDL.P. person
BANK OF
CHINA-CHINA
MERCHANTS
CHINA
SECURITIES
Other 2.10% 11110421 1900000 9210421
LIQUOR INDEX
CLASSIFICATIO
N SECURITIES
INVESTMENT
FUND
AGRICULTURAL
BANK OF CHINA
－ E FUND
CONSUMPTION
Other 1.92% 10128102 1000000 9128102
SECTOR STOCK
SECURITIES
INVESTMENT
FUND
INDUSTRIAL Other 1.89% 9999951 9999951
~ 75 ~Annual Report 2021
AND
COMMERCIAL
BANK OF CHINA
LIMITED-
INVESCO GREAT
WALL
EMERGING
GROWTH
HYBRID
SECURITIES
INVESTMENT
FUND
CHINA
INTERNATIONA
L CAPITAL Foreign legal
1.65%87077528707752
CORPORATION person
HONG KONG
SECURITIES LTD
HONG KONG
SECURITIES Foreign legal
1.53%80868188086818
CLEARING person
COMPANY LTD.UBS (LUX)
EQUITY FUND -
Foreign legal
CHINA 1.42% 7505261 7505261
person
OPPORTUNITY
(USD)
BANK OF
CHINA-
INVESCO GREAT
WALL DINGYI
Other 0.95% 4995403 4995403
HYBRID
SECURITIES
INVESTMENT
FUND (LOF)
GREENWOODS
Foreign legal
CHINA ALPHA 0.87% 4614326 4614326
person
MASTER FUND
Strategic investor or general legal
person becoming a top-10 ordinary
N/A
shareholder due to rights issue (if
any) (see note 3)
~ 76 ~Annual Report 2021
Among the shareholders above the Company’s controlling shareholder—Anhui Gujing Group
Company Limited—is not a related party of other shareholders; nor are they parties acting in
concert as defined in the Administrative Measures on Information Disclosure of Changes in
Related or acting-in-concert parties
Shareholding of Listed Companies. As for the other shareholders the Company does not know
among the shareholders above
whether they are related parties or whether they belong to parties acting in concert as defined
in the Administrative Measures on Information Disclosure of Changes in Shareholding of
Listed Companies.Explain if any of the shareholders
above was involved in
entrusting/being entrusted with N/A
voting rights or waiving voting
rights
Special account for share
repurchases (if any) among the top N/A
10 shareholders (see note 10)
Top 10 non-restricted shareholders
Shares by type
Name of shareholder Non-restricted shares held at the period-end
Type Shares
ANHUI GUJING GROUP RMB-denominate
270234022270234022
COMPANY LIMITED d ordinary share
Domestically
GAOLING FUNDL.P. 12446408 listed foreign 12446408
share
INDUSTRIAL AND
COMMERCIAL BANK OF
CHINA LIMITED- INVESCO RMB-denominate
99999519999951
GREAT WALL EMERGING d ordinary share
GROWTH HYBRID SECURITIES
INVESTMENT FUND
BANK OF CHINA-CHINA
MERCHANTS CHINA
RMB-denominate
SECURITIES LIQUOR INDEX 9210421 9210421
d ordinary share
CLASSIFICATION SECURITIES
INVESTMENT FUND
AGRICULTURAL BANK OF
CHINA － E FUND
RMB-denominate
CONSUMPTION SECTOR 9128102 9128102
d ordinary share
STOCK SECURITIES
INVESTMENT FUND
CHINA INTERNATIONAL Domestically
87077528707752
CAPITAL CORPORATION listed foreign
~ 77 ~Annual Report 2021
HONG KONG SECURITIES LTD share
HONG KONG SECURITIES RMB-denominate
80868188086818
CLEARING COMPANY LTD. d ordinary share
Domestically
UBS (LUX) EQUITY FUND -
7505261 listed foreign 7505261
CHINA OPPORTUNITY (USD)
share
BANK OF CHINA- INVESCO
GREAT WALL DINGYI HYBRID RMB-denominate
49954034995403
SECURITIES INVESTMENT d ordinary share
FUND (LOF)
Domestically
GREENWOODS CHINA ALPHA
4614326 listed foreign 4614326
MASTER FUND
share
Among the shareholders above the Company’s controlling shareholder—Anhui Gujing Group
Related or acting-in-concert parties
Company Limited—is not a related party of other shareholders; nor are they parties acting in
among top 10 unrestricted public
concert as defined in the Administrative Measures on Information Disclosure of Changes in
shareholders as well as between
Shareholding of Listed Companies. As for the other shareholders the Company does not know
top 10 unrestricted public
whether they are related parties or whether they belong to parties acting in concert as defined
shareholders and top 10
in the Administrative Measures on Information Disclosure of Changes in Shareholding of
shareholders
Listed Companies.Since October 2021 the Company's controlling shareholder Gujing Group has conducted the
Top 10 ordinary shareholders
business of "Refinancing by Lending Securities" and as of 31 December 2021 1170000 lent
involved in securities margin
shares were outstandingthe ownership of the shares lent by the refinancing securities will not
trading (if any) (see note 4)
be transferred.Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the
Company conducted any promissory repo during the Reporting Period.□ Yes √ No
No such cases in the Reporting Period.
2. Controlling Shareholder
Nature of the controlling shareholder: controlled by a local state-owned legal person
Type of the controlling shareholder: legal person
Legal
Name of controlling Unified social credit
representative/person Date of establishment Principal activity
shareholder code
in charge
Making beverage
ANHUI GUJING GROUP
Liang Jinhui 16 January 1995 91341600151947437P construction materials and
COMPANY LIMITED
plastic products etc.Controlling shareholder’s As of 31 December 2021 the controlling shareholder ANHUI GUJING GROUP COMPANY
holdings in other listed LIMITED directly holds 99220400 shares of Huaan Securities Co. Ltd. owning the proportion of
~ 78 ~Annual Report 2021
companies at home or abroad shares of 2.11%.in the Reporting Period
Change of the controlling shareholder in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Information about the Actual Controller and Acting-in-concert Parties
Nature of the actual controller: Local administrator for state-owned assets
Type of the actual controller: legal person
Legal
Date of Unified social credit
Name of actual controller representative/person Principal activity
establishment code
in charge
State-owned Assets Supervision
and Administration
Zhao Liang N/A 113416007316875206 N/A
Commission of the People’s
Government of Bozhou
Other listed companies at home
or abroad controlled by the
N/A
actual controller in the
Reporting Period
Change of the actual controller during the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.Ownership and control relations between the actual controller and the Company:
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset management.~ 79 ~Annual Report 2021
□ Applicable √ Not applicable
4. Number of Accumulative Pledged Shares held by the Company’s Controlling Shareholder or the Largest
Shareholder as well as Its Acting-in-Concert Parties Accounts for 80% of all shares of the Company held
by Them
□ Applicable √ Not applicable
5. Other 10% or Greater Corporate Shareholders
□ Applicable √ Not applicable
6. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder Actual Controller
Reorganizer and Other Commitment Makers
□ Applicable √ Not applicable
IV Specific Implementation of Share Repurchase during the Reporting Period
Progress on any share repurchase
□ Applicable √ Not applicable
Progress on reducing the repurchased shares by means of centralized bidding
□ Applicable √ Not applicable
~ 80 ~Annual Report 2021
Part VIII Preference Shares
□ Applicable √ Not applicable
No preference shares in the Reporting Period.~ 81 ~Annual Report 2021
Part IX Bonds
□ Applicable √ Not applicable
~ 82 ~Annual Report 2021
Part X Financial Statements
I Independent Auditor’s Report
Type of auditor’s opinion Unmodified unqualified opinion
Date of signing the auditor’s report 29 April 2022
Name of the auditor RSM China
No. of the auditor’s report Rongcheng audit character [2022] 518Z0165
Name of CPA Zhang Liping Han Songliang
Text of the Auditor’s Report
To the Shareholders of Anhui Gujing Distillery Company Limited:
I. Opinion
We have audited the financial statements of Anhui Gujing Distillery Co. Ltd. (hereafter referred to as “Anhui Gujing”) which
comprises the consolidated and the parent company’s statement of financial position as at 31 December 2021 the consolidated and
the parent company’s statement of profit or loss and other comprehensive income the consolidated and the parent company’s
statement of cash flows the consolidated and the parent company’s statement of changes in equity for the year then ended and the
notes to the financial statements.In our opinion the accompanying Anhui Gujing’s financial statements present fairly in all material respects the consolidated and the
company’s financial position as at 31 December 2021 and of their financial performance and cash flows for the year then ended in
accordance with Accounting Standards for Business Enterprises.II. Basis for Opinion
We conducted our audit in accordance with Chinese Standards on Auditing (CSAs). Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent
of Anhui Gujing in accordance with the Code of Ethics for Professional Accountants of the Chinese Institute of Certified Public
Accountants and we have fulfilled our other ethical responsibilities. We believe that the audit evidence we obtained is sufficient and
appropriate to provide a basis for our opinion.III. Key Audit Matters
Key audit matters are those matters that in our professional judgment were of the most significance in our audit of the financial
statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole and
informing our opinion thereon and we do not provide a separate opinion on these matters.(I) Revenue recognition
1. Description
Refer to notes to the consolidated financial statements "3. 27. Revenue" and "5. 37. Revenue and Cost of Sales ".In 2021 the Company achieved revenue of RMB13.27 billion an increase of 28.93% compared with the same period in 2020. As
revenue is one of the key performance indicators of the company there may be the risk of material misstatement in whether the
revenue is recognized in an appropriate accounting period. Therefore we regard revenue recognition as a key audit matter.
2. Audit response
~ 83 ~Annual Report 2021
Our procedures for revenue recognition include:
(1) Understand the internal control process design related to the sales business and execute the walk-through test perform the
control test on the identified key control points;
(2) Interview with the management check the samples of sales contract analyze the significant risk and reward transferring point
related to revenue recognition of liquor sales and then evaluate whether the company's sales revenue recognition policy is
reasonable;
(3) Sampling inspection of supporting documents related to liquor sales revenue recognition including sales orders sales invoices
outbound orders etc.;
(4) Compared with the liquor sales data of other enterprises in the same industry compared the liquor sales data of the last period
with the current period analyzed the overall rationality of revenue and gross margin;
(5) For the liquor sales revenue recognized before and after the balance sheet date select samples to check the sales orders sales
invoices outbound orders etc. in order to evaluate whether the sales revenue is recorded in an appropriate accounting period;
(6) Confirm the amount of liquor sold and the closing balance of the advance payment to the main distributor by sending
confirmation letter.(II) Accuracy of inventory balances
1. Description
Refer to notes to the consolidated financial statements "3 12. Inventory" and "5. 7. Inventory".Anhui Gujing has a large inventory balance and needs to maintain an appropriate level of inventory to meet future market or
production demand. The inventory balance accounts for 18.35% of the Company's total assets and most of the inventory is
semi-finished products and work in progress products. As the most important asset of liquor production enterprises inventory has a
high balance at the end of the year and a large proportion of the total assets. Therefore we regard the accuracy of the Company's
inventory balance as a key audit matter.
2. Audit response
Our procedures for the accuracy of inventory balances include:
(1) Understand the internal control process design related to inventory business and carry out walk-through test carry out control
tests for identified key control points;
(2) Obtain the stocktaking plan and stocktaking results of the company understand the stocktaking methods and review procedures of
the company and supervise the stocktaking;
(3) Understand the company's inventory cost accounting method select several months of cost calculation sheet to review and select
the main categories of inventory to carry out valuation test;
(4) To understand the provision method of the company's inventory impairment evaluate the appropriateness of the provision method
and review whether the provision amount is correct;
(5) Perform analytical procedures and compare with companies in the same industry.
IV. Other information
Management of Anhui Gujing is responsible for the other information. The other information comprises the information included in
the Annual Report of Anhui Gujing for the year of 2021 but does not include the financial statements and our auditor’s report
thereon.Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion
thereon.In connection with our audit of the financial statements our responsibility is to read the other information and in doing so consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or
~ 84 ~Annual Report 2021
otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatement of this other information we are required
to report that fact. We have nothing to report in this regard.V. Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management of Anhui Gujing is responsible for the preparation and fair presentation of the financial statements in accordance with
Accounting Standards of Business Enterprises and for the design implementation and maintenance of such internal control as
management determines is necessary to enable the preparation of financial statements that are free from material misstatement
whether due to fraud or error.In preparing the financial statements management is responsible for assessing Anhui Gujing’s ability to continue as a going concern
disclosing as applicable matters related to going concern and using the going concern basis of accounting unless management either
intends to liquidate Anhui Gujing or to cease operations or have no realistic alternative but to do so.Those charged with governance are responsible for overseeing Anhui Gujing’s financial reporting process.VI. Auditor’s Responsibilities for the Audit of the Financial Statements
Our Objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement whether due to fraud or error and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance but is not a guarantee that an audit conducted in accordance with CSAs will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.As part of an audit in accordance with CSAs we exercise professional judgment and maintain professional skepticism throughout the
audit. We also:
1. Identify and assess the risks of material misstatement of the financial statements whether due to fraud or error design and perform
audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud
may involve collusion forgery intentional omissions misrepresentations or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management.
4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and based on the audit evidence
obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on Anhui Gujing’s
ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our
auditor’s report to the related disclosures in the financial statements or if such disclosures are inadequate to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However future events or conditions may
cause Anhui Gujing to cease to continue as a going concern.
5. Evaluate the overall presentation structure and content of the financial statements and whether the financial statements represent
the underlying transactions and events in a manner that achieves fair presentation.
6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within Anhui
Gujing to express an opinion on the financial statements. We are responsible for the direction supervision and performance of the
group audit. We remain solely responsible for our audit opinion.We communicate with those charged with governance regarding among other matters the planned scope and timing of the audit and
significant audit findings including any significant deficiencies in internal control that we identify during our audit.We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
~ 85 ~Annual Report 2021
independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence and where applicable related safeguards.From the matters communicated with those charged with governance we determine those matters that were of most significance in
the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we
determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.RSM China CPA LLP [Name of CPA]：Zhang Liping
(Engagement Partner)
China·Beijing [Name of CPA]：Han Songliang
[Date] 29 April 2022
~ 86 ~Annual Report 2021
II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Anhui Gujing Distillery Company Limited
31 December 2021
Unit: RMB
Item 31 December 2021 31 December 2020
Current assets:
Monetary assets 11924922771.76 5971212569.66
Settlement reserve
Interbank loans granted
Held-for-trading financial assets 2661103876.68 203877915.51
Derivative financial assets
Notes receivable
Accounts receivable 89005804.17 67933735.91
Accounts receivable financing 545204103.42 1673510794.51
Prepayments 156570970.99 55575543.21
Premiums receivable
Reinsurance receivables
Receivable reinsurance contract
reserve
Other receivables 71753212.24 33451121.48
Including: Interest receivable
Dividends receivable
Financial assets purchased under
resale agreements
Inventories 4663456672.30 3416880808.96
Contract assets
Assets held for sale
Current portion of non-current assets
Other current assets 178222222.56 97412681.26
Total current assets 20290239634.12 11519855170.50
Non-current assets:
Loans and advances to customers
~ 87 ~Annual Report 2021
Investments in debt obligations
Investments in other debt obligations
Long-term receivables
Long-term equity investments 5312600.78 4915575.83
Investments in other equity
54542418.500.00
instruments
Other non-current financial assets
Investment property 4075801.06 4392943.54
Fixed assets 1984063975.87 1797789271.62
Construction in progress 1064134904.21 279169201.60
Productive living assets
Oil and gas assets
Right-of-use assets 43927228.97 0.00
Intangible assets 1063468842.61 934711977.79
Development costs
Goodwill 561364385.01 478283495.29
Long-term prepaid expense 55908338.03 64591933.65
Deferred income tax assets 283828000.24 96972421.95
Other non-current assets 7220318.40 5943717.02
Total non-current assets 5127846813.68 3666770538.29
Total assets 25418086447.80 15186625708.79
Current liabilities:
Short-term borrowings 30035138.89 70665500.00
Borrowings from the central bank
Interbank loans obtained
Held-for-trading financial liabilities
Derivative financial liabilities
Notes payable 127114336.16 140614535.60
Accounts payable 1020437321.89 505206561.86
Advances from customers
Contract liabilities 1825447705.85 1206573886.26
Financial assets sold under
repurchase agreements
Customer deposits and interbank
deposits
~ 88 ~Annual Report 2021
Payables for acting trading of
securities
Payables for underwriting of
securities
Employee benefits payable 709671787.74 498129114.76
Taxes payable 873270986.71 349142692.10
Other payables 2280937078.12 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
13190399.320.00
liabilities
Other current liabilities 799522562.60 320792383.03
Total current liabilities 7679627317.28 4487723834.75
Non-current liabilities:
Insurance contract reserve
Long-term borrowings 172356255.83 60117638.89
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities 28107223.18 0.00
Long-term payables
Long-term employee benefits
payable
Provisions
Deferred income 91101512.05 75111997.53
Deferred income tax liabilities 194033257.93 114821451.24
Other non-current liabilities
Total non-current liabilities 485598248.99 250051087.66
Total liabilities 8165225566.27 4737774922.41
Owners’ equity:
Share capital 528600000.00 503600000.00
Other equity instruments
~ 89 ~Annual Report 2021
Including: Preferred shares
Perpetual bonds
Capital reserves 6224747667.10 1295405592.25
Less: Treasury stock
Other comprehensive income -2735058.19 0.00
Specific reserve
Surplus reserves 269402260.27 256902260.27
General reserve
Retained earnings 9517374574.46 7987380161.21
Total equity attributable to owners of
16537389443.6410043288013.73
the Company as the parent
Non-controlling interests 715471437.89 405562772.65
Total owners’ equity 17252860881.53 10448850786.38
Total liabilities and owners’ equity 25418086447.80 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 31 December 2021 31 December 2020
Current assets:
Monetary assets 6701949499.06 4287808756.66
Held-for-trading financial assets 2611037013.67 203877915.51
Derivative financial assets
Notes receivable
Accounts receivable 0.00 494976.27
Accounts receivable financing 269471899.40 1399214331.97
Prepayments 85579299.60 11737580.47
Other receivables 290480736.49 141378010.40
Including: Interest receivable
Dividends receivable
Inventories 3667928608.55 2976360208.66
Contract assets
~ 90 ~Annual Report 2021
Assets held for sale
Current portion of non-current assets
Other current assets 142527867.24 9734249.41
Total current assets 13768974924.01 9030606029.35
Non-current assets:
Investments in debt obligations
Investments in other debt obligations
Long-term receivables
Long-term equity investments 1547415641.38 1118213665.32
Investments in other equity
instruments
Other non-current financial assets
Investment property 4075801.06 4392943.54
Fixed assets 1375344792.42 1322818855.86
Construction in progress 692315065.86 139865487.21
Productive living assets
Oil and gas assets
Right-of-use assets 40811867.62 0.00
Intangible assets 437919619.31 369163089.18
Development costs
Goodwill
Long-term prepaid expense 41319866.13 44072241.78
Deferred income tax assets 28775933.22 30716488.80
Other non-current assets 0.00 75999.80
Total non-current assets 4167978587.00 3029318771.49
Total assets 17936953511.01 12059924800.84
Current liabilities:
Short-term borrowings
Held-for-trading financial liabilities
Derivative financial liabilities
Notes payable 0.00 74535.60
Accounts payable 672018963.99 397554006.51
Advances from customers
Contract liabilities 23438890.01 1130074436.39
~ 91 ~Annual Report 2021
Employee benefits payable 160404100.41 127974331.78
Taxes payable 473881384.92 200876134.49
Other payables 632857371.46 524000730.59
Including: Interest payable
Dividends payable
Liabilities directly associated with
assets held for sale
Current portion of non-current
11633827.850.00
liabilities
Other current liabilities 15080461.56 160738917.51
Total current liabilities 1989315000.20 2541293092.87
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities 26476999.19 0.00
Long-term payables
Long-term employee benefits
payable
Provisions
Deferred income 27176546.19 31601732.51
Deferred income tax liabilities 21499021.71 19407895.89
Other non-current liabilities
Total non-current liabilities 75152567.09 51009628.40
Total liabilities 2064467567.29 2592302721.27
Owners’ equity:
Share capital 528600000.00 503600000.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 6176504182.20 1247162107.35
Less: Treasury stock
Other comprehensive income -1385311.78 0.00
Specific reserve
~ 92 ~Annual Report 2021
Surplus reserves 264300000.00 251800000.00
Retained earnings 8904467073.30 7465059972.22
Total owners’ equity 15872485943.72 9467622079.57
Total liabilities and owners’ equity 17936953511.01 12059924800.84
3. Consolidated Income Statement
Unit: RMB
Item 2021 2020
1. Revenue 13269826266.04 10292064534.41
Including: Operating revenue 13269826266.04 10292064534.41
Interest income
Insurance premium income
Handling charge and
commission income
2. Costs and expenses 10213542938.71 7878036538.50
Including: Cost of sales 3304077011.92 2549814944.76
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 2031815205.67 1625289169.55
Selling expense 4008075483.08 3120977163.32
Administrative expense 1022181419.74 802201580.48
R&D expense 51449475.36 40590136.46
Finance costs -204055657.06 -260836456.07
Including: Interest
7036575.14876815.80
expense
Interest
210634326.57261861342.00
income
Add: Other income 55269628.48 47474532.19
~ 93 ~Annual Report 2021
Return on investment (“-” for loss) 4692379.15 6787443.77
Including: Share of profit or loss
397024.95237293.59
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 (“-”
7225961.17-19983181.51
for loss)
Credit impairment loss (“-” for
-6492841.44-933752.84
loss)
Asset impairment loss (“-” for loss) -16738156.85 -14095047.32
Asset disposal income (“-” for
1368763.131223536.53
loss)
3. Operating profit (“-” for loss) 3101609060.97 2434501526.73
Add: Non-operating income 80358158.20 66597288.07
Less: Non-operating expense 10673284.61 27262848.08
4. Profit before tax (“-” for loss) 3171293934.56 2473835966.72
Less: Income tax expense 796962295.09 625947783.69
5. Net profit (“-” for net loss) 2374331639.47 1847888183.03
5.1 By operating continuity
5.1.1 Net profit from continuing
2374331639.471847888183.03
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
shareholders of the Company as the 2297894413.25 1854576249.29
parent
5.2.1 Net profit attributable to
76437226.22-6688066.26
non-controlling interests
6. Other comprehensive income net of
-2702255.360.00
tax
Attributable to owners of the Company
-2735058.190.00
as the parent
6.1 Items that will not be
312174.310.00
reclassified to profit or loss
~ 94 ~Annual Report 2021
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
312174.310.00
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
-3047232.500.00
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 -3047232.50 0.00
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
32802.830.00
interests
7. Total comprehensive income 2371629384.11 1847888183.03
Attributable to owners of the Company
2295159355.061854576249.29
as the parent
Attributable to non-controlling
76470029.05-6688066.26
interests
8. Earnings per share
8.1 Basic earnings per share 4.45 3.68
8.2 Diluted earnings per share 4.45 3.68
~ 95 ~Annual Report 2021
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 2021 2020
1. Operating revenue 6861927173.56 5879367295.74
Less: Cost of sales 2685143091.93 2404770507.12
Taxes and surcharges 1709930259.58 1486154736.28
Selling expense 57374585.54 51077418.28
Administrative expense 638615142.40 573997212.59
R&D expense 24789072.53 26372590.76
Finance costs -146376995.59 -147492851.31
Including: Interest expense 2057303.09
Interest income 148286685.55 147976230.15
Add: Other income 12884387.21 22085298.08
Return on investment (“-” for
740925389.76703295993.73
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 (“-”
7159098.16-19983181.51
for loss)
Credit impairment loss (“-” for
1569395.15381399.86
loss)
Asset impairment loss (“-” for
-9447015.13-8393409.55
loss)
Asset disposal income (“-” for
1217988.7160176.99
loss)
2. Operating profit (“-” for loss) 2646761261.03 2181933959.62
Add: Non-operating income 45118776.84 38145926.01
Less: Non-operating expense 5010863.26 22352299.16
3. Profit before tax (“-” for loss) 2686869174.61 2197727586.47
~ 96 ~Annual Report 2021
Less: Income tax expense 479562073.53 374398634.87
4. Net profit (“-” for net loss) 2207307101.08 1823328951.60
4.1 Net profit from continuing
2207307101.081823328951.60
operations (“-” for net loss)
4.2 Net profit from discontinued
operations (“-” for net loss)
5. Other comprehensive income net of
-1385311.780.00
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
-1385311.780.00
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 -1385311.78 0.00
financial assets
5.2.4 Credit impairment allowance
for investments in other debt
obligations
5.2.5 Reserve for cash flow hedges
5.2.6 Differences arising from the
translation of foreign
currency-denominated financial
statements
5.2.7 Other
6. Total comprehensive income 2205921789.30 1823328951.60
~ 97 ~Annual Report 2021
7. Earnings per share
7.1 Basic earnings per share 4.18 3.62
7.2 Diluted earnings per share 4.18 3.62
5. Consolidated Cash Flow Statement
Unit: RMB
Item 2021 2020
1. Cash flows from operating activities:
Proceeds from sale of commodities
15533370561.7110807605859.36
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 10939461.17 7344191.33
Cash generated from other operating
1154331493.953104278291.78
activities
Subtotal of cash generated from
16698641516.8313919228342.47
operating activities
Payments for commodities and
2476695652.352216094155.87
services
Net increase in loans and advances to
customers
Net increase in deposits in the central
bank and in interbank loans granted
~ 98 ~Annual Report 2021
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 2764878720.68 2377569201.11
Taxes paid 3745603413.41 3323475922.81
Cash used in other operating
2457155602.602377545537.15
activities
Subtotal of cash used in operating
11444333389.0410294684816.94
activities
Net cash generated from/used in
5254308127.793624543525.53
operating activities
2. Cash flows from investing activities:
Proceeds from disinvestment 685446809.53 326968000.00
Return on investment 27570964.03 41473224.56
Net proceeds from the disposal of
fixed assets intangible assets and other 8510785.59 3756621.07
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
721528559.15372197845.63
investing activities
Payments for the acquisition of fixed
assets intangible assets and other 578154171.08 561616750.96
long-lived assets
Payments for investments 8939702000.00 41798000.00
Net increase in pledged loans granted
Net payments for the acquisition of
65123508.250.00
subsidiaries and other business units
Cash used in other investing
activities
Subtotal of cash used in investing
9582979679.33603414750.96
activities
Net cash generated from/used in
-8861451120.18-231216905.33
investing activities
3. Cash flows from financing activities:
~ 99 ~Annual Report 2021
Capital contributions received 4962827169.81 0.00
Including: Capital contributions by
5280000.000.00
non-controlling interests to subsidiaries
Borrowings raised 202510000.00 130665500.00
Cash generated from other financing
activities
Subtotal of cash generated from
5165337169.81130665500.00
financing activities
Repayment of borrowings 357436327.65 0.00
Interest and dividends paid 760093886.59 831838344.55
Including: Dividends paid by
0.0075792108.39
subsidiaries to non-controlling interests
Cash used in other financing
20017478.320.00
activities
Subtotal of cash used in financing
1137547692.56831838344.55
activities
Net cash generated from/used in
4027789477.25-701172844.55
financing activities
4. Effect of foreign exchange rates
changes on cash and cash equivalents
5. Net increase in cash and cash
420646484.862692153775.65
equivalents
Add: Cash and cash equivalents
5636903693.742944749918.09
beginning of the period
6. Cash and cash equivalents end of the
6057550178.605636903693.74
period
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
Item 2021 2020
1. Cash flows from operating activities:
Proceeds from sale of commodities
6255940908.126224786292.61
and rendering of services
Tax rebates 136317.05 367573.41
Cash generated from other operating
1011350323.141055973163.52
activities
Subtotal of cash generated from
7267427548.317281127029.54
operating activities
Payments for commodities and
1619308652.041620053478.29
services
~ 100 ~Annual Report 2021
Cash paid to and for employees 893957837.80 785902280.22
Taxes paid 2421277549.92 2490592485.18
Cash used in other operating
257177069.10235549046.19
activities
Subtotal of cash used in operating
5191721108.865132097289.88
activities
Net cash generated from/used in
2075706439.452149029739.66
operating activities
2. Cash flows from investing activities:
Proceeds from disinvestment 546849809.53 306970000.00
Return on investment 43845258.48 738058038.36
Net proceeds from the disposal of
fixed assets intangible assets and other 6000032.69 5535791.98
long-lived assets
Net proceeds from the disposal of
13673346.370.00
subsidiaries and other business units
Cash generated from other investing
activities
Subtotal of cash generated from
610368447.071050563830.34
investing activities
Payments for the acquisition of fixed
assets intangible assets and other 793665435.61 414403643.54
long-lived assets
Payments for investments 8151105000.00 21800000.00
Net payments for the acquisition of
440643400.000.00
subsidiaries and other business units
Cash used in other investing
activities
Subtotal of cash used in investing
9385413835.61436203643.54
activities
Net cash generated from/used in
-8775045388.54614360186.80
investing activities
3. Cash flows from financing activities:
Capital contributions received 4957547169.81 0.00
Borrowings raised
Cash generated from other financing
activities
Subtotal of cash generated from
4957547169.810.00
financing activities
Repayment of borrowings
~ 101 ~Annual Report 2021
Interest and dividends paid 755400000.00 755400000.00
Cash used in other financing
18667478.320.00
activities
Subtotal of cash used in financing
774067478.32755400000.00
activities
Net cash generated from/used in
4183479691.49-755400000.00
financing activities
4. Effect of foreign exchange rates
changes on cash and cash equivalents
5. Net increase in cash and cash
-2515859257.602007989926.46
equivalents
Add: Cash and cash equivalents
4087808756.662079818830.20
beginning of the period
6. Cash and cash equivalents end of the
1571949499.064087808756.66
period
~ 102 ~Annual Report 2021
7. Consolidated Statements of Changes in Owners’ Equity
2021
Unit: RMB
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 Perpetu Treasur comprehensi c Subtotal
ng interests equity
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 prior 00 25 27 21 73 65 38
year
Add:
Adjustment
for change in
accounting
policy
Adjustment
for
correction of
previous
error
~ 103 ~Annual Report 2021
Adjustment
for business
combination
under
common
control
Other
adjustments
2. Balance as
at the 503600000. 1295405592. 256902260. 7987380161. 10043288013. 405562772. 10448850786.beginning of 00 25 27 21 73 65 38
the year
3. Increase/
decrease in
25000000.04929342074.-2735058.112500000.01529994413.6494101429.9309908665.6804010095.1
the period
08590251245
(“-” for
decrease)
3.1 Total
-2735058.12297894413.2295159355.076470029.02371629384.1
comprehensi
925651
ve income
3.2
Capital
25000000.04929342074.4954342074.8233438636.5187780711.0
increased
0855194
and reduced
by owners
3.2.1
Ordinary 25000000.0 4929342074. 4954342074.8 4954342074.8
shares 0 85 5 5
increased by
~ 104 ~Annual Report 2021
owners
3.2.2
Capital
increased by
holders of
other equity
instruments
3.2.3
Share-based
payments
included in
owners’
equity
3.2.4233438636.
233438636.19
Other 19
3.3 Profit 12500000.0 -767900000.0
-755400000.00-755400000.00
distribution 0 0
3.3.1
Appropriatio 12500000.0
-12500000.00
n to surplus 0
reserves
3.3.2
Appropriatio
n to general
reserve
3.3.3
-755400000.0
Appropriatio -755400000.00 -755400000.00
0
n to owners
~ 105 ~Annual Report 2021
(or
shareholders
)
3.3.4
Other
3.4
Transfers
within
owners’
equity
3.4.1
Increase in
capital (or
share capital)
from capital
reserves
3.4.2
Increase in
capital (or
share capital)
from surplus
reserves
3.4.3
Loss offset
by surplus
reserves
3.4.4
Changes in
defined
~ 106 ~Annual Report 2021
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
528600000.6224747667.-2735058.1269402260.9517374574.16537389443.715471437.17252860881.
at the end of
001092746648953
the period
2020
~ 107 ~Annual Report 2021
Unit: RMB
2020
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. 6888203911. 8944111764.4 488042947. 9432154711.7
the prior 00 25 27 92 4 30 4
year
Add:
Adjustment
for change in
accounting
policy
Adjustment
for
correction of
previous
error
Adjustment
for business
combination
under
~ 108 ~Annual Report 2021
common
control
Other
adjustments
2. Balance as
at the 503600000. 1295405592. 256902260. 6888203911. 8944111764.4 488042947. 9432154711.7
beginning of 00 25 27 92 4 30 4
the year
3. Increase/
decrease in
1099176249.1099176249.2-82480174.61016696074.6
the period
29954
(“-” for
decrease)
3.1 Total
1854576249.1854576249.21847888183.0
comprehensi -6688066.26
2993
ve income
3.2
Capital
increased
and reduced
by owners
3.2.1
Ordinary
shares
increased by
owners
3.2.2
Capital
increased by
~ 109 ~Annual Report 2021
holders of
other equity
instruments
3.2.3
Share-based
payments
included in
owners’
equity
3.2.4
Other
3.3 Profit -755400000.0 -75792108.3
-755400000.00-831192108.39
distribution 0 9
3.3.1
Appropriatio
n to surplus
reserves
3.3.2
Appropriatio
n to general
reserve
3.3.3
Appropriatio
n to owners -755400000.0 -75792108.3
-755400000.00-831192108.39
(or 0 9
shareholders
)
3.3.4
Other
~ 110 ~Annual Report 2021
3.4
Transfers
within
owners’
equity
3.4.1
Increase in
capital (or
share capital)
from capital
reserves
3.4.2
Increase in
capital (or
share capital)
from surplus
reserves
3.4.3
Loss offset
by surplus
reserves
3.4.4
Changes in
defined
benefit
schemes
transferred to
retained
earnings
~ 111 ~Annual Report 2021
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
503600000.1295405592.256902260.7987380161.10043288013.405562772.10448850786.
at the end of
00252721736538
the period
8. Statements of Changes in Owners’ Equity of the Company as the Parent
2021
Unit: RMB
Item 2021
~ 112 ~Annual Report 2021
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
503600000.001247162107.35251800000.007465059972.229467622079.57
of the prior year
Add: Adjustment for
change in accounting
policy
Adjustment for
correction of previous
error
Other adjustments
2. Balance as at the
503600000.001247162107.35251800000.007465059972.229467622079.57
beginning of the year
3. Increase/ decrease in
the period (“-” for 25000000.00 4929342074.85 -1385311.78 12500000.00 1439407101.08 6404863864.15
decrease)
3.1 Total
-1385311.782207307101.082205921789.30
comprehensive income
3.2 Capital increased
25000000.004929342074.854954342074.85
and reduced 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
~ 113 ~Annual Report 2021
3.2.3 Share-based
payments included in
owners’ equity
3.2.4 Other
3.3 Profit
12500000.00-767900000.00-755400000.00
distribution
3.3.1
Appropriation to 12500000.00 -12500000.00
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
reserves
3.4.3 Loss offset
by surplus reserves
3.4.4 Changes in
defined benefit
~ 114 ~Annual Report 2021
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
528600000.006176504182.20-1385311.78264300000.008904467073.3015872485943.72
of the period
2020
Unit: RMB
2020
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
503600000.001247162107.35251800000.006397131020.628399693127.97
end of the prior year
Add: Adjustment for
change in accounting
policy
Adjustment for
~ 115 ~Annual Report 2021
correction of
previous error
Other adjustments
2. Balance as at the
503600000.001247162107.35251800000.006397131020.628399693127.97
beginning of the year
3. Increase/ decrease
in the period (“-” for 1067928951.60 1067928951.60
decrease)
3.1 Total
comprehensive 1823328951.60 1823328951.60
income
3.2 Capital
increased and
reduced by owners
3.2.1 Ordinary
shares increased by
owners
3.2.2 Capital
increased by holders
of other equity
instruments
3.2.3
Share-based
payments included in
owners’ equity
3.2.4 Other
3.3 Profit
-755400000.00-755400000.00
distribution
~ 116 ~Annual Report 2021
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
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
~ 117 ~Annual Report 2021
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
503600000.001247162107.35251800000.007465059972.229467622079.57
end of the period
~ 118 ~Annual Report 2021
Anhui Gujing Distillery Company Limited
Notes to the Financial Statements
for the Year Ended 31 December 2021
(Unless otherwise stated all amounts are expressed in CNY Yuan.)
Note 1 Company profile
1.1 Company profile
The Anhui State-owned Asset Management Bureau approved through WanGuoZiGongZi
(1996) Di 053 Hao the incorporation of Anhui Gujing Distillery Company Limited (the
Company and GJ Distillery) by Anhui Gujing Group Company Limited (GJ Group) as the sole
founder by the operating assets of Anhui Bozhou Gujing Distillery Factory (GJ Distillery
Factory) which is the core operating unit of GJ Group. The incorporation was further
approved by the Anhui People's Government through WanZhengMi (1996) 42 Hao. The
incorporation General Meeting was held on 28 May 1996 and the incorporation was
registered with the Anhui Admistration Bureau for Commerce and Industry on 30 May
1996 with the registered address at Bozhou Anhui the People’s Republic of China (the
PRC). At incorporation the Company’s total number of shares stood at 155 million with a
valuation of CNY 377 .17million which was the fair value of the operating assets of GJ
Distillery Factory upon appraisal.The Company initiated public offering of 60 million domestic listed shares held by foreign
investors (known as “B share(s)”) in June 1996 and 20 million domestic listed CNY ordinary
shares (known as “A share(s)”) in September 1996. The par value of both the B share and A
share is CNY 1.00 per share. The B shares and A shares issued were listed on the Shenzhen
Stock Exchange.The Company is headquartered at Gujing Bozhou Anhui. The Company and its subsidiaries
(collectively the Group) operates in the food manufacturing sector and engages in the
production and sales of distilled wine.As of the public listing the Company has 235 million shares in total with the share capital
at CNY 235 million. The Company’s at public listing comprised 155 million state-owned
shares 60 million B shares and 20 million A shares. Each of the Company’s shares has a par
value at CNY 1.00 per share.In accordance with the resolution of the General Meeting held on 29 May 2006 the
Company exercised the share reorganisation plan in June 2006. Immediately after the
119Annual Report 2021
implementation of the share reorganisation plan the Company had in total 235 million
shares comprising 147 million shares with restriction of disposal (equal to 62.55% of total
shares) and 88 million free-floating shares (equal to 37.45% of total shares).Upon the Company’s publication of the Notice of Lifting Restriction of Shares on 27 June
2007 the restriction on disposal on 11.75 million shares was lifted on 29 June 2007.
Immediately after the lifting the Company had in total 235 million shares comprising
135.25 million shares with restriction of disposal (equal to 57.55% of total shares) and
99.75 million free-floating shares (equal to 42.45% of total shares).
Upon the Company’s publication of the Notice of Lifting Restriction of Shares on 17 July
2008 the restriction on disposal on 11.75 million shares was lifted on 18 July 2008.
Immediately after the lifting the Company had in total 235 million shares comprising
123.5 million shares with restriction of disposal (equal to 52.55% of total shares) and 111.5
million free-floating shares (equal to 47.45% of total shares).Upon the Company’s publication of the Notice of Lifting Restriction of Shares on 24 July
2009 the restriction on disposal on 123.5 million shares was lifted on 29 July 2009.
Immediately after the lifting the Company had in total 235 million shares comprising 235
million free-floating shares (equal to 100% of total shares).Upon approval by the China Securities Regulatory Commission (CSRC) through
ZhengJianXuKe [2011] 943 Hao the Company issued on 15 July 2011 through private
offering of 16.8 million A shares with the par value at CNY 1.00 to designated investors.The shares were issued at CNY 75.00 per share. Gross proceeds from this issuance was CNY
1260 million and the respective net proceeds after deduction of the cost of issuance (CNY
32.5 million) was CNY 1227.5 million. The subscription for the issuance was verified by
Reanda CPAs Co. Ltd. through Reanda YanZi [2011] Di 1065 Hao. Immediately after this
private offering the share capital of the Company increased to CNY 251.8 million.In accordance with the resolution of the Company’s 2011 General Meeting a bonus issue
of 10 shares for every 10 shares held at 31 December 2011 through utilisation of capital
reserves was exercised in 2012. 251.8 bonus shares were issued in total. Immediately after
the exercise of the bonus issue the Company’s share capital increased to CNY 503.6
million.Upon approval by the CSRC through ZhengJianXuKe [2021] 1422 Hao the Company issued
on 22 July 2021 through private offering of 25 million A shares with the par value at CNY
1.00 to designated investors. The shares were issued at CNY 200.00 per share. Gross
proceeds from this issuance was CNY 5000 million and the respective net proceeds after
120Annual Report 2021
deduction of the cost of issuance (CNY 45.66 million) was CNY 4954.34 million. The
subscription for the issuance was verified by RSM China CPAs LLP through RSM Yan [2021]
No. 518Z0050. Immediately after this private offering the share capital of the Company
increased to CNY 528.6 million.As of 31 December 2021 total number of the Company’s shares stood at 528.6 million. See
Note 5.32 for further details.Place of registration: Gujing Bozhou Anhui.Registered scope of operation: grain purchase (operation under permit) production of
distilled wine brewery equipments packaging materials glass bottles alcohol fat (as
by-product of alcohol production) development of innovative technology and biological
technology deep processing of agricultural and auxillary products and sales of owned
produced goods.These financial statements are approved on 29 April 2022 by the Company’s Board of
Directors for publication.
1.2 Scope of consolidation
1.2.1 Subsidiaries included in the Company’s scope of consolidation as of the statement
date
Shareholding %
Subsidiary Abbreviation
Direct Indirect
1 Bozhou Gujing Sales Co. Ltd. GJ Sales 100 -
2 Anhui Jinyunlai Culture Media Co. Ltd. Jinyunlai 100 -
3 Anhui Ruisi Weier Technology Co. Ltd. Ruisi Weier 100 -
4 Anhui Longrui Glass Co. Ltd. Longrui Glass 100 -
5 Bozhou Gujing Waste Recycle Co. Ltd. (Dissolved) Waste Recycle 100 -
6 Shanghai Gujing Jinhao Hotel Management Co. Ltd. Jinhao Hotel 100 -
7 Baozhou Gujing Guest House Co. Ltd. GJ Guest House 100 -
8 YQ Environment Anhui Yuanqing Environment Protection Co. Ltd. 100 -
Protection
9 Anhui Gujing Yunshang E-Commerce Co. Ltd. GJ E-Commerce 100 -
10 Anhui Runan Xinke Testing Technology Co. Ltd. Runan Xinke 100 -
11 Anhui Jiuan Electric Equipments Co. Ltd. Jiuan Electric 100 -
12 Anhui Jiudao Culture Media Co. Ltd. Jiudao Media 100 -
13 Anhui Jiuhao ChinaRail Construction Engineering Co. Ltd. Jiuhao ChinaRail 52 -
14 Anhui Zhenrui Construction Engineering Co. Ltd. Zhenrui Construction - 52
121Annual Report 2021
Shareholding %
Subsidiary Abbreviation
Direct Indirect
15 Huanghelou Distillery Co. Ltd. HHL Distillery 51 -
16 HHL Distillery (Suizhou) Co. Ltd. HHL Suizhou - 51
17 Hubei Junlou Culture Travel Co. Ltd. Junlou Culture - 51
18 Hubei HHL Beverage Co. Ltd. HHL Beverage - 51
19 HHL Distillery (Xianning) Co. Ltd. HHL Xianning - 51
20 Wuhan Yashibo Technology Co. Ltd. Yashibo - 51
21 Hubei Xinjia Testing Technology Co. Ltd. Xinjia Testing - 51
22 Wuhan Tianlong Jindi Technology Development Co. Ltd. Tianlong Jindi - 51
23 Wuhan Junya Sales Co. Ltd. Junya Sales - 51
24 Xianning Junhe Sales Co. Ltd. Xianning Junhe - 51
25 Suizhou Junhe Trading Co. Ltd. Suizhou Junhe - 51
26 Guizhou Huairen Maotai Treasure Distillery Co. Ltd. Treasure Distillery 60 -
27 Anhui Mingguang Distillery Co. Ltd. Mingguang Distillery 60 -
28 Mingguang Tiancheng Mingjiu Sales Co. Ltd. Tiancheng Sales - 60
29 Fengyang Xiaogangcun Mingjiu Distillery Co. Ltd. FY Xiaogangcun - 42
See Note 7 for further details.
1.2.2 Change of the scope of consolidation in the period
See Note 7 for further details. Mingguang Distillery Tiancheng Sales FY Xiaogangcun
Treasure Distillery Jiuhao ChinaRail and Jiuan Electric were included in the Company’s
scope of consolidation in the period for the first time. Waste Recylce was excluded from
the Company’s scope of consolidation in the period upon dissolution.Note 2 Basis of preparation for the financial statements
2.1 Basis of preparation
Based on going concern according to actually occurred transactions and events the
Company prepares its financial statements in accordance with the Accounting Standards
for Business Enterprises – Basic standards and concrete accounting standards Accounting
Standards for Business Enterprises – Application Guidelines Accounting Standards for
Business Enterprises – Interpretations and other relevant provisions (collectively known as
“Accounting Standards for Business Enterprises” or ASBE(s)). At the same time the
Company discloses relevant financial information in accordance with Disclosure Rule for
Companies with Publicly Traded Securities No. 15 – General Provisions for Financial
122Annual Report 2021
Statements (Revised in 2014) issued by the CSRC.
2.2 Going concern
The Company has assessed its ability to continually operate for the next twelve months
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.Note 3 Significant account policies and accounting estimates
The following significant accounting policies and accounting estimates of the Company are
formulated in accordance with the Accounting Standards for Business Enterprises.Businesses not mentioned are complied with relevant accounting policies of the
Accounting Standards for Business Enterprises.
3.1 Statement of compliance with the Accounting Standards for Business Enterprises
The Company prepares its financial statements in accordance with the requirements of the
Accounting Standards for Business Enterprises truly and completely reflecting the
Company’s financial position as at 31 December 2021 and its operating results changes in
shareholders' equity cash flows and other related information for the year then ended.
3.2 Accounting period
The accounting year of the Company is from January 1 to December 31 in calendar year.
3.3 Operating cycle
The normal operating cycle of the Company is twelve months.
3.4 Functional currency
The functional currency of the Company is CNY Yuan. An Overseas subsidiary (or branch)
uses the currency prominent in its business activities as its functional currency.
3.5 Business combination under common control and business combination not under
common contorl
3.5.1 Business combination under common control
The assets and liabilities that the Company obtains in a business combination under
common control are measured at their carrying amounts as consolidated in the ultimate
controller’s consolidated statement of financial position at the combination date. If the
accounting policy adopted by the acquired entity is different from that adopted by the
Company the Company according to accounting policy it adopts adjusts the relevant
items in the financial statements of the acquired entity based on the principle of
materiality. the Company’s capital reserve (capital premium or share premium) is adjusted
123Annual Report 2021
by the difference between the carrying amount of the net assets obtained by the Company
and the carrying amount of the consideration paid for the combination; where the capital
reserve (capital premium or share premium) is not sufficient to absorb the difference the
excess is adjusted to the Company’s surplus reserves and retained earnings if needed.See Note 3.6.6 for business combination under common control through multiple
transactions.
3.5.2 Business combination not under common control
The identifiable assets and liabilities that the Company obtains in a business combination
not under common control are 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
Company the Company according to accounting policy it adopts adjusts the relevant
items in the financial statements of the acquired entity based on the principle of
materiality. The Company recognises the excess of the cost of combination over the fair
value of the identifiable net assets it obtains from the acquired entity as goodwill. Where
the fair value of the identifiable net assets obtained by the Company is higher than the
cost of combination the Company 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 cost of combination; where the excess remains upon the review the Company
recognises the excess through profit or loss for the period in which the combination
occurs.See Note 3.6.6 for business combination not under common control through multiple
transactions.
3.5.3 Transaction costs of a business combination
The intermediary costs such as audit legal services and valuation consulting and other
related management costs that are directly attributable to the business combination are
charged to 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 are recorded as a part of
the value of the respect equity or debt securities upon initial recognition.
3.6 Consolidated financial statements
3.6.1 Scope of consolidation
The scope of consolidation is determined on the basis of control. It not only 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
124Annual Report 2021
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 a legal entity a
divisible part of the investee and a structured entity controlled by a legal entity). 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.
3.6.2 Accounting policies applicable to an investing entity
Where an entity is an investing entity it consolidates its subsidiaries to the extent that the
subsidiaries which provide services to the investing entity; investment by the investing
entity in other subsidiaries of the investing entity which are not consolidated by the
investing entity is reocgnised as financial assets at fair value through profit or loss.An entity is an investing entity is all of the following conditions are satisfied:
I. the entity obtains funds from one or more investors for the purpose of providing
those investors with investment management services;
II. the entity commits to its investors that its business purpose is to invest funds solely
for returns from capital appreciation investment income or both; and
III. the entity measures and evaluates the performance of substantially all of its
investments on a fair value basis.Where a non-investing entity becomes an investing entity subsidiaries excluded from
consolidation upon the change in status are accounted for in accordance with the principle
of partial disposal not giving rise to loss of control.Where an investing entity becomes a non-investing entity subsidiairies which were not
previously consolidated are consolidated into the non-investing entity upon the change in
status in accordance with the principle of business combination not under common control
while their fair value as of the date of change in status is recognised by the non-investing
entity as cost of combination.
3.6.3 Preparation of the consolidated financial statements
The consolidated financial statements are prepared by the Company based on the financial
statements of the Company and its subsidiaries and using other related information.When preparing consolidated financial statements the Company considers the entire
group as an accounting entity adopts uniform accounting policies and applies the
requirements of Accounting Standard for Business Enterprises related to recognition
measurement and presentation. The consolidated financial statements reflect the overall
125Annual Report 2021
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. The impact of intragroup transactions between the Company and the subsidiaries
or between subsidiaries are eliminated and when intragroup transactions indicate an
impairment of related assets the losses are recognised in full.IV. Adjustments are made for special transactions from the perspective of the group.
3.6.4 Accounting for inclusion into and exclusion from the scope of consolidation
3.6.4.1 Inclusion into the scope of consolidation
I. Subsidiaries or businesses acquired through business combination under common
control
When preparing the consolidated statements of financial position the opening
balances are adjusted. Related items of comparative financial statements are 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 arising from the beginning of the
reporting period to the end of the reporting period are included into the consolidated
statement of comprehensive income. Related items of comparative financial
statements are 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 are included into the consolidated statement of cash flows. Related items of
comparative financial statements are adjusted as well deeming that the combined
entity has always existed ever since the ultimate controlling party began to control.II. Subsidiaries or businesses acquired through business combination not under
common control
When preparing the consolidated statements of financial position the opening
balances of the consolidated statements of financial position are not adjusted.Incomes expenses and profits of the subsidiary arising from the acquisition date to the
end of the reporting period are included into the consolidated statement of
comprehensive income.Cash flows from the acquisition date to the end of the reporting period are included
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into the consolidated statement of cash flows.
3.6.4.2 Exclusion from the scope of consolidation resulted from disposal of subsidiaries or
businesses
When preparing the consolidated statements of financial position the opening balances of
the consolidated statements of financial position are not adjusted.Incomes expenses and profits incurred from the beginning of the subsidiary to the
disposal date are included into the consolidated statement of comprehensive income.Cash flows from the beginning of the subsidiary to the disposal date are included into the
consolidated statement of cash flows.
3.6.5 Special consideration in consolidation elimination
3.6.5.1 Long-term equity investment held by the subsidiaries to the Company is recognisedas treasury stock of the Company which is offset with equity represented as “treasurystock” under “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.
3.6.5.2 Due to not belonging to share capital and capital reserve and being different from
retained earnings and undistributed profit “Specific reserves” is 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.
3.6.5.3 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 unrealised inter-company transaction profit or loss deferred tax
assets of deferred tax liabilities are recognised and income tax expense in the
consolidated statement of comprehensive income is adjusted simultaneously excluding
deferred taxes related to transactions or events directly recognised in equity or business
combination.
3.6.5.4 Unrealised inter-company transactions profit or loss generated from the Companyselling assets to its subsidiaries is eliminated against “net profit attributable to theshareholders of the parent company” in full. Unrealised inter-company transactions profit
or loss generated from the subsidiaries selling assets to the Company is eliminated
between “net profit attributable to the shareholders of the parent company” and “netprofit attributable to non-controlling shareholders” pursuant to the proportion of the
127Annual Report 2021
Company in the related subsidiaries. Unrealised inter-company transactions profit or lossgenerated from the assets sales between the subsidiaries is eliminated between “net profitattributable to the shareholders of the parent company” and “net profit attributable tonon-controlling shareholders” pursuant to the proportion of the Company in the selling
subsidiaries.
3.6.5.5 If loss attributable to the non-controlling shareholders of a subsidiary in current
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.
3.6.6 Accounting for special transactions
3.6.6.1 Acquiring shares from non-controlling shareholders
Where the Company purchases non-controlling interests of its subsidiary in the 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
insufficient for offset surplus reserve and retained earnings shall be offset in turn.
3.6.6.2 Gaining control over a subsidiary in stages through multiple transactions
I. Business combination under common control 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 is adjusted against surplus reserve and
undistributed profit in turn.In the consolidated financial statements the assets and liabilities acquired during the
combination are recognised at their carrying amounts 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
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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 is
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 is
offset against the opening balance of retained earnings at the comparative financial
statements period respectively.II. Business combination not under common control 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 is 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. Other comprehensive income related to the equity
interest held prior to the acquisition date calculated through equity method is
transferred to current investment income of the acquisition period excluding other
comprehensive income resulted from the remeasurement of defined benefit plans.The Company discloses 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.
3.6.6.3 Disposal of investment in subsidiaries without a loss of control
For partial disposal of a long-term equity investment in a subsidiary 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 is adjusted into capital reserve (capital premium or share premium). If the capital
reserve is not enough to absorb the difference any excess is adjusted against retained
earnings.
3.6.6.4 Disposal of investment in subsidiaries with a loss of control
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I. Loss of control through one single 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 is 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 is 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 is transferred into current investment
income when control is lost excluding other comprehensive income resulted from the
remeasurement of defined benefit plans.II. Loss of control through multiple transactions
In the consolidated financial statements whether the transactions should be
accounted for as “a single transaction” needs to be decided firstly.If the disposal through multiple transactions is not classified as “a single transaction”
in the separate financial statements for transactions prior to the date of loss of
control carrying amount of each disposal of long-term equity investment is
de-recognised at upon disposal and the difference between consideration received
and the carrying amount of long-term equity investment corresponding to the equity
interest disposed is recognised in current investment income; in the consolidated
financial statements the disposal transaction is accounted for in accordance with
3.6.6.3.
If the disposal through multiple transactions is classified as “a single transaction”
these transactions should be accounted for as one single transaction of disposal of
subsidiary resulting in loss of control. In the separate financial statements for each
transaction prior to 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 is recognised in 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 to the date of loss of control
difference between consideration received and proportion of the subsidiary’s net
assets corresponding to the equity interest disposed is recognised in profit or loss as a
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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:
i. The transactions are entered into simultaneously or in contemplation of one
another.ii. The transactions form a single transaction designed to achieve an overall
commercial effect.iii. The occurrence of one transaction depends on the occurrence of at least one
other transaction.iv. 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.
3.6.6.5 Diluting equity share of parent company in its subsidiaries due to additional capital
contribution by the subsidiaries’ non-controlling shareholders.Other shareholders (non-controlling shareholders) of the subsidiaries inject additional
capital in the subsidiary which results in the dilution of equity interest of parent company
in the subsidiary. In the consolidated financial statements difference between share of the
corresponding subsidiary’s net assets calculated based on the parent’s equity interest
before and after the capital injection is adjusted into capital reserve (capital premium or
share premium). If the capital reserve is not enough to absorb the difference any excess is
adjusted against retained earnings.
3.7 Joint arrangement
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.
3.7.1 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.The Company recognises the following items in relation to shared interest in a joint
operation and accounts for them in accordance with relevant accounting standards of the
Accounting Standards for Business Enterprises:
I. its assets including its share of any assets held jointly;
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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.
3.7.2 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
3.9.1 Translation of a transaction denominated in a foreign currency
At the time of initial recognition of a foreign currency transaction the amount in the
foreign currency is 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).
3.9.2 Translation of monetary items denominated in foreign currencies on a balance-sheet
date
The foreign currency monetary items are 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 are translated at the spot exchange rate on the transaction date; the foreign currency
non-monetary items restated to a fair value measurement are translated 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.
3.9.3 Translation of financial statements denominated in a foreign currency
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Before translating the financial statements of foreign operations the accounting period
and accounting policies are adjusted so as to conform to the Company’s accounting period
and accounting policies. The adjusted foreign operation financial statements denominated
in foreign currency (other than functional currency) are 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
equity items except retained earnings are translated at the spot exchange rates when
they are incurred.II. The income and expense items in the statement of comprehensive income are
translated 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 are 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
are presented separately as “other comprehensive income” under the 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 are reclassified into current
profit or loss according to the proportion disposed.
3.10 Financial instruments
A 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.
3.10.1 Recognition and derecognition of a financial instrument
A financial asset or a financial liability is 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 the rights to the contractual cash flows
from the financial asset expire; or
A financial liability (or a part of a financial liability) is derecognised in on of the following
ways:
I. a financial liability (or a part of the financial liability) is derecognised when the
133Annual Report 2021
obligation associated with the financial liability (or the part of the financial liability) is
released;
II. Where an existing financial liability is replaced by a new financial liability by an
agreement with the counter party and the new financial liability is substantially
different from the existing financial liability the existing financial liability is
derecognised while the new financial liablity is recognised;
III. Where the contractual terms of a financial liability (or a part of a financial liability)
are substantially altered the financial liablity is dercognised in full and a new financial
liablity reflecting the contractual terms after alteration is recognised.Purchase or sale of a financial instrument in a regular-way is recognised and derecognised
using trade date accounting. A regular-way purchase or sale of a financial instrument is a
transaction under a contract whose terms require delivery of the instrument within the
timeframe established generally by regulations or convention in the market place
concerned. Trade date is the date on which the entity commits itself to purchase or sell aA
financial instrument.
3.10.2 Classification and measurement of financial assets
A financial asset is recognised as one of the following upon initial recognition based on
both the business model for managing the financial asset and the contractual cash flow
characteristics of the financial asset:
I. a financial asset at amortised cost;
II. a financial asset at fair value through profit or loss (FVATPL); or
III. a financial asset at fair value through other comprehensive income (FVATOCI).Reclassification of a financial asset is permitted if and only if the objective of the entity’s
business model for managing the financial asset changes. In this circumstance all affected
financial assets are reclassified on the first day of the first reporting period after the
changes in business model; otherwise a financial asset cannot be reclassified after initial
recognition.Financial assets shall be measured at initial recognition at fair value. For financial assets
measured at fair value through profit or loss transaction costs are recognised in current
profit or loss. For financial assets not measured at fair value through profit or loss
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:
134Annual Report 2021
I. Financial assets at amortised cost
A financial asset is classified as a financial asset at amortised cost when both the
following conditions are satisfied:
i. the financial asset is held within the business model whose objective is to hold
the financial asset in order to collect contractual cash flows; and
ii. the contractual term of the financial asset gives rise to cash flows on specified
dates that are solely payment of principal and interest on the outstanding
principal amount.A financial asset at amortised cost is subsequently measured at amortised cost by
adopting the effective interest rate method. Any gain or loss arising from
derecognition amortisation computed using the effective interest rate method and
impairment are recognised in current profit or loss.II. Financial assets at fair value through other comprehensive income (FVATOCI)
A financial asset is classified as a FVATOCI when both the following conditions are
satisfied:
i. the financial asset is held within the business model whose objective is achieved
by both collecting contractual cash flows and selling financial asset; and
ii. the contractual term of the financial asset gives rise to cash flows on specified
dates that are solely payment of principal and interest on the outstanding
principal amount.A FVATOCI is subsequently measured at fair value with changes in fair value
recognised in other comprehensive income excep for the following gain or loss which
is recognised in current profit or loss:
i. gain or loss arising from impairment or exchange differences; and
ii. interest income calculated based on the effective interest rate
Where a non-trading equity instrument investment is irrevocably designated as a
FVTAOCI fair value change is recognised in other comprehensive income and dividend
income is recognised in current profit or loss. Upon derecognised cumulative gain or
loss previously recognised in other comprehensive income is reclassified to retained
earnings.III Financial assets at fair value through profit or loss (FVATPL)
A financial asset which is neither a financial asset at amortised cost nor a FVATOCI is
classified as a FVATPL. A FVATPL is subsequently measured as fair value with changes
in fair value recognised in current profit or loss.
3.10.3 Classification and measurement of financial liabilities
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The Company classified the financial liabilities as financial liabilities at fair value through
profit or loss (FVLTPL) loan commitments at a below-market interest rate financial
guarantee contracts and financial liablities at amortised cost.Subsequent measurement of financial assets will be based on the classification:
I. Financial liabilities at fair value through profit or loss (FVLTPL)
Held-for-trading financial liabilities (including derivatives that are financial liabilities)
and financial liabilities designated as FVLTPL are classified as financial liabilities at
FVLTPL. After initial recognition any gain or loss (including interest expense) are
recognised in current profit or loss except for those to which hedge accounting is
applied. For a financial liability that is designated as a FVLTPL changes in the fair value
of the financial liability that is attributable to changes in the own credit risk of the
issuer is recognised in other comprehensive income. At derecognition cumulative gain
or loss previously recognised under other comprehensive income is reclassified to
retained earnings.II. Loan commitments and financial guarantee contracts
A 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 is recognised based on expected credit losses model.A 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. A financial guarantee contract liability shall be
subsequently measured at the higher of the amount determined in accordance with
the accounting policies applicable to impairment of a financial asset and the amount
initially recognised less the cumulative amortisation calculated in accordance with the
accounting policies applicable to revenue.III. Financial liabilities at amortised cost
A financial liability at amortised cost is subsequently measured at its amortised cost
calculated using the effective interest rate method.Unless in exceptional case financial liabilities and equity instruments are classfified in the
following ways:
I. Where the issuer of a financial instrument has no uncondintional right to avoid
deliverying cash or another financial asset(s) to fulfill an obligation this obligation
meets the definition of a financial liablity. A contract of a financial instrument may not
136Annual Report 2021
explicitly comprise terms and conditions relating to a obligation of delivery cash or
another financial asset(s) it may implicitly include such obligation through other terms
and conditions.II. Where a financial instrument can only or may be settled by the issuer’s own equity
instruments:
i. if the issuer’s equity instruments are a substitution of cash or other financial
asset(s) the financial instrument is the issuer’s liability;
ii. if the issuer’s equity instruments enable the holder to the issuer’s residual
interest after deducting all of the issuer’s liabilities from all of the issuer’s assets
the financial instrument is the issuer’s equity instrument.In certain cases a financial instrument can only or may be settled by the issuer’s own
equity instruments and the settlement amount is calculated by multiplying the number of
equity instruments deliverable with the fair value of the equity instrument at the
settlement date the instrument is the issuer’s financial liablity regardless of whether the
settlement amount is fixed or determinable wholly or partly by variables other than the
market price of the issuer’s own equity instrument (such as interest rate market price of a
commodity or price of a financial instrument).
3.10.4 Derivatives and embedded derivatives
A financial derivative is initially measured at its fair value at the inception date of the
derivative contract and subsequently measured at fair value. At initial recognition a
financial deriivative with fair value at positive amount is recognised as an asset and as a
liability is the fair value is at negative amount.Except for the change of fair value of the effective portion of a cash flow hedge which is
recognised other comprehensive income and reclassified to profit or loss upon cease of
hedging effectiveness change of fair value of a financial financial derivative in recognised
in current profit or loss.Where the non-derivative part of a hybrid instrument is a financial asset the hybrid
instrument is as a whole accounted for a financial asset.Where the non-derivative part of a hybrid instrument is a non-financial asset the
derivative part is separately accounted for as a financial derivative if all of the following
conditions are satisfied:
I. the hybrid instrument is not accounted for at fair value through profit or loss;
II. the economic characteristics and risks of the derivative part is not closely related to
those of the non-derivative part; and
III. a stand-alone instrument with characteristics similar to the derivative part is a
137Annual Report 2021
financial derivative.Where the fair value of the derivative part of a hybrid instrument with the non-derivative
part being a non-financial asset cannot be inidividually measured either upon or
subsequent to initial recognition the hybrid instrument as a whole is accounted as either a
FVATPL or FVLTPL.
3.10.5 Impairment of financial instruments
Impairment allowance for financial assets at amortised costs FVATOCI contract assets
lease receivables loan commitments and financial guarantee contracts is recognised on
the basis of their expected credit loss.I. Measurement of expected credit loss
Expected credit loss are the weighted average of credit loss of a financial instrument
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 (ie all cash shortfalls) discounted at the original effective interest rate or
credit-adjusted effective interest rate in the case of purchased credit-impaired
financial assets or financial assets with origninated credit impairment.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
138Annual Report 2021
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 (ie impairment loss not been deducted). For financial
instrument at stage 3 interest revenue shall be calculated by applying the effective
interest rate to the amortised 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.i. 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 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:
A. Notes receivables:
Group 1: Commercial acceptance
Group 2: Bank acceptance
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.B. Accounts receivable:
Group 1: Related parties within the scope of consolidation
Group 2: Receivables due from third parties
The expected credit loss for a portfolio of accounts receivable is computed
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using the expected credit loss rate over the entire lifes of the accounts
receivable and the age groups of these accouns receivable while taking into
consideration of their historical credit loss and the assessment for current and
expected general economic conditions.C. Other receivables:
Group 1: Related parties within the scope of consolidation
Group 2: Receivables due from third parties
The expected credit loss for a portfolio of other receivables is computed using
the expected credit loss rate over the next 12 months of the other receivables
and their exposure to default risk while taking into consideration of their
historical credit loss and the assessment for current and expected general
economic conditions.ii. Debts investment and other debt investments
The expected credit loss for a debt investment or other debt investment is
computed using the expected credit loss rate over the next 12 months or the
entire life of the investment and its exposure to default risk while taking into
consideration of its nature.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 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:
i. significant changes in internal price indicators of credit risk as a result of a
change in credit risk since inception;
140Annual Report 2021
ii. 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;
iii. 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;
iv. 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;
v. significant change that are expected to reduce the borrower’s economic
incentive to make scheduled contractual payments
vi. 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;
vii. significant changes in the expected performance and behaviour of the
borrower
viii. contractual payments are not less 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 credit-impaired when one or
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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.
3.10.6 Transfer of financial assets
An entity may transfer a financial asset by either transferring the contractual rights to the
cash flows of the financial asset to another party or transferring the financial asset to
another party while retaining the contractual rights to the cash flows of the financial asset
and assuming the contractual obligations to deliver cash flows received to one or multiple
142Annual Report 2021
parties.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 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:
i. the carrying amount of transferred financial asset;
ii. 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 - 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:
i. the carrying amount (measured at the date of derecognition) allocated to the
part derecognised
ii. 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
143Annual Report 2021
accordance with Article 18 of the Accounting Standards for Business Enterprises -
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.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.
3.10.7 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.
3.10.8 Determination of fair value of financial instruments
See Note 3.11 for determination of fair value of financial instruments.
3.11 Determination of fair value
Fair value refers to the price that would be received to sell an asset or paid to transfer 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
144Annual Report 2021
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.
3.11.1 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 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.
3.11.2 Fair value hierarchy
To Company establishes a fair value hierarchy that categorises into three levels the inputs
145Annual Report 2021
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
3.12.1 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 semi-finished goods work in progress finished goods merchandises
consumables etc.
3.12.2 Measurement method applicable to issuance of inventories
Inventories are measured at actual cost at recognition. The actual cost of an item of
inventories comprises the purchase cost cost of processing and other costs. Inventories
are issued at weighted average cost.
3.12.3 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.
3.12.4 Provision for impairment of inventory
Inventories are stated at the lower of cost and net realizable value. The excess of cost over
net realisable 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.
3.12.4.1 In normal operation process finished goods products and materials for direct sale
their net realizable values are determined at estimated selling prices less estimated 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
146Annual Report 2021
based on general selling prices. Net realizable value of materials held for sale shall be
measured based on market price.
3.12.4.2 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.
3.12.4.3 Provisions for inventory impairment are generally determined on an individual
basis. For inventories with large quantity and low unit price the provisions for inventory
impairment are determined on a category basis.
3.12.4.4 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.
3.12.5 Amortisation method of low-value consumables
A low-value consumable is amortised in full upon issuance. A packaging material is
amortised in full upon issuance.
3.13. Contract assets and contract liabilities
Effective on 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 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
147Annual Report 2021
liquidity. Contract assets and contract liabilities arising form different contracts are not be
offset.
3.14 Contract costs
Effective on 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 obtain 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;
148Annual Report 2021
otherwise it is presented in other non-current assets.
3.15 Long-term equity investments
Long-term equity investments refer to equity investments where an investor has control of
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.
3.15.1 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.
3.15.2 Determination of initial investment cost
3.15.2.1 Long-term equity investments arising from business combination
3.15.2.1.1 For a business combination involving enterprises under common control if 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
149Annual Report 2021
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.
3.15.2.1.2 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.
3.15.2.1.3 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.
3.15.2.2 Long-term equity investments not arising from business combination
3.15.2.2.1 For long-term equity investments acquired by payments in cash the initial cost
is the actually paid purchase cost including the expenses taxes and other necessary
expenditures directly related to the acquisition of long-term equity investments.
3.15.2.2.2 For long-term equity investments acquired through issuance of equity securities
the initial cost is the fair value of the issued equity securities.
3.15.2.2.3 For the long-term equity investments obtained through exchange of
non-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.
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3.15.2.2.4 For long-term equity investment acquired through debt restructuring the initial
cost is measured at the fair value of the equity investment obtained. Difference between
the fair value of the equity investment obtained and the book value of the debt given away
is recognised in current profit or loss.
3.15.3 Subsequent measurement and recognition of profit or loss
Long-term equity investment to an entity over which the Company has ability of control
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.
3.15.3.1 Cost method
For Long-term equity investment at cost method cost of the long-term equity investment
shall be adjusted when 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.
3.15.3.2 Equity method
If the initial cost of the investment is in excess of the share of the fair value of the 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
151Annual Report 2021
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 other equity investment difference between
its fair value and the carrying value in addition to the cumulative gain or loss previously
recorded in other comprehensive income shall be recogised into current profit or loss at
the time when the equity method becomes applicable.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 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.
3.15.4 Held-for-sale equity investments
The remaining equity investment after partial disposal which is not classified as
held-for-sale is accounted for by the equity method.If a held-for-sale equity investment no longer satisfies the conditions for classifying as
held-for-sale it is retrospectively adjusted from the date on which it was classified as
held-for-sale using the equity method. The financial statements for the period during
which the investment was classified as held-for-sale are respectively restated.
3.15.5 Impairment of long-term equity investments
See Note 3.22 for details.
3.16 Investment properties
3.16.1 Classification
Investment properties are properties to earn rentals or for capital appreciation or both
including:
I. Land use right leased out;
152Annual Report 2021
II. Land held for transfer upon appreciation;
III. Buildings leased out.
3.16.2 Measurement
Investment properties are subsequently measured by the cost method. See Note 3.22 for
impairment of investment properties.The residual after deducting the scrap value and cumulative impairment from the historical
cost of an item of investment properties is depreciated or amortised using the 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.
3.17.1 Recognition
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.
3.17.2 Depreciation
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. The estimated
economic useful lives and estimated net residual rates of fixed assets are listed as
followings:
Depreciation Annual depreciation
Category Useful life in years Scrap value rate (%)
method rate (%)
Houses and buildings Straight line 8.00-35.00 3.00-5.00 2.70-12.10
Machinery Straight line 5.00-10.00 3.00-5.00 9.50-19.40
Transportation
Straight line 4.00 3.00 24.25
vehicles
Administrative and
Straight line 4.00 3.00 32.33
other devices
For the fixed assets with impairment provided the impairment provision should be
excluded from the cost when calculating depreciation.
153Annual Report 2021
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.
3.17.3 Fixed assets acquired through financial lease
Where a leasing arrangement transfers substantially all risks and rewards associated with
the leased item to the Group the lease is regarded as a finance lease and the leased item
is recognised as an item of fixed assets. An item of fixed asset obtained from a finance
lease is measured upon recognition at the lower of the fair value of the leased item and
the present value of the minimum lease payment as of the lease inception date. An item of
fixed asset obtained through a finance lease is depreciated in accordance with the
depreciation method applicable to the category of fixed assets to which the lease item
belongs. If it is reasonably certain that ownership of the lease item will transfer to the
Group upon expiry of the lease the leased item is depreciated over its useful life; if
however transfer of ownership of the leased item upon expiry of the lease to the Group
cannot be reasonably expected the leased item is depreciated over the shorter of its
useful life and the lease term.
3.18 Construction in progress
3.18.1 Construction in progress is measured on an individual project basis.
3.18.2 Transfer to fixed assets
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 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
At the lease commencement date a right-of-use asset is measured at cost. The cost of a
154Annual Report 2021
right-of-use asset comprise:
I. the amount of the initial measurement of the lease liability;
II. any lease payments made at or before the commencement date less any lease
incentives received;
III. any initial direct costs incurred by the Group; and
IV. an estimate of costs to be incurred by the Group in dismantling and removing the
underlying asset restoring the site on which it is located or restoring the underlying
asset to the condition required by the terms and conditions of the lease unless those
costs are incurred to produce inventories.A right-of-use asset is subsequently measured at cost. If it is reasonably certain that
ownership of the lease item will transfer to the Group upon expiry of the lease the leased
item is depreciated over its useful life; if however transfer of ownership of the leased
item upon expiry of the lease to the Group cannot be reasonably expected the leased item
is depreciated over the shorter of its useful life and the lease term. Where a leased item
has recorded impairment its residual value after deducting the impairment allowance is
depreciated in accordance the principle described in this paragraph.
3.20 Borrowing costs
3.20.1 Capitalisation
The Company shall capitalize the borrowing costs that are directly attributable to 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 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.
3.20.2 Capitalisation rate and capitalised amount
When funds are borrowed specifically for purchase construction or manufacturing of
155Annual Report 2021
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
capitalisation 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
3.21.1 Initial measurement
An intangible assets is initial measured at the actual cost of acquisition
3.21.2 Useful lives
3.21.2.1 Intangible assets with define useful lives
Category Useful life in years Basis for useful life determination
Land use rights 50 Legal right to use
Patents 10 Period that the asset can generate economic benefits
Software 3-5 Period that the asset can generate economic benefits
Trademarks 10 Period that the asset can generate economic benefits
For intangible assets with finite useful life the estimated useful life and amortisation
method are reviewed annually at the end of each reporting period and adjusted when
necessary. No change incur in current year in the estimated useful life and amortisation
method upon review.
3.21.2.2 Assets of which the period to bring economic benefits to the Company 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.
3.21.2.3 Amortisation
For intangible assets with finite useful lives their useful lives should be determined upon
their acquisition and systematically amortised on a straight-line basis [units of production
method] 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
156Annual Report 2021
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.
3.21.3 Research and development expenditure
3.21.3.1 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.
3.21.3.2 Development activities after the research phase of the Company shall be treated
as development phase.
3.21.4 Capitalisation of research and development expenditure
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.
3.22 Impairment of long-term assets
Impairment loss of long-term equity investment in subsidiaries associates and joint
ventures investment properties fixed assets constructions in progress and intangible
assets subsequently measured at cost shall be determined according to following method:
The Company shall assess at the end of each reporting period whether there is any
157Annual Report 2021
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.
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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 “Employee benefits payable” and “Long-term employee benefits payable”.
3.24.1 Short-term employee benefits
3.24.1.1 Salaries wages allowances and subsidies
The Company recognises in the accounting period in which an employee provides service
actually occurred short-term employee benefits as a liability with a corresponding charge
to current profit except for those recognised as capital expenditure based on the
requirement of accounting standards.
3.24.1.2 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 benefits.
3.24.1.3 Social securities such as medical insurance and work-place 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-place 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.
3.24.1.4 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.
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3.24.1.5 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; and
II. A reliable estimate of the amounts of employee benefits obligation arising from the
profit- sharing plan can be made.
3.24.2 Post-employement benefits
3.24.2.1 Defined contribution plans
The Company shall recognise in the accounting period in which an employee 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.
3.24.2.2 Defined benefit plans
I. 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.II. Net assets or liabilities of a defined benefit plan
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
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asset ceiling.III. Amount recognised as plan assets or charged to the 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.IV. Amount recognised in other comprehensive income
Changes in the net liability or asset of the defined benefit plan resulting from the
remeasurements including:
i. 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;
ii. Return on plan assets excluding amounts included in net interest on the net
defined benefit liability or asset;
iii. 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.
3.24.3 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; or
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
161Annual Report 2021
term which shall be consistent with the currency and estimated term of the defined
benefit obligations) to measure the employee benefits.
3.24.4 Other long-term employee benefits
3.24.4.1 Other long-term employee beneifts satisfying the recognition conditions
applicable to defined contribution plans
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.
3.24.4.2 Other long-term employee benefits satisfying the recognition conditions
applicable to defined benefit plans
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:
I. Service costs;
II. Net interest cost for net liability or asset of other long-term employee benefits;
III. Changes resulting from the remeasurements of the net liability or asset of other
long-term employee benefits.In order to simplify the accounting treatment the net amount of above items shall be
recognised in profit or loss or relevant cost of assets.
3.25 Lease liabilities
At the commencement date the Group measures the lease liability at the present value of
the lease payments that are not paid at that date. The lease payments comprise:
I. fixed payments or in-substance fixed payments less any lease incentives receivable;
II. variable lease payments that depend on an index or a rate;
III. the exercise price of a purchase option if the Group is reasonably certain to
exercise that option;
IV. payments of penalties for terminating the lease if the lease term reflects the
Group exercising an option to terminate the lease; and
V. amounts expected to be payable by the Group under residual value guarantees.The lease payments shall be discounted using the interest rate implicit in the lease if that
rate can be readily determined. If that rate cannot be readily determined the lessee shall
use the lessee’s incremental borrowing rate. The excess of the lease payments over its
present value is amortised over the lease term as interest expenses using the discount rate.A variable lease payment which is not included in the initial measurement of the lease
liability is recognised in profit or loss when incurred.
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3.26 Provisions
3.26.1 Recognition
A provision is recognised for an obligation associated with a contingent event when the
following conditions are satisfied:
I. The obligation is a present obligation assumed by the entity;
II. It is probable that fulfillment of the obligation will result in outflows of economic
benefits from the entity;
III. The amount of the obligation can be reliably measured.
3.26.2 Measurement
A provision is initially measured at the best estimate of expenses required for the
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 provision 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 provision the carrying amount shall be
adjusted based on the updated best estimate.
3.27 Revenue
Effective on 1 January 2020
3.27.1 General policy
Revenue is total economic inflows arising from the Company’s daily operation which result
in increases in equity other than those relating to contributions from holders of equity
claims.The Company recognises revenue when (or as) the Company satisfies a performance
obligation by transferring a promised good or service (ie an asset) to a customer. An asset
is transferred when (or as) the customer obtains control of that asset. A customer has
control of an asset when (or as) the customer has the ability to direct the use of and
obtain substantially all of the remaining benefits from the asset.Where a contract include two or more performance obligations the Company allocate the
transaction price upon inception of the contract to each performance
obligation identified in the contract on a relative stand-alone selling price basis revenue
associated with each performance obligation is measured at the allocated price.The transaction price is the amount of consideration to which the Company expects to be
entitled in exchange for transferring promised goods or services to a customer excluding
amounts collected on behalf of third parties. If the consideration promised in
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a contract includes a variable amount the Company estimates the amount of
consideration to which the Company will be entitled in exchange for transferring the
promised goods or services to a customer to the extent that it is highly probable that a
significant reversal in the amount of cumulative revenue recognised will not occur when
the uncertainty associated with the variable consideration is subsequently resolved. Where
a contract contains a significant financing component the Company recognises revenue at
an amount that reflects the price that a customer would have paid for the promised goods
or services if the customer had paid cash for those goods or services when (or as) they
transfer to the customer (ie the cash selling price); the difference between the amount of
promised consideration and the cash selling price of the promised goods or services is
amortised over the life of the contract using the effective interest rate method. The
Company does not adjust the promised amount of consideration for the effects of a
significant financing component if the Comopany expects at contract inception that the
period between when the Company transfers a promised good or service to a customer
and when the customer pays for that good or service will be one year or less.The Company transfers control of a good or service over time and therefore satisfies
a performance obligation and recognises revenue over time if one of the following criteria
is met:
I. the customer simultaneously receives and consumes the benefits provided by the
Company’s performance as the entity performs;
II. the Company’s performance creates or enhances an asset that the customer controls
as the asset is created or enhanced; or
III. the Company’s performance does not create an asset with an alternative use to the
Company and the Company has an enforceable right to payment for performance
completed to date.For each performance obligation satisfied over time the Company
recognises revenue over time by measuring the progress towards complete satisfaction of
that performance obligation unless the progress towards complete satisfaction cannot be
reliably measured. The Company uses either the input method or output method to
measure the progress towards complete satisfaction of a performance obligation. When
the progress towards complete satisfaction of a performance obligation cannot be reliably
measured the Company recognises revenue only to the extent of the costs incurred until
such time that it can reasonably measure the outcome of the performance obligation.Where a performance obligation is satisfied at a point in time the Company recognises
revenue when (or as) the customer obtains control of the transferred asset (either goods
164Annual Report 2021
or service). To determine the point in time at which a customer obtains control of a
promised asset the Company considers the following indicators:
I. The Company has a present right to payment for the asset ie. the customer has the
present obligation to pay for the asset.II. The legal title to the asset has been transferred to the customer ie. the customer
has the legal title to the asset.III. The Company has transferred physical possession of the asset ie. the customer has
physical possession of the asset.IV. The significant risks and rewards of ownership of the asset has been transferred to
the customer ie. the customer has obtained the significant risks and rewards of
ownership of the asset.V. The customer has accepted the asset.VI. Other indication that the customer has obtained control over the asset.
3.27.2 Specific policies
3.27.2.1 Revenue from sales of goods
Revenue from sales of goods is recognised if all of following conditions are satisfied:
I. Substantially all risks and rewards associated with the ownership of the goods are
transferred to the customer.II. The Company retains neither continuous management associated with the
ownership of the goods nor effective control over the goods.III. Revenue from the sales can be realiably measured.IV. It is probable that the associated economic benefits will flow to the Company.V. Costs incurred and expected to be incurred can be realiably measured.With regards to domestic sales revenue is recognised upon dispatch of the goods and
delivery of the goods to the customer if all of following conditions are satisfied:
I. Substantially all risks and rewards associated with the ownership of the goods are
transferred to the customer.II. The Company retains neither continuous management associated with the
ownership of the goods nor effective control over the goods.III. Revenue from the sales can be realiably measured.IV. It is probable that the associated economic benefits will flow to the Company.V. Costs incurred and expected to be incurred can be realiably measured.With regards to export sales revenue is recognised upon the presence of the respective
bill of lading and custom clearance.
3.27.2.2 Revenue from rendering of services
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Where the outcome of a service rendered by the Company can be reliably estimated on a
statement date revenue arising from the rendering of the service is recognised using the
percentage of completion method.The outcome of a service rendered by the Company can be reliably estimated if all of the
following conditions are satisfied:
I. The revenue can be reliably measured.II. It is probable that the associated economic benefits will flow to the Company.III. The percentage of completion can be reliably determined.IV. Costs incurred and expected to be incurred can be realiably measured.Total revenue of a service rendered is determined by the respective contract price unless
the contract price is not fair. Revenue from a service rendered recognised for a particular
period is computed as the residual after deducting revenue from that service cumulatively
recognised in prior periods from the product of multiplying the service’s total revenue with
the percentage of completion as of the statement date. Costs for a service rendered
recognised for a particular period are computed as the residual after deducting costs for
that service cumulatively recognised in prior periods from the product of multiplying the
service’s total budgeted costs with the percentage of completion as of the statement date.Where the outcome of a service rendered by the Company can not be reliably estimated
on a statement date costs incurred are recognised in profit or loss upon occurrence and
revenue is recognised to the extent that costs incurred can be recovered.
3.27.2.3 Revenue from usage of assets
Revenue from usage of the Group’s assets is recognised if the revenue can be reliably
measured and it is probable that the associated economic benefits will flow to the Group.Interest income is measured using the effective interest rate method on the basis of the
period during which the Group monetary funds are used by the user.Royalty income is measured in accordance with the method determined by the respective
contracts.
3.28 Government grants
3.28.1 Recognition
A government grant shall not be recgonised until there is reasonable assurance that:
I. The Company will comply with the conditions attaching to them; and
II. The grants will be received.
3.28.2 Measurement
Monetary grants from the government shall be measured at amount received or receivable
and non-monetary grants from the government shall be measured at their fair value or at a
166Annual Report 2021
nominal value of CNY 1.00 when reliable fair value is not available.
3.28.3 Accounting for government grant
3.28.3.1 Asset-related government grants
Government grants pertinent to assets mean the government grants that are obtained by
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.
3.28.3.2 Income-related government grants
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:
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.
3.28.3.3 Loan interest subsidies
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
167Annual Report 2021
recognised as offsetting the relevant borrowing cost.
3.28.3.4 Repayment of government grants
Repayment of the government grants shall be recorded by increasing the carrying amount
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 recognises and measures 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.
3.29.1 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 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
168Annual Report 2021
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.
3.29.2 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.No deferred tax liability shall be recognised for taxable temporary differences arising from:
I. the initial recognition of goodwill; or
II. 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)
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:
I. the Company is able to control the timing of the reversal of the temporary difference;
and
II. it is probable that the temporary difference will not reverse in the foreseeable
future.
3.29.3 Recognition of deferred tax liabilities or assets involved in special transactions or
events
3.29.3.1 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).
3.29.3.2 Items directly recognised in equity
Current tax and deferred tax related to items that are recognised directly in equity shall be
recognised in equity. Such items include: other comprehensive income generated from fair
value fluctuation of other debt investments; 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.
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3.29.3.3 Unused tax losses and unused tax credits
3.29.3.3.1 Unsused tax losses and unused tax credits generated from daily operation of 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.
3.29.3.3.2 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.
3.29.3.4 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.
3.29.3.5 Share-based payment settled by equity
If tax authority permits tax deduction that relates to share-based payment during the
period 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
170Annual Report 2021
recognised when criteria of recognition are satisfied. If the amount of estimated future tax
deduction 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
3.30.1 Identifying a lease contract
Upon contract inception the Company assesses whether a contract is a lease contract or a
contract with embedded leasing arrangement. Where a party to a contract transfers the
use right of one or more identified asset over a period for consideration the contract is
either a lease contract or a contract with embedded leasing arrangement. A party to a
contract transfers the use right of one or more identified asset over a period when the two
conditions as follow are present:
I. the counter party is entitled to obtain substantially all economic benefits arising
from the use of the identified asset over the period specified by the contact; and
II. the counter party is entitled to direct the use of the identified asset during the
period period specified by the contract.
3.30.2 Identifying individual leases
Where a contract comprises multiple leases the contract is separated and each lease is
accounted for separately. A leasing arrangement in a contract is a separately identifiable
lease if:
I. the leasee can obtain economic benefits by using the assets covered by the leasing
arrangement alone or in combination with other resources obtainable by the leasee;
and
II. the assets covered by the leasing arrangement has no close dependence on or close
connection to other assets specified by the contract.
3.30.3 Accounting for a lease as the lessee
A lease which has a lease term of 12 months or less at the commencement date is a
short-term lease. A lease for which the underlying asset is of low value when it is new is a
low-value lease. Where an asset of low value when it is new obtained from a lease is
intended to be subleased the lease for which such asset is not a low-value lease.A right to use asset and lease liability is recognised for a lease which is neither a
short-term lease nor a low-value lease at its commencement.
3.30.4 Accounting for a lease as the lessor
A lease which substantially transfers all the risks and rewards incidental to ownership of an
underlying asset is classified as a finance lease at its commencement; a lease which is not a
171Annual Report 2021
finance lease is classified as an operating lease at it commencement.
3.30.4.1 Operating lease
When the Company as a lessor lease income should be recognised over the lease terms on
a straight-line basis. Where the Company offers rental-free period in a lease the
amortisation period is the lease term inclusive of the rental free period. Where certain
costs incurred by the lessee are reimbursed by the Company rental income recognised is
reduced proportionately by the reimbursement.Substantial initial direct costs relating to lease transactions incurred by the Company shall
be capitalised and amortised over the lease terms on the same basis as the recognition of
lease income. Contingent rental if included in the lease contract shall be recognised into
profit or loss upon occurrence.
3.30.4.2 Finance lease
The sum of initial direct costs and minimum lease rentals receivable is recognised as lease
rentals receivable at the commencement date. The excess of the sum of unguaranteed
residual value of the leased item intial direct costs and minimum lease rentals receivable
over the present value of the sum is reocgnised as unrealised financing gain at the
commencement date and subsequently amortised using the effective interest rate
method.
3.31 Change of significant accounting policies and significant accounting estimates
3.31.1 Change of significant accounting policies
ASBE 21 – Leases (Revised in 2018) (ASBE 21 (2018)) was issued by the Ministry of Finance
on 7 December 2018 through CaiKuai [2018] No. 35. Companies with both domestic and
foreign listing which prepare the financial statements in accordance with either the
International Financial Reporting Standards or ASBEs shall adopt ASBE 21 (2018) on 1
January 2019. Other companies which prepare the financial statements in accordance with
ASBEs shall adopt ASBE 21 (2018) on 1 January 2021.In accordance with ASBE 21 (2018):
I. A lessee shall recognise a right-of-use asset and lease liability for a lease except in
the case that the lease in question is either a short-term lease or low-value lease.II. A right-of-use asset shall be depreciated over the useful life of the underlying asset
if it is reasonably certain that the ownership of the underlying asset will transfer to the
lessee upon lease expiry; it shall be depreciated over the shorter of the useful life of
the underlying asset and the lease term if transfer of ownership of the underlying
asset to the lessee upon lease expiry is not reasonably certain. A right-of-use asset is
subject is impairment assessment and impairment is any shall be properly accounted
172Annual Report 2021
for.III. A lessee shall establish interest expense in connection with the lease liability
applicable to each period within the lease term and recognise the interest expense in
profit or loss for the respective period.IV. A lessee may elect not to recognise a right-of-use asset and lease liability for a
short-term lease or low-value lease. In such case the lease rental of the short-term
lease or low value lease shall be recognised in profit or loss or as part of the cost of the
respective asset using the straight-line method or another reasonable systematic
method.Resulting from the adoption of ASBE 21 (2018) the following adjustments were made to
the Company’s consolidated statement of financial position as of 1 January 2021: increase
of right-of-use assets at CNY 57.4 million increase of lease liabilities at CNY 53.2 million
and decrease of prepayments at CNY 4.2 million. These adjustments had no impact on the
Company’s consolidated equity attributable to shareholders of the Company; nor did they
have impact on the Company’s consolidated surplus reserves or consolidated retained
earnings. These adjustments had no impact on the Company’s consolidated
non-controlling interests. The following adjustments were made to the Company’s
statement of financial position as of 1 January 2021: increase of right-of-use assets at CNY
52.7 million increase of lease liabilities at CNY 48.6 million and decrease of prepayments
at CNY 4.2 million. These adjustments had no impact on the Company’s equity; nor did
they have impact on the Company’s surplus reserves or retained earnings. See Note 3.31.2
for further information.
3.31.2 Impact on the financial statements as a result of adoption of ASBE 21 (2018)
Consolidated Statement of Financial Position
Currency unit: CNY million
Affected line item 31/12/2020 1/1/2021 Adjustment
Right-of-use assets 0.00 57.4 57.4
Lease liabilities 0.00 53.2 53.2
Prepayments 55.6 51.4 -4.2
Statement of Financial Position
Currency unit: CNY million
Affected line item 31/12/2020 1/1/2021 Adjustment
Right-of-use assets 0.00 52.7 52.7
Lease liabilities 0.00 48.6 48.6
173Annual Report 2021
Affected line item 31/12/2020 1/1/2021 Adjustment
Prepayments 11.7 7.6 -4.1
3.31.3 Change of significant accounting estimates
There is no change of significant accounting estimates in the current period.Note 4 Taxes
4.1 Major taxes and tax rates
Tax Tax base Tax rate
Valur added in the course of
Value added tax (VAT) sales of goods and rendering 13% 9% 6%
of services
Tax by quantity: CNY 1.00 per kilogram or litre
of distrilled wine sold;
Consumption duty Taxable revnue
Tax by revenue: 20% on taxable revenue from
sale of distrilled wine
Urban maintenance and
Transaction tax payable 7% 5%
construction tax
Education surcharge Transaction tax payable 3%
Local education surcharge Transaction tax payable 2%
Corporate income tax (CIT) Taxable income 25%
The CIT rate applicable to the Company is 25%. The CIT rates applicable to certain
subsidiaries are presented below.Entity CIT rate
Longrui Glass 15.00%
Ruisi Weier 15.00%
Runan Xinke 15.00%
Yashibo 2.5%
GJ Guest House 2.5%
Taxable income up to CNY 1 million: 2.5%
Junlou Culture Taxable income between CNY 1 million and CNY 3 million: 10%
HHL Beverage 2.5%
Taxable income up to CNY 1 million: 2.5%
Xinjia Testing Taxable income between CNY 1 million and CNY 3 million: 10%
Jiuan Electric 2.5%
4.2 Preferential tax treatments
4.2.1 Longrui Glass’s High-Tech Enterprise Status was jointly approved by the Anhui Science
and Technology Department (Anhui STD) Anhui Finance Department (Anhui FiD) and Anhui
Tax Office (Anhui PAT) through GuoKeHuoZi [2019] No. 216 and was issued the High-Tech
Enterprise Certificate (GR201934001625) with the validity term of 3 years. In accordance
with the Corporate Income Tax Law of the People’s Republic of China the CIT rate
174Annual Report 2021
applicable to Longrui Glass for the period from 1 January 2019 to 31 Decmeber 2021 is
15%.
4.2.2 Ruisi Weier’s High-Tech Enterprise Status was jointly approved by the Anhui STD
Anhui FiD and Anhui PAT through GuoKeHuoZi [2019] No. 216 and was issued the
High-Tech Enterprise Certificate (GR201934000355) with the validity term of 3 years. In
accordance with the Corporate Income Tax Law of the People’s Republic of China the CIT
rate applicable to Ruisi Weier for the period from 1 January 2019 to 31 Decmeber 2021 is
15%.
4.2.3 Runan Xinke’s High-Tech Enterprise Status was jointly approved by the Anhui STD
Anhui FiD and Anhui PAT through WanKeGaoMi [2022] No. 49 and was issued the
High-Tech Enterprise Certificate (GR202134004920) with the validity term of 3 years. In
accordance with the Corporate Income Tax Law of the People’s Republic of China the CIT
rate applicable to Runan Xinke for the period from 1 January 2021 to 31 Decmeber 2023 is
15%.
4.2.4 In accordance with MoF&SAT Announcement [2021] No. 12 jointly issued by the
Ministry for Finance and State Administration of Taxation 87.5% of the first CNY 1 million
annual taxable income of a qualified small entreprise with small profit for the period from 1
January 2021 to 31 Dcember 2022 is exempted from CIT and the CIT rate applicable to the
remaining 12.5% is 20%; 50% of the annual taxable income between CNY 1 million and CNY
3 million of a qualified small entreprise with small profit for the period from 1 January 2021
to 31 Dcember 2022 is exempted from CIT and the CIT rate applicable to the remaining
12.5% is 20%; GJ Guest House Junlou Culture HHL Beverage Xinjia Testing Jiuan Electric
and Yashibo are eligible to this preferential tax treatment.Note 5 Notes to the consolidated financial statements
5.1 Monetary funds
31/12/202131/12/2020
Cash on hand 135129.66 178127.77
Cash at bank 11891283646.58 5936406199.84
Other monetary funds 33503995.52 34628242.05
Total 11924922771.76 5971212569.66
Cash at bank as of the statement date included fixed term deposits pledged for bank
acceptance at CNY 100 million deposits pledged for guarantee letters at CNY 4 million and
structural deposits not eligible for early redemption at CNY 573 thousand; other monetary
funds as of the statement date included margin deposits not eligible for early redemption
175Annual Report 2021
at CNY 33.4 million. Except for the pre-mentioned monetary funds as of the statement
date was not subject to limitation on usage such as pledging or freezing or risk on recovery.
5.2 Financial assets held for trading
31/12/202131/12/2020
FVTPL 2661103876.68 203877915.51
T/o: Structural financial products 2457565232.32 -
T/o: Fund investments 203538644.36 203877915.51
Total 2661103876.68 203877915.51
Increase of financial assets held for trading for CNY 2457 million or 1205.24% year over
year was mainly due to the Company’s purchase of structural financial products close to
the statement date.
5.3 Accounts receivable
5.3.1 Disclosure by age group
Age group 31/12/2021 31/12/2020
Within 1 year 97023731.05 64157166.51
T/o: Within 6 months 92114086.85 61367773.81
T/o: 7 months to 1 years 4909644.20 2789392.70
1 to 2 years 883133.28 4953687.55
2 to 3 years 137464.27 142796.00
Over 3 years 1146581.68 -
Gross 99190910.28 69253650.06
Less: Impairment allowance 10185106.11 1319914.15
Net 89005804.17 67933735.91
5.3.2 Dislcosure by method of impairment
31/12/2021
Gross Impairment allowance
Net
Amount % of total Amount Impairment %
Individual assessment 7792783.72 7.86 7792783.72 100.00 -
Portfolio assessment 91398126.56 92.14 2392322.39 2.62 89005804.17
T/o: Group 1
T/o: Group 2 91398126.56 92.14 2392322.39 2.62 89005804.17
Total 99190910.28 100.00 10185106.11 10.27 89005804.17
(Continued)
31/12/2020
Gross Impairment allowance
Net
Amount % of total Amount Impairment %
176Annual Report 2021
31/12/2020
Gross Impairment allowance
Net
Amount % of total Amount Impairment %
Individual assessment - - - - -
Portfolio assessment 69253650.06 100.00 1319914.15 1.91 67933735.91
T/o: Group 1 - - - - -
T/o: Group 2 69253650.06 100.00 1319914.15 1.91 67933735.91
Total 69253650.06 100.00 1319914.15 1.91 67933735.91
Group 2 Receivables
31/12/2021
Age group
Gross Impairment allowance Impairment %
Within 1 year 89230947.33 1088695.25 1.22
T/o: Within 6 months 84321303.13 843213.03 1.00
T/o: 7 months to 1 years 4909644.20 245482.22 5.00
1 to 2 years 883133.28 88313.32 10.00
2 to 3 years 137464.27 68732.14 50.00
Over 3 years 1146581.68 1146581.68 100.00
Total 91398126.56 2392322.39 2.62
(Continued)
31/12/2020
Age group
Gross Impairment allowance Impairment %
Within 1 year 64157166.51 753147.38 1.17
T/o: Within 6 months 61367773.81 613677.74 1.00
T/o: 7 months to 1 years 2789392.70 139469.64 5.00
1 to 2 years 4953687.55 495368.77 10.00
2 to 3 years 142796.00 71398.00 50.00
Over 3 years - - -
Total 69253650.06 1319914.15 1.91
See Note 3.10 for recognition and measurement of impairment by portfolio.
5.3.3 Movement of impairment allowance
Movement
31/12/2020 Business combination not
Provision
under common control
Individually significant receivables subject to
7792783.72
individual impairment assessment
Individually insignificant receivables subject to
individual impairment assessment
Group 2 1319914.15 546297.81 1166733.53
Total 1319914.15 8339081.53 1166733.53
(Continued)
177Annual Report 2021
Movement
Reversal or Release or 31/12/2021
recovery write-off
Individually significant receivables subject to
individual impairment assessment 7792783.72
Individually insignificant receivables subject to
-
individual impairment assessment
Group 2 640623.10 2392322.39
Total 640623.10 10185106.11
5.3.4 Top-five accounts receivable as of the statement date
Gross % of gross accounts receivable Impairment allowance
Top 1 14642996.21 14.76 146429.96
Top 2 13949950.50 14.06 139499.51
Top 3 13469384.49 13.58 134693.84
Top 4 7792783.72 7.86 7792783.72
Top 5 5350431.84 5.39 53504.32
Total 55205546.76 55.65 8266911.35
5.3.5 Increase of accounts receivable for 31.02% year over year was mainly resulted from
the increase of accounts receivable due to Tianlong Jindi.
5.4 Receivables held for factoring
5.4.1 General disclosure
31/12/2021
Type
Gross Impairment allowance Net
Bank acceptance 545204103.42 545204103.42
Commercial acceptance - - -
Total 545204103.42 545204103.42
(Continued)
31/12/2020
Type
Gross Impairment allowance Net
Bank acceptance 1673510794.51 - 1673510794.51
Commercial acceptance - - -
Total 1673510794.51 - 1673510794.51
5.4.2 Notes receivable transferred by endorsement or cashed by discount which are not
matured as of the statement date
Amount not
Type Amount derecognised
derecognised
Bank acceptance 2692765337.03
Notes receivable cashed with discount or transferred with endorsement were originally
178Annual Report 2021
issued by banks with advanced credit rating. Due the credit rating of the issuing banks
credit risks and risks of delayed payment are relatively low and transferred from the
Company upon cashing or transfer. These notes receivable were therefore derecognised
upon cashing or transfer.
5.4.3 No accounts receivable were resulted from reclassification of notes receivables due to
issuers’ default.
5.4.4 Dislcosure by method of impairment
31/12/2021
Gross Impairment allowance
Net
Amount % of total Amount Impairment %
Individual assessment - - - - -
Portfolio assessment 545204103.42 100.00 - - 545204103.42
T/o: Group 1 -
T/o: Group 2 545204103.42 100.00 - - 545204103.42
Total 545204103.42 100.00 - - 545204103.42
(Continued)
31/12/2020
Gross Impairment allowance
Net
Amount % of total Amount Impairment %
Individual assessment - - - - -
Portfolio assessment 1673510794.51 100.00 - - 1673510794.51
T/o: Group 1 - -
T/o: Group 2 1673510794.51 100.00 - - 1673510794.51
Total 1673510794.51 100.00 - - 1673510794.51
Note 1: No Group 1 receivable was subject to impairment assessment.Note 2: The Company assessed impairment for Group 2 receivables as of the statement
date. Upon the assessment the Company believed that Group 2 receivables were unlikely
subject to loss resulted from the default by issuing banks or other issuers and therefore
not subject to significant credit risk.
5.4.5 Movement of impairment allowance
Not applicable.
179Annual Report 2021
5.5 Prepayments
5.5.1 Disclosure by age group
31/12/202131/12/2020
Age group
Amount % of total Amount % of total
Within 1 year 156395547.90 99.89 55069897.85 99.09
1 to 2 years 173426.53 0.11 505645.36 0.91
2 to 3 years 1996.56 - - -
Over 3 years - - - -
Total 156570970.99 100.00 55575543.21 100.00
5.5.2 Top-five venders as of the statement date by prepayment balance
31/12/2021 % of total
Top 1 102458395.34 65.44
Top 2 14684191.29 9.38
Top 3 6632298.50 4.24
Top 4 6214000.00 3.97
Top 5 4309993.84 2.75
Total 134298878.97 85.78
5.6 Other receivables
5.6.1 General disclosure
31/12/202131/12/2020
Interests receivable -
Dividends receivable -
Other receivables 71753212.24 33451121.48
Total 71753212.24 33451121.48
5.6.2 Other receivables
(1) Disclosure by age group
Age group 31/12/2021 31/12/2020
Within 1 year 68887383.04 31014800.18
T/o: Within 6 months 62942239.54 29186461.60
T/o: 7 months to 1 years 5945143.50 1828338.58
1 to 2 years 2808217.47 2842287.06
2 to 3 years 2530226.11 523089.00
Over 3 years 43669449.88 42535188.41
Gross 117895276.50 76915364.65
Less: Impairment allowance 46142064.26 43464243.17
180Annual Report 2021
Age group 31/12/2021 31/12/2020
Net 71753212.24 33451121.48
(2) Disclosure by nature
31/12/202131/12/2020
Security investments 38857584.88 40807394.41
Margin deposits 8788917.25 5266477.91
Advanced travel expenses 1219958.15 795646.51
Rentals and utilities receivable 7910881.41 8962876.17
Others 61117934.81 21082969.65
Gross 117895276.50 76915364.65
Less: Impairment allowance 46142064.26 43464243.17
Net 71753212.24 33451121.48
(3) Disclosure by method of impairment
A. Disclosure by the 3-stage m odel as of the statement date
Gross Impairment allowance Net
Stage 1 79037691.62 7284479.38 71753212.24
Stage 2
Stage 3 38857584.88 38857584.88 -
Total 117895276.50 46142064.26 71753212.24
Details of Stage 1 receivables as of the statement date
Expected loss rate
Impairment
Gross for the next 12 Net
allowance
months in %
Individual assessment
Portfolio assessment 79037691.62 9.22 7284479.38 71753212.24
T/o: Group 1
T/o: Group 2 79037691.62 9.22 7284479.38 71753212.24
Total 79037691.62 9.22 7284479.38 71753212.24
Details of Group 2 receivables as of the statement date
31/12/2021
Age group
Gross Impairment allowance Impairment %
Within 1 year 68887383.04 926679.58 1.35
T/o: Within 6 months 62942239.54 629422.41 1.00
T/o: 7 months to 1 years 5945143.50 297257.17 5.00
1 to 2 years 2808217.47 280821.74 10.00
2 to 3 years 2530226.11 1265113.06 50.00
Over 3 years 4811865.00 4811865.00 100.00
181Annual Report 2021
31/12/2021
Age group
Gross Impairment allowance Impairment %
Total 79037691.62 7284479.38 9.22
Details of Stage 3 receivables as of the statement date
Expected loss rate
Impairment
Gross for the next 12 Net
allowance
months in %
Individual assessment 38857584.88 100.00 38857584.88
Portfolio assessment
T/o: Group 1
T/o: Group 2
Total 38857584.88 100.00 38857584.88
Details of receivables subject to individual assessment as of the statement date
31/12/2021
Impairment Reason for
Gross Impairment %
allowance impairment
Hengxin Securities Co. Ltd. 28966894.41 28966894.41 100.00 In bankruptcy
Jianqiao Securities Co. Ltd. 9890690.47 9890690.47 100.00 In bankruptcy
Total 38857584.88 38857584.88 100.00 -
B. Disclosure by the 3-stage model as of 31 December 2020
Gross Impairment allowance Net
Stage 1 36107970.24 2656848.76 33451121.48
Stage 2 - - -
Stage 3 40807394.41 40807394.41 -
Total 76915364.65 43464243.17 33451121.48
Details of Stage 1 receivables as of 31 December 2020
Expected loss rate
Impairment
Gross for the next 12 Net
allowance
months in %
Individual assessment - - - -
Portfolio assessment 36107970.24 7.36 2656848.76 33451121.48
T/o: Group 1 - - - -
T/o: Group 2 36107970.24 7.36 2656848.76 33451121.48
Total 36107970.24 7.36 2656848.76 33451121.48
Details of Group 2 receivables as of 31 December 2020
31/12/2020
Age group
Gross Impairment allowance Impairment %
Within 1 year 31014800.18 383281.55 1.24
T/o: Within 6 months 29186461.60 291864.62 1.00
182Annual Report 2021
31/12/2020
Age group
Gross Impairment allowance Impairment %
T/o: 7 months to 1 years 1828338.58 91416.93 5.00
1 to 2 years 2842287.06 284228.71 10.00
2 to 3 years 523089.00 261544.50 50.00
Over 3 years 1727794.00 1727794.00 100.00
Total 36107970.24 2656848.76 7.36
Details of Stage 3 receivables as of 31 December 2020
Expected loss rate
Impairment
Gross for the next 12 Net
allowance
months in %
Individual assessment 40807394.41 100.00 40807394.41 -
Portfolio assessment - - - -
T/o: Group 1 - - - -
T/o: Group 2 - - - -
Total 40807394.41 100.00 40807394.41 -
Details of receivables subject to individual assessment as of 31 December 2020
31/12/2020
Impairment Reason for
Gross Impairment %
allowance impairment
Hengxin Securities Co.
28966894.41 28966894.41 100.00 In bankruptcy
Ltd.Jianqiao Securities Co. 11840500.00 11840500.00 100.00 In bankruptcy
Ltd.Total 40807394.41 40807394.41 100.00 -
(4) Movement of impairment allowance
Movement
Business
31/12/2020 combination Release Reversal or 31/12/2021
Provision not under or
recovery
common write-off
control
Individual
40807394.411949809.5338857584.88
assessment
Portfolio
2656848.761392920.963883438.08648728.427284479.38
assessment
Total 43464243.17 1392920.96 3883438.08 2598537.95 46142064.26
(5) Top-five other receivables as of the statement date
% of total gross Impairment
Debtor Nature 31/12/2021 Age group
other receivables allowance
Top 1 Security investment 28966894.41 Over 3 years 24.57 28966894.41
Top 2 Other 18255567.00 Within 6 months 15.48 182555.67
Top 3 Security investment 9890690.47 Over 3 years 8.39 9890690.47
183Annual Report 2021
% of total gross Impairment
Debtor Nature 31/12/2021 Age group
other receivables allowance
Top 4 Other 7318942.51 Within 1 year 6.21 97193.84
Top 5 Other 6499462.17 Within 6 months 5.51 64994.62
Total 70931556.56 60.16 39202329.01
5.6.3 Increase of other receivables for 114.50% year over year was mainly resulted from
increase in prepaid expenses.
5.7 Inventories
5.7.1 General disclosure
31/12/2021
Impairment
Gross Net
allowance
Raw materials and packaging 236485211.32 22919192.93 213566018.39
Semi-finished goods and work in progress 3680675328.83 0.00 3680675328.83
Merchandises 776158681.46 6943356.38 769215325.08
Total 4693319221.61 29862549.31 4663456672.30
(Continued)
31/12/2020
Impairment
Gross Net
allowance
Raw materials and packaging 191873650.49 13274081.73 178599568.76
Semi-finished goods and work in
2861343683.53-2861343683.53
progress
Merchandises 387506042.80 10568486.13 376937556.67
Total 3440723376.82 23842567.86 3416880808.96
5.7.2 Movement of impairment allowance
Increase Decrease
Business
31/12/2020 combination not Reversal and 31/12/2021
Provision Other
under common release
control
Raw materials
13274081.7311527075.198134202.3910016166.38-22919192.93
and packaging
Merchandises 10568486.13 5331142.92 2607.59 8958880.26 - 6943356.38
Total 23842567.86 16858218.11 8136809.98 18975046.64 - 29862549.31
5.8 Other current assets
31/12/202131/12/2020
Loans securied by treasury bonds 76205000.00 -
Interests on deposits 54529762.09 19563936.43
184Annual Report 2021
31/12/202131/12/2020
Deductible taxes 47487460.47 77848744.83
Total 178222222.56 97412681.26
Increase of other current assets for 82.96% year over year was mainly resulted from
increase in loans securied by treasury bonds and interests on deposits.
5.9 Long-term equity investments
Movement
Investee 31/12/2020 Investment Investment OCI Other equity
Contribution income at
withdrawal adjustment movement
equity
A. Associates -
Beijing Guge Trading Co. Ltd.
4915575.83397024.95
(Guge Trading)
Total 4915575.83 397024.95 - -
(Continued)
Movement
Dividend or Cumulative
Investee Impairment profit 31/12/2021 impairment
allowance Others
appropriation allowance
recognised
declared
A. Associates -
Guge Trading - - - 5312600.78 -
Total - - - 5312600.78 -
5.10 Other equity investments
31/12/202131/12/2020
Anhui Mingguang Village Commercial Bank
54542418.50
(Mingguang VCB)
Total 54542418.50
Supplementary disclosure
Dividend Reclassification
income Cumulative Cumulative from OCI to Reason for designation
recognised in gain loss retained as FVTOCI
the period earnings
On the basis of purpose
Mingguang VCB 809860.62 693720.70
of investment
5.11 Investment properties
Houses and buildings Land use rights Total
A. Costs
1.31/12/20208680555.752644592.0011325147.75
2. Increase - - -
3. Decrease - - -
4.31/12/20218680555.752644592.0011325147.75
185Annual Report 2021
Houses and buildings Land use rights Total
B. Cumulative depreciation
1.31/12/20206176477.79755726.426932204.21
2. Increase 261115.92 56026.56 317142.48
(1) Recognition 261115.92 56026.56 317142.48
3. Decrease - - -
4.31/12/20216437593.71811752.987249346.69
C. Impairment allowance
1.31/12/2020---
2. Increase - - -
3. Decrease - - -
4.31/12/2021---
D. Net value
1. As of the statement date 2242962.04 1832839.02 4075801.06
2. As of 31/12/2020 2504077.96 1888865.58 4392943.54
5.12 Fixed assets
5.12.1 Disclosure by category
31/12/202131/12/2020
Fixed assets 1984063975.87 1797789271.62
Fixed asset disposals - -
Total 1984063975.87 1797789271.62
5.12.2 Fixed assets
5.12.2.1 General disclosure
Houses and Transportation Administrative
Machinery Total
buildings vehicles and other devices
A. Costs
1.31/12/20202110023036.541137831234.6163055889.31202211609.803513121770.26
2. Increase 180129304.08 225064092.92 13431756.86 81405165.78 500030319.64
(1) Purchase 12028973.66 23895869.67 5082033.26 19273732.23 60280608.82
(2) Reclassification from
construction in progress 40268524.79 148773794.01 - 36731276.67 225773595.47
(3) Business combination 127441392.30 46747037.26 8269210.78 7457866.92 189915507.26
(4) Others 390413.33 5647391.98 80512.82 17942289.96 24060608.09
3. Decrease 62328761.51 31975682.30 5254418.05 14647711.05 114206572.91
(1) Disposal or scrap 50289570.30 20561493.46 5254418.05 8274628.89 84380110.70
(2) Others 12039191.21 11414188.84 - 6373082.16 29826462.21
4.31/12/20212227823579.111330919645.2371233228.12268969064.533898945516.99
B. Cumulative depreciation
186Annual Report 2021
Houses and Transportation Administrative
Machinery Total
buildings vehicles and other devices
1.31/12/2020887885451.17652893081.6354246302.02115239124.541710263959.36
2. Increase 100743005.66 127047360.43 11938113.54 47675329.27 287403808.90
(1) Recognition 82594638.72 106147587.41 5614356.78 30141917.34 224498500.25
(2) Business combination 17769678.01 15507216.88 6249135.23 4805171.31 44331201.43
(3) Others 378688.93 5392556.14 74621.53 12728240.62 18574107.22
3. Decrease 48672755.95 23688674.55 4797006.03 10598210.13 87756646.66
(1) Disposal or scrap 44602165.53 15272988.76 4797006.03 4510379.11 69182539.43
(2) Others 4070590.42 8415685.79 - 6087831.02 18574107.23
4.31/12/2021939955700.88756251767.5161387409.53152316243.681909911121.60
C. Impairment allowance
1.31/12/20202804324.861674420.097047.07582747.265068539.28
2. Increase 611808.94 - - - 611808.94
(1) Recognition 611808.94 - - - 611808.94
3. Decrease 299539.41 403328.74 7047.07 13.48 709928.70
(1) Disposal or scrap 299539.41 403328.74 7047.07 13.48 709928.70
4.31/12/20213116594.391271091.35-582733.784970419.52
D. Net value
1. As of the statement
date 1284751283.84 573396786.37 9845818.59 116070087.07 1984063975.87
2. As of 31/12/2020 1219333260.51 483263732.89 8802540.22 86389738.00 1797789271.62
5.12.2.2 Temporarily idle fixed assets
Cumulative
Cumulative
Cost impairment Net value Note
depreciation
allowance
Houses and
10582609.557282125.833116594.39183889.33
buildings
Machinery 9002312.33 7610219.08 1271091.35 121001.90
Transportation
----
vehicles
Administrative and
874608.18265657.69582733.7826216.71
other devices
Total 20459530.06 15158002.60 4970419.52 331107.94
5.12.2.3 Fixed assets with uncompleted ownership registration
Net value Remark
Houses and buildings 638158624.34 Registration in progress
Total 638158624.34 ——
5.12.2.4 Fixed assets with restriction as of the statement date
Cumulative
Cumulative
Cost impairment Net value Note
depreciation
allowance
187Annual Report 2021
Cumulative
Cumulative
Cost impairment Net value Note
depreciation
allowance
Houses and
8982726.644756988.19-4225738.45
buildings
Total 8982726.64 4756988.19 - 4225738.45
5.13 Construction in progress
5.13.1 Disclosure by category
31/12/202131/12/2020
Construction in progress 1064134904.21 279169201.60
Materials held for construction - -
Total 1064134904.21 279169201.60
5.13.2 Construction in progress
5.13.2.1 General disclosure
31/12/202131/12/2020
Impairment Impairment
Gross Net Gross Net
allowance allowance
Smart Zone 700794613.29 - 700794613.29 54494827.90 - 54494827.90
Theme Hotel 61431126.99 - 61431126.99 5538005.31 - 5538005.31
Automated Brewery 0.00 - 0.00 42832649.99 - 42832649.99
Automated Bottling System 0.00 - 0.00 14835486.72 - 14835486.72
Renovation
GJ Plant #11 Wine Cellar - - - 11166144.14 - 11166144.14
GJ Plant #12 Wine Cellar 10666666.95 - 10666666.95 -
Experience Centre - - - 8064287.27 - 8064287.27
Suizhou Plant 266102852.17 - 266102852.17 135930812.66 - 135930812.66
Other projects 25139644.81 - 25139644.81 6306987.61 - 6306987.61
Total 1064134904.21 - 1064134904.21 279169201.60 - 279169201.60
5.13.2.2 Detailed disclosure
Budget CNY million 31/12/2020 Increase
Smart Zone 8289.66 54494827.90 648404140.96
Theme Hotel 499.00 5538005.31 55893121.68
Automated Brewery 274.30 42832649.99 77555002.43
Automated Bottling System Renovation 40.00 14835486.72 15164247.79
GJ Plant #11 Wine Cellar 90.00 11166144.14 48281006.51
GJ Plant #12 Wine Cellar 162.50 - 10666666.95
Experience Centre 29.50 8064287.27 9544855.31
Suizhou Plant 600.00 135930812.66 130320712.07
Other projects 51.71 6306987.61 39649557.36
188Annual Report 2021
Budget CNY million 31/12/2020 Increase
Total 10036.67 279169201.60 1035479311.06
(Continued)
Reclassification to
Other decrease 31/12/2021
fixed assets
Smart Zone 2104355.57 - 700794613.29
Theme Hotel - - 61431126.99
Automated Brewery 120387652.42 - -
Automated Bottling System Renovation 29999734.51 - 0.00
GJ Plant #11 Wine Cellar 59447150.65 - -
GJ Plant #12 Wine Cellar 10666666.95
Experience Centre - 17609142.58 -
Suizhou Plant 148672.56 - 266102852.17
Other projects 13686029.76 7130870.40 25139644.81
Total 225773595.47 24740012.98 1064134904.21
(Continued)
Cumulative T/o: Borrowing
% of capitalisation costs
% of budget
completion of borrowing capitalised in
costs the period
Smart Zone 8.48 11.22 - -
Theme Hotel 12.31 24.37 - -
Automated Brewery 95.85 100.00 - -
Automated Bottling System Renovation 76.74 100.00 - -
GJ Plant #11 Wine Cellar 66.05 100.00 - -
GJ Plant #12 Wine Cellar 6.56 6.56 - -
Experience Centre 86.93 100.00
Suizhou Plant 44.38 44.38 2527982.73 2527982.73
Other projects 88.87 88.87 - -
Total 2527982.73 2527982.73
(Continued)
Current period
Source of funding
capitalisation rate
Smart Zone - Self-funded public financing
Theme Hotel - Self-funded
Automated Brewery - Self-funded
Automated Bottling System Renovation - Self-funded
GJ Plant #11 Wine Cellar - Self-funded
GJ Plant #12 Wine Cellar - Self-funded
Experience Centre Self-funded
189Annual Report 2021
Current period
Source of funding
capitalisation rate
Suizhou Plant 3.45 Self-funded loans
Other projects - Self-funded
Total -
Increase of construction in progress for 281.18% year over year was mainly resulted from
investment in Smart Zone and Suizhou Plant in the period.
5.14 Right-of-use assets
Houses and buildings Machinery Total
A. Costs -
1.31/12/2020-
Change of accounting policies -
1/1/202156071482.961330929.5757402412.53
2. Increase 978998.78 978998.78
3. Decrease - - -
4.31/12/202157050481.741330929.5758381411.31
B. Cumulative depreciation -
1.31/12/2020-
Change of accounting policies -
1/1/2021---
2. Increase 14010539.12 443643.22 14454182.34
3. Decrease - - -
4.31/12/202114010539.12443643.2214454182.34
C. Impairment allowance -
1.31/12/2020-
Change of accounting policies -
1/1/2021-
2. Increase -
3. Decrease -
4.31/12/2021---
D. Net value -
1. As of the statement date 43039942.62 887286.35 43927228.97
2. As of 01/01/2021 56071482.96 1330929.57 57402412.53
5.15 Intangible assets
5.15.1 General disclosure
Patents and
Land use rights Software Total
trademarks
A. Costs
1.31/12/2020846743730.35125206832.57215006066.191186956629.11
2. Increase 155302466.40 5495369.70 38039080.00 198836916.10
190Annual Report 2021
Patents and
Land use rights Software Total
trademarks
(1) Purchase 103066353.81 2201787.53 26992.33 105295133.67
(2) Internal development - - - -
(3) Reclassification from
-3293582.17-3293582.17
construction in progress
(4) Business combination 52236112.59 - 38012087.67 90248200.26
3. Decrease 282456.00 1451037.06 - 1733493.06
(1) Disposal 282456.00 1451037.06 - 1733493.06
4.31/12/20211001763740.75129251165.21253045146.191384060052.15
B. Cumulative amortisation - -
1.31/12/2020158016689.4048008475.1646219486.76252244651.32
2. Increase 23935548.47 22301486.24 23335984.15 69573018.86
(1) Recognition 19804993.98 22301486.24 46904.15 42153384.37
(2) Business combination 4130554.49 - 23289080.00 27419634.49
3. Decrease 282456.00 944004.64 - 1226460.64
(1) Disposal 282456.00 944004.64 1226460.64
4.31/12/2021181669781.8769365956.7669555470.91320591209.54
C. Impairment allowance - -
1.31/12/2020----
2. Increase - - - -
3. Decrease - - - -
4.31/12/2021----
D. Net value - -
1. As of the statement date 820093958.88 59885208.45 183489675.28 1063468842.61
2. As of 31/12/2020 688727040.95 77198357.41 168786579.43 934711977.79
5.15.2 Intangible assets pledged as of the statement date
Cumulative Impairment
Cost Net value Note
amortisation allowance
Land use rights 4029919.10 1249274.92 2780644.18
Total 4029919.10 1249274.92 2780644.18
5.15.3 No intangible assets as of the statement date was with pending ownership
registration.
191Annual Report 2021
5.16 Goodwill
5.16.1 General disclosure
Increase Decrease
Investee 31/12/2020 Business 31/12/2021
Other Disposal Other
combination
HHL Distillery 478283495.29 478283495.29
Mingguang
-60686182.0760686182.07
Distillery
Treasure
-22394707.6522394707.65
Distillery
Total 478283495.29 83080889.72 561364385.01
5.16.2 Asset groups associated with goodwill
Asset group CNY million
Unrecognis Chang
Composition Alloca ed goodwill e in
Investee of asset Book ted attributable Determination
group Total
the
value good to period
will non-control
ling interest
Active markets are
available for the products
Operating of the asset group to which
HHL assets of 974.0 478.2 191 goodwill is allocated and
459.53 No
Distillery HHL 8 8 1.89 hence the asset group is
Distillery capable of generating
identifiable separate cash
flows.Active markets are
available for the products
Operating of the asset group to which Recog
Mingguang assets of 187.1 288. goodwill is allocated and nition
60.6840.46
Distillery Mingguang 3 27 hence the asset group is in the
Distillery capable of generating period
identifiable separate cash
flows.Active markets are
available for the products
Operating of the asset group to which Recog
Treasure assets of 107. goodwill is allocated and nition
69.8522.3914.93
Distillery Treasure 17 hence the asset group is in the
Distillery capable of generating period
identifiable separate cash
flows.Note: The book value of HHL Distillery asset group did not include surplus assets and
non-operating liabilities of HHL Distillery.
5.16.3 Impairment assessment
The recoverable amounts of the asset groups were determined by the present value of
their respective future cash flows. Detailed forecasted cash flows for the next 5 years and
192Annual Report 2021
further forecasted cash flows for periods starting from the 6th year from the statement date
applicable to each asset group was approved by the management of the Company. The
discount rates adopted reflect the current time value of money and the specific risks of the
asset groups. Key assumptions such revenue cost of sales growth rate and expenses were
used in the forecast. These key assumptions had been developed by taking into
consideration factors such as historical profitability growth trend sector conditions and
management expection for future market development.Following the impairment test and with reference to the Appraisal Reports
(HuayaZhengxinPingBaoZi [2022] No. A07-0006 and HuayaZhengxinPingBaoZi [2022] No.A07-0007) issued by Beijing Huaya Zhengxin Assets Appraisal Co. Ltd. the recoverable
amounts of the asset groups were not lower than their respective value inclusive of
goodwill as of the statement date. No impairment was identified upon the impairment test.
5.16.4 Impact of impairment assessment
See Note 11.1 for further details.
5.17 Long-term deferred expenses
31/12/2020 Capitalisation Amortisation Other decrease 31/12/2021
Experience Centre 25368080.45 17682269.18 12597202.10 - 30453147.53
Waste Water Plant 2844754.10 - 922622.95 - 1922131.15
HHL Winery and
7937278.72-3466982.03-4470296.69
Museum
GJCCP Culture Centre 3545454.55 - 1181818.18 - 2363636.37
Yantai Distilled Wine
937109.64-488926.78-448182.86
Culture Project
Miscellaneous 23959256.19 7357775.48 15066088.24 - 16250943.43
Total 64591933.65 25040044.66 33723640.28 - 55908338.03
5.18 Deferred tax assets (DTAs) and deferred tax liabilities (DTLs)
5.18.1 DTAs before offset
31/12/202131/12/2020
Deductible temporary Deductible temporary
DTA DTA
difference difference
Asset impairment
34832968.838597940.2128911107.147211407.41
allowance
Credit impairment
56327170.3714078521.6944784157.3211179541.79
allowance
Unrealised profit 89880690.08 22470172.52 31616173.72 7904043.43
Deferred income 91101512.05 22355416.63 75111997.53 18270618.94
Recoverable loss 3275424.29 235799.84 43272801.87 10777899.23
Accrued employee
14728894.073682223.5221874338.705468584.68
benefits
Accrued expenses 845357525.22 211333743.87 144731955.22 36160326.47
193Annual Report 2021
31/12/202131/12/2020
Deductible temporary Deductible temporary
DTA DTA
difference difference
and rebates
Fair value change
or receivables held 4296727.84 1074181.96
for factoring
Total 1139800912.75 283828000.24 390302531.50 96972421.95
5.18.2 DTLs before offset
31/12/202131/12/2020
Taxable temporary Taxable temporary
DTL DTL
difference difference
Fixed asset depreciation 74959073.18 18739768.30 73753668.04 18438417.01
Purchase price allocation 689376361.16 172344090.29 381654221.40 95413555.35
Fair value change of
financial asset held for 11103876.68 2775969.16 3877915.51 969478.88
trading
Fair value change of other
693720.70173430.18
equity investments
Total 776133031.72 194033257.93 459285804.95 114821451.24
5.19 Other non-current assets
31/12/202131/12/2020
Prepayment for machinery 7220318.40 5943717.02
Total 7220318.40 5943717.02
5.20 Short-term borrowings
31/12/202131/12/2020
Credit loans 70665500.00
Loans with securities by physical assets 10008555.55
Loans with securities by intangible assets 20026583.34
Total 30035138.89 70665500.00
5.21 Notes payable
5.21.1 Disclosure by type
Type 31/12/2021 31/12/2020
Bank acceptance 127114336.16 140540000.00
Commercial acceptance - 74535.60
Total 127114336.16 140614535.60
5.21.2 No overdue note payable as of the statement date.
5.21.3 Decrease of notes payable for 9.60% year over year was mainly resulted from
settlement of mature notes payable prior to the year end.
5.22 Accounts payable
194Annual Report 2021
5.22.1 Disclosure by nature
31/12/202131/12/2020
Payable for goods 605774178.94 299936875.62
Payable for construction and machinery 253893258.27 135720442.04
Others 160769884.68 69549244.20
Total 1020437321.89 505206561.86
5.22.2 Top-five venders as of the statement date by account payable balance
31/12/2021 Reason for remaining unsettled
Top 1 505111.19 Payable for goods
Top 2 393392.70 Tail payment for construction
Top 3 348350.03 Other
Top 4 312248.05 Tail payment for construction
Top 5 244906.28 Tail payment for construction
Total 1804008.25
5.23 Contract liabilities
31/12/202131/12/2020
Advanced receipts for goods 1825447705.85 1206573886.26
Total 1825447705.85 1206573886.26
Increase of contract liabilities for 51.29% year over year was mainly resulted from increase
of advanced receipts for goods by GJ Sales.
5.24 Employee benefits payable
5.24.1 General disclosure
31/12/2020 Accrual Decrease 31/12/2021
A. Short-term benefits 496473581.57 2847457558.70 2634468000.81 709463139.46
B. Post-employment benefits
1655533.19127559816.28129006701.19208648.28
–Defined comtribution plans
C. Termination benefits - 1111573.22 1111573.22 -
D. Other long-term benefits due
----
within 1 year
Total 498129114.76 2976128948.20 2764586275.22 709671787.74
5.24.2 Short-term benefits
31/12/2020 Accrual Decrease 31/12/2021
A. Salaries wages allowances
418034813.692502957312.682290212301.09630779825.28
and subsidies
B. Welfare 101477123.04 101477123.04 -
C. Social securities 486019.58 57776560.68 57817118.04 445462.22
T/o: Medical insurance 486019.58 55629075.40 55669667.26 445427.72
T/o: Work-place injury
2147485.282147450.7834.50
insurance
195Annual Report 2021
31/12/2020 Accrual Decrease 31/12/2021
D. Housing funds 4342621.32 82964882.88 81654033.80 5653470.40
E. Union fund and education
70812311.3027042198.4028333852.2269520657.48
fund
F. Annuity 2797815.68 75239481.02 74973572.62 3063724.08
Total 496473581.57 2847457558.70 2634468000.81 709463139.46
5.24.3 Post-employement benefits – Defined contribution plans
31/12/2020 Accrual Decrease 31/12/2021
A. Basic pension 1655533.19 123493690.55 124940575.46 208648.28
B. Job-loss insurance - 4066125.73 4066125.73 -
Total 1655533.19 127559816.28 129006701.19 208648.28
5.25 Taxes and fees payable
31/12/202131/12/2020
VAT 154597583.14 93836793.23
Consumption duty 406331487.38 144069975.35
CIT 255882481.65 78334425.91
Individual income tax 2674057.91 2966503.37
Urban maintenance and construction tax 20431543.35 12449531.95
Stamp duty 2882861.65 909983.20
Education surcharge 18506770.12 11829108.81
Others 11964201.51 4746370.28
Total 873270986.71 349142692.10
5.26 Other payables
5.26.1 General disclosure
31/12/202131/12/2020
Interests payable -
Dividends payable - -
Other payables 2280937078.12 1396599161.14
Total 2280937078.12 1396599161.14
5.26.2 Other payables
31/12/202131/12/2020
Margin deposits 1845795843.02 1280042883.26
Quality warranty 48556830.53 41210694.26
Withheld housing fund payable 4722066.45 4342621.32
Others 381862338.12 71002962.30
Total 2280937078.12 1396599161.14
Other payables aged over 1 year as of the statement date mainly comprised pre-mature
margin deposits and quality warranty.
196Annual Report 2021
5.27 Non-current liabilities due within 1 year
31/12/202131/12/2020
Lease liabilities due within 1 year 13190399.32
Total 13190399.32
5.28 Other current liabilities
31/12/202131/12/2020
Accruals 562547100.62 164008324.26
Pre-mature output VAT 236975461.98 156784058.77
Total 799522562.60 320792383.03
5.29 Long-term borrowings
31/12/202131/12/2020
Credit loans 60000000.00 60000000.00
Interests 176255.83 117638.89
Guaranteed loans 112180000.00
Total 172356255.83 60117638.89
5.30 Lease liabilities
31/12/202131/12/2020
Gross lease payments 45436263.46
Less: Unrecognised financing costs 4138640.96
Net 41297622.50 -
T/o: Due within 1 year 13190399.32
T/o: Due after 1 year 28107223.18 -
5.31 Deferred income
5.31.1 General disclosure
Reason for
31/12/2020 Increase Decrease 31/12/2021
recognition
Receipt of
Government grants 75111997.53 23193903.44 7204388.92 91101512.05 asset-related
government grants
Total 75111997.53 23193903.44 7204388.92 91101512.05
5.31.2 Government grants
Reclassified
Other
31/12/2020 Receipt to other 31/12/2021 Nature
movement
income
Subsidy on
Construction of 35338000.00 - - - 35338000.00 Asset-related
Suizhou Plant
Refund of Land Fee 22032186.60 22208000.00 1539876.31 - 42700310.29 Asset-related
Fund for Clustered
Development Base
2375360.02 - 622719.96 - 1752640.06 Asset-related
for Strategic
Innovative Sectors
197Annual Report 2021
Reclassified
Other
31/12/2020 Receipt to other 31/12/2021 Nature
movement
income
Subsidy Fund for Air
2379469.47 - 294364.80 - 2085104.67 Asset-related
Pollution Prevention
Subsidy on Devices 1681178.20 - 401472.41 - 1279705.79 Asset-related
Subsidy of 2019
Leading
Manufacturing
Province and 1558837.69 - 308654.28 - 1250183.41 Asset-related
Non-state-owned
Economy
Development
Anhui Innovation
Subsidy for
Development of 1217575.00 - 730545.00 - 487030.00 Asset-related
Owned Innovation
Capacity
R&D Fund for Smart
Distilling Yeast 1130000.00 - 1130000.00 - - Asset-related
Fabrication
Subsidy on
Renovation of #2 981481.48 - 222222.24 - 759259.24 Asset-related
Furnace
Subsidy on
795911.83 - 127004.59 - 668907.24 Asset-related
Equipments
Renovation of GJ
787708.47 - 47499.96 - 740208.51 Asset-related
Zhangji Cellar
Subsidy for
Corporation on Key
Technology of Key 600000.00 - 600000.00 - - Asset-related
Food Isotope
Authenticity
Subsidy for
Improvement of Food 551724.25 - 137931.00 - 413793.25 Asset-related
Safety
Anhui Leading Capital
502439.24 - 292682.88 - 209756.36 Asset-related
for Service Sector
Subsidy for Electricity
Demand-side 372000.00 - 144000.00 - 228000.00 Asset-related
Adminsitration
Full-time Online
Supervision on
Automated Blending 171875.00 - 93749.68 - 78125.32 Asset-related
Storage and Product
Quality
Energy Saving
Renovation for
137500.28 - 137500.28 - 0.00 Asset-related
Electric Motors and
Furnaces
198Annual Report 2021
Reclassified
Other
31/12/2020 Receipt to other 31/12/2021 Nature
movement
income
Technological
Renovation for 2410208.51 - 229487.88 - 2180720.63 Asset-related
Distilling System
Smart Fermentation
88541.49 - 31250.04 - 57291.45 Asset-related
Innovation
Designated Fund for
- 232500.00 35000.00 - 197500.00 Asset-related
Furnace Renovation
Bonus for
Technological
- 631049.92 78427.61 - 552622.31 Asset-related
Improvement
Investment
Subsidy to the
Technical and Quality - 122353.52 - - 122353.52 Asset-related
Department
Total 75111997.53 23193903.44 7204388.92 91101512.05
5.32 Share capital
Movement
31/12/2020
Bonus Reserve
Qty Issue Others Total
31/12/2021
issue conversion
Qty. Qty. Qty.Qty. Qty
Shares 503600000.00 25000000.00 - - - - 528600000.00
5.33 Capital reserves
31/12/2020 Increase Decrease 31/12/2021
Share premium 1262552456.05 4929342074.85 6191894530.90
Other capital reserves 32853136.20 32853136.20
Total 1295405592.25 4929342074.85 6224747667.10
5.34 Other comprehensive income (OCI)
Movement
31/12/2020
Before tax Less: Income tax
A. Not reclassifiable to profit or loss 693720.70 173430.18
Change in the fair value of other equity investments 693720.70 173430.18
B. Reclassifiable to profit or loss -4296727.84 -1074181.96
Gain from reclassification of financial assets -4296727.84 -1074181.96
Total -3603007.14 -900751.78
(Continued)
Movement
After tax After tax
attributable to attributable to 31/12/2021
shareholders of non-controlling
the Company interests
199Annual Report 2021
Movement
After tax After tax
attributable to attributable to 31/12/2021
shareholders of non-controlling
the Company interests
A. Not reclassifiable to profit or loss 312174.31 208116.21 312174.31
Change in the fair value of other equity investments 312174.31 208116.21 312174.31
B. Reclassifiable to profit or loss -3047232.50 -175313.38 -3047232.50
Gain from reclassification of financial assets -3047232.50 -175313.38 -3047232.50
Total -2735058.19 32802.83 -2735058.19
5.35 Surplus reserves
31/12/2020 Increase Decrease 31/12/2021
Statutory reserve 256902260.27 12500000.00 269402260.27
Total 256902260.27 12500000.00 269402260.27
10% of the current year’s net profit was transferred to surplus reserves in accordance with
the Company Law and the Company’s Article of Association.
5.36 Retained earnings
Y/e 31/12/2021 Y/e 31/12/2020
As of 31/12/2020 7987380161.21 6888203911.92
Total adjustment of retained earnings brought forward - -
As of 1/1/2021 7987380161.21 6888203911.92
Add: Net profit attributable to shareholders of the Company 2297894413.25 1854576249.29
Less: Transfer to statutory reserve 12500000.00
Less: Dividends on ordinary shares payable 755400000.00 755400000.00
As of 31/12/2021 9517374574.46 7987380161.21
5.37 Revenue and cost of sales
Y/e 31/12/2021 Y/e 31/12/2020
Revenue Cost of sales Revenue Cost of sales
Primary operation 13180706416.64 3271880424.79 10236883038.46 2522906977.56
Other operation 89119849.40 32196587.13 55181495.95 26907967.20
Total 13269826266.04 3304077011.92 10292064534.41 2549814944.76
5.38 Taxes and surcharges
Y/e 31/12/2021 Y/e 31/12/2020
Consumption duty 1669063914.39 1343748348.14
Urban construction and maintenance tax and education surcharges 300643974.00 231441505.09
Urban land use tax 15985317.49 13696863.78
Property tax 18286057.72 17123738.65
200Annual Report 2021
Y/e 31/12/2021 Y/e 31/12/2020
Stamp duty 11749843.93 8853581.53
Others 16086098.14 10425132.36
Total 2031815205.67 1625289169.55
5.39 Selling expenses
Y/e 31/12/2021 Y/e 31/12/2020
Personnel costs 863583183.40 723874977.05
Travel 161091812.25 133511390.56
Advertisement 900546437.33 840407171.96
Comprehensive promotion 1268396513.56 755941972.88
Services 705368563.00 578401082.92
Others 109088973.54 88840567.95
Total 4008075483.08 3120977163.32
5.40 Administrative expenses
Y/e 31/12/2021 Y/e 31/12/2020
Personnel costs 647493344.01 507634459.19
Office costs 61116360.31 60807905.04
Repairs 59205451.47 46267736.17
Depreciation 76054616.50 67142270.79
Amortisation 34799459.54 31267096.32
Sewage 27191838.92 17742036.94
Travel 11420677.10 10324813.18
Utilities 11157257.56 7613501.49
Others 93742414.33 53401761.36
Total 1022181419.74 802201580.48
5.41 R&D expenses
Y/e 31/12/2021 Y/e 31/12/2020
Personnel costs 32495950.89 24471993.23
Direct costs 9389089.92 3988348.08
Depreciation 3230977.28 3084671.65
Overheads 6333457.27 9045123.50
Total 51449475.36 40590136.46
5.42 Financial costs
Y/e 31/12/2021 Y/e 31/12/2020
Interest expenses 7036575.14 876815.80
Less: Interest income 210634326.57 261861342.00
Net interest expenses -203597751.43 -260984526.20
201Annual Report 2021
Y/e 31/12/2021 Y/e 31/12/2020
Net exchange loss -168340.77 51764.56
Bank charges and others -289564.86 96305.57
Total -204055657.06 -260836456.07
Increase of financial costs for 21.77% year over year was mainly resulted from reduction in
interest income in the period.
5.43 Other income
Y/e 31/12/2021 Y/e 31/12/2020 Nature
Government grants
T/o: Transfer from deferred income 7204388.92 5548440.39 Asset-related
T/o: Government grants directly recognised in P&L 48065239.56 41926091.80 Revenue-related
Total 55269628.48 47474532.19
Increase of other income for 16.42% year over year was mainly resulted from receipt of the
Hubei University of Science and Technology Industrialisation Fund in the period.
5.44 Investment income
Y/e 31/12/2021 Y/e 31/12/2020
Investment income from long-term equity investments at equity 397024.95 237293.59
Gain from disposal of FVTPLs 11855405.29
Gain from holding of debt instruments
Gain from holding of other equity investments 809860.62
Gain from disposal of FVTOCIs -23271118.08 -34923074.38
Gain from holding of financial assets held for trading 14393316.21 41473224.56
Others 507890.16
Total 4692379.15 6787443.77
Decrease of investment income for 30.87% year over year was mainly resulted from
reduction in Gain from holding of financial assets held for trading in the period.
5.45 Gain from fair value changes
Y/e 31/12/2021 Y/e 31/12/2020
Financial assets held for trading 7225961.17 -19983181.51
T/o: Derivative financial assets - -
Total 7225961.17 -19983181.51
5.46 Credit impairment loss
Y/e 31/12/2021 Y/e 31/12/2020
Notes receivable - 34938.37
Accounts receivable -7698458.43 -596892.02
Other receivables 1205616.99 -371799.19
202Annual Report 2021
Y/e 31/12/2021 Y/e 31/12/2020
Total -6492841.44 -933752.84
5.47 Asset impairment loss
Y/e 31/12/2021 Y/e 31/12/2020
Inventories -16126347.91 -13182487.48
Fixed assets -611808.94 -912559.84
Total -16738156.85 -14095047.32
5.48 Gain from asset disposals
Y/e 31/12/2021 Y/e 31/12/2020
Gain or loss from disposal of fixed assets construction in
1368763.131223536.53
progress and intangible assets not classified as held for sale
T/o: Fixed assets 1368763.13 1223536.53
Total 1368763.13 1223536.53
5.49 Non-operating income
5.49.1 General disclosure
Current period
Y/e 31/12/2021 Y/e 31/12/2020
non-recurring
Damage and scrapping of non-current assets 12541.54 178.25 12541.54
Government grants not related to ordinary
4873.94150000.004873.94
operating activities
Fine and compensation 43776517.37 34815119.51 43776517.37
Wastes 4549768.93 5743313.19 4549768.93
Release of payables 30649702.32 23936972.51 30649702.32
Others 1364754.10 1951704.61 1364754.10
Total 80358158.20 66597288.07 80358158.20
5.49.2 Government grants not related to ordinary operating activities
Y/e 31/12/2021 Y/e 31/12/2020 Nature
Other bonuses 4873.94 150000.00 Revenue related
Total 4873.94 150000.00 -
5.50 Non-operating expenses
Current period
Y/e 31/12/2021 Y/e 31/12/2020
non-recurring
Damage and scrapping of non-current assets 7358161.65 4916354.87 7358161.65
Donations 21405652.43
Others 3315122.96 940840.78 3315122.96
Total 10673284.61 27262848.08 10673284.61
5.51 Income tax expenses
5.51.1 General disclosure
203Annual Report 2021
Y/e 31/12/2021 Y/e 31/12/2020
Current income tax 903705314.91 636476576.50
Deferred income tax -106743019.82 -10528792.81
Total 796962295.09 625947783.69
5.51.2 Reconciliation of profit before tax and income tax expenses
Y/e 31/12/2021
Profit before tax 3171293934.56
Income tax calcuated by the applicable tax rate 792823483.64
Impact of different tax rates applicable to subsidiaries -10694115.33
Adjustment for prior period 28428411.94
Non-taxable income -2437521.86
Non-deductible costs expenses and loss 1328323.89
Utilisation of prior period recoverable tax loss with no DTA recognised -
Impact of current period recoverable tax loss and temporary differences
-
with no DTA recognised
Progressive deduction for R&D expenses -12486287.19
Impact of tax rate changes -
Exemption
Income tax expenses 796962295.09
5.52 Notes to the consolidated cash flow statements
5.52.1 Other cash receipts in relation to operating activities
Y/e 31/12/2021 Y/e 31/12/2020
Margin deposits and quality warranty 573099096.03 71271892.53
Government grants received 59512598.91 42815381.22
Bank interests received 175668500.91 244206194.38
Release of restricted cash 334308875.92 2675000000.00
Others 11742422.18 70984823.65
Total 1154331493.95 3104278291.78
5.52.2 Other cash payments for operating activities
Y/e 31/12/2021 Y/e 31/12/2020
Paid expenses 2252989080.36 1947222615.61
Margin deposits and quality warranty 7522439.34 7848981.62
Cash restricted for bank acceptance and guarantee
133372593.16134308875.92
letters
Structural desposits and fixed term deposits not
200000000.00
eligible for early redemption
Others 63271489.74 88165064.00
Total 2457155602.60 2377545537.15
204Annual Report 2021
5.52.3 Other cash receipts in relation to financing activities
Y/e 31/12/2021 Y/e 31/12/2020
Financing costs paid 4587264.16
Rentals paid 15430214.16
Total 20017478.32
5.53 Supplemenatry information to the consolidated cash flow statement
5.53.1 Suppplementary information to the consolidated cash flow statement
Y/e 31/12/2021 Y/e 31/12/2020
A. Reconciliation between net profit and net cash flows from operating
activities
Net profit 2374331639.47 1847888183.03
Add: Asset impairment loss 16738156.85 15028800.16
Add: Credit impairment loss 6492841.44
Add: Fixed asset depreciation and investment property depreciation 224815642.73 214098270.11
Add: Right-of-use asset depreciation 14454182.34
Add: Intangible asset amortisation 42153384.37 34419897.25
Add: Long-term deferred expense amortisation 33723640.28 23731383.35
Add: Loss from disposal of fixed assets intangible assets and other
-1368763.13-1223536.53
long-term assets (gain with “–”)
Add: Loss from scrapping of fixed assets (gain with “–”) 7345620.11 4916176.62
Add: Loss from fair value changes (gain with “–”) -7225961.17 19983181.51
Add: Financial costs (income with “–”) -47493186.95 928580.36
Add: Investment loss (gain with “–”) -4692379.15 -6787443.77
Add: DTA decrease (increase with “–”) -186855578.29 -6477877.44
Add: DTL increase (decrease with “–”) 79211806.69 -4050915.37
Add: Inventory decrease (increase with “–”) -1252595844.79 -415011334.66
Add: Operating receivable decrease (increase with “–”) 868490814.49 -548002635.36
Add: Operating payable increase (decrease with “–”) 2752473236.58 104411672.19
Add: Others (Note) 334308875.92 2340691124.08
Net cash flows from operating activities 5254308127.79 3624543525.53
B. Significant investing and financing activities not involving cash
Debt-to-equity conversion -
Corporate bonds convertible within 1 year -
Fixed asset acquired through financial leasing -
C. Movement of cash and cash equivalents
Cash as of 31/12/2021 6057550178.60 5636903693.74
Less: Cash as of 31/12/2020 5636903693.74 2944749918.09
Add: Cash equivalents as of 31/12/2021 -
Less: Cash equivalents as of 31/12/2020 -
205Annual Report 2021
Y/e 31/12/2021 Y/e 31/12/2020
Net increase of cash and cash equivalents 420646484.86 2692153775.65
Note: Others represented impact of restricted cash on the net cash flows from operating
activities for the period.
5.53.2 Composition of cash and cash equivalents
31/12/202131/12/2020
A. Cash 6057550178.60 5636903693.74
T/o: Cash in hand 135129.66 178127.77
T/o: Cash at bank usable on demand 6057283646.58 5636406199.84
T/o: Other monetary funds usable on demand 131402.36 319366.13
B. Cash equivalents - -
T/o: Investment in debt instruments mature in 3 months - -
C. Cash and cash equivalents as of 31 December 6057550178.60 5636903693.74
T/o: Cash and cash equivalents held by group companies with
-
restriction on use
5.54 Assets with restriction on ownership or disposal
Book value as of
Restriction
31/12/2021
Structural deposits not eligible for early redemption and fixed term
Notes receivable 5867372593.16
deposits and margin deposits for bank acceptance
Fixed assets 4225738.45 Securities for loans
Intangible assets 2780644.18 Securities for loans
Total 5874378975.79 ——
5.55 Government grants
5.55.1 Asset related government grants
Amount recognised in the income Income
Balance
Grant amount statement statement
sheet item
Y/e 31/12/2021 Y/e 31/12/2020 item
Subsidy on Construction of Deferred
35338000.00 - - Other income
Suizhou Plant income
Deferred
Refund of Land Fee 42700310.29 1539876.31 530641.33 Other income
income
Fund for Clustered
Deferred
Development Base for 1752640.06 622719.96 422719.98 Other income
income
Strategic Innovative Sectors
Subsidy Fund for Air Deferred
2085104.67 294364.80 265613.82 Other income
Pollution Prevention income
Deferred
Subsidy on Devices 1279705.79 401472.41 155259.30 Other income
income
Subsidy of 2019 Leading
Manufacturing Province Deferred
1250183.41 308654.28 311162.31 Other income
and Non-state-owned income
Economy Development
206Annual Report 2021
Amount recognised in the income Income
Balance
Grant amount statement statement
sheet item
Y/e 31/12/2021 Y/e 31/12/2020 item
Anhui Innovation Subsidy
Deferred
for Development of Owned 487030.00 730545.00 730545.00 Other income
income
Innovation Capacity
R&D Fund for Smart Deferred
- 1130000.00 - Other income
Distilling Yeast Fabrication income
Subsidy on Renovation of Deferred
759259.24 222222.24 18518.52 Other income
#2 Furnace income
Deferred
Subsidy on Equipments 668907.24 127004.59 288116.33 Other income
income
Renovation of GJ Zhangji Deferred
740208.51 47499.96 47499.96 Other income
Cellar income
Subsidy for Corporation on
Deferred
Key Technology of Key Food - 600000.00 - Other income
income
Isotope Authenticity
Subsidy for Improvement Deferred
413793.25 137931.00 137931.00 Other income
of Food Safety income
Anhui Leading Capital for Deferred
209756.36 292682.88 292682.88 Other income
Service Sector income
Subsidy for Electricity
Deferred
Demand-side 228000.00 144000.00 144000.00 Other income
income
Adminsitration
Full-time Online
Supervision on Automated Deferred
78125.32 93749.68 93750.00 Other income
Blending Storage and income
Product Quality
Energy Saving Renovation
Deferred
for Electric Motors and 0.00 137500.28 137499.96 Other income
income
Furnaces
Technological Renovation Deferred
2180720.63 229487.88 62499.96 Other income
for Distilling System income
Smart Fermentation Deferred
57291.45 31250.04 31250.04 Other income
Innovation income
Designated Fund for Deferred
- - 22500.00 Other income
Company Development income
Deferred
IOT Souce Tracing System - - 1856250.00 Other income
income
Designated Fund for Deferred
197500.00 35000.00 Other income
Furnace Renovation income
Bonus for Technological Deferred
552622.31 78427.61 Other income
Improvement Investment income
Subsidy to the Technical Deferred
122353.52 - Other income
and Quality Department income
Total 91101512.05 - 7204388.92 5548440.39 ——
5.55.2 Revenue related government grants
Income Amount recognised in the income Income
Grant amount statement statement statement
item Y/e 31/12/2021 Y/e 31/12/2020 item
Other
Tax Refund 10939461.17 10939461.17 7142710.58 Other income
income
207Annual Report 2021
Income Amount recognised in the income Income
Grant amount statement statement statement
item Y/e 31/12/2021 Y/e 31/12/2020 item
Hubei University of
Other
Science and Technology 9541000.00 9541000.00 2180000.00 Other income
income
Industrialisation Fund
Subsidy for Suizhou
Other
Relocation and 6946300.00 6946300.00 Other income
income
Renovation Project
Xianning Fiscal Incentive
Other
for 0 Fiscal Account 2300000.00 2300000.00 Other income
income
Balance
Other
Job-loss Insurance Refund 1504366.43 1504366.43 2280389.84 Other income
income
2021 Training Subsidy for
Other
Workplace Skill 1226000.00 1226000.00 Other income
income
Improvement
2021 Substantial Fund for Other
1200000.00 1200000.00 Other income
Innovative Province income
2020 Designated Fund for
Provincial Manufacturing Other
1000000.00 1000000.00 Other income
Development with High income
Quality
Fiscal Bonus for Digital
Economy Development
Other
offered by Construction 1000000.00 1000000.00 Other income
income
Fund of Leading
Manufacturing Province
Subsidies by Local
Other
Finance Supervision 1000000.00 1000000.00 Other income
income
Authorities
Bonus for Strategic Other
1000000.00 1000000.00 Other income
Innovative Base income
2020 Construction Fund
Other
of Leading Manufacturing 5160000.00 Other income
income
Province
2020 Designated Fund for
Development of Other
4600000.00 Other income
Emerging Leading income
Manufacturing City
Fiscal Subsidy offered by
Other
Cashing Centre of Wuhan 2364000.00 Other income
income
Hanyang Treasury
Subsidy for Wuhan Class
A Scenic Site Free
Other
Entrance offered by 2220000.00 Other income
income
Wuhan Culture and Travel
Bureau
208Annual Report 2021
Income Amount recognised in the income Income
Grant amount statement statement statement
item Y/e 31/12/2021 Y/e 31/12/2020 item
Subsidy for Air Pollution
Prevention offered by Other
1000000.00 Other income
Environmental Protection income
Bureau
AMR Bonus for Other
900000.00 Other income
Standardisation income
Trademark Bonus by Other
895000.00 Other income
Bozhou Treasury income
Other grants related to
Other
ordinary operating 10408111.96 10408111.96 13183991.38 Other income
income
activities
Grants related to ordinary Non-operat Non-operating
4873.944873.94150000.00
operating activities ing income income
Financial
Interest subsidies 874116.13 874116.13 992947.18 Financial costs
costs
Total 48944229.63 —— 48944229.63 43069038.98 ——
Note 6 Change in the scope of consolidation
6.1 Business combination not under common control
6.1.1 General disclosure
Revenue for Net profit for
the period the period
Determinati
Date of Type of from the from the
Subsidiar Purchase Shareholdi Combinatio on of
acquisitio transactio combination combination
y price ng acquired n date combination
n n date to the date to the
date
statement statement
date date
Purchase
price paid
transfer of
Mingguan
2021.1.1 200200000. ownership of 295308911. -11423106.
g 60% Purchase 2021.1.10
0 00 shares 41 29
Distillery
transfer of
control over
assets
Additiona
Completion
Treasure 2021.9.1 224723400. l
60% 2021.9.15 of regulatory 0.00 -914211.68
Distillery 5 00 investme
registration
nt
209Annual Report 2021
6.1.2 Cost of acquisition and goodwill
Mingguang Distillery Treasure Distillery
Cost of acquisition
Cash 200200000.00 224723400.00
Total cost of acquisition 200200000.00 224723400.00
Less: Fair value of net identifiable
139513817.93202328692.35
assets acquired
Goodwill 60686182.07 22394707.65
6.1.3 Net identifiable assets of the acquirees as of the combination dates
Mingguang Distillery
Fair value Book value
Monetary funds 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
Other equity investments 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 deferred expenses 2929439.00 2929439.00
Deferred tax assets 3498516.13 3498516.13
Short-term borrowings 94000000.00 94000000.00
Accounts payable 43654530.85 43654530.85
Contract liabilities 46956781.25 46956781.25
Employee benefits payable 4147589.59 4147589.59
Taxes and fees payable 38825770.24 38825770.24
Other payables 141767461.40 141767461.40
Other current liabilities 18104381.56 18104381.56
Deferred income 807082.92 807082.92
Deferred tax liabilities 50824231.26 0.00
Net Assets 232786659.22 80313965.43
Less: Non-controlling interests 93272841.29 32283763.77
210Annual Report 2021
Fair value Book value
Net assets acquired 139513817.93 48030201.66
Treasure Distillery
Fair value Book value
Monetary funds 62824.85 62824.85
Accounts receivable 303593.00 303593.00
Other receivables 224723400.00 224723400.00
Inventories 162938624.00 28256221.73
Other current assets 2970.29 2970.29
Fixed assets 25952387.00 11875869.22
Intangible assets 6501400.00 5962094.20
Short-term borrowings 6200000.00 6200000.00
Taxes and fees payable 16882.41 16882.41
Other payables 39729273.01 39729273.01
Deferred tax liabilities 37324556.46
Net Assets 337214487.26 225240817.87
Less: Non-controlling interests 134885794.91 90096327.15
Net assets acquired 202328692.35 135144490.72
6.2 Other changes
Jiuhao ChinaRail and Jiuan Electric were included in the Company’s scope of consolidation for the
first time in the period as a result of incorporation. Waste Recycle was excluded from the
Company’s scope of consolidation in the period as a result of dissolution.Note 7 Interests in other entities
7.1 Interests in subsidiaries
7.1.1 General disclosure
Place of Shareholding in % Means of
Place of Nature of
Subsidiary primary control
registration operation Direct Indirect
operation acquisition
Bozhou Bozhou
GJ Sales Trading 100.00 —— Incorporation
Anhui Anhui
Bozhou Bozhou
Longrui Glass Production 100.00 —— Incorporation
Anhui Anhui
Bozhou Bozhou Waste
Waste Recycle 100.00 —— Incorporation
Anhui Anhui recycling
Bozhou Bozhou Machinery
Jiuan Electric 100.00 —— Incorporation
Anhui Anhui production
Jinyunlai Hefei Anhui Hefei Anhui Advertising 100.00 —— Incorporation
211Annual Report 2021
Place of Shareholding in % Means of
Place of Nature of
Subsidiary primary control
registration operation Direct Indirect
operation acquisition
Bozhou Bozhou
Ruisi Weier R&D 100.00 —— Incorporation
Anhui Anhui
Business
Hotel combination
Jinhao Hotel Shanghai Shanghai 100.00 ——
management under common
control
Business
Bozhou Bozhou Hotel combination
GJ Guest House 100.00 ——
Anhui Anhui operation under common
control
Bozhou Bozhou Sewage
YQ Environment Protection 100.00 —— Incorporation
Anhui Anhui processing
GJ E-Commerce Hefei Anhui Hefei Anhui E-commerce 100.00 —— Incorporation
Bozhou Bozhou
Runan Xinke Food testing 100.00 —— Incorporation
Anhui Anhui
Jiudao Media Hefei Anhui Hefei Anhui Advertising 100.00 —— Incorporation
Business
combination
Wuhan Wuhan
HHL Distillery Production 51.00 not under
Hubei Hubei
common
control
Business
combination
Xianning Xianning
HHL Xianning Production —— 51.00 not under
Hubei Hubei
common
control
Business
combination
Suizhou Suizhou
HHL Suizhou Production —— 51.00 not under
Hubei Hubei
common
control
Business
combination
Wuhan Wuhan
Junlou Culture Advertising —— 51.00 not under
Hubei Hubei
common
control
Xianning Xianning
HHL Beverage Production —— 51.00 Incorporation
Hubei Hubei
Wuhan Wuhan
Yashibo R&D —— 51.00 Incorporation
Hubei Hubei
212Annual Report 2021
Place of Shareholding in % Means of
Place of Nature of
Subsidiary primary control
registration operation Direct Indirect
operation acquisition
Xianning Xianning
Xinjia Testing Food testing —— 51.00 Incorporation
Hubei Hubei
Business
combination
Wuhan Wuhan
Tianlong Jindi Trading —— 51.00 not under
Hubei Hubei
common
control
Business
combination
Xianning Xianning
Xianning Junhe Trading —— 51.00 not under
Hubei Hubei
common
control
Wuhan Wuhan
Junya Sales Trading —— 51.00 Incorporation
Hubei Hubei
Suizhou Suizhou
Suizhou Junhe Trading —— 51.00 Incorporation
Hubei Hubei
Business
combination
Chuzhou Mingguang
Mingguang Distillery Production 60.00 not under
Anhui Anhui
common
control
Business
combination
Chuzhou Mingguang
Tiancheng Sales Trading 60.00 not under
Anhui Anhui
common
control
Business
combination
Chuzhou Fengyang
FY Xiaogangcun Production 42.00 not under
Anhui Anhui
common
control
Bozhou Bozhou
Jiuhao ChinaRail Construction 52.00 Incorporation
Anhui Anhui
Bozhou Bozhou
Zhenrui Construction Construction 52.00 Incorporation
Anhui Anhui
Business
combination
Renhuai Renhuai
Treasure Distillery Production 60.00 not under
Guizhou Guizhou
common
control
7.1.2 Significant partially owned subsidiaries
213Annual Report 2021
Profit or loss
attributable to Dividends declared Minority interest as
Non-controlling
Subsidiary minority for minority of the statement
shareholding %
shareholders for the shareholders date
period
HHL Distillery 49.00 81338863.48 486726322.76
7.1.3 Key Significant partially owned subsidiaries
31/12/2021
Subsidiary Non-current Current Non-current
Current assets Total Total liabilities
assets liabilities liabilities
HHL
1106087761.341004277608.572110365369.91792402887.81324643456.051117046343.86
Distillery
(Continue)
31/12/2020
Subsidiary Non-current Current Non-current
Current assets Total Total liabilities
assets liabilities liabilities
HHL
633542317.24868332173.161501874490.40482603067.57191592294.97674195362.54
Distillery
(Continue)
Y/e 31/12/2021
Subsidiary Total comprehensive Cash flows from
Revenue Net profit
income operating activities
HHL Distillery 1458982962.92 165997680.58 165639898.18 386107248.19
(Continue)
Y/e 31/12/2020
Subsidiary Total comprehensive Cash flows from
Revenue Net profit
income operating activities
HHL Distillery 516045801.88 -13649114.81 -13649114.81 -22001852.09
7.2 Significant joint ventures and associates
The Company had no significant joint venture or associate.Note 8 Risks associated with 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 (e.g. credit management department of the
214Annual Report 2021
Company reviews each credit sale). 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 monetary funds notes receivable accounts receivables other receivables and long-term
receivables. Credit risk of these financial assets is derived from the counterparty’s breach of
contract. The maximum risk exposure is equal to the carrying amount of these financial
instruments.Monetary funds of the Company has lower credit risk as they are mainly deposited in financial
institutions such as commercial banks of which the Company believes with higher reputation and
financial position.Notes receivable held by the Company mainly comprise bank acceptance which have relatively
high liquidity. The Company has established necessary internal control policies that can ensure the
safety of the maintenance and usage of notes and such policies have been implemented effectively.The Company believes that notes receivable have low credit risk.Accounts receivable mainly arising from sales. The Company makes sales only to customers with
advanced credit worthiness and monitors accounts receivable on a continuous basis to ensure the
occurrence of significant bad debts. The maximum risk exposure brought by financial instruments
is their book value. The Company believes that the credit risk is relatively low.
8.2 Liquidity risk
Liquidity risk is the risk of shortage of funds when fulfilling the obligation of settlement 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 a financial instrument refers to the risk on the fair value or future cash flows of
the financial instrument brought by market factors. Market risk mainly comprises foreign exchange
risk and interest risk.
215Annual Report 2021
8.3.1 Foreign currency risk
Foreign currency risk of the Company mainly arise from foreign currency assets and liabilities
denominated in currency other than the Company’s functional currency. As the Company mainly
operate in Mainland China with transactions mostly settled in CNY and very limited export
activities foreign currency risk is insignificant.
8.3.2 Interest risk
Interest risk refers to the risk on the fair value or future cash flows of a financial instrument
brought by the change of market interest rate. Interest risk mainly arises from bank loans. As of the
statement date the Company had no bank loan with a floating interest rate.
8.3.2 Other price risk
Investments held for trading were measured at fair value. As such these investments are subject
to the risk brought by the change of security prices. The Company controls this risk to the
acceptable level by utilising multiple investment mix.Note 9 Fair value disclosure
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
9.1 Fair value of assets and liabilities measured by fair value as of the statement date
Fair value as of the statement date
Level 1 Level 2 Level 3 Total
Continously measured by fair value
A. Financial assets held for trading 2661103876.68 2661103876.68
a. FATPLs 2661103876.68 2661103876.68
1. Debt instruments -
2. Structural financial products 2457565232.32 2457565232.32
3. Investment in funds - 203538644.36 203538644.36
B. FATOCIs 54542418.50 545204103.42 599746521.92
a. Receivables held for factoring - 545204103.42 545204103.42
b. Other equity investments 54542418.50 54542418.50
Total 2715646295.18 545204103.42 3260850398.60
216Annual Report 2021
The fair value of financial instruments traded in an active market was based on quoted market
prices at the reporting date. The fair value of financial instruments not traded in an active market
was 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 Qualitative and quantitative information of key inputs and valuation methods applicable to
Level 2 financial instruments continuously measured by fair value
As of the statement date the Company’s Level 3 financial instruments comprised mainly
investment in funds and structural financial products. The fair value of investment in funds was
determined by the valuation offered by the asset management companies. The fair value of
structural financial products were computed in accordance with the terms of the respective
contracts.
9.3 Qualitative and quantitative information of key inputs and valuation methods applicable to
Level 3 financial instruments continuously measured by fair value
As of the statement date the Company’s Level 3 financial instruments comprised solely
pre-mature notes receivable. Issuers of the notes had healthy credit worthiness. The fair value of
these receivables as of the statement date was measured at the recoverable amount of these
receivables as of the statement date which was computed using the respective discount rates
offered by banks for cashing.Note 10 Related parties
An entity or individual is a related party to the Company if the entity or individual:
a. is controlled or jointly controlled by the Company;
b. over which the Company has significant influence;
c. controls or jointly controls the Company; or
d. is subject to the same control or joint control over the Company.
10.1 Controlling shareholder of the Company
Shareholding in Voting right in
Place of
Nature of business Registered capital the Company the Company
registration
in % in %
Production of
beverage construction
GJ Group Bozhou Anhui 1000 million 51.34 51.34
materials plastic
products.The Company’s ultimate controller is the State-owned Asset Management Commission of the
217Annual Report 2021
People's Government of Baozhou Anhui
10.2 Subsidiaries
See Note 7 for details.
10.3 Joint ventures and associates
See Note 7 for details.
10.4 Other related parties of the Company
Relationship to the Company
Controlled by the Company's controlling
Anhui Ruifuxiang Food Co. Ltd. (Ruifuxiang Food)
shareholder or ultimate controller
Controlled by the Company's controlling
Anhui Ruijing Catering Co. Ltd. (Ruijing Catering)
shareholder or ultimate controller
Controlled by the Company's controlling
Anhui Haochidian Catering Co. Ltd. (Haochidian Catering)
shareholder or ultimate controller
Controlled by the Company's controlling
Shanghai Beihai Hotel Co. Ltd. (Beihai Hotel)
shareholder or ultimate controller
Controlled by the Company's controlling
Anhui Ruijing Shanglv (Group) Co. Ltd. (RJSL Group)
shareholder or ultimate controller
Controlled by the Company's controlling
Bozhou Guest House Co. Ltd. (Bozhou Guest House)
shareholder or ultimate controller
Dongfang Ruijing Enterprise Investment Co. Ltd. Controlled by the Company's controlling
(Dongfang Ruijing) shareholder or ultimate controller
Controlled by the Company's controlling
Anhui Hengxin Pawnshop Co. Ltd. (Hengxin Pawnshop)
shareholder or ultimate controller
Anhui Ruijing Shanglv (Group) Co. Ltd. Hefei Gujing Holiday Inn (RJSL Controlled by the Company's controlling
Holiday Inn) shareholder or ultimate controller
Anhui Gujing Hotel Development Co. Ltd. Controlled by the Company's controlling
(GJ Hotel Development) shareholder or ultimate controller
Controlled by the Company's controlling
Anhui Ruixin Pawnshop Co. Ltd. (Ruixin Pawnshop)
shareholder or ultimate controller
Anhui Zhongxin Financial Leasing Co. Ltd. Controlled by the Company's controlling
(Zhongxin Financial Leasing) shareholder or ultimate controller
Anhui Huixin Financial Investment Group Co. Ltd. Controlled by the Company's controlling
(Huixin Financial Investment) shareholder or ultimate controller
Hefei Longxin Corporate Management Advisory Co. Ltd. (Longxin Controlled by the Company's controlling
Advisory) shareholder or ultimate controller
Controlled by the Company's controlling
Bozhou Anxin Small Loan Co. Ltd. (Anxin Small Loan)
shareholder or ultimate controller
Dazhongyuan Wine Valley Culture Travel Development Co. Ltd. Controlled by the Company's controlling
(Dazhongyuan) shareholder or ultimate controller
Controlled by the Company's controlling
Anhui Youxin Financing Guarantee Co Ltd. (Youxin Guarantee)
shareholder or ultimate controller
Controlled by the Company's controlling
Anhui Lixin E-Commerce Co. Ltd. (Lixin E-Commerce)
shareholder or ultimate controller
Bozhou Gujing Huuishenglou Catering Co. Ltd. Controlled by the Company's controlling
218Annual Report 2021
Relationship to the Company
(GJ Huishenglou Catering) shareholder or ultimate controller
Controlled by the Company's controlling
Anhui Gujing Health Industry Co. Ltd. (Health Industry)
shareholder or ultimate controller
Controlled by the Company's controlling
Anhui Lejiu Jiayuan Travel Management Co. Ltd. (Lejiu Jiayuan)
shareholder or ultimate controller
Controlled by the Company's controlling
Anhui Shenglong Trading Co. Ltd. (Longsheng Trading)
shareholder or ultimate controller
Anhui Gujing International Development Co. Ltd. Controlled by the Company's controlling
(GJ International) shareholder or ultimate controller
Anhui Lvyuan Ecological Agriculture Development Co. Ltd. (Ecological Controlled by the Company's controlling
Agriculture) shareholder or ultimate controller
Anhui Jiuan Construction Management Advisory Co. Ltd. Controlled by the Company's controlling
(Jiuan Advisory) shareholder or ultimate controller
Nanjing Suning Property Development Co. Ltd. Controlled by ZHANG Guiping the
(Suning Property Development) non-executive director of the Company
10.5 Related party transactions
10.5.1 Goods and services
Purchase of goods and services
Related party Transaction Y/e 31/12/2021 Y/e 31/12/2020
Purchase of materials
Haochidian Catering 16752135.81 22586183.13
and services
GJ Group Houses and buildings - 9608025.00
Receiving catering and
Bozhou Guest House 5276946.76 6540711.38
accommodation
Receiving catering and
GJ Huishenglou Catering 1697688.00 2309426.00
accommodation
Receiving catering and
Haochidian Catering 2800831.40 1419119.70
accommodation
Receiving catering and
GJ Hotel Development 1195369.24 1124539.94
accommodation
RJSL Group Purchase of materials 96890.00 623966.45
Receiving catering and
RJSL Group 658611.03 24820.00
accommodation
Receiving catering and
RJSL Holiday Inn 113524.00 405725.64
accommodation
Purchase of materials
RJSL Holiday Inn 871614.88 653730.07
and services
Purchase of materials
Dazhongyuan - 215018.51
and services
Purchase of materials
Health Industry - 191893.81
and services
219Annual Report 2021
Related party Transaction Y/e 31/12/2021 Y/e 31/12/2020
GJ International Receiving services - 103773.58
Lejiu Jiayuan Purchase of materials - 99546.43
GJ Group Purchase of materials - 56952.00
Youxin Guarantee Receiving services 49504.95 47169.81
Ruifuxiang Food Purchase of materials - 31130.76
Purchase of materials
Ecological Agriculture - 19562.48
and services
Purchase of materials
GJ Hotel Development 2735.85 3413.21
and services
Haochidian Catering Purchase of assets 135398.23 -
Jiuan Advisory Advisory and assurance 3427517.43 -
Total —— 33078767.58 46064707.90
Sales of goods and rendering of services
Related party Transaction Y/e 31/12/2021 Y/e 31/12/2020
Longsheng Trading Sales of distilled wine 1506569.89 1456440.72
RJSL Group Sales of distilled wine 1125056.17 649884.96
GJ Hotel Development Provision of utilities 290336.98 -
Provision of catering and
GJ Group 279597.00 184013.00
accommodation
GJ Group Sales of small materials 223523.11 94174.07
GJ Hotel Development Sales of distilled wine 146484.95 122893.76
Provision of catering and
RJSL Group 121295.14 70217.96
accommodation
RJSL Holiday Inn Sales of distilled wine 81451.34 30265.48
Bozhou Guest House Sales of distilled wine 55274.34 74628.33
Huixin Financial Investment Sales of distilled wine 38500.88 39836.29
GJ Huishenglou Catering Sales of distilled wine 30106.20 77893.81
Anxin Small Loan Sales of distilled wine 19656.64 15330.09
Haochidian Catering Sales of distilled wine 19115.04 71283.20
Zhongxin Financial Leasing Sales of distilled wine 11572.57 14939.82
Hengxin Pawnshop Sales of distilled wine 11405.32 11207.09
Jiuan Advisory Sales of distilled wine 8968.14 -
Beihai Hotel Sales of distilled wine 8601.77 17203.54
Lejiu Jiayuan Sales of distilled wine 8235.39 8261.95
Provision of catering and
Longsheng Trading 7084.00 14470.00
accommodation
Lejiu Jiayuan Provision of utilities 6545.75 56413.97
220Annual Report 2021
Related party Transaction Y/e 31/12/2021 Y/e 31/12/2020
Ruixin Pawnshop Sales of distilled wine 6443.36 6614.16
Youxin Guarantee Sales of distilled wine 3082.30 4983.18
Haochidian Catering Provision of services 2547.17 -
Bozhou Guest House Provision of services 707.55 -
Provision of catering and
Jiuan Advisory 2230.00 -
accommodation
Longxin Advisory Sales of distilled wine 1194.69 -
Jiuan Advisory Sales of small materials 778.68 -
GJ International Sales of distilled wine - 1649076.57
Health Industry Provision of services - 232430.19
Bozhou Ruineng Thermal Electricity Co. Ltd. Sales of distilled wine - 74150.45
Dazhongyuan Sales of distilled wine - 44674.42
Lejiu Jiayuan Provision of services - 7620.00
Lixin E-Commerce Sales of distilled wine - 7461.93
GJ International Sales of small materials - 5437.89
Dazhongyuan Provision of services - 2889.91
Provision of catering and
GJ International - 2820.00
accommodation
Dazhongyuan Sales of small materials - 2631.13
Health Industry Sales of small materials - 1314.60
Provision of catering and
Health Industry - 1250.00
accommodation
Provision of catering and
Dazhongyuan - 420.00
accommodation
Health Industry Sales of distilled wine -797129.56 5254234.43
Total —— 3219234.81 10307366.90
10.5.2 Leases
The Company as the Lessor
Rental income Rental income
Lessee Leased item
Y/e 31/12/2021 Y/e 31/12/2020
GJ Hotel Development Houses and buildings 1379517.44 670730.21
Total —— 1379517.44 670730.21
The Company as the Lessee
Rental cost Rental cost
Lessor Leased item
Y/e 31/12/2021 Y/e 31/12/2020
GJ Group Houses and buildings 1197761.12 1850265.66
Suning Property Development Houses and buildings 2050000.00 1583333.32
221Annual Report 2021
Total 3247761.12 3433598.98
10.5.3 Key management remuneration
Y/e 31/12/2021 Y/e 31/12/2020
Key management remuneration 18.53 million 14.18 million
10.6 Related party balances - Liabilities
Related party 31/12/2021 31/12/2020
Contract liabilities Health Industry 617959.73 658339.50
Contract liabilities RJSL Group 92.04 342484.96
Contract liabilities GJ International 164675.75 186083.60
Contract liabilities GJ Huishenglou Catering 15300.00
Accounts payable GJ Group 4804012.50
Accounts payable Haochidian Catering 2479131.69
Other payables GJ Group 1050004.75
Other payables RJSL Group 115533.60 114660.00
Other payables GJ Hotel Development 50000.00 100000.00
Note 11 Commitments and contingencies
11.1 Significant commitments
In accordance with the agreement entered into by the Company Wuhan Tianlong Investment
Group Co. Ltd and YAN Hongye on the transfer of the shareholding in HHL Distillery the Company
made a commitment for the tax inclusive revenue performance of HHL Distillery as follow:
20172018201920202021
Committed 805.00 1006.25 1308.13 1700.56 2040.68
tax inclusive revenue million million million million million
The Company also committed that in the five consecutive years following the year in which the
ownership transaction is completed the net profit ratio of HHL Distillery for each year shall not be
less than 11.00%. If in any of the 5 consecutive year the audited net profit ratio of HHL Distillery is
less than 11.00% the Company shall compensate the sellers the difference between the
committed net profit and the actual net profit. If the audited net profit ratio for any 2 consecutive
years with the 5-year period is lower than 11.00% the sellers are entitled to repurchase all
shareholding sold to the Company at the repurchase price of CNY 816.00 million.The operating performance of HHL Distillery for 2020 as reported by its financial statements for
that period is presented as below:
% of Committed
Actual Commited Difference
performance
Revenue (tax inclusive) 583.13 million 1700.56 million -1117.43 million 34.29%
222Annual Report 2021
Net profit -11.72 million 165.54 million -177.26 million Loss
Net profit ratio -2.27% 11.00% -13.27% Loss
The operation of HHL Distillery was significant impacted by the COVID-19 pandemic. Upon mutual
negotiation the performance commitment was altered with 2020 excluded from the performance
assessment period.
1) Committed before tax revenue for the assessment period
201720182019202020212022
Committed 805.00 1006.25 1308.13 1700.56 2040.68
Excluded
tax inclusive revenue million million million million million
2) The committed net profit ratio net profit and estimated profit available for distribution as
agreed by the orginal agreement for 2020 and 2021 become applicable for 2021 and 2022
respectively.
3) No party to the agreement shall have the right to demand reimbursement compensation or
other liabilities to any other party to the agreement on the basis of the performance of HHL
Distillery for 2020.The operating performance of HHL Distillery for 2021 as reported by its financial statements for
that period is presented as below:
% of Committed
Actual Commited Difference
performance
Revenue (tax inclusive) 1707.01 million 1700.56 million 6.45 million 100.38%
Net profit 171.06 million 165.54 million 5.52 million 103.33%
Net profit ratio 11.32% 11.00% 0.32% 102.91%
11.2 Contingencies
No contingency as of the statement date was required for disclosure.Note 12 Subsequent events
Except for the matters described in Note 11 as of the date of these financial statements no
subsequent event is required for disclosure.Note 13 Other significant matters – Segment reporting
In accordance with the Company’s internal management and reporting structure segment
reporting is not applicable.Note 14 Notes to the separate financial statements of the Company
14.1 Accounts receivable
14.1.1 Disclosure by age group
Age group 31/12/2021 31/12/2020
Within 1 year 494976.27
223Annual Report 2021
Age group 31/12/2021 31/12/2020
T/o: Within 6 months 494976.27
T/o: 7 months to 1 years -
1 to 2 years -
2 to 3 years -
Over 3 years -
Gross 494976.27
Less: Impairment allowance 0.00
Net 494976.27
14.1.2 Dislcosure by method of impairment
31/12/2021
Gross Impairment allowance
Net
Amount % of total Amount Impairment %
Individual assessment - - - - -
Portfolio assessment - - - - -
T/o: Group 1 - - - - -
T/o: Group 2 - - - - -
Total - - - - -
(Continued)
31/12/2020
Gross Impairment allowance
Net
Amount % of total Amount Impairment %
Individual assessment - - - - -
Portfolio assessment 494976.27 100.00 - - 494976.27
T/o: Group 1 494976.27 100.00 - - 494976.27
T/o: Group 2 - - - - -
Total 494976.27 100.00 - - 494976.27
Group 1 Receivables as of 31 December 2020
31/12/2020
Gross Impairment allowance Impairment %
Related parties within the scope of
494976.27--
consolidation
Total 494976.27 - -
Group 2 Receivables had no balance as of 31 December 2020.
14.1.3 Impairment movement for the period was not applicable for accounts receivable.
14.1.4 No account receivable as of the statement date.
224Annual Report 2021
14.2 Other receivables
14.2.1 General disclosure
31/12/202131/12/2020
Interests receivable -
Dividends receivable -
Other receivables 290480736.49 141378010.40
Total 290480736.49 141378010.40
14.2.2 Other receivables
(1) Disclosure by age group
Age group 31/12/2021 31/12/2020
Within 1 year 289632069.08 140143887.64
T/o: Within 6 months 289213314.37 139805782.01
T/o: 7 months to 1 years 418754.71 338105.63
1 to 2 years 763921.03 1322306.20
2 to 3 years 797227.20 244089.00
Over 3 years 39383584.88 41333188.41
Gross 330576802.19 183043471.25
Less: Impairment allowance 40096065.70 41665460.85
Net 290480736.49 141378010.40
(2) Disclosure by nature
31/12/202131/12/2020
Due from related party within the
267559576.83133696578.89
scope of consolidation
Security investments 38857584.88 40807394.41
Margin deposits 3330794.09 1879230.29
Rentals and utilities receivable 472547.89 1275238.93
Others 20356298.50 5385028.73
Total 330576802.19 183043471.25
(3) Disclosure by method of impairment
A. Disclosure by the 3-stage m odel as of the statement date
Gross Impairment allowance Net
Stage 1 291719217.31 1238480.82 290480736.49
Stage 2 -
Stage 3 38857584.88 38857584.88 -
Total 330576802.19 40096065.70 290480736.49
Details of Stage 1 receivables as of the statement date
225Annual Report 2021
Expected loss rate for
Impairment
Gross the next 12 months Net
allowance
in %
Individual assessment
Portfolio assessment 291719217.31 0.42 1238480.82 290480736.49
T/o: Group 1 267559576.83 - 267559576.83
T/o: Group 2 24159640.48 5.13 1238480.82 22921159.66
Total 291719217.31 0.42 1238480.82 290480736.49
Details of Group 2 receivables as of the statement date
31/12/2021
Age group
Gross Impairment allowance Impairment %
Within 1 year 22072492.25 237475.12 1.08
T/o: Within 6 months 21653737.54 216537.38 1.00
T/o: 7 months to 1 years 418754.71 20937.74 5.00
1 to 2 years 763921.03 76392.10 10.00
2 to 3 years 797227.20 398613.60 50.00
Over 3 years 526000.00 526000.00 100.00
Total 24159640.48 1238480.82 5.13
Details of Stage 3 receivables as of the statement date
Expected loss rate for
Impairment
Gross the next 12 months Net
allowance
in %
Individual assessment 38857584.88 100.00 38857584.88 -
Portfolio assessment
T/o: Group 1
T/o: Group 2
Total 38857584.88 100.00 38857584.88 -
Details of receivables subject to individual assessment as of the statement date
31/12/2021
Impairment Reason for
Gross Impairment %
allowance impairment
Hengxin Securities Co. Ltd. 28966894.41 28966894.41 100.00 In bankruptcy
Jianqiao Securities Co. Ltd. 9890690.47 9890690.47 100.00 In bankruptcy
Total 38857584.88 38857584.88 100.00
B. Disclosure by the 3-stage model as of 31 December 2020
Gross Impairment allowance Net
Stage 1 142236076.84 858066.44 141378010.40
Stage 2 - - -
226Annual Report 2021
Gross Impairment allowance Net
Stage 3 40807394.41 40807394.41 -
Total 183043471.25 41665460.85 141378010.40
Details of Stage 1 receivables as of 31 December 2020
Expected loss rate for
Impairment
Gross the next 12 months Net
allowance
in %
Individual assessment - - - -
Portfolio assessment 142236076.84 0.60 858066.44 141378010.40
T/o: Group 1 133696578.89 - - 133696578.89
T/o: Group 2 8539497.95 10.05 858066.44 7681431.51
Total 142236076.84 0.60 858066.44 141378010.40
Details of Group 2 receivables as of 31 December 2020
31/12/2020
Age group
Gross Impairment allowance Impairment %
Within 1 year 6447308.75 77997.31 1.21
T/o: Within 6 months 6109203.12 61092.03 1.00
T/o: 7 months to 1 years 338105.63 16905.28 5.00
1 to 2 years 1322306.20 132230.63 10.00
2 to 3 years 244089.00 122044.50 50.00
Over 3 years 525794.00 525794.00 100.00
Total 8539497.95 858066.44 10.05
Details of Stage 3 receivables as of 31 December 2020
Expected loss rate for
Impairment
Gross the next 12 months Net
allowance
in %
Individual assessment 40807394.41 100.00 40807394.41 0.00
Portfolio assessment - - - -
T/o: Group 1 - - - -
T/o: Group 2 - - - -
Total 40807394.41 100.00 40807394.41 0.00
Details of receivables subject to individual assessment as of 31 December 2020
31/12/2020
Impairment Reason for
Gross Impairment %
allowance impairment
Hengxin Securities Co. Ltd. 28966894.41 28966894.41 100.00 In bankruptcy
Jianqiao Securities Co. Ltd. 11840500.00 11840500.00 100.00 In bankruptcy
Total 40807394.41 40807394.41 100.00 -
(4) Movement of impairment allowance
227Annual Report 2021
Movement
31/12/2020 Reversal or Release or 31/12/2021
Provision
recovery write-off
Individual assessment 40807394.41 1949809.53 38857584.88
Portfolio assessment 858066.44 380414.38 1238480.82
Total 41665460.85 380414.38 1949809.53 40096065.70
(5) Top-five other receivables as of the statement date
% of total gross Impairment
Debtor Nature 31/12/2021 Age group
other receivables allowance
Due from related party
Within 6
Top 1 within the scope of 97207352.12 29.41 -
months
consolidation
Due from related party
Within 6
Top 2 within the scope of 90000000.00 27.23 -
months
consolidation
Due from related party
Within 6
Top 3 within the scope of 78961561.36 23.89 -
months
consolidation
Over 3
Top 4 Security investment 28966894.41 8.76 28966894.41
years
Within 6
Top 5 Other 18255567.00 5.52 182555.67
months
Total 313391374.89 94.81 29149450.08
14.3 Long-term equity investments
14.3.1 General disclosure
31/12/202131/12/2020
Impairment Impairment
Gross Impairment % Gross Impairment %
allowance allowance
Investment in
1547415641.38-1547415641.381118213665.32-1118213665.32
subsidiaries
Total 1547415641.38 - 1547415641.38 1118213665.32 - 1118213665.32
14.3.2 Investment in subsidiaries
Cumulative
Impairment
impairment
Subsidiary 31/12/2020 Increase Decrease 31/12/2021 recognised
as of
in the period
31/12/2021
GJ Sales 68949286.89 - - 68949286.89 - -
Longrui Glass 85267453.06 - 85267453.06 - -
Jinhao Hotel 49906854.63 - - 49906854.63 - -
228Annual Report 2021
Cumulative
Impairment
impairment
Subsidiary 31/12/2020 Increase Decrease 31/12/2021 recognised
as of
in the period
31/12/2021
GJ Guest
648646.80--648646.80--
House
Ruisi Weier 40000000.00 - - 40000000.00 - -
YQ
Environment 16000000.00 - - 16000000.00
Protection
GJ
5000000.00--5000000.00--
E-Commerce
Zhenrui
10000000.00-10000000.00---
Construction
HHL Distillery 816000000.00 - - 816000000.00 - -
Jinyunlai 15000000.00 - - 15000000.00 - -
Waste
1441423.94-1441423.94---
Recycle
Runan Xinke 10000000.00 - - 10000000.00 - -
Jiuan Electric 10000000.00 - 10000000.00 - -
Mingguang
200200000.00200200000.00
Distillery
Treasure
224723400.00224723400.00
Distillery
Jiuhao
5720000.005720000.00
ChinaRail
Total 1118213665.32 440643400.00 11441423.94 1547415641.38 - -
14.4 Revenue and cost of sales
Y/e 31/12/2021 Y/e 31/12/2020
Revenue Cost of sales Revenue Cost of sales
Primary operation 6756444863.19 2623827961.16 5806187227.99 2359384925.04
Other operation 105482310.37 61315130.77 73180067.75 45385582.08
Total 6861927173.56 2685143091.93 5879367295.74 2404770507.12
14.5 Investment income
Y/e 31/12/2021 Y/e 31/12/2020
Investment income from long-term equity investments at cost 737875260.92 707487107.56
Gain from disposal of long-term equity investments 2670112.66
Gain from disposal of FVTPLs 8072295.21 -
229Annual Report 2021
Y/e 31/12/2021 Y/e 31/12/2020
Gain from holding of debt instruments -
Gain from holding of other debt like investments -
Gain from disposal of FVTOCIs -22496045.46 -34762044.63
Gain from holding of financial assets held for trading 14393316.21 30570930.80
Others 410450.22 -
Total 740925389.76 703295993.73
Note 15 Supplementary information
15.1 Non-recurring gain or loss
Y/e 31/12/2021 Y/e 31/12/2020 Note
Gain or loss from disposal of non-current assets -5976856.98 -3692640.09
Government grants included in current profit or loss (excluding
government grants closely associated with the Company’s operation 55274502.42 48617479.37
and granted in accordance with national standard quota or quantity
Gain or loss from changes in fair value of financial assets held for
trading derivative financial assets financial liabilities held for trading
and derivative financial liabilities and gain from disposal of financial
assets held for trading derivative financial assets financial liabilities 34792433.45 21490043.05
held for trading derivative financial liabilities and other debt-like
investments excluding instruments held for effective hedging
associated with the Company’s operation
Reversal of impairment allowance for accounts receivable previously
1949809.5343554.94
recognised upon individual assessment
Non-operating income and non-operating expenses not included in
77025619.7644100616.61
above categories
Other items falling into the definition of non-recurring gain or loss -
Total non-recurring gain or loss 163065508.18 110559053.88
Less: Impact on income tax 40243159.73 27033395.22
Total non-recurring gain or loss (net of income tax) 11167403.88 1960716.42
T/o: Attributable to non-controlling interests 111654944.57 81564942.24
15.2 Return on net assets (RONA) and earnings per share (EPS)
15.2.1 Year ened 31 December 2021
Weighted average EPS
Net profit
RONA in % Basic EPS Diluted EPS
Net profit attributable to shareholders of the
21.254.454.45
Company
Net profit post adjustment for non-recurring
gain or loss attributable to shareholders of the 20.22 4.24 4.24
Company
230Annual Report 2021
15.2.2 Year ened 31 December 2020
Weighted average EPS
Net profit
RONA in % Basic EPS Diluted EPS
Net profit attributable to shareholders of the
19.533.683.68
Company
Net profit post adjustment for non-recurring
gain or loss attributable to shareholders of the 18.68 3.52 3.52
Company
Anhui Gujing Distillery Company Limited
29 April 2022
Chairman of the Board:
(Liang Jinhui)
Anhui Gujing Distillery Company Limited
29 April 2022
231
