ANHUI GUJING DISTILLERY COMPANY LIMITED
INTERIM REPORT 2018
August 2018
Gujinggong Liquor Aged Original Liquor Interim Report 2018 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, theCompany’s legal representative, Ye Changqing, theCompany’s Chief Accountant, and Zhu Jiafeng, head of theCompany’s financial department (equivalent to financial manager) hereby guarantee that the Financial Statements carried in this Report are factual, accurate and complete.
All theCompany’s directors have attended the Board meeting for the review of this Report and its summary.
Any plans for the future and other forward-looking statements mentioned in this Report and its summary shall NOT be considered as absolute promises of the Company to investors. Therefore, investors are reminded to exercise caution when making investment decisions. The Company has no interim dividend plan, either in the form of cash or stock.
This Report and its summary have been prepared in both Chinese and English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese versions shall prevail.
~ 2~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 Contents
Part I Important Notes, Table of Contents and Definitions 2
Part II Corporate Information and Key Financial Information 5
Part III Business Summary 8
Part IV Operating Performance Discussion and Analysis 9
Part V Significant Events 21
Part VI Share Changes and Shareholder Information 28
Part VII Preferred Shares 32
Part VIII Directors, Supervisors and Senior Management 33
Part IX Corporate Bonds 34
Part X Financial Report 35
Part XI Documents Available for Reference 158
~ 3~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 Definitions
|||
|-|-|
|Term|Definition|
||Anhui Gujing Distillery Company Limited and its consolidated subsidiaries,|
|The “Company”, “ Gu Jing” or “we”||
||except where the context otherwise requires|
|Gujing Group|Anhui Gujing Group Co., Ltd.|
|Yellow Crane Tower|Yellow Crane Tower Distillery Co., Ltd.|
|The “Reporting Period” or “Current Period”|The period from 1 January 2018 to 30 June 2018|
||Expressed in the Chinese currency of Renminbi, expressed in ten thousand|
|RMB, RMB’0,000||
||Renminbi|

~ 4~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 Part II Corporate Information and Key Financial Information I Corporate Information
|||||
|-|-|-|-|
||Gujing Distillery, Gujing|||
|Stock name||Stock code|000596, 200596|
||Distillery-B|||
|Stock exchange for stock listing|Shenzhen Stock Exchange|||
|Company name in Chinese||||
|Abbr. (if any)|古井|||
|Company name in English (if any)|ANHUI GUJING DISTILLERY COMPANY LIMITED|||
|Abbr. (if any)|GU JING|||
|Legal representative||||

II Contact Information
||||
|-|-|-|
||Board Secretary|Securities Representative|
|Name|Ye Changqing|Mei Jia|
||Gujing Town, Bozhou City, Anhui|Gujing Town, Bozhou City, Anhui|
|Address|||
||Province, P.R.China|Province, P.R.China|
|Tel.|（0558）5712231|（0558）5710057|
|Fax|（0558）5710099|（0558）5710099|
|Email address|gjzqb@gujing.com.cn|gjzqb@gujing.com.cn|

III Other Information
1. Contact Information of the Company
Indicate by tick mark whether any change occurred to the registered address, office address and their zip codes, website address and email address of the Company in the Reporting Period.
□ Applicable√ Not applicable
No change occurred to the said information in the Reporting Period, which can be found in the 2017 Annual Report.
2. Media for Information Disclosure and Place where this Report is Kept
Indicate by tick mark whether any change occurred to the information disclosure media and the place for keeping theCompany’s
periodic reports in the Reporting Period.
~ 5~
Gujinggong Liquor Aged Original Liquor Interim Report 2018□ Applicable√ Not applicable
The newspapers designated by the Company for information disclosure, the website designated by the CSRC for disclosing theCompany’s periodic reports and the place for keeping such reports did not change in the Reporting Period. The said information can be found in the 2017 Annual Report.
IV Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes√ No
|||||
|-|-|-|-|
||H1 2018|H1 2017|Change (%)|
|Operating revenue (RMB)|4,783,083,895.33|3,670,127,764.59|30.32%|
|Net profit attributable to the listed|892,422,337.64|548,889,891.65||
||||62.59%|
|company’s shareholders (RMB)||||
|Net profit attributable to the listed||||
|company’s shareholders before exceptional|872,348,474.12|483,955,014.12|80.25%|
|items (RMB)||||
|Net cash generated from/used in operating|668,946,891.61|425,365,224.08||
||||57.26%|
|activities (RMB)||||
|Basic earnings per share (RMB/share)|1.77|1.09|62.39%|
|Diluted earnings per share (RMB/share)|1.77|1.09|62.39%|
|Weighted average return on net assets (%)|13.94%|9.86%|4.08%|
||30 June 2018|31 December 2017|Change (%)|
|Total assets (RMB)|11,210,703,795.70|10,152,862,119.05|10.42%|
|Net assets attributable to the listed|6,802,798,440.44|6,459,078,378.38||
||||5.32%|
|company’s shareholders (RMB)||||

V Accounting Data Differences under Chinese Accounting Standards (CAS) and International Financial Reporting Standards (IFRS) and Foreign Accounting Standards 1. Net Profit and Net Asset Differences under CAS and IFRS
□ Applicable√ Not applicable
No such differences for the Reporting Period.
2. Net Profit and Net Asset Differences under CAS and Foreign Accounting Standards
□ Applicable√ Not applicable
No such differences for the Reporting Period.
~ 6~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 XI Exceptional Gains and Losses
√ Applicable□ Not applicable
Unit: RMB
||||
|-|-|-|
|Item|Reporting Period|Note|
|Gain or loss on disposal of non-current assets (inclusive of|-3,419,972.96||
|impairment allowance write-offs)|||
|Government subsidies charged to current profit or loss (exclusive|4,708,036.05||
|of government subsidies given in the Company’s ordinary course|||
|of business at fixed quotas or amounts as per government’s|||
|uniform standards)|||
|Gain or loss on fair-value changes in trading financial assets and|12,507,302.31||
|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)|||
|Non-operating income and expense other than above|13,674,195.49||
|Less: Income tax effects|6,827,920.31||
|Non-controlling interests effects (net of tax)|567,777.06||
|Total|20,073,863.52|--|

Explanation of why the Company classifies a gain/loss item as exceptional according to the definition in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to thePublic—Exceptional Gain/Loss Items, or reclassifies any exceptional item listed in the said explanatory announcement as recurrent:
□ Applicable√ Not applicable
No such cases for the Reporting Period.
~ 7~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 Part III Business Summary
I Core Business Scope of the Company in Reporting Period
Is the Company subject to any disclosure requirements for special industries?
No.
The Company primarily produces and markets liquor and spirits.
As one ofChina’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 theworld’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 inChina’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 ofChina’s “Geographical Indication Product”, the recognition as a “Key Cultural Relics Site under the State Protection”, the recognition with a “National Intangible Cultural Heritage Protection Project”, a Quality Award from the Anhui provincial government, a title of “National Quality Benchmark”, among other honors.
II Material Changes in Major Assets
1. Material Changes in Major Assets
□ Applicable√ Not applicable
2. Major Assets Overseas
□ Applicable√ Not applicable
III Core Competitiveness Analysis
Is the Company subject to any disclosure requirements for special industries?
No.
No material changes occurred to theCompany’s core competitiveness in the Reporting Period.
~ 8~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 Part IV Operating Performance Discussion and Analysis
I Overview
In the first half of 2018,China’s economy was generally stable and further restructuring was seen. As for the liquor and spirits industry, concentration was increasing.
Under the common efforts of the Board and all the staff, for the six months from January to June 2018, the Company recorded operating revenue of RMB4,783 million, up30.32% compared to the same period of last year; and a net profit attributable to the Company as the parent of RMB892 million, representing a year-on-year growth of62.59%. As such, the operating goals that the Company had set for the first half of 2018 at the beginning of the year were all accomplished. To achieve that, the Company took the following main measures in the Reporting Period:① continuously strengthening branding with more investments to carry forward the brand revitalization programme;② promoting digital marketing to carry on with the “5.0” strategy;③ reinforcing quality control, which has resulted in higher-quality liquor and spirits;④ stimulating endogenous driving force through better management;⑤ strengthening safety and environmental protection management to ensure smooth operations;⑥ enhancing system and risk assessment to optimize business processes; and⑦ improving corporate culture by promoting party committee-management integration.
II Analysis of Core Businesses
See “I Overview” above.
Year-on-year changes in key financial data:
Unit: RMB
||||||
|-|-|-|-|-|
||H1 2018|H1 2017|Change (%)|Main reason for change|
|Operating revenue|4,783,083,895.33|3,670,127,764.59||More upmarket products|
||||30.32%||
|||||were sold|
|Cost of sales|1,042,675,468.24|913,179,198.91|14.18%||
|Selling expense|1,597,300,315.17|1,249,688,761.13|27.82%||
|Administrative expense|280,500,337.72|263,421,695.43|6.48%||
|Finance costs|-20,284,906.55|-17,264,642.65|-17.49%||
|Income tax expense|320,789,915.24|203,016,533.12|58.01%|Rise in gross profit|
|Net cash generated|668,946,891.61|425,365,224.08|||
|||||Rise in payments|
|from/used in operating|||57.26%||
|||||collected from customers|
|activities|||||
|Net cash generated|-266,649,560.60|32,576,174.29|||
|||||Decline in cash proceeds|
|from/used in investing|||-918.54%||
|||||from disinvestment|
|activities|||||
|Net cash generated|-503,600,000.00|-302,160,000.00|-66.67%|Rise in dividend|

~ 9~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||||
|-|-|-|-|-|
|from/used in financing||||distributed|
|activities|||||
||-101,302,668.99|155,781,398.37||Decline in net cash|
|Net increase in cash and|||||
||||-165.03%|generated from investing|
|cash equivalents|||||
|||||and financing activities|
||30 June 2018|31 December 2017|Change (%)|Main reason for change|
||967,785,957.41|1,484,088,626.40||Decline in net increase in|
|Monetary assets|||-34.79%|paid cash and cash|
|||||equivalents|
||1,898,811,744.49|720,611,126.78||Notes were adopted more|
|Notes receivable|||163.50%|often in settlement of|
|||||sales|
||82,209,009.71|41,729,637.34||Rise in prepaid|
|Prepayments|||97.00%||
|||||advertising fee|
|Available-for-sale|267,197,036.68|517,086,347.91||Rise in financial assets|
||||-48.33%||
|financial assets||||sold|
|Advances from|803,222,097.92|503,083,108.13|||
||||59.66%|Rise in sales revenue|
|customers|||||
||804,829,022.62|182,846,942.10||Rise in unrecognized|
|Other current liabilities|||340.17%||
|||||expense|
||8,418,551.86|53,520,827.44||Disposal of|
|Other comprehensive|||||
||||-84.27%|available-for-sale|
|income|||||
|||||financial assets|

Material changes to the profit structure or sources of the Company in the Reporting Period:
□ Applicable√ Not applicable
No such changes in the Reporting Period.
Breakdown of core businesses:
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
|||||YoY change in||YoY change in|
||Operating||Gross profit||YoY change in||
|||Cost of sales||operating revenue||gross profit|
||revenue||margin||cost of sales (%)||
|||||(%)||margin (%)|
|By industry|||||||
|Manufacturing|4,783,083,895.33|1,042,675,468.24|78.20%|30.32%|14.18%|3.08%|
|By product category|||||||
|Liquor and spirits|4,707,210,564.91|1,010,894,998.63|78.52%|30.99%|15.28%|2.92%|
|Hotel services|41,620,289.12|18,192,924.18|56.29%|2.03%|4.45%|-1.01%|
|Other|34,253,041.30|13,587,545.43|60.33%|-4.03%|-27.95%|13.17%|
|By operating segment|||||||

~ 10~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||||||
|-|-|-|-|-|-|-|
|Domestic|4,776,503,422.80|1,040,361,772.83|78.22%|30.17%|13.96%|3.10%|
|Overseas|6,580,472.53|2,313,695.41|64.84%|759.68%|715.97%|1.88%|

 III Analysis of Non-Core Businesses
□ Applicable√ Not applicable
IV Analysis of Assets and Liabilities
1. Material Changes in Asset Composition
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
||30 June 2018||30 June 2017||Change in||
||Value|As % of total||As % of total|percentage|Reason for material change|
||||Value||||
|||assets||assets|(%)||
|Monetary assets|967,785,957.41|8.63%|688,690,424.44|7.17%|1.46%||
|Accounts|19,492,576.07||14,701,820.59||||
|||0.17%||0.15%|0.02%||
|receivable|||||||
|Inventories|2,140,586,455.59|19.09%|1,846,271,997.98|19.23%|-0.14%||
|Investment|5,055,069.67||8,160,298.60||||
|||0.05%||0.09%|-0.04%||
|property|||||||
|Fixed assets|1,717,043,900.68|15.32%|1,785,781,644.39|18.60%|-3.28%||
|Construction in|76,076,053.22||77,471,004.70||||
|||0.68%||0.81%|-0.13%||
|progress|||||||

2. Assets and Liabilities at Fair Value
√ Applicable□ Not applicable
Unit: RMB
|||||||||
|-|-|-|-|-|-|-|-|
|||Gain/loss on|Cumulative|||||
|||||Impairment||||
|||fair-value|fair-value||Purchased in|Sold in||
||Beginning|||allowance for||||
|Item||changes in|changes||Reporting|Reporting|Ending amount|
||amount|||Reporting||||
|||Reporting|charged to||Period|Period||
|||||Period||||
|||Period|equity|||||
|Financial assets||||||||
|1. Financial||||||||
|assets at fair||||||||
|value through||||||||
||99,800.76|396,379.39|0.00|0.00|1,539,796.23|978,316.65|1,057,659.73|
|profit or loss||||||||
|(exclusive of||||||||
|derivatives)||||||||

~ 11~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||||||
|-|-|-|-|-|-|-|-|
|2. Derivative||||||||
||0.00|0.00|0.00|0.00|0.00|0.00|0.00|
|financial assets||||||||
|3.||||||||
|Available-for-sale|517,086,347.91|0.00|-41,442,155.53|0.00|0.00|208,447,155.70|267,197,036.68|
|financial assets||||||||
|Subtotal of||||||||
||517,186,148.67|396,379.39|-41,442,155.53|0.00|1,539,796.23|209,425,472.35|268,254,696.41|
|financial assets||||||||
|Total of the||||||||
||517,186,148.67|396,379.39|-41,442,155.53|0.00|1,539,796.23|209,425,472.35|268,254,696.41|
|above||||||||
|Financial||||||||
||0.00|0.00|0.00|0.00|0.00|0.00|0.00|
|liabilities||||||||

Material changes in the measurement attributes of the major assets in the Reporting Period:
□ Yes√ No
3. Restricted Asset Rights as of End of the Reporting Period
Unit: RMB
||||
|-|-|-|
|Item|Ending carrying value|Reasons|
||45,000,000.00||
||99,930,600.00||
|Total|144,930,600.00||

~ 12~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
V Investments Made
1. Total Investments Made
□ Applicable√ Not applicable
2. Significant Equity Investments Made in the Reporting Period
□ Applicable√ Not applicable
3. Significant Non-Equity Investments Ongoing in the Reporting Period
□ Applicable√ Not applicable
4. Financial Investments
(1) Securities Investments
√ Applicable□ Not applicable
Unit: RMB
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||Gain/los||||||||
||Code of||Initial||Beginning|s on fair|Cumulative|Purchase||Gain/loss in|Ending|||
|Variety of||Name of||Accounting||value|fair value||Sold in the||||Source of|
||securitie||investment|measureme||changes|changes|d in the|Reporting|the||Accounting title||
|securities||securities|||carrying value|||Reportin||Reporting|carrying value||funds|
||s||cost|nt model||in the|charged to|g Period|Period|Period||||
|||||||Reportin|equity|||||||
|||||||g Period||||||||
|Domestic/overse||||Fair value|106,943,823.7||-25,087,573.6|||11,586,297.2||Available-for-sa|Self-owne|
||000001|PAYH|70,317,243.98||||||81,856,250.02||0.00|||
|as stock||||method|0||8|||3||le financial asset|d funds|
|Domestic/overse|601988|ZGYH|44,385,674.20|Fair value|71,313,507.00||-6,466,716.00||0.00|0.00|64,846,791.00|Available-for-sa|Self-owne|

~ 13~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|as stock|||method||||||le financial asset|d funds|
||GFNSTYR||||||||||
||1st E||||||||||
|||150,000,000.0|Fair value|127,154,958.0||126,590,905.6|||Available-for-sa|Self-owne|
|Funds|Securities||||-564,052.40||8,841,868.22|0.00|||
|||0|method|8||8|||le financial asset|d funds|
||Investment||||||||||
||Funds||||||||||
||ZXYSDP||||||||||
||1st Assets||||||||||
|||200,000,000.0|Fair value|211,674,059.1|||10,883,000.0|202,350,245.6|Available-for-sa|Self-owne|
|Funds|Manage||||-9,323,813.45|0.00|||||
|||0|method|3|||0|8|le financial asset|d funds|
||ment||||||||||
||Plan||||||||||
|Other ending holding securities|||||||||||
||||--||||||--|--|
|investments|||||||||||
|||464,702,918.1||517,086,347.9|-41,442,155.5|208,447,155.7|31,311,165.4|267,197,036.6|||
|Total|||--||||||--|--|
|||8||1|3|0|5|8|||
|Disclosure date of the announcement|||||||||||
|about the board’s consent for the||Naught|||||||||
|securities investment|||||||||||
|Disclosure date of the announcement|||||||||||
|about the general meeting’s consent for||Naught|||||||||
|the securities investment (if any)|||||||||||

(2) Investments in Derivative Financial Instruments
√ Applicable□ Not applicable
Unit:RMB’0,000
~ 14~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||||||||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||||||||||||||
||Naught|No|repurchase of|0.00|||5,000|12,000|17,000|0|0|0.00%|21.44|
|of national||||||||||||||
||||national debt|||||||||||
|debt||||||||||||||
|Total||||0.00|--|--|5,000|12,000|17,000|0|0|0.00%|21.44|
|Capital source for derivative investment||||Company’s own funds||||||||||
|Lawsuits involved (if applicable)||||N/A||||||||||
|Disclosure date of board announcement approving||||||||||||||
|||||30 August 2013||||||||||
|derivative investment (if any)||||||||||||||
|Disclosure date of shareholders’ meeting announcement||||||||||||||
|||||N/A||||||||||
|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,||||||||||||||
|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)||||||||||||||

~ 15~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||
|-|-|
|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.|

VI Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable√ Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Interests
□ Applicable√ Not applicable
VII Main Controlled and Joint Stock Companies
√ Applicable□ Not applicable
Main subsidiaries and joint stock companies with an over10% influence on theCompany’s net profits
~ 16~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
Unit: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
||Relationship|Main|||||||
|Company|||||||||
||||Registered capital|Total assets|Net assets|Operating revenues|Operating profit|Net profit|
|||business|||||||
||with the||||||||
|name|||||||||
|||scope|||||||
||Company||||||||
|||Wholesales|||||||
|||of distilled|||||||
|||spirit,|||||||
|Bozhou|||||||||
|||construction|||||||
|Gujing Sales|Subsidiary||84,864,497.89|3,210,400,453.96|511,474,706.76|4,253,242,535.90|502,639,601.02|373,876,477.59|
|||materials,|||||||
|Co., Ltd|||||||||
|||feeds and|||||||
|||assistant|||||||
|||materials|||||||
|Anhui||Manufacture|||||||
|Longrui||and sale of|||||||
||Subsidiary||86,660,268.98|272,051,488.82|227,087,845.41|113,642,525.23|25,405,466.53|21,249,089.19|
|Glass Co.,||glass|||||||
|Ltd||products|||||||
|Yellow|||||||||
|||Production|||||||
|Crane Tower|||||||||
|||and sales of|||||||
|Wine|Subsidiary||400,000,000.00|801,720,368.65|529,953,868.24|429,495,365.21|66,529,234.06|50,054,993.63|
|||distilled|||||||
|Industry Co.,|||||||||
|||spirit|||||||
|Ltd|||||||||
|Shanghai|||||||||
|||Hotel|||||||
|Gujing|||||||||
|||management|||||||
|Jinhao Hotel|Subsidiary||54,000,000.00|205,362,160.86|81,853,741.49|37,879,862.42|6,957,747.80|3,584,728.10|
|||and house|||||||
|Management|||||||||
|||lease|||||||
|Co., Ltd.|||||||||

~ 17~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
Subsidiaries obtained or disposed in the Reporting Period:
□ Applicable√ Not applicable
~ 18~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 VIII Structured Bodies Controlled by the Company
□ Applicable√ Not applicable
IX Performance Forecast for January-September 2018
Warning of possible loss or considerable YoY change in the accumulative net profit made during the period-beginning to the end of the next reporting period, as well as the reasons:
□ Applicable√ Not applicable
X Risks Facing the Company and Countermeasures
1. Operating risk of the Company
(1) The adverse effect of the systematic risk in macro-economic environment on the development of the industry and the Company. (2) Impact of industrial policy adjustment and change on the sustainable development of the Company.
(3) Impact of the change of consumption behaviors and habits on the consumption crowds and trend replacement of distilled spirits. 2. Countermeasures
(1) Marketing
Build Anhui market and accelerate Henan's market construction. Intensify strategic node market promotion, establish the commanding point of the brand and radiate across the country. Accelerate the upward movement of the product structure and take efforts to develop secondary high-end and high-end products. Continue to follow a strategy of “setting a higher market positioning and meanwhile maintaining a higher quality, from the international market to the domestic market, and focusing on both international and domestic market”.
(2) Product management
Continuously boost intelligent and green brewing process, implement quality upgrading action plan, enhance information, scientific and systematic management of product quality, lay a solid foundation for quality management. Make full use of the platform of National Distilled Spirits Health Research Institute and continuously strengthen the research on heath factors in distilled spirits. Continue to deeply boost product, technology and operation standardization and lay a solid foundation for the Company to implement automation and intellectualization.
(3) Management innovation
Focus on the users, accelerate the implementation of Strategy 5.0, achieve business process evolution, introduce the "User-Centered" thought in the design and construction of Strategy 5.0, and continuously promote the transformation of business model of the enterprise. Deeply drive internal marketization and independent legal person system. Facilitate budget management informatization. Build data standardization, strengthen statistical analysis and application and comprehensively deepen the budget management system.
(4) Human resources
Build the development channel and improve the incentive mechanism. Advocate a "united, tense, serious and lively" office atmosphere, establish a sound multi-level talent cultivation system, and further improve the various talent assessment system and incentive and constraint mechanism. Establish talent "craftsman pool" and "elite pool",get through the "Management Channel" and "Technology Channel", and build the "Innovation Platform" and "Entrepreneurship Platform".
~ 19~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 (5) Corporate cultural construction
Thoroughly study and implement the spirit of the 19th National Congress of the Communist Party of China and Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, and guide all the Party members to enhance their thought and action consciousness to maintain the core. Focus on the general keynote of "establishing, revitalizing and stabilizing the enterprise through Party building", tighten the politics string, build the organization wall, main a strict standard in probity and ensure co-frequency resonance of Party governance. Continuously strengthen "four-consciousness", and strengthen political leadership. Deepen the implementation ofGujing’s core values and consolidate Gujing new thought guidance.
~ 20~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 Part V Significant Events
I Annual and Extraordinary General Meeting Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
|||||||
|-|-|-|-|-|-|
|||Investor|||Index to disclosed|
|Meeting|Type||Convened date|Disclosure date||
|||participation ratio|||information|
||||||For details, see|
||||||Announcement about|
||||||Resolutions of 2017|
||||||Annual General Meeting|
||||||of the Company disclosed|
|The 2017 Annual|Annual General|||||
|||58.79%|22 May 2018|23 May 2018|on China Securities|
|General Meeting|Meeting|||||
||||||Journal, Shanghai|
||||||Securities News, Ta Kung|
||||||Pao (HK), and|
||||||http://www.cninfo.com.cn|
||||||on 23 May 2018.|

 2. Extraordinary General Meeting Convened at Request of Preference Shareholders with Resumed Voting Rights
□ Applicable√ Not applicable
II Interim Dividend Plan for the Reporting Period
□ Applicable√ Not applicable
The Company has no interim dividend plan.
III Commitments of theCompany’s Actual Controller, Shareholders, Connected Parties and Acquirer, as well as the Company and Other Commitment Makers, Fulfilled in the Reporting Period or still Ongoing at Period-End
□ Applicable√ Not applicable
No such cases in the Reporting Period.
~ 21~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 IV Engagement and Disengagement of CPAs Firm
Has the Interim financial report been audited?
□Yes√ No
This Interim Report is unaudited.
V Explanations Given by Board of Directors and Supervisory Committee Regarding “ModifiedAuditor’s Report” Issued by CPAs Firm for the Reporting Period
□ Applicable√ Not applicable
VI Explanations Given by Board of Directors Regarding “ModifiedAuditor’s Report” Issued for Last Year
□ Applicable√ Not applicable
VII Bankruptcy and Restructuring
□ Applicable√ Not applicable
No such cases in the Reporting Period.
VIII Legal Matters
Significant lawsuits or arbitrations:
□ Applicable√ Not applicable
No such cases in the Reporting Period.
Other legal matters:
□ Applicable√ Not applicable
IX Punishments and Rectifications
□ Applicable√ Not applicable
No such cases in the Reporting Period.
~ 22~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 X Credit Conditions of the Company as well as its Controlling Shareholder and Actual Controller
□ Applicable√ Not applicable
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 Significant Connected Transactions
1. Connected Transactions Relevant to Routine Operations
□ Applicable√ Not applicable
No such cases in the Reporting Period.
2. Connected Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable√ Not applicable
No such cases in the Reporting Period.
3. Connected Transactions Regarding Joint Investments in Third Parties
□ Applicable√ Not applicable
No such cases in the Reporting Period.
4. Credits and Liabilities with Connected Parties
□ Applicable√ Not applicable
No such cases in the Reporting Period.
5. Other Significant Connected Transactions
□ Applicable√ Not applicable
No such cases in the Reporting Period.
~ 23~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 XIII. Particulars about the Non-operating Occupation of Funds by the Controlling Shareholder and Other Connected Parties of the Company
□ Applicable√ Not applicable
The Company was not involved in the non-operating occupation of funds by the controlling shareholder and other connected parties during the Reporting Period.
XIV. Significant Contracts and Execution
1. Entrustment, Contracting and Leasing
(1) Entrustment
□ Applicable√ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable√ Not applicable
No such cases in the Reporting Period.
(3) Leasing
□ Applicable√ Not applicable
No such cases in the Reporting Period.
2. Significant Guarantees
□ Applicable√ Not applicable
No such cases in the Reporting Period.
3. Other Significant Contracts
□ Applicable√ Not applicable
No such cases in the Reporting Period.
XV. Social Responsibilities
Indicate by tick mark whether the Company or any of its subsidiaries is a heavily polluting business identified by the environmental
~ 24~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 protection authorities of China
Yes
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Name of|||||||||
|Name of||||||Pollutant||||
||major||Quantity of|Distribution||||||
|company or||Way of|||Discharge|discharge|Total|Permitted|Excess|
||pollutant and||discharge|of discharge||||||
|subsidiary||discharge|||concentration|standard|discharge|discharge|discharge|
||typical||outlet|outlet||||||
|company||||||implemented||||
||pollutant|||||||||
||COD|Directlydischarge|3|GujingplantZhangjiplantHeadquarterplant|75.81 mg/L|≤100 mg/L|106.06 t|155.05 t||
||NH3-N|Directlydischarge|3|GujingplantZhangjiplantHeadquarterplant|6.38mg/L|≤10 mg/L|8.93 t|15.53 t||
||Smoke|Organizeddischarge|3|GujingplantZhangjiplantHeadquarterplant|37mg/m³|≤80mg/ m³|18 t|Naught||
|||Organizeddischarge|3|GujingplantZhangjiplantHeadquarterplant|250mg/ m³|≤400mg/ m³|121.8 t|Naught||
||Sulfur Dioxide|||||||||
||Nitrogenoxide|Organizeddischarge|3|GujingplantZhangjiplantHeadquarterplant|273mg/ m³|≤400mg/ m³|132.8 t|Naught||
||Smoke|Organizeddischarge|3|No. 1furnaceNo. 2|43mg/ m³|≤200mg/ m³|6.6 t|Naught||

~ 25~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||||||
|-|-|-|-|-|-|-|-|
||||furnaceNo. 3furnace|||||
||Organizeddischarge|3|No. 1furnaceNo. 2furnaceNo. 3furnace|182mg/ m³|≤850mg/ m³|27.9 t|Naught|
|Sulfur Dioxide||||||||
|Nitrogenoxide|Organizeddischarge|3|No. 1furnaceNo. 2furnaceNo. 3furnace|335mg/ m³|≤700mg/ m³|51.1 t|Naught|

Construction and operation of pollution prevention and management
Rain and sewage distribution measures have been carried out, sewage treatment stations has been built and COD, NH3-N online monitors has been installed in the production areas of the Company. All detected data will be uploaded to the Pollution Sources Key Monitoring Information Platform of Anhui Province and accepts social supervision. The existing pollution-control facilities of the Company perform well and discharge according to relevant discharge standard. Wastewater discharge can meet requirements of GB27631-2011Discharge Standard of Water Pollutants for Fermentation Alcohol and Distilled Spirits Industry, and flue gas emission can meet requirements of GB13271-2014 Emission Standard of Air Pollutants for Boiler.
Environmental impact assessment of construction project and other administrative license situation in respect of environmental protection
1. The Gujing No. 9 Semi-Open Spirit Storehouse Renovation Project has carried out environmental impact assessment and prepared the environmental impact assessment report, which has been approved by Bozhou Environmental Protection Bureau on 21 May 2017. Please refer to BHB[2017] No. 62 document for details. The project is currently under construction;
2. The Gujing No. 10 Open Spirit Storehouse and Spirit Recycling Workshop Renovation Project has carried out environmental impact assessment and prepared the environmental impact assessment report, which has been approved by Bozhou Environmental Protection Bureau on 8 September 2017. Please refer to BHB[2017] No. 139 document for details. The project is currently under construction;
3. Environmental impact assessment work of Anhui Longrui Glass Co., Ltd VOC treatment project has been carried out. Environmental impact assessment reports has been compiled and approved by Bozhou Environmental Protection Bureau on 28, March 2018 (see Bozhou Environment Impact Report[2018] No. 16 for reference). This project is now under construction. Emergency plan for sudden environment affairs
The Company has formulated the Emergency Plan of Anhui Gujing Distillery Company Limited for Sudden Environmental Pollution Accident, which has been filed with municipal environmental protection bureau. Emergency plan drill has been carried out according to relevant requirements.
Environmental self-monitoring scheme
The Company has formulated the Self-Monitoring Scheme of Key Pollution Source Enterprises under the National Monitoring and
published it on the website of Bozhou Environmental Protection Bureau.
~ 26~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 Other environment information that should be disclosed
Longrui Glass Co., Ltd, as subsidiary of the Company, shares sewage treatment system with the Company to dispose household and industrial waste water. Waste water will be treated by sewage treatment station of the Company before being discharged according to relevant discharge standard and the discharge process can meet requirements of GB27631-2011Discharge Standard of Water Pollutants for Fermentation Alcohol and Distilled Spirits Industry. Glass furnaces flue gas of Longrui Glass Co., Ltd will be dusted, desulfurized and denitrated according to relevant standard before being discharged and the discharge process can meet requirements of GB9078-1996 Emission Standard of Air Pollutants for Industrial Kiln and Furnace.
Other related environment protection information
No
2. Targeted Measures Taken to Help People Lift Themselves Out of Poverty
(1) Summary of Precision Poverty Alleviation for the Reporting Period
In accordance with the requirements of the State, Anhui Provincial Party Committee and Government, and Bozhou Municipal Party Committee and Government on precision poverty alleviation, the Company has established targeted support towards 176poor families in Bali village, Wuma town, Qiaocheng District, Bozhou. The Company has established a complete and formal long-term mechanism for poverty alleviation targeted at those families. A supporting policy of one file for one family, one card for one family, and one policy for one family has been implemented based on the principle of “organizations are responsible for villages and cadres are responsible for families”, and files have been created based on family members, major labor force, farmland and income structure of poor families in each poor village. Since the implementation of poverty alleviation work, Bali Village in Wuma Town has all achieved poverty alleviation and has a fixed income.
(2) Subsequent Plan for Precision Poverty Alleviation
First, the Company will continue to engage in poverty alleviation and strengthen its efforts in targeted support towards poor families; second, the Company will continue to implement the supporting policy of the Provincial Party Committee and Government and the Municipal Party Committee and Government, soundly advancing the poverty alleviation work in line with the relevant requirements to carry out the social responsibility.
XVI. Other Significant Events
□ Applicable√ Not applicable
No such cases in the Reporting Period.
XVII. Significant Events of Subsidiaries
□ Applicable√ Not applicable
~ 27~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 Part VI Share Changes and Shareholder Information
I. Share Changes
Unit: share
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Before||Increase/decrease (+/-)|||||After||
|||Percentage|New|Bonus|Bonus issue||||Percentage|
||Number|||||Other|Subtotal|Number||
|||(%)|issues|shares|from profit||||(%)|
|I. Restricted shares|0|0.00%||||||0|0.00%|
|II. Non-restricted shares|503,600,000|100.00%||||||503,600,000|100.00%|
|1 RMB ordinary shares|383,600,000|76.17%||||||383,600,000|76.17%|
|2 Domestically listed||||||||||
||120,000,000|23.83%||||||120,000,000|23.83%|
|foreign shares||||||||||
|III. Total shares|503,600,000|100.00%||||||503,600,000|100.00%|

 Reasons for the share changes
□ Applicable√ Not applicable
Approval of share changes
□ Applicable√ Not applicable
Transfer of share ownership
□ Applicable√ Not applicable
Effects of share changes on the basic EPS, diluted EPS, net assets per share attributable to ordinary shareholders of the Company and other financial indexes over the prior year and the prior period
□ Applicable√ Not applicable
Other contents that the Company considers necessary or is required by the securities regulatory authorities to disclose
□ Applicable√ Not applicable
2. Changes in Restricted Shares
□ Applicable√ Not applicable
II. Issuance and Listing of Securities
□ Applicable√ Not applicable
~ 28~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 III. Total Number of Shareholders and Their Shareholdings
Unit: share
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|||||||Total number of preference shareholders|||||
|Total number of ordinary|||||||||||
|||18,171||||with resumed voting rights at the|||0||
|shareholders at the period-end|||||||||||
|||||||period-end (if any) (see Note 8)|||||
|5% or greater ordinary shareholders or the top 10 ordinary shareholders|||||||||||
||||||||Number||Pledged or frozen shares||
||||Shareholding|Total shares|Increase/decrease||of|Number of|||
|Name of|Nature of||||||||||
||||percentage|held at the|during the||restricted|non-restricted|||
|shareholder|shareholder||||||||Status|Number|
||||(%)|period-end|Reporting Period||shares|shares held|||
||||||||held||||
||State-ownedlegal person||53.89%|271,404,022||||271,404,022|||
||||||||||Pledge|114,000,000|
||Foreign legalperson||2.89%|14,554,480||||14,554,480|||
||Foreign legalperson||2.47%|12,446,408||||12,446,408|||
||Other||1.49%|7,485,278||||7,485,278|||
||Foreign legalperson||1.46%|7,372,976||||7,372,976|||
||Foreign legalperson||1.41%|7,096,361||||7,096,361|||
||State-ownedlegal person||1.30%|6,543,600||||6,543,600|||

~ 29~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||||||
|-|-|-|-|-|-|-|
||Foreign legalperson|0.98%|4,939,963|4,939,963|||
||Foreign legalperson|0.90%|4,541,338|4,541,338|||
||Foreign legalperson|0.70%|3,529,479|3,529,479|||
|Strategic investor or general|||||||
|corporation becoming a top ten|||||||
|||N/A|||||
|shareholder due to placing of new|||||||
|shares (if any) (note 3)|||||||
|||Among the shareholders above, the Company’s controlling shareholder—Anhui Gujing Group|||||
|||Company Limited—is not a connected party of other shareholders; nor are they parties acting in|||||
|Explanation on connected|||||||
|||concert as defined in the Administrative Measures on Information Disclosure of Changes in|||||
|relationship or/and persons acting in|||||||
|||Shareholding of Listed Companies. As for the other shareholders, the Company does not know|||||
|concert among the above-mentioned|||||||
|||whether they are connected parties or whether they belong to parties acting in concert as defined|||||
|shareholders|||||||
|||in the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed|||||
|||Companies.|||||
|Shareholdings of the top ten non-restricted ordinary shareholders|||||||
||||||Type of shares||
|Name of shareholder||Number of non-restricted shares held at the period-end|||||
||||||Type|Number|
|||271,404,022|||RMB ordinary||
|||||||271,404,022|
||||||share||
|||14,554,480|||Domestically||
||||||listed foreign|14,554,480|
||||||share||
|||12,446,408|||Domestically||
||||||listed foreign|12,446,408|
||||||share||
|||7,485,278|||||
||||||RMB ordinary||
|||||||7,485,278|
||||||share||
|||7,372,976|||Domestically||
|||||||7,372,976|
||||||listed foreign||

~ 30~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||
|-|-|-|-|
|||share||
||7,096,361|Domestically||
|||listed foreign|7,096,361|
|||share||
||6,543,600|RMB ordinary||
||||6,543,600|
|||share||
||4,939,963|Domestically||
|||listed foreign|4,939,963|
|||share||
||4,541,338|Domestically||
|||listed foreign|4,541,338|
|||share||
||3,529,479|Domestically||
|||listed foreign|3,529,479|
|||share||
||Among the shareholders above, the Company’s controlling shareholder—Anhui Gujing Group|||
|Connected or acting-in-concert||||
||Company Limited—is not a connected party of other shareholders; nor are they parties acting in|||
|parties among the top ten||||
||concert as defined in the Administrative Measures on Information Disclosure of Changes in|||
|non-restrictedly tradable share||||
||Shareholding of Listed Companies. As for the other shareholders, the Company does not know|||
|holders and between the top ten||||
||whether they are connected parties or whether they belong to parties acting in concert as defined|||
|non-restrictedly tradable share||||
||in the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed|||
|holders and the top ten shareholders||||
||Companies.|||
|Top ten ordinary shareholders||||
|conducting securities margin|N/A|||
|trading (if any) (see Note 4)||||

Did any top 10 common shareholders or the top 10 common shareholders not subject to trading moratorium of the Company carry out an agreed buy-back in the Reporting Period?
□ Yes√ No
The top 10 common shareholders or the top 10 common shareholders not subject to trading moratorium of the Company had not carried out any agreed buy-back in the Reporting Period.
IV. Change of the Controlling Shareholder or the Actual Controller
Change of the controlling shareholder in the Reporting Period
□ Applicable√ Not applicable
There was no any change of the controlling shareholder of the Company in the Reporting Period.
Change of the actual controller in the Reporting Period
□ Applicable√ Not applicable
There was no any change of the actual controller of the Company in the Reporting Period.
~ 31~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 Part VII Preferred Shares
□ Applicable√ Not applicable
No preferred shares in the Reporting Period.
~ 32~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 Part VIII Directors, Supervisors and Senior Management
I Changes in Shareholdings of Directors, Supervisors and Senior Management
□ Applicable√ Not applicable
There were no changes in shareholdings of directors, supervisors, and senior management in the Reporting Period. For details, see Annual Report of 2017.
II Changes in Directors, Supervisors and Executive Officers
□ Applicable√ Not applicable
~ 33~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 Part IX Corporate Bonds
Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue before the approval date of this Report or were due but could not be redeemed in full?
No
~ 34~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 Part X Financial Report
I.Auditor’s Report
Whether the interim report has been audited?
□Yes√ No
The interim report of the Company has not been audited.
II. Financial Statements
The unit of the financial statements attached: RMB
1. Consolidated Balance Sheet
Prepared by Anhui Gujing Distillery Company Limited
30 June 2018
Unit: RMB
||||
|-|-|-|
|Item|30 June 2018|31 December 2017|
|Current assets:|||
|Monetary assets|967,785,957.41|1,484,088,626.40|
|Settlement reserve|||
|Interbank loans granted|||
|Financial assets at fair value through|||
||1,057,659.73|99,800.76|
|profit or loss|||
|Derivative financial assets|||
|Notes receivable|1,898,811,744.49|720,611,126.78|
|Accounts receivable|19,492,576.07|22,466,143.06|
|Prepayments|82,209,009.71|41,729,637.34|
|Premiums receivable|||
|Reinsurance receivables|||
|Receivable reinsurance contract|||
|reserve|||
|Interest receivable|19,403,178.08|13,883,178.08|
|Dividends receivable|||
|Other receivables|12,882,228.59|15,390,106.14|

~ 35~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|Financial assets purchased under|||
|resale agreements|||
|Inventories|2,140,586,455.59|2,064,130,297.51|
|Assets classified as held for sale|||
|Current portion of non-current assets|||
|Other current assets|2,167,041,053.66|1,772,310,946.58|
|Total current assets|7,309,269,863.33|6,134,709,862.65|
|Non-current assets:|||
|Loans and advances to customers|||
|Available-for-sale financial assets|267,197,036.68|517,086,347.91|
|Held-to-maturity investments|||
|Long-term receivables|||
|Long-term equity investments|||
|Investment property|5,055,069.67|5,343,777.33|
|Fixed assets|1,717,043,900.68|1,792,254,178.56|
|Construction in progress|76,076,053.22|54,496,798.56|
|Engineering materials|||
|Proceeds from disposal of fixed assets|||
|Productive living assets|||
|Oil and gas assets|||
|Intangible assets|747,362,393.05|691,381,442.67|
|R&D expense|||
|Goodwill|478,283,495.29|478,283,495.29|
|Long-term prepaid expense|74,201,576.33|69,238,523.78|
|Deferred income tax assets|223,740,381.46|92,157,477.74|
|Other non-current assets|312,474,025.99|317,910,214.56|
|Total non-current assets|3,901,433,932.37|4,018,152,256.40|
|Total assets|11,210,703,795.70|10,152,862,119.05|
|Current liabilities:|||
|Short-term borrowings|||
|Borrowings from central bank|||
|Customer deposits and deposits from|||
|banks and other financial institutions|||
|Interbank loans obtained|||
|Financial liabilities at fair value|||

~ 36~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|through profit or loss|||
|Derivative financial liabilities|||
|Notes payable|188,073,094.09|200,750,000.00|
|Accounts payable|292,602,067.69|435,615,039.83|
|Advances from customers|803,222,097.92|503,083,108.13|
|Financial assets sold under repurchase|||
|agreements|||
|Handling charges and commissions|||
|payable|||
|Payroll payable|249,960,170.72|372,374,014.37|
|Taxes payable|413,938,710.44|420,984,845.45|
|Interest payable|||
|Dividends payable|||
|Other payables|1,103,986,706.45|1,032,543,553.34|
|Reinsurance payables|||
|Insurance contract reserve|||
|Payables for acting trading of|||
|securities|||
|Payables for underwriting of|||
|securities|||
|Liabilities directly associated with|||
|assets classified as held for sale|||
|Current portion of non-current|||
|liabilities|||
|Other current liabilities|804,829,022.62|182,846,942.10|
|Total current liabilities|3,856,611,869.93|3,148,197,503.22|
|Non-current liabilities:|||
|Long-term borrowings|||
|Bonds payable|||
|Including: Preferred shares|||
|Perpetual bonds|||
|Long-term payables|||
|Long-term payroll payable|||
|Specific payables|||
|Provisions|||
|Deferred income|41,140,119.46|43,706,503.22|
|Deferred income tax liabilities|105,037,408.26|119,779,105.90|

~ 37~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|Other non-current liabilities|||
|Total non-current liabilities|146,177,527.72|163,485,609.12|
|Total liabilities|4,002,789,397.65|3,311,683,112.34|
|Owners’ equity:|||
|Share capital|503,600,000.00|503,600,000.00|
|Other equity instruments|||
|Including: Preferred shares|||
|Perpetual bonds|||
|Capital reserves|1,295,405,592.25|1,295,405,592.25|
|Less: Treasury shares|||
|Other comprehensive income|8,418,551.86|53,520,827.44|
|Specific reserve|||
|Surplus reserves|256,902,260.27|256,902,260.27|
|General reserve|||
|Retained profits|4,738,472,036.06|4,349,649,698.42|
|Total equity attributable to owners of the|||
||6,802,798,440.44|6,459,078,378.38|
|Company as the parent|||
|Non-controlling interests|405,115,957.61|382,100,628.33|
|Total owners’ equity|7,207,914,398.05|6,841,179,006.71|
|Total liabilities and owners’ equity|11,210,703,795.70|10,152,862,119.05|

 Legal representative: Liang Jinhui TheCompany’s chief accountant: Ye Changqing Head of theCompany’s financial department: Zhu Jiafeng
2. Balance Sheet of the Company as the Parent
Unit: RMB
||||
|-|-|-|
|Item|30 June 2018|31 December 2017|
|Current assets:|||
|Monetary assets|772,284,862.52|1,276,262,109.02|
|Financial assets at fair value through|||
||1,057,659.73|99,800.76|
|profit or loss|||
|Derivative financial assets|||
|Notes receivable|1,707,225,175.49|674,521,654.40|
|Accounts receivable|7,614,296.08|8,509,918.03|
|Prepayments|24,857,999.07|8,534,600.82|

~ 38~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|Interest receivable|||
|Dividends receivable|||
|Other receivables|103,848,091.62|130,357,778.75|
|Inventories|1,888,382,381.02|1,818,358,884.18|
|Assets classified as held for sale|||
|Current portion of non-current assets|||
|Other current assets|1,525,688,078.30|1,554,870,774.98|
|Total current assets|6,030,958,543.83|5,471,515,520.94|
|Non-current assets:|||
|Available-for-sale financial assets|266,691,636.68|516,530,547.91|
|Held-to-maturity investments|||
|Long-term receivables|||
|Long-term equity investments|1,155,089,408.32|1,155,089,408.32|
|Investment property|25,599,187.91|26,409,050.95|
|Fixed assets|1,248,446,627.92|1,303,119,011.66|
|Construction in progress|62,902,724.31|44,673,219.38|
|Engineering materials|||
|Proceeds from disposal of fixed assets|||
|Productive living assets|||
|Oil and gas assets|||
|Intangible assets|191,482,188.30|185,868,178.71|
|R&D expense|||
|Goodwill|||
|Long-term prepaid expense|52,071,942.48|58,563,409.89|
|Deferred income tax assets|45,869,242.45|37,996,747.93|
|Other non-current assets|12,474,026.00|12,474,026.00|
|Total non-current assets|3,060,626,984.37|3,340,723,600.75|
|Total assets|9,091,585,528.20|8,812,239,121.69|
|Current liabilities:|||
|Short-term borrowings|||
|Financial liabilities at fair value|||
|through profit or loss|||
|Derivative financial liabilities|||
|Notes payable|46,282,864.09|0.00|

~ 39~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|Accounts payable|198,568,181.33|347,757,180.53|
|Advances from customers|2,231,969,430.14|1,680,678,175.37|
|Payroll payable|89,036,488.26|110,435,403.45|
|Taxes payable|130,156,087.08|262,884,211.13|
|Interest payable|||
|Dividends payable|||
|Other payables|229,014,721.93|173,250,790.29|
|Liabilities directly associated with|||
|assets classified as held for sale|||
|Current portion of non-current|||
|liabilities|||
|Other current liabilities|69,116,753.96|18,296,415.85|
|Total current liabilities|2,994,144,526.79|2,593,302,176.62|
|Non-current liabilities:|||
|Long-term borrowings|||
|Bonds payable|||
|Including: Preferred shares|||
|Perpetual bonds|||
|Long-term payables|||
|Long-term payroll payable|||
|Specific payables|||
|Provisions|||
|Deferred income|37,612,568.27|39,976,048.28|
|Deferred income tax liabilities|6,095,966.89|19,792,209.68|
|Other non-current liabilities|||
|Total non-current liabilities|43,708,535.16|59,768,257.96|
|Total liabilities|3,037,853,061.95|2,653,070,434.58|
|Owners’ equity:|||
|Share capital|503,600,000.00|503,600,000.00|
|Other equity instruments|||
|Including: Preferred shares|||
|Perpetual bonds|||
|Capital reserves|1,247,162,107.35|1,247,162,107.35|
|Less: Treasury shares|||
|Other comprehensive income|8,390,260.80|53,454,736.38|

~ 40~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|Specific reserve|||
|Surplus reserves|251,800,000.00|251,800,000.00|
|Retained profits|4,042,780,098.10|4,103,151,843.38|
|Total owners’ equity|6,053,732,466.25|6,159,168,687.11|
|Total liabilities and owners’ equity|9,091,585,528.20|8,812,239,121.69|

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

~ 41~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|Foreign exchange gain (“-” for loss)|||
|Asset disposal income (“-” for loss)|154,437.81|487,886.67|
|Other income|4,487,036.05|23,716,926.49|
|3. Operating profit (“-” for loss)|1,225,906,797.44|762,358,692.40|
|Add: Non-operating income|14,758,797.76|14,961,789.67|
|Less: Non-operating expense|4,438,013.04|2,189,022.01|
|4. Profit before taxation (“-” for loss)|1,236,227,582.16|775,131,460.06|
|Less: Income tax expense|320,789,915.24|203,016,533.12|
|5. Net profit (“-” for net loss)|915,437,666.92|572,114,926.94|
|5.1 Net profit from continuing|||
||915,437,666.92|572,114,926.94|
|operations (“-” for net loss)|||
|5.2 Net profit from discontinued|||
|operations (“-” for net loss)|||
|Net profit attributable to owners of the|||
||892,422,337.64|548,889,891.65|
|Company as the parent|||
|Net profit attributable to|||
||23,015,329.28|23,225,035.29|
|non-controlling interests|||
|6. Other comprehensive income, net of|||
||-45,102,275.58|-19,896,472.08|
|tax|||
|Attributable to owners of the Company|||
||-45,102,275.58|-19,896,472.08|
|as the parent|||
|6.1 Items that will not be reclassified|||
|to profit or loss|||
|6.1.1 Changes in net liabilities or|||
|assets caused by remeasurements on|||
|defined benefit pension schemes|||
|6.1.2 Share of other|||
|comprehensive income of investees that|||
|will not be reclassified to profit or loss|||
|under equity method|||
|6.2 Items that may subsequently be|||
||-45,102,275.58|-19,896,472.08|
|reclassified to profit or loss|||
|6.2.1 Share of other|||
|comprehensive income of investees that|||
|will be reclassified to profit or loss under|||
|equity method|||
|6.2.2 Gain/Loss on changes in fair|||
||-45,102,275.58|-19,896,472.08|
|value of available-for-sale financial assets|||
|6.2.3 Gain/Loss arising from|||
|reclassification of held-to-maturity|||

~ 42~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|investments to available-for-sale financia|l||
|assets|||
|6.2.4 Effective gain/loss on cash|||
|flow hedges|||
|6.2.5 Differences arising from|l||
|translation of foreign|||
|currency-denominated financia|||
|statements|||
|6.2.6 Other|||
|Attributable to non-controlling interests|||
|7. Total comprehensive income|870,335,391.34|552,218,454.86|
|Attributable to owners of the Company|847,320,062.06||
|||528,993,419.57|
|as the parent|||
|Attributable to non-controlling interests|23,015,329.28|23,225,035.29|
|8. Earnings per share|||
|8.1 Basic earnings per share|1.77|1.09|
|8.2 Diluted earnings per share|1.77|1.09|

 Legal representative: Liang Jinhui TheCompany’s chief accountant: Ye Changqing Head of theCompany’s financial department: Zhu Jiafeng
4. Income Statement of the Company as the Parent
Unit: RMB
||||
|-|-|-|
|Item|H1 2018|H1 2017|
|1. Operating revenue|2,373,509,719.96|2,032,050,832.48|
|Less: Cost of sales|962,446,727.32|808,157,556.90|
|Taxes and surtaxes|612,880,006.38|521,153,270.11|
|Selling expense|90,185,702.99|119,601,430.10|
|Administrative expense|190,821,389.57|180,104,417.79|
|Finance costs|-17,205,534.12|-8,358,356.49|
|Asset impairment loss|1,440,847.72|-1,943,865.48|
|Add: Gain on changes in fair value(“-” for loss)|||
||236,707.77|-119,656.35|
|Investment income (“-” for loss)|61,302,268.33|74,940,152.97|
|Including: Share of profit or lossof joint ventures and associates|||
|Asset disposal income (“-” for loss)|0.00|117,524.82|

~ 43~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|Other income|2,363,480.01|20,551,597.62|
|2. Operating profit (“-” for loss)|596,843,036.21|508,825,998.61|
|Add: Non-operating income|12,278,301.09|2,446,478.83|
|Less: Non-operating expense|3,316,344.52|798,234.93|
|3. Profit before taxation (“-” for loss)|605,804,992.78|510,474,242.51|
|Less: Income tax expense|162,576,738.06|136,935,504.91|
|4. Net profit (“-” for net loss)|443,228,254.72|373,538,737.60|
|4.1 Net profit from continuing|||
||443,228,254.72|373,538,737.60|
|operations (“-” for net loss)|||
|4.2 Net profit from discontinued|||
|operations (“-” for net loss)|||
|5. Other comprehensive income, net of|||
||-45,064,475.58|-19,923,772.08|
|tax|||
|5.1 Items that will not be reclassified|||
|to profit or loss|||
|5.1.1 Changes in net liabilities or|||
|assets caused by remeasurements on|||
|defined benefit pension schemes|||
|5.1.2 Share of other comprehensive|||
|income of investees that will not be|||
|reclassified into profit or loss under|||
|equity method|||
|5.2 Items that may subsequently be|||
||-45,064,475.58|-19,923,772.08|
|reclassified to profit or loss|||
|5.2.1 Share of other comprehensive|||
|income of investees that will be|||
|reclassified into profit or loss under|||
|equity method|||
|5.2.2 Gain/Loss on changes in fair|||
|value of available-for-sale financial|-45,064,475.58|-19,923,772.08|
|assets|||
|5.2.3 Gain/Loss arising from|||
|reclassification of held-to-maturity|||
|investments to available-for-sale|||
|financial assets|||
|5.2.4 Effective gain/loss on cash|||
|flow hedges|||
|5.2.5 Differences arising from|||
|translation of foreign|||
|currency-denominated financial|||
|statements|||

~ 44~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|5.2.6 Other|||
|6. Total comprehensive income|398,163,779.14|353,614,965.52|
|7. Earnings per share|||
|7.1 Basic earnings per share|0.88|0.74|
|7.2 Diluted earnings per share|0.88|0.74|

 5. Consolidated Cash Flow Statement
Unit: RMB
||||
|-|-|-|
|Item|H1 2018|H1 2017|
|1. Cash flows from operating activities:|||
|Proceeds from sale of commodities|||
||4,168,785,414.04|3,555,497,838.84|
|and rendering of services|||
|Net increase in customer deposits and|||
|deposits from banks and other financial|||
|institutions|||
|Net increase in loans from central|||
|bank|||
|Net increase in loans from other|||
|financial institutions|||
|Premiums received on original|||
|insurance contracts|||
|Net proceeds from reinsurance|||
|Net increase in deposits and|||
|investments of policy holders|||
|Net increase in proceeds from|||
|disposal of financial assets at fair value|||
|through profit or loss|||
|Interest, handling charges and|||
|commissions received|||
|Net increase in interbank loans|||
|obtained|||
|Net increase in proceeds from|||
|repurchase transactions|||
|Tax rebates|1,526,552.28|14,260,319.10|
|Cash generated from other operating|||
||578,221,173.31|163,681,861.39|
|activities|||
|Subtotal of cash generated from|||
||4,748,533,139.63|3,733,440,019.33|
|operating activities|||
|Payments for commodities and|||
||805,659,265.35|519,208,246.66|
|services|||

~ 45~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|Net increase in loans and advances to|||
|customers|||
|Net increase in deposits in central|||
|bank and in interbank loans granted|||
|Payments for claims on original|||
|insurance contracts|||
|Interest, handling charges and|||
|commissions paid|||
|Policy dividends paid|||
|Cash paid to and for employees|777,363,928.00|664,176,293.14|
|Taxes paid|1,875,377,764.19|1,695,407,866.03|
|Cash used in other operating activities|621,185,290.48|429,282,389.42|
|Subtotal of cash used in operating|||
||4,079,586,248.02|3,308,074,795.25|
|activities|||
|Net cash generated from/used in|||
||668,946,891.61|425,365,224.08|
|operating activities|||
|2. Cash flows from investing activities:|||
|Proceeds from disinvestments|1,050,984,415.12|2,122,314,171.98|
|Investment income|64,643,822.92|79,384,831.47|
|Net proceeds from disposal of fixed|||
|assets, intangible assets and other|170,207.20|412,563.04|
|long-lived assets|||
|Net proceeds from disposal of|||
|subsidiaries or other business units|||
|Cash generated from other investing|||
||0.00|1,646,000.00|
|activities|||
|Subtotal of cash generated from|||
||1,115,798,445.24|2,203,757,566.49|
|investing activities|||
|Payments for acquisition of fixed|||
|assets, intangible assets and other|160,906,209.61|74,306,031.33|
|long-lived assets|||
|Payments for investments|1,221,541,796.23|2,096,875,360.87|
|Net increase in pledged loans granted|||
|Net payments for acquisition of|||
|subsidiaries and other business units|||
|Cash used in other investing activities|||
|Subtotal of cash used in investing|||
||1,382,448,005.84|2,171,181,392.20|
|activities|||
|Net cash generated from/used in|||
||-266,649,560.60|32,576,174.29|
|investing activities|||

~ 46~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|3. Cash flows from financing activities:|||
|Capital contributions received|||
|Including: Capital contributions by|||
|non-controlling interests to subsidiaries|||
|Increase in borrowings obtained|||
|Net proceeds from issuance of bonds|||
|Cash generated from other financing|||
|activities|||
|Subtotal of cash generated from|||
|financing activities|||
|Repayment of borrowings|||
|Payments for interest and dividends|503,600,000.00|302,160,000.00|
|Including: Dividends paid by|||
|subsidiaries to non-controlling interests|||
|Cash used in other financing activities|||
|Subtotal of cash used in financing|||
||503,600,000.00|302,160,000.00|
|activities|||
|Net cash generated from/used in|||
||-503,600,000.00|-302,160,000.00|
|financing activities|||
|4. Effect of foreign exchange rate|||
|changes on cash and cash equivalents|||
|5. Net increase in cash and cash|||
||-101,302,668.99|155,781,398.37|
|equivalents|||
|Add: Cash and cash equivalents,|||
||1,024,088,626.40|527,849,026.07|
|beginning of the period|||
|6. Cash and cash equivalents, end of the|||
||922,785,957.41|683,630,424.44|
|period|||

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

~ 47~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|Payments for commodities and|||
||621,024,637.00|451,629,264.08|
|services|||
|Cash paid to and for employees|299,547,110.96|280,790,376.47|
|Taxes paid|1,185,933,500.57|1,125,948,368.08|
|Cash used in other operating activities|122,550,902.77|114,239,605.20|
|Subtotal of cash used in operating|||
||2,229,056,151.30|1,972,607,613.83|
|activities|||
|Net cash generated from/used in|||
||232,152,466.19|484,158,876.13|
|operating activities|||
|2. Cash flows from investing activities:|||
|Proceeds from disinvestments|860,984,415.12|2,069,314,171.98|
|Investment income|62,684,376.34|78,831,554.77|
|Net proceeds from disposal of fixed|||
|assets, intangible assets and other|||
|long-lived assets|||
|Net proceeds from disposal of|||
|subsidiaries or other business units|||
|Cash generated from other investing|||
||0.00|1,646,000.00|
|activities|||
|Subtotal of cash generated from|||
||923,668,791.46|2,149,791,726.75|
|investing activities|||
|Payments for acquisition of fixed|||
|assets, intangible assets and other|84,656,707.92|59,402,496.47|
|long-lived assets|||
|Payments for investments|621,541,796.23|1,969,875,360.87|
|Net payments for acquisition of|||
|subsidiaries and other business units|||
|Cash used in other investing activities|||
|Subtotal of cash used in investing|||
||706,198,504.15|2,029,277,857.34|
|activities|||
|Net cash generated from/used in|||
||217,470,287.31|120,513,869.41|
|investing activities|||
|3. Cash flows from financing activities:|||
|Capital contributions received|||
|Increase in borrowings obtained|||
|Net proceeds from issuance of bonds|||
|Cash generated from other financing|||
|activities|||
|Subtotal of cash generated from|||
|financing activities|||

~ 48~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|Repayment of borrowings|||
|Payments for interest and dividends|503,600,000.00|302,160,000.00|
|Cash used in other financing activities|||
|Sub-total of cash used in financing|||
||503,600,000.00|302,160,000.00|
|activities|||
|Net cash generated from/used in|||
||-503,600,000.00|-302,160,000.00|
|financing activities|||
|4. Effect of foreign exchange rate|||
|changes on cash and cash equivalents|||
|5. Net increase in cash and cash|||
||-53,977,246.50|302,512,745.54|
|equivalents|||
|Add: Cash and cash equivalents,|||
||826,262,109.02|225,792,686.26|
|beginning of the period|||
|6. Cash and cash equivalents, end of the|||
||772,284,862.52|528,305,431.80|
|period|||

~ 49~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
7. Consolidated Statements of Changes inOwners’ Equity
H1 2018
Unit: RMB
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||H1 2018|||||||||||||
||Equity attributable to owners of the Company as the parent|||||||||||||
|Item||||||||||||||
|||Other equity instruments||||Less:|Other|||||Non-controlling|Total owners’|
|||||||||Specific|Surplus|General||||
||Share capital|Preferred|Perpetual||Capital reserves|Treasury|comprehensive||||Retained profits|interests|equity|
|||||Other||||reserve|reserves|reserve||||
|||shares|bonds|||shares|income|||||||
|1. Balances as of||||||||||||||
||503,600,000.00||||1,295,405,592.25||53,520,827.44||256,902,260.27||4,349,649,698.42|382,100,628.33|6,841,179,006.71|
|end of prior year||||||||||||||
|Add: Adjustments||||||||||||||
|for changed||||||||||||||
|accounting||||||||||||||
|policies||||||||||||||
|Adjustments for||||||||||||||
|corrections of||||||||||||||
|previous errors||||||||||||||
|Adjustments for||||||||||||||
|business||||||||||||||
|combinations||||||||||||||
|involving||||||||||||||
|enterprises under||||||||||||||
|common control||||||||||||||
|Other||||||||||||||
|adjustments||||||||||||||
|2. Balances as of||||||||||||||
||503,600,000.00||||1,295,405,592.25||53,520,827.44||256,902,260.27||4,349,649,698.42|382,100,628.33|6,841,179,006.71|
|beginning of the||||||||||||||

~ 50~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||||
|-|-|-|-|-|
|year|||||
|3. Increase/|||||
|decrease in the|||||
||-45,102,275.58|388,822,337.64|23,015,329.28|366,735,391.34|
|period (“-” for|||||
|decrease)|||||
|3.1 Total|||||
|comprehensive|-45,102,275.58|892,422,337.64|23,015,329.28|870,335,391.34|
|income|||||
|3.2 Capital|||||
|increased and|||||
|reduced by owners|||||
|3.2.1|||||
|Ordinary shares|||||
|increased by|||||
|shareholders|||||
|3.2.2 Capital|||||
|increased by|||||
|holders of other|||||
|equity instruments|||||
|3.2.3|||||
|Share-based|||||
|payments included|||||
|in owners’ equity|||||
|3.2.4 Other|||||
|3.3 Profit|||||
|||-503,600,000.00||-503,600,000.00|
|distribution|||||
|3.3.1|||||
|Appropriation to|||||

~ 51~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|surplus reserves|||
|3.3.2|||
|Appropriation to|||
|general reserve|||
|3.3.3|||
|Appropriation to|||
||-503,600,000.00|-503,600,000.00|
|owners (or|||
|shareholders)|||
|3.3.4 Other|||
|3.4|||
|Carryforwards|||
|within owners’|||
|equity|||
|3.4.1 Increase|||
|in capital (or share|||
|capital) from|||
|capital reserves|||
|3.4.2 Increase|||
|in capital (or share|||
|capital) from|||
|surplus reserves|||
|3.4.3 Surplus|||
|reserves used to|||
|make up losses|||
|3.4.4 Other|||
|3.5 Specific|||
|reserve|||
|3.5.1|||

~ 52~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||||||
|-|-|-|-|-|-|-|
|Withdrawn for the|||||||
|period|||||||
|3.5.2 Used|||||||
|during the period|||||||
|3.6 Other|||||||
|4. Balances as of|||||||
||503,600,000.00|1,295,405,592.25|8,418,551.86|256,902,260.27|4,738,472,036.06|405,115,957.61|
|end of the period|||||||

H1 2017
Unit: RMB
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||H1 2017|||||||||||||
||Equity attributable to owners of the Company as the parent|||||||||||||
|Item||||||||||||||
|||Other equity instruments||||Less:|Other|||||Non-controlling|Total owners’|
|||||||||Specific|Surplus|General||||
||Share capital|Preferred|Perpetual||Capital reserves|Treasury|comprehensive||||Retained profits|interests|equity|
|||||Other||||reserve|reserves|reserve||||
|||shares|bonds|||shares|income|||||||
|1. Balances as of||||||||||||||
||503,600,000.00||||1,295,405,592.25||36,144,477.95||256,902,260.27||3,503,069,053.49|345,609,535.80|5,940,730,919.76|
|end of prior year||||||||||||||
|Add: Adjustments||||||||||||||
|for changed||||||||||||||
|accounting||||||||||||||
|policies||||||||||||||
|Adjustments for||||||||||||||
|corrections of||||||||||||||
|previous errors||||||||||||||
|Adjustments for||||||||||||||
|business||||||||||||||
|combinations||||||||||||||

~ 53~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||||||
|-|-|-|-|-|-|-|-|
|involving||||||||
|enterprises under||||||||
|common control||||||||
|Other||||||||
|adjustments||||||||
|2. Balances as of||||||||
|beginning of the|503,600,000.00|1,295,405,592.25|36,144,477.95|256,902,260.27|3,503,069,053.49|345,609,535.80|5,940,730,919.76|
|year||||||||
|3. Increase/||||||||
|decrease in the||||||||
||||17,376,349.49||846,580,644.93|36,491,092.53|900,448,086.95|
|period (“-” for||||||||
|decrease)||||||||
|3.1 Total||||||||
|comprehensive|||17,376,349.49||1,148,740,644.93|36,491,092.53|1,202,608,086.95|
|income||||||||
|3.2 Capital||||||||
|increased and||||||||
|reduced by owners||||||||
|3.2.1||||||||
|Ordinary shares||||||||
|increased by||||||||
|shareholders||||||||
|3.2.2 Capital||||||||
|increased by||||||||
|holders of other||||||||
|equity instruments||||||||
|3.2.3||||||||
|Share-based||||||||
|payments included||||||||

~ 54~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|in owners’ equity|||
|3.2.4 Other|||
|3.3 Profit|||
||-302,160,000.00|-302,160,000.00|
|distribution|||
|3.3.1|||
|Appropriation to|||
|surplus reserves|||
|3.3.2|||
|Appropriation to|||
|general reserve|||
|3.3.3|||
|Appropriation to|||
||-302,160,000.00|-302,160,000.00|
|owners (or|||
|shareholders)|||
|3.3.4 Other|||
|3.4|||
|Carryforwards|||
|within owners’|||
|equity|||
|3.4.1 Increase|||
|in capital (or share|||
|capital) from|||
|capital reserves|||
|3.4.2 Increase|||
|in capital (or share|||
|capital) from|||
|surplus reserves|||
|3.4.3 Surplus|||

~ 55~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||||||
|-|-|-|-|-|-|-|-|
|reserves used to||||||||
|make up losses||||||||
|3.4.4 Other||||||||
|3.5 Specific||||||||
|reserve||||||||
|3.5.1||||||||
|Withdrawn for the||||||||
|period||||||||
|3.5.2 Used||||||||
|during the period||||||||
|3.6 Other||||||||
|4. Balances as of||||||||
||503,600,000.00|1,295,405,592.25|53,520,827.44|256,902,260.27|4,349,649,698.42|382,100,628.33|6,841,179,006.71|
|end of the period||||||||

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

~ 56~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||||||
|-|-|-|-|-|-|-|
|policies|||||||
|Adjustments for|||||||
|corrections of previous|||||||
|errors|||||||
|Other adjustments|||||||
|2. Balances as of|||||||
||503,600,000.00|1,247,162,107.35|53,454,736.38|251,800,000.00|4,103,151,843.38|6,159,168,687.11|
|beginning of the year|||||||
|3. Increase/ decrease in|||||||
|the period (“-” for|||-45,064,475.58||-60,371,745.28|-105,436,220.86|
|decrease)|||||||
|3.1 Total|||||||
||||-45,064,475.58||443,228,254.72|398,163,779.14|
|comprehensive income|||||||
|3.2 Capital increased|||||||
|and reduced by owners|||||||
|3.2.1 Ordinary shares|||||||
|increased by shareholders|||||||
|3.2.2 Capital|||||||
|increased by holders of|||||||
|other equity instruments|||||||
|3.2.3 Share-based|||||||
|payments included in|||||||
|owners’ equity|||||||
|3.2.4 Other|||||||
|3.3 Profit distribution|||||-503,600,000.00|-503,600,000.00|
|3.3.1 Appropriation|||||||
|to surplus reserves|||||||
|3.3.2 Appropriation|||||||
||||||-503,600,000.00|-503,600,000.00|
|to owners (or|||||||

~ 57~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||||
|-|-|-|-|-|-|
|shareholders)||||||
|3.3.3 Other||||||
|3.4 Carryforwards||||||
|within owners’ equity||||||
|3.4.1 Increase in||||||
|capital (or share capital)||||||
|from capital reserves||||||
|3.4.2 Increase in||||||
|capital (or share capital)||||||
|from surplus reserves||||||
|3.4.3 Surplus||||||
|reserves used to make up||||||
|losses||||||
|3.4.4 Other||||||
|3.5 Specific reserve||||||
|3.5.1 Withdrawn for||||||
|the period||||||
|3.5.2 Used during the||||||
|period||||||
|3.6 Other||||||
|4. Balances as of end of||||||
||503,600,000.00|1,247,162,107.35|8,390,260.80|251,800,000.00|4,042,780,098.10|
|the period||||||

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

~ 58~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||Preferred|Perpetual|||Treasury|comprehensive|reserve|reserves||equity|
|||||Other||||||||
|||shares|bonds|||shares|income|||||
|1. Balances as of end of||||||||||||
||503,600,000.00||||1,247,162,107.35||37,315,555.64||251,800,000.00|3,307,203,353.63|5,347,081,016.62|
|prior year||||||||||||
|Add: Adjustments for||||||||||||
|changed accounting||||||||||||
|policies||||||||||||
|Adjustments for||||||||||||
|corrections of previous||||||||||||
|errors||||||||||||
|Other adjustments||||||||||||
|2. Balances as of||||||||||||
||503,600,000.00||||1,247,162,107.35||37,315,555.64||251,800,000.00|3,307,203,353.63|5,347,081,016.62|
|beginning of the year||||||||||||
|3. Increase/ decrease in||||||||||||
|the period (“-” for|||||||16,139,180.74|||795,948,489.75|812,087,670.49|
|decrease)||||||||||||
|3.1 Total||||||||||||
||||||||16,139,180.74|||1,098,108,489.75|1,114,247,670.49|
|comprehensive income||||||||||||
|3.2 Capital increased||||||||||||
|and reduced by owners||||||||||||
|3.2.1 Ordinary shares||||||||||||
|increased by shareholders||||||||||||
|3.2.2 Capital||||||||||||
|increased by holders of||||||||||||
|other equity instruments||||||||||||
|3.2.3 Share-based||||||||||||
|payments included in||||||||||||
|owners’ equity||||||||||||

~ 59~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||||||
|-|-|-|-|-|-|-|
|3.2.4 Other|||||||
|3.3 Profit distribution|||||-302,160,000.00|-302,160,000.00|
|3.3.1 Appropriation|||||||
|to surplus reserves|||||||
|3.3.2 Appropriation|||||||
|to owners (or|||||-302,160,000.00|-302,160,000.00|
|shareholders)|||||||
|3.3.3 Other|||||||
|3.4 Carryforwards|||||||
|within owners’ equity|||||||
|3.4.1 Increase in|||||||
|capital (or share capital)|||||||
|from capital reserves|||||||
|3.4.2 Increase in|||||||
|capital (or share capital)|||||||
|from surplus reserves|||||||
|3.4.3 Surplus|||||||
|reserves used to make up|||||||
|losses|||||||
|3.4.4 Other|||||||
|3.5 Specific reserve|||||||
|3.5.1 Withdrawn for|||||||
|the period|||||||
|3.5.2 Used during the|||||||
|period|||||||
|3.6 Other|||||||
|4. Balances as of end of|503,600,000.00|1,247,162,107.35|53,454,736.38|251,800,000.00|4,103,151,843.38|6,159,168,687.11|

~ 60~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||
|-|
|the period|

~ 61~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 Anhui Gujing Distillery Company Limited
Notes to Financial Statements for H1 2018
(Currency Unit Is RMB Unless Otherwise Stated)
I. Company Profile
Authorized by document WGZGZ (1996) No.053 of Anhui Administrative Bureau of State-owned Property, Anhui Gujing Distillery Company Limited (“the Company”) was established as a limited liability company with net assets of RMB377,167,700 and state-owned shares of 155,000,000 shares and considered Anhui Gujing Company as the only promoter. The registration place was Bozhou Anhui China. The Company was established on 5 March 1996 by document of WZM (1996) No.42 of AnhuiPeople’s Government. The Company set up plenary session on 28 May 1996 and registered in Anhui on 30 May 1996 with business license of 14897271-1. The Company has issued 60,000,000 domestic listed foreign shares (“B” shares) in June 1996 and 20,000,000 ordinary shares (“A shares) on September 1996, ordinary shares are listed in national and par value is RMB1.00 per share. Those A shares and B shares are listed in Shenzhen Stock exchange.
Headquarter of the Company is located in Gujing Bozhou Anhui. The Company and its subsidiaries (the Company) specialize in producing and selling white spirit.
Registered capitals of the Company were RMB235,000,000 with stocks of 235,000,000, of which 155,000,000 shares were issued in China, B shares of 60,000,000 shares and A shares of 20,000,000 shares. The book value of the stocks of the Company was of RMB1 per share.
On 29 May 2006, a shareholder meeting was held to discuss and approval a program of equity division of A share, the program was implement in June 2006. After implementation, all shares are outstanding share, which include 147,000,000 shares with restrict condition on disposal, represent62.55% of total equity, and 88,000,000 shares without restrict condition on disposal, represent37.45% of total equity.
The Company issued<Announcement of release restriction shares by Anhui Gujing Distillery CompanyLimited> on 27 June 2007, 11,750,000 outstanding shares with restrict condition on disposal are listed in stock market on 29 June 2007. Up to that day, outstanding shares with restrict condition on disposal are 135,250,000, representing57.55% of total equity, the share without restrict condition are 99,750,000, representing42.45% of total equity. The Company issued<Announcement of release restriction shares by Anhui Gujing Distillery CompanyLimited> on 17 July 2008, 11,750,000 outstanding shares with restrict condition on disposal are listed in stock market on 18 July 2008. Up to that day, outstanding shares with restrict condition on disposal are 123,500,000, representing52.55% of total equity, the share without restrict condition are 111,500,000, representing47.45% of total equity. The Company issued<Announcement of release restriction shares by Anhui Gujing Distillery CompanyLimited> on 24 July 2009, 123,500,000 outstanding shares with restrict condition on disposal are listed in stock market on 29 July 2009. Up to that day, theCompany’s all shares are all tradable.
~ 62~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 Approved by the CSRC Document Zheng-Jian-Xu-Ke[2011] No. 943, the Company privately offered 16,800,000 ordinary shares (A-shares) to special investors on 15 July 2011, with a par value of RMB1 and the price of RMB75.00 per share, raising RMB1,260,000,000.00 in total, the net amount of raised funds stood at RMB1,227,499,450.27 after deducting RMB32,500,549.73 of various issuance expenses. Certified Public Accountants verified the raised capital upon its arrival and issued the Capital Verification Report Reanda-Yan-Zi[2011] No. 1065. After private issuance, the share capital of the Company increased to RMB251.8 million. Pursuant to the Resolution of The 2011 Annual General Meeting, the Company that considered 251,800,000 shares as base number on 31 December 2011 transferred capital reserve into share capital at a rate of “10 shares for per 10 shares” accounting for 251,800,000 shares and implemented in the year of 2012. Upon the transference, the registered capitals increased to RMB503,600,000.
In April 2016, the company entered a strategic cooperation agreement with Wuhan Tianlong Yellow Crane Tower Co., Ltd., creating a new age for cooperation related to Chinese famous spirit. As the only Chinese famous spirit in Hubei Province, it features unique mellow taste, elegant appearance and tempting smell. Moreover, Yellow Crane Tower White Spirit won the Golden Prize respectively in 1984 and 1989 National White Spirit Appraisal Competition as one of the business card representing HubeiProvince’s economy. At present, the company has established three major bases in Wuhan, Xianning and Suizhou, of which, Xianning Base has integrated modernism, ecologism and high technology as a new spirit-making base, known as “the most beautiful chateau in China”. In 2016, Yellow Crane Tower Spirit won “2015 Top 10 Star Product in Hubei Province”.
By 30 June 2018, the Company issued 503,600,000 shares.
The company is registered at Gujing Town, Bozhou City, Anhui Province.
The approved business of the Company including procurement of grain (operating with business license), manufacture of distilled spirits, wine distilling facilities, packaging material, bottles, alcohol, grease (limited to byproducts from wine manufacture), and research and development of high-tech, biotechnology development, agricultural and sideline products deep processing, as well as sale of self-manufacturing products.
The Company as the parent and the final company as the parent is Anhui Gujing Company Co., Ltd in China. Financial statement of the Company will be released on 27 August 2018 by the Board of Directors.
On 30 June 2018, there were 23 subsidiaries included in the consolidation scope. Please refer to Note VIII “Rights and Interests in other Entities” for details.
II. Basis for the Preparation of Financial Statements
1. Basis for the Preparation
With the going-concern assumption as the basis and based on transactions and other events that actually occurred, the Company prepared financial statements in accordance with the ASBE-Basic Standard (No. 33 issued decreed by Ministry of Finance and No. 76 revised decreed by Ministry of Finance), the 41 specific standards of Accounting Standards for Business Enterprises issued by Ministry of Finance of the PRC on 15 February 2006 and
~ 63~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 revised thereafter, Application Guidance of Accounting Standard for Business Enterprises, Interpretation of Accounting Standards for Business Enterprises and other regulations(hereinafter referred to as “the Accounting Standards for Business Enterprises”, “China Accounting Standards” or “CAS”), Rules for Preparation Convention of Disclosure of Public Offering Companies No.15– General Regulations for Financial Reporting (revised in 2014) by China Securities Regulatory Commission.
In line with relevant rules of ASBE, financial accounting of the Company is based on accrual system. Except financial instruments and instrument real estate, the financial statement is calculated on the basis of history costs. Available-for-sale non-current assets are calculated by the lower one of fair value deducting estimated costs and original costs meeting the standard of available-for-sale. If assets confront impairment, it shall be withdrawn provision for impairment in line with relevant stipulations.
2. Continuous Operation
The management of the Company executed the assessment on the continuation ability and had not discovered any event or situation caused significant suspicion on the continuation ability. Thus, the financial statements compiled based on the hypothesis of the continuation.
III. Declaration of Compliance with the Enterprise Accounting Standards
The financial statements of the Company have been prepared in accordance with the Enterprise Accounting Standards to present truly and completely the financial position of the Company on June 30, 2018, operating results, cash flow from January to June in 2018 and other relevant information. The financial statement of the Company met the relevant disclosure requirements of financial statement and notes of “Compiling stipulations of public information disclosure No.15---general rules of financial statement” (revised in 2014).
IV. Main Accounting Policies and Accounting Estimates
The company and various subsidiaries are mainly specialized in manufacturing and selling white spirit. According to the actual production& operation and related ASBE provisions, this company and various subsidiaries have formulated some specific accounting policies and estimations related to various transactions and matters including revenue recognition. Please refer to Note IV. 23 “Revenues” for details. For any description of major accounting judgment and estimations made by thecompany’s management, please refer to Note IV. 28 “Major Accounting Judgment and Estimations” for details.
1. Accounting Year
Accounting year is divided to annual term and medium term. Accounting medium refers to reporting period shorter than a complete accounting period. The Company employs a period of calendar days from January 1st to December 31st each year as accounting year.
2. Operating Cycle
Normal operating cycle refers to the period from the Company purchases the assets for processing to realize the cash or cash equivalents. The Company regards 12 months as an operating cycle and regards which as the
~ 64~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 partition criterion of the mobility of the assets and liabilities.
3. Bookkeeping Base Currency
Renminbi is the dominant currency used in the economic circumstances where the Company and its domestic subsidiaries are involved. Therefore, the Company and its domestic subsidiaries use Renminbi as their bookkeeping base currency. And the Company adopted Renminbi as the bookkeeping base currency when preparing the financial statements for the reporting period.
4. Accounting Treatment Methods for Business Combinations Under the Same Control and those not Under the Same Control
The term “business combinations” refers to a transaction or event bringing together two or more separate enterprises into one reporting entity. Business combinations are classified into the business combinations under the same control and the business combinations not under the same control.
(1) Accounting treatment of the business combination that is under the same control
A business combination involving enterprises under common control is a business combination in which all of the combining enterprises are ultimately controlled by the same party or parties both before and after the business combination, and that control is not transitory. The assets and liabilities obtained are measured at the carrying amounts as recorded by the enterprise being combined at the combination date. The difference between the carrying amount of the net assets obtained and the carrying amount of consideration paid for the combination (or the total face value of shares issued) is adjusted to share premium in the capital reserve. If the balance of share premium is insufficient, any excess is adjusted to retained earnings. Other direct expenses occur when the Company conducting business combinations is recognized in current profit and loss. The combination date is the date on which one combining enterprise effectively obtains control of the other combining enterprises.
Those assets and liabilities obtained by the Company during the business combination should be recognized in the carrying value of the equity of the merged party on the merger date. The difference between the carrying amount of the net assets obtained and carrying amount of the merger consideration (or total par value of issued shares) paid shall be adjusted to capital reserve. If the capital reserve is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.
Direct costs of a business combination shall be reckoned into current gains and losses.
(2) Accounting treatment of the business combination that is not under the same control
A business combination involving entities not under common control is a business combination in which all of the combining entities are not ultimately controlled by the same party or parties both before and after the business combination. In business combination not under the same control, acquirer refers to party obtaining control of other combining corporations in the date of acquisition and acquiree refers to corporation participating in combination. Date of acquire refers to the date the acquirer actually obtaining control of the acquiree.
~ 65~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 As for combination not under the same control, costs of combination includes assets that acquirers occur in the date of combination in order to obtain control of acqirees, loans, fair value of issued equity securities, intermediary costs such as audit, legal services and evaluation consultation, and other administrative fees occurred in the reporting period. As for trading costs that acquirers as combination consideration issue equity securities or debt securities, it shall be reckoned into initial accounts of equity securities or debt securities. As for business combination realized by several exchanges and trades, in the combined financial statement of the Company, the Company shall recalculate the stock right obtained by acquirees before the date of acquisition in line with fair value of the stock right in the date of acquisition. When the Company acts as the combination party, the cost of a business combination paid by the acquirer is the aggregate of the fair value at the acquisition date of assets given (including share equity of the acquiree held before the combination date), liabilities incurred or assumed, and equity securities issued by the acquirer. Any excess of the cost of a business combination over theacquirer’s interest in the fair value of theacquiree’s identifiable net assets is recognized as goodwill, while any excess of theacquirer’s interest in the fair value of theacquiree’s identifiable net assets over the cost of a business combination is recognized in profit or loss. The cost of equity securities or liability securities as on combination consideration offering is recognized in initial recording capital on equity securities or liability securities. Other direct expenses occur when the Company conducting business combinations is recognized in current profit and loss. The difference between the fair value and the carrying amount of the assets given is recognized in profit or loss. The Company, at the acquisition date, recognized theacquiree’s identifiable asset, liabilities and contingent liabilities at their fair value at that date. The acquisition date is the date on which the acquirer effectively obtains control of the acquiree.
As for deductible temporary difference of acquirers obtained by acquirers whichcan’t be confirmed due to failure of meeting the confirmation requirements of deferred income tax assets, if there is newly information proving the existence of relevant situation in the date of acquisition in a year after the acquisition date and financial benefits of deductible temporary difference of acquirers in the date of acquisition are estimated to be realized, deferred income tax assets shall be confirmed. At the same time, goodwill shall be decreased. If goodwill is insufficient, the difference shall be reckoned into current gains and losses; except the above circumstance, reliable deferred income tax assets relevant to the Company shall be reckoned into current gains and losses.
For a business combination not involving enterprise under common control, which achieved in stages that involves multiple exchange transactions, according to “The notice of the Ministry of Finance on the issuance of Accounting Standards Interpretation No. 5” (CaiKuai[2012] No. 19) and Article 51 of Accounting Standards for Enterprises No. 33– Consolidated Financial Statements on the “package deal” criterion (see Note IV. 5 (2)), to judge the multiple exchange transactions whether they are the “package deal”. If it belongs to the “package deal” in reference to the preceding paragraphs of this section and the Notes described in Note IV. 13 “long-term investment” accounting treatment, if it does not belong to the “package deal” to distinguish the individual
~ 66~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 financial statements and the consolidated financial statements related to the accounting treatment:
In the individual financial statements, the sum of the book value and new investment cost of the Company holds in the acquiree before the acquiring date shall be considered as initial cost of the investment. Other related comprehensive gains in relation to the equity interests that the Company holds in the acquiree before the acquiring date shall be treated on the same basis as the acquiree directly disposes the related assets or liabilities when disposing the investment (that is, except for the corresponding share in the changes in the net liabilities or assets with a defined benefit plan measured at the equity method arising from theacquiree’s re-measurement, the others shall be transferred into current investment gains).
In theCompany’s consolidated financial statements, as for the equity interests that the Company holds in the acquiree before the acquiring date, they shall be re-measured according to their fair values at the acquiring date; the positive difference between their fair values and carrying amounts shall be recorded into the investment gains for the period including the acquiring date. Other related comprehensive gains in relation to the equity interests that the Company holds in the acquiree before the acquiring date shall be treated on the same basis as the acquiree directly disposes the related assets or liabilities when disposing the investment (that is, except for the corresponding share in the changes in the net liabilities or assets with a defined benefit plan measured at the equity method arising from theacquiree’s re-measurement, the others shall be transferred into current investment gains on the acquiring date).
5. Methods for Preparing Consolidated Financial Statements
(1) Principle for determining the consolidation scope
The consolidation scope for financial statements is determined on the basis of control. The term “control” is the power of the Company upon an investee, with which it can take part in relevant activities of the investee to obtain variable returns and is able to influence the amount of returns. The consolidated financial statements comprise the financial statements of the Company and its subsidiaries. A subsidiary is an enterprise or entity controlled by the Company.
The Company would reassess it if the involved relevant factors of above control definitions changed, which was caused by changes of relevant facts and situations.
(2) Methods for preparing the consolidated financial statements
The Company begins to include subsidiaries into consolidation scope from the date obtaining net assets of subsidiaries and actual control of production and operation and terminates to include subsidiaries into consolidation scope from the date losing actual control of subsidiaries. As for the disposal of subsidiaries, operating results and cash flow are included in consolidated income statement and consolidated statement of cash flow before the date of the disposal; as for current disposal of subsidiaries, opening balance of the consolidated balance sheet shall not be adjusted. As for subsidiaries increased in the combination not under the same control, operating results and cash flow after the date of the acquisition are included in consolidated income statement and
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Gujinggong Liquor Aged Original Liquor Interim Report 2018 consolidated statement of cash flow, in addition, opening balance of the consolidated balance sheet shall not be adjusted. As for subsidiaries increased in the combination under the same control and combined parties under acquisition, operating results and cash flow from the beginning of combination to the date of combination are included in consolidated income statement and consolidated statement of cash flow, in addition, opening balance of the consolidated balance sheet shall be adjusted.
Where a subsidiary was acquired during the reporting period, through a business combination involving entities under common control, the financial statements of the subsidiary are included in the consolidated financial statements as if the combination had occurred at the date that common control was established. Therefore the opening balances and the comparative figures of the consolidated financial statements are restated. In the preparation of the consolidated financial statements, thesubsidiary’s assets, liabilities and results of operations are included in the consolidated balance sheet based on their carrying amounts; while results of operations are included in the consolidated income statement, from the date that common control was established.
All the significant inter-company balances, trading and unrealized profits shall be offset when preparing the consolidated financial statement.
If current loss shoulder by minority shareholders of a subsidy over the proportion enjoyed by minority shareholders in a subsidy atowners’ equity at period-begin, its balance still offset minorityshareholders’ equity. When the accounting period or accounting policies of a subsidiary are different from those of the Company, the Company makes necessary adjustments to the financial statements of the subsidiary based on theCompany’s own accounting period or accounting policies. Intra-Company balances and transactions, and any unrealized profit or loss arising from intra-Company transactions, are eliminated in preparing the consolidated financial statements. Unrealized losses resulting from intra-Company transactions are eliminated in the same way as unrealized gains but only to the extent that there is no evidence of impairment.
When losing control right of subsidiaries because of the disposal of stock right investment or other reasons, the Company shall recalculate residual stock right in accordance to the fair value in the date of losing control right. As for remaining equity investment after disposal, the Company will re-account it according to the fair value at the date the control was lost. Any profit or loss occurred shall be recorded into the investment income during the period of losing control right. Then follow-up measurement of remaining equity shall be arranged in line with “No.2—Long-term Equity Investment” or “No.22—Affirmation and Calculation of Financial Instrument”. More details please refer to Note IV, 13 “Long-term Equity Investment” or Note IV, 9 “Financial Instrument”.
The company through multiple transactions step deals with disposal of the subsidiary's equity investment until the loss of control; need to distinguish between equity until the disposal of a subsidiary's loss of control over whether the transaction is package deal. Terms of the transaction disposition of equity investment in a subsidiary, subject to the following conditions and the economic impact of one or more of cases, usually indicates that several transactions should be accounted for as a package deal:① these transactions are considered simultaneously, or in the case of mutual influence made,② these transactions as a whole in order to achieve a complete business results;
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Gujinggong Liquor Aged Original Liquor Interim Report 2018③ the occurrence of a transaction depends on occurs at least one other transaction ;④ a transaction look alone is not economical, but when considered together with other transaction is economical. If they do not belong to the package deal, each of them separately, as the case of a transaction in accordance with “without losing control over the disposal of a subsidiary part of long-term equity investments” (see Note IV. 13. (2)④)) and “due to the disposal of certain equity investments or other reasons lost control of a subsidiary of the original” (see previous paragraph) principles applicable accounting treatment. Until the disposal of the equity investment loss of control of a subsidiary of the transactions belonging to the package deal, the transaction will be used as a disposal of a subsidiary and the loss of control of the transaction. However, before losing control of the price of each disposal entitled to share in the net assets of the subsidiary's investment corresponding to the difference between the disposals, recognized in the consolidated financial statements as other comprehensive income, loss of control over the transferred together with the loss of control or loss in the period.
6. Classification of Joint Arrangements and Accounting Treatment of Joint Operations
A joint arrangement refers to an arrangement jointly controlled by two participants or above. The Company classifies joint arrangements into joint operations and joint ventures according to its rights and duties in the joint arrangements. A joint operation refers to a joint arrangement where the Company enjoys assets and has to bear liabilities related to the arrangement. A joint venture refers to a joint arrangement where the Company is only entitled to the net assets of the arrangement.
TheCompany’s investments in joint ventures are measured at the equity method according to the accounting policies mentioned in Note IV. 13 (2)② “Long-term equity investments measured at the equity method”.
For a joint operation, the Company, as a joint operator, recognizes the assets and liabilities that it holds and bears in the joint operation, and recognizes the jointly-held assets and jointly-borne liabilities according to theCompany’s stake in the joint operation; recognizes the income from sale of theCompany’s share in the output of the joint operation; recognizes the income from sale of the jointoperation’s outputs according to theCompany’s stake in it; and recognizes the expense solely incurred to the Company and the expense incurred to the joint operation according to theCompany’s stake in it.
When the Company, as a joint operator, transfers or sells assets (the assets not constituting business, the same below) to the joint operation, or purchases assets from the joint operation, before the assets are sold to a third party, the Company only recognizes the share of the other joint operators in the gains and losses arising from the sale. Where impairment occurs to the assets as prescribed in<The Accounting Standard No. 8 for BusinessEnterprises—AssetImpairment>, the Company shall fully recognizes the loss for a transfer or sale of assets to a joint operation; and shall recognize the loss according to its stake in the joint operation for a purchase of assets from the joint operation.
7. Recognition Standard for Cash and Cash Equivalents
Cash and cash equivalents of the Company include cash on hand, ready usable deposits and investments having
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Gujinggong Liquor Aged Original Liquor Interim Report 2018 short holding term (normally will be due within three months from the day of purchase), with strong liquidity and easy to be exchanged into certain amount of cash that can be measured reliably and have low risks of change. 8. Foreign Currency Businesses and Translation of Foreign Currency Financial Statements
(1) Accounting treatments for translation of foreign currency transactions
The foreign currency transactions are recorded, on initial recognition in the functional currency, by applying[the spot exchange rate on the date of the transaction / an exchange rate that approximates the actual spot exchange rate on the date oftransaction]. The exchange of foreign currency and transactions related to the foreign exchange are translated at the spot exchange rate.
(2) Accounting treatments for translation of foreign currency monetary items and non-monetary items
At the balance sheet date, foreign currency monetary items are translated using the spot exchange rate at the balance sheet date. All the exchange differences thus resulted are taken to profit or loss, except for① those relating to foreign currency borrowings specifically for construction and acquisition of qualifying assets, which are capitalized in accordance with the principle of capitalization of borrowing costs,② hedging accounting, the exchange difference related to hedging instruments for the purpose of net oversea operating investment is recorded in the comprehensive income till the date of disposal and recognized in profit or loss of the period; exchange difference from changes of other account balance of foreign currency monetary items,③available-for-trade is recorded into profit or loss except for amortized cost.
Non-monetary foreign currency items measured at historical cost shall still be translated at the spot exchange rate prevailing on the transaction date, and the amount denominated in the functional currency is not changed. Non-monetary foreign currency items measured at fair value are translated at the spot exchange rate prevailing at the date when the fair values are determined. The exchange difference thus resulted are recognized in profit or loss for the current period or as capital reserve.
9. Financial Instruments
The Company recognizes a financial asset or liability when it becomes a party of the relevant financial instrument contract. Financial assets and liabilities are measured at fair value in initial recognition. As for the financial assets and liabilities measured at fair value of which changes are recorded into current gains and losses, the relevant dealing expenses are directly recorded into gains and losses; and the dealing expenses on other kinds of financial assets and liabilities are included in the amounts initially recognized.
(1) Determination of the fair value of main financial assets and financial liabilities
Fair value refers to the price that a market participant shall receive for selling an asset or shall pay for transferring a liability in an orderly transaction on the measurement date. As for the financial assets or financial liabilities for which there is an active market, the quoted prices in the active market shall be used to determine the fair values thereof. The quoted prices in the active market refers to the prices available from stock exchange,broker’s
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Gujinggong Liquor Aged Original Liquor Interim Report 2018 agencies, guilds, pricing organization and etc., which represent the actual trading price under equal transaction. Where there is no active market for a financial instrument, the enterprise concerned shall adopt value appraisal techniques, including the prices adopted by the parties, who are familiar with the condition, in the latest market transaction upon their own free will, the current fair value obtained by referring to other financial instruments of the same essential nature, the cash flow capitalization method and the option pricing model, etc., to determine its fair value.
(2) Classification, recognition and measurement of financial assets
The purchase and sale of financial assets under the normal ways shall be recognized and stopped to be recognized respectively at the price of transaction date. Financial assets shall be classified into the following four categories when they are initially recognized: (a) the financial assets which are measured at their fair values and the variation of which is recorded into the profits and losses of the current period, (b) the investments which will be held to their maturity; (c) loans and the account receivables; and (d) financial assets available for sale.
① The financial assets which are measured at their fair values and the variation of which is recorded into the profits and losses of the current period
Including transactional financial assets and the financial assets which are designated to be measured at their fair value when they are initially recognized and of which the variation is recorded into the profits and losses of the current period;
The financial assets meeting any of the following requirements shall be classified as transactional financialassets： A. The purpose to acquire the said financial assets is mainly for selling them in the near future; B. Forming a part of the identifiable combination of financial instruments which are managed in a centralized way and for which there are objective evidences proving that the enterprise may manage the combination by way of short-term profit making in the near future; C. Being a derivative instrument, excluding the designated derivative instruments which are effective hedging instruments, or derivative instruments to financial guarantee contracts, and the derivative instruments which are connected with the equity instrument investments for which there is no quoted price in the active market, whose fair value cannot be reliably measured, and which shall be settled by delivering the said equity instruments.
The financial assets meeting any of the following requirements shall be designated as financial assets which are measured at their fair values and the variation of which is recorded into the profits and losses of the current period for initial recognition: A. the designation can eliminate or significantly reduce the difference of relevant gains and losses between recognition and measurement causing from different bases for measurement of financial assets; B. The official written documents for risk management and investment strategies of the enterprise have clearly stated that it shall, manage, evaluate and report to important management personnel based on the fair value, about the financial assets Company or the Company of financial assets& liabilities which the financial assets are belong to. For the financial assets which are measured at their fair values and the variation of which is recorded into the
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Gujinggong Liquor Aged Original Liquor Interim Report 2018 profits and losses of the current period shall continue to be measured by fair value, gains and losses of change in fair value, dividends and interest related with these financial assets should be recorded into gains and losses of current period.
② Held-to-maturity investment
The term "held-to-maturity investment" refers to a non-derivative financial asset with a fixed date of maturity, a fixed or determinable amount of repo price and which the enterprise holds for a definite purpose or the enterprise is able to hold until its maturity.
For the held-to-maturity investment adopting actual interest rate method, which is measured at the post-amortization costs, the profits and losses that arise when such financial assets or financial liabilities are terminated from recognition, or are impaired or amortized, shall be recorded into the profits and losses of the current period.
The actual interest rate method refers to the method by which the post-amortization costs and the interest incomes of different installments or interest expenses are calculated in light of the actual interest rates of the financial assets or financial liabilities (including a set of financial assets or financial liabilities). The actual interest rate refers to the interest rate adopted to cash the future cash flow of a financial asset or financial liability within the predicted term of existence or within a shorter applicable term into the current carrying amount of the financial asset or financial liability.
When the actual interest rate is determined, the future cash flow shall be predicted on the basis of taking into account all the contractual provisions concerning the financial asset or financial liability (the future credit losses shall not be taken into account).and also the various fee charges, trading expenses, premiums or reduced values, etc., which are paid or collected by the parties to a financial asset or financial liability contract and which form a part of the actual interest rate.
③ Loans and the accounts receivables
Loans and the accounts receivables refer to non-derivative financial assets, which there is no quotation in the active market, with fixed recovery cost or recognizable. Financial assets that are defined as loans and the accounts receivables by the Company including notes receivables, accounts receivables, interest receivable, dividends receivable and other receivables etc..
Loans and the accounts receivables are made follow-up measurement on the basis of post-amortization costs employing the effective interest method. Gains or loss arising from the termination recognition, impairment occurs or amortization shall be recorded into the profits and losses of the current period.
④ Assets available for sales
Assets available for sales including non-derivative financial asset that has been assigned as assets available for sales on the initial recognition and financial assets excluded those measured at fair value and of which the
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Gujinggong Liquor Aged Original Liquor Interim Report 2018 variation into profits and losses of the current period, they are some financial assets, loans and accounts receivables, held-to-maturity investment.
The cost at the period-end of the available-for-sale liabilities instruments should be confirmed according to its amortized cost method, that is the initially recognized amount which deduct the principal that had been repaid, to plus or minus the accumulative amortization amount formed by the amortization between the difference of the initially recognized amount and the amount on the due date that adopted the actual interest rate method, and at the same time deduct the amount after the impairment loss happened. The cost at the period-end of the available-for-sale liabilities instruments is its initial cost.
Financial assets available-for-trade are subsequently measured at fair value, and gains or losses arising from changes in the fair value are recognized as other comprehensiveincome，and be carried forward when the said financial assets stopped recognition, then it shall be recorded into the profits and losses of the current period. But, the equity instrument investment which neither have quotation in the active market nor its fair value could not be reliable measured, as well as the derivative financial assets that concern with the equity instruments and should be settled through handing over to its equity instruments, should take the follow-up measurement according to the cost.
Interest receive during the holding of assets available for sales and cash dividends with distribution announcement by invested companies, it shall be recorded into the profits and losses of the current period.
(3) Impairment of financial assets
The Company assesses at the balance sheet date the carrying amount of every financial asset except for the financial assets that measured by the fair value. If there is objective evidence indicating a financial asset may be impaired, a provision is provided for the impairment.
The Company carries out a separate impairment test for every financial asset which is individually significant. As for a financial asset which is individually insignificant, an impairment test is carried out separately or in the financial asset Company with similar credit risk. Where the financial asset (individually significant or insignificant) is found not impaired after the separate impairment test, it is included in the financial asset Company with similar credit risk and tested again on the Company basis. Where the impairment loss is recognized for an individual financial asset, it is not included in the financial asset Company with similar credit risk for an impairment test.
① Impairment on held-to maturity investment, loans and receivables
The financial assets measured by cost or amortized cost write down their carrying value by the estimated present value of future cash flow. The difference is recorded as impairment loss. If there is objective evidence to indicate the recovery of value of financial assets after impairment, and it is related with subsequent event after recognition of loss, the impairment loss recorded originally can be reversed. The carrying value of financial assets after
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Gujinggong Liquor Aged Original Liquor Interim Report 2018 impairment loss reversed shall not exceed the amortized cost of the financial assets without provisions of impairment loss on the reserving date.
② Impairment of available-for-sale financial assets
When it judged that the decrease of fair value of the available-for-sale equity instrument investment is serious and not temporarily after comprehensive considering relevant factors, it reflected that the available-for-sale equity instrument investment occurred impairment. Of which, the “serious decline” refers to the accumulative decline range of the fair value over20%; while the “non-temporary decline” refers to the consecutive decline time of the fair value over 12 months.
Where an available-for-sale financial asset is impaired, the accumulative losses arising from the decrease of the fair value of the capital reserve which is directly included are transferred out and recorded in the profits and losses for the current period. The accumulative losses transferred out are the balance obtained from the initially obtained cost of the said financial asset after deducting the principals as taken back, the amortized amount, the current fair value and the impairment loss originally recorded in the profits and losses.
Where the impairment loss has been recognized for an available-for-sale financial asset, if, within the accounting periods thereafter, there is any objective evidence proving that the value of the said financial asset has been restored and the restoration is objectively related to the events that occur after the impairment loss was recognized, the originally recognized impairment loss is reversed. The impairment losses on the available-for-sale equity instrument investments are reversed and recognized as other comprehensive incomes, and the impairment losses on the available-for-sale liability instruments are reversed and recorded in the profits and losses for the current period.
The impairment loss incurred to an equity instrument investment for which there is no quoted price in the active market and whose fair value cannot be reliably measured, or incurred to a derivative financial asset which is connected with the said equity instrument investment and which must be settled by delivering the said equity investment, is not reversed.
(4) Recognition and measurement of financial asset transfers
Where a financial asset satisfies any of the following requirements, the recognition of it is terminated:① The contractual rights for collecting the cash flow of the said financial asset are terminated;② The said financial asset has been transferred and nearly all of the risks and rewards related to the ownership of the financial asset to the transferee; or③ The said financial asset has been transferred. And the Company has ceased its control on the said financial asset though it neither transfers nor retains nearly all of the risks and rewards related to the ownership of the financial asset.
Where the Company neither transfers nor retains nearly all of the risks and rewards related to the ownership of a financial asset, and it does not cease its control on the said financial asset, it recognizes the relevant financial asset
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Gujinggong Liquor Aged Original Liquor Interim Report 2018 and liability accordingly according to the extent of its continuous involvement in the transferred financial asset. The term "continuous involvement in the transferred financial asset" refers to the risk level that the enterprise faces resulting from the change of the value of the financial asset.
If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the difference between the amounts of the following 2 items is recorded in the profits and losses of the current period: (1) The book value of the transferred financial asset; and (2) The sum of consideration received from the transfer, and the accumulative amount of the changes of the fair value originally recorded in other comprehensive incomes. If the transfer of partial financial asset satisfies the conditions to stop the recognition, the book value of the transferred financial asset is apportioned between the portion whose recognition has been stopped and the portion whose recognition has not been stopped according to their respective relative fair value, and the difference between the amounts of the following 2 items is included into the profits and losses of the current period: (1) The summation of the consideration received from the transfer and the portion of the accumulative amount of changes in the fair value originally recorded in other comprehensive incomes which corresponds to the portion whose recognition has been stopped; and (2) The amortized carrying amounts of the aforesaid amounts.
In respect of the assets using recourse to sell or using endorsement to transfer, the Company needs to determine whether almost all of the risks and rewards of the financial asset ownership are transferred. If almost all of the risks and rewards of the financial asset ownership had been transferred to the transferee, derecognize the financial assets. For almost all of the risks and rewards of the financial asset ownership retained, do not end to recognize the financial assets. For which neither transfer or retain almost all of the risks and rewards of the financial asset ownership, continuously judge whether the Company retain the control of the assets, and conduct accounting treatment according to the principle of mentioned in the previous paragraphs.
(5) Classification and measurement of financial liabilities
In the initial recognition, financial liabilities are divided into the financial liabilities measured at fair values and whose changes are recorded in current gains and losses and other financial liabilities. Financial liabilities are initially recognized at their fair values. As for a financial liability measured at fair value and whose changes are recorded in current gains and losses, the relevant trading expense is directly recorded in the profits and losses for the current period. As for other financial liabilities, the relevant trading expenses are recorded in the initially recognized amounts.
① Financial liabilities measured at fair values and whose changes are recorded in current gains and losses Such financial liabilities are divided into transactional financial liabilities and financial liabilities designated to be measured at fair values and whose changes are recorded in current gains and losses in the initial recognition under the same conditions where such financial assets are divided into transactional financial assets and financial assets designated to be measured at fair values and whose changes are recorded in current gains and losses in the initial recognition.
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Gujinggong Liquor Aged Original Liquor Interim Report 2018 Financial liabilities measured at fair values and whose changes are recorded in current gains and losses are subsequently measured at their fair values. Gains or losses arising from the fair value changes, as well as the dividend and interest expenses in relation to the said financial liabilities, are recorded in the profits and losses for the current period.
② Other financial liabilities
As for a derivative financial liability connected to an equity instrument for which there is not quoted price in an active market and whose fair value cannot be reliably measured and which must be settled by delivering the equity instrument, it is subsequently measured on the basis of costs. Other financial liabilities are subsequently measured according to the amortized cost using the actual interest rate method. Gains or losses arising from de-recognition or amortization of the said financial liabilities is recorded in the profits and losses for the current period.
③ Financial guarantee contract and loan commitment
For the financial guarantee contracts which are not designated as a financial liability measured at its fair value and the variation thereof is recorded into the profits and losses of the current period, or the loan commitment which is not designated as a financial liability measured at its fair value and the variation thereof is recorded into the gains and losses that will be loaned lower than the market interest rate, which shall be initially recognized by fair value, and the subsequent measurement shall be made after they are initially recognized according to the higher one of the following: a. the amount as determined according to the Accounting Standards for Enterprises No. 13– Contingencies; b. the surplus after accumulative amortization as determined according to the principles of the Accounting Standards for Enterprises No. 14 - Revenues is subtracted from the initially recognized amount. (6) De-recognition of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial liability be terminated in all or partly. Where the Company (debtor) enters into an agreement with a creditor so as to substitute the existing financial liabilities by way of any new financial liability, and if the contractual stipulations regarding the new financial liability is substantially different from that regarding the existing financial liability, it terminates the recognition of the existing financial liability, and at the same time recognizes the new financial liability.
Where the recognition of a financial liability is totally or partially terminated, the enterprise concerned shall include into the profits and losses of the current period for the gap between the book value which has been terminated from recognition and the considerations it has paid (including the non-cash assets it has transferred out and the new financial liabilities it has assumed)
(7) Derivatives and embedded derivatives
Derivative financial instruments include derivatives are initially measured at fair value at the date when the derivative contracts are entered into and are substantially re-measured at fair value. The resulting gain and loss is
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Gujinggong Liquor Aged Original Liquor Interim Report 2018 recognized in profit or loss.
An embedded derivative is separated from the hybrid instrument, where the hybrid instrument is not designated as a financial asset or financial liability at fair value though profit or loss, and the treated as a standalone derivative if (a) the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract; and (b) a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative. If the Company is unable to measure the embedded derivative separately either at acquisition or at a subsequent balance sheet date, it designates the entire hybrid instrument as a financial asset or financial liability at fair value through profit or loss.
(8) Offsetting financial assets and financial liabilities
When the Company has a legal right that is currently enforceable to set off the recognized financial assets and financial liabilities, and intends either to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously, a financial asset and a financial liability shall be offset and the net amount is presented in the balance sheet. Except for the above circumstances, financial assets and financial liabilities shall be presented separately in the balance sheet and shall not be offset.
(9) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. The Company issues (including refinancing), re-purchases, sells or written-offs the equity instrument as the disposing of the changes of the equity. The Company not recognized the changes of the fair value of the equity instrument. The transaction expenses related to the equity transaction would be deducted from the equity.
All types of distribution (excluding stock dividends) made by the Company to holders of equity instruments are deducted fromshareholders’ equity. The Company does not recognize any changes in the fair value of equity instruments.
10. Receivables
The receivables by the Company include account receivables, and other receivables.
(1) Criteria for recognition of bad debts:
The Company carries out an inspection on the balance sheet date. Where there is any objective evidence proving that the receivables have been impaired, an impairment provision shall be made:
1) A serious financial difficulty occurs to the issuer or debtor;
2) The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the payment of interests or the principal, etc.;
3) The debtor will probably become bankrupt or carry out other financial reorganizations;
4) Other objective evidences showing the impairment of the receivables.
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Gujinggong Liquor Aged Original Liquor Interim Report 2018 (2) Method for bad debts provision
① Provisions of bad debts in account receivables that is individually significant.
The Company recognized the accounts receivables which amounted to more than 2 million as the account receivables that is individual significant.
For an account receivable that is individually significant, the asset is individually assessed for impairment, the impairment loss is recognized at the difference between the present value of future cash flow less the carrying amount, and provision is made accordingly.
② Provisions of bad debts in account receivables that individually insignificant item with similar credit risk characteristics that have significant risk:
A. Evidence of credit risk characteristics
Whether the financial asset is individually significant or not individually significant, it is included in a group of financial assets with similar credit risk characteristics and collectively assessed for impairment. Such credit risk reflects the repayment of all due amount under the contract, and is related to the estimation of future cash flow expected to be derived from the assets.
Evidence of portfolios:
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|-|-|
|Item|Basis|

Age portfolios Age
Connected party portfolios Companies within the combination scope of the Company B. Provision by credit risk characteristics
During the Company impairment test, the amount of bad debts provisions is determined by the assessed result from the experience of historical loss and current economic status and the existing loss in the estimated account receivables according to the set of account receivables and credit risk characteristic.
Provision for different portfolios:
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|-|-|
|Item|Provision|

Age portfolios Age analysis method
Don’t withdraw the bad debts provision unless the related-party lost the repaying Connected party portfolios
capability
a. Portfolio by age analysis
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|-|-|-|
|Category|Proportion for accounts receivable (%)|Proportion for other receivable (%)|
||1.00||

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Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|Category|Proportion for accounts receivable (%)|Proportion for other receivable (%)|
||5.00||
||10.00||
||50.00||
||100.00||

③Accounts receivable with insignificant amount but being individually withdrawn bad debts provision
When making individual impairment test on accounts receivable with insignificant amount but high credit risk, the impairment loss shall be recognized based on the difference of the book values higher than the present value of future cash flows, then withdraw the bad debts provision. For example, accounts receivable of related parties; accounts receivable involving dispute or litigation, arbitration; accounts receivable having clear signs to indicate that debtor probably cannot implement obligations of payment.
(3) Reversal of provision for bad debt
If there is any provident demonstrating recovery of the value of the accounts receivable and objectively correlating to the issues after the confirmation of the losses, the original confirmed losses would be reversed and recorded into current gains and losses. However, the reserved book value shall not exceed the amortized costs of the accounts receivable under non-withdrawing impairment circumstance.
11. Inventory
(1) Category of inventory
Inventory mainly includes raw materials, packing materials, self-made semi-manufactured products, goods in process and finished goods, etc.
(2) Pricing method for outgoing inventories
Inventory is priced by actual costs when it is obtained. Inventory costs include procurement costs, processing costs and other costs. Weighted average method is used to price inventory when it is received and delivered. (3) Recognition basis of net realizable value and withdrawal method of falling price provision for inventories Net realizable value in daily activity, it is referred to the estimated selling price minus the estimated selling expenses and related tax and fees in normal operating process. When confirming the net realizable value of inventories, the Company shall take the intention of inventories into consideration and influence of issues after balance sheet date.
On the balance sheet date, the evaluation criteria should base on the lower value between costs and net realizable
value. When net realizable value is lower than costs, falling price provision of inventories shall be made. Under
normal circumstances, the Company withdraws the falling price provision in according to individual inventory
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Gujinggong Liquor Aged Original Liquor Interim Report 2018 items, but for large quantity and low-unit-price inventories, falling price provision of inventories shall be made based on the category of inventories; for those inventories that relating to the same product line that have similar purposes or end uses, are produced and marketed in the same geographical area, and cannot be practicably evaluated separately from other items in that product line, their falling price provision of inventories shall be consolidated.
After withdrawing the depreciation reserves for inventories, if the factors, which cause any write-down of the inventories, have disappeared, the amount of write-down shall be recovered and reversed from the original amount of depreciation reserve for inventories. The reversed amount shall be included in the profits and losses of the current period.
(4) Inventory system for inventories is perpetual inventory system
(5) Amortization method of the low-value consumption goods and packing articles
Low-value consumption goods: one-off amortization method; Packing articles: one-off amortization method 12. Assets Held for Sale and Disposal Group
The company classifies a non-current asset or disposal group as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. For this to be the case, the following conditions shall be met: a) the asset (or disposal group) must be available for immediate sale in its present condition subject to terms that are usual and customary for sales of such assets or disposal groups; b) the company has made the resolution on the disposal plan and must be committed to a plan to sell the asset (or disposal group); c) the sale is expected to be completed within one year from the date of classification. A disposal group is a group of assets to be disposed of, by sale or otherwise, together as a group in a single transaction, and liabilities directly associated with those assets that will be transferred in the transaction. The group shall include goodwill acquired in a business combination if the group is a cash-generating unit to which goodwill has been allocated in accordance with the requirements of Accounting Standard for Business Enterprises No. 8– Impairment of assets.
The company measure a non-current asset or disposal group classified as held for sale at the lower of its carrying amount and fair value less costs to sell on initial recognition and subsequent remeasuremnt on the balance sheet date. An impairment loss is recognised when the carrying amount is higher than the fair value less costs to sell, and allowance for impairment is recognised accordingly. For the disposal group, the recognised impairment loss on assets is offset against the carrying amount of the goodwill in the disposal group, and then reduced in proportion of the book value of the non-current assets applicable to "Accounting Standard for Business Enterprises No. 42 - Non-current Assets Held for Sale, Disposal Group and Discontinued Operations (hereinafter referred to as "held for sale accounting principle") measurement requirements. The company shall recognise a gain during the period for any subsequent increase in fair value less costs to sell of an asset, but not in excess of the cumulative impairment loss that has been recognised after the reclassification to non-current assets held for
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Gujinggong Liquor Aged Original Liquor Interim Report 2018 sale. The book value of assets in the disposal group is increased proportionately according to the proportion of the book value of each non-current asset except for goodwill. Impairment loss recognised before the reclassification to non-current assets held for sell shall not be recovered.
Non-current asset or non-current asset in the disposal group classified as held for sale is not subject to depreciation or amortization. The interest and other expenses on liabilities held in the disposal group for sale are continuously recognised.
Non-current assets or disposal group that no longer meet the conditions of non-current asset held for sell shall be removed from the category, and shall be measured at the lower of the following: (1) The carrying amount before classification as held for sale after adjustment of depreciation, amortization or impairment that should be recognised if it is not classified as non-current assets held for sell; (2) recoverable amount.
13. Long-term Equity Investments
The long-term equity investments of this part refer to the long-term equity investments that the Company has control, joint control or significant influence over the investees. The long-term equity investment that the Company does not have control, joint control or significant influence over the investees, should be recognized as available-for-sale financial assets or be measured by fair value with the changes should be included in the financial assets accounting of the current gains and losses, and please refer the details of the accounting policies to Notes IV. 9 “Financial instrument”.
Joint control, refers to the control jointly owned according to the relevant agreement on an arrangement by the Company and the relevant activities of the arrangement should be decided only after the participants which share the control right make consensus. Significant influence refers to the power of the Company which could anticipate in the finance and the operation polices of the investees, but could not control or jointly control the formulation of the policies with the other parties.
(1) Recognition of investment costs
As for long-term equity investments acquired by enterprise merger, if the merger is under the same control, the share of the book value of theowner’s equity of the merged enterprise, on the date of merger, is regarded as the initial cost of the long-term equity investment. The difference between the initial cost of the long-term equity investment and the payment in cash, non-cash assets transferred as well as the book value of the debts borne by the merging party shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. If the consideration of the merging enterprise is that it issues equity securities, it shall, on the date of merger, regard the share of the book value of the shareholder's equity of the merged enterprise on the consolidated financial statement of the ultimate control party as the initial cost of the long-term equity investment. The total face value of the stocks issued shall be regarded as the capital stock, while the difference between the initial cost of the long-term equity investment and total face value of the shares issued shall offset
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Gujinggong Liquor Aged Original Liquor Interim Report 2018 against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. The equities of the combined party which respectively acquired through multiple transaction under the same control that ultimately form into the combination of the enterprises under the same control, should be disposed according whether belongs to package deal; if belongs to package deal, each transaction would be executed accounting treatment by the Company as a transaction of acquiring the control right. If not belongs to package deal, it shall, on the date of merger, regard the enjoyed share of the book value of the shareholder's equity of the merged enterprise on the consolidated financial statement of the ultimate control party as the initial cost of the long-term equity investment, and as for the difference between the initial investment cost of the long-term equity investment and sum of the book value of the long-term equity investment before the combination and the book value of the consideration of the new payment that further required on the combination date, should adjust the capital reserve; if the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. The equity investment held before the combination date which adopted the equity method for accounting, or the other comprehensive income confirmed for the available-for-sale financial assets, should not have any accounting disposal for the moment.
For the long-term investment required from the business combination under different control, the initial investment cost regarded as long-term equity investment on the purchasing date according to the combination cost, the combination costs shall be the sum of the fair values of the assets paid, the liabilities incurred or assumed and the equity securities issued by the Company. The equities of the acquirees which respectively acquired through multiple transaction that ultimately form into the combination of the enterprises under the different control, should be disposed according whether belongs to package deal; if belongs to package deal, each transaction would be executed accounting treatment by the Company as a transaction of acquiring the control right. If not belongs to package deal, the sum of the book value of the original held equity investment of the acquirees and the newly added investment cost should be regarded as the initial investment cost of the long-term equity investment that changed to be accounted by cost method. If the original held equity is calculated by cost method, the other relevant comprehensive income would not have any accounting disposal for the moment. If the original held equity investment is the financial assets available for sale, its difference between the fair value and the book value as well as the accumulative changes of the fair value that include in the other comprehensive income, should transfer into the current gains and losses.
The commission fees for audit, law services, assessment and consultancy services and other relevant expenses occurred in the business combination by the combining party or the purchase party, shall be recorded into current profits and losses upon their occurrence; the transaction expense from the issuance of equity securities or bonds securities which are as consideration for combination by the combining party, should be recorded as the initial amount of equity securities and bonds securities.
Besides the long-term equity investments formed by business combination, the other long-term equity investments
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Gujinggong Liquor Aged Original Liquor Interim Report 2018 shall be initially measured by cost, the cost is fixed in accordance with the ways of gaining, such as actual cash payment paid by the Company, the fair value of equity securities issued by the Company, the agreed value of the investment contract or agreement, the fair value or original carrying amount of exchanged assets from non-monetary assets exchange transaction, the fair value of the long-term equity investments, etc. The expenses, taxes and other necessary expenditures directly related with gaining the long-term equity investments shall also be recorded into investment cost. The long-term equity investment cost for those could execute significant influences on the investees because of appending the investment or could execute joint control but not form as control, should be as the sum of the fair value of the original held equity investment and the newly added investment cost recognized according to the No. 22 of Accounting Standards for BusinessEnterprises—Recognition and Measurement of Financial Instrument.
(2) Subsequent measurement and recognition of gains or losses
A long-term equity investment where the investing enterprise has joint control (except for which forms into common operators) or significant influence over the investors should be measured by equity method. Moreover, long-term equity investment adopting the cost method in the financial statements, and which the Company has control on invested entity.
① Long-term equity investment measured by adopting cost method
The price of a long-term equity investment measured by adopting the cost method shall be included at its initial investment cost and append as well as withdraw the cost of investing and adjusting the long-term equity investment. The return on investment at current period shall be recognized in accordance with the cash dividend or profit announced to distribute by the invested entity, except the announced but not distributed cash dividend or profit included in the actual payment or consideration upon gaining the investment.
②Long-term equity investment measured by adopting equity method
If the initial cost of a long-term equity investment is more than theCompany’s attributable share of the fair value of the investedentity’s identifiable net assets for the investment, the initial cost of the long-term equity investment may not be adjusted. If the initial cost of a long-term equity investment is less than theCompany’s attributable share of the fair value of the investedentity’s identifiable net assets for the investment, the difference shall be included in the current profits and losses and the cost of the long-term equity investment shall be adjusted simultaneously.
When measured by adopting equity method, respectively recognize investment income and other comprehensive income according to the net gains and losses as well as the portion of other comprehensive income which should be enjoyed or be shared, and at the same time adjust the book value of the long-term equity investment; corresponding reduce the book value of the long-term equity investment according to profits which be declared to distribute by the investees or the portion of the calculation of cash dividends which should be enjoyed; for the other changes except for the net gains and losses, other comprehensive income and theowners’ equity except for
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Gujinggong Liquor Aged Original Liquor Interim Report 2018 the profits distribution of the investees, should adjust the book value of the long-term equity investment as well as include in the capital reserve. The investing enterprise shall, on the ground of the fair value of all identifiable assets of the invested entity when it obtains the investment, recognize the attributable share of the net profits and losses of the invested entity after it adjusts the net profits of the invested entity. If the accounting policies adopted by the investees is not accord with that of the Company, should be adjusted according to the accounting policies of the Company and the financial statement of the investees during the accounting period and according which to recognize the investment income as well as other comprehensive income. For the transaction happened between the Company and associated enterprises as well as joint ventures, if the assets launched or sold not form into business, the portion of the unrealized gains and losses of the internal transaction, which belongs to the Company according to the calculation of the enjoyed proportion, should recognize the investment gains and losses on the basis. But the losses of the unrealized internal transaction happened between the Company and the investees which belongs to the impairment losses of the transferred assets, should not be neutralized. The assets launched by the Company to the associated enterprises or the joint ventures if could form into business, the long-term equity investment without control right which acquired by the investors, should regard the fair value of the launched business as the initial investment cost the newly added long-term equity investment, and for the difference between the initial investment cost and the book value of the launched business, should be included into the current gains and losses with full amount. The assets sold by the Company to the associated enterprises or the joint ventures if could form into business, the difference between the acquired consideration and the book value of the business should be included in the current gains and losses with full amount. The assets purchased by the Company to the associated enterprises or the joint ventures if could form into business, should be accounting disposed according to the regulations of No. 20 ofASBE—Business Combination, and should be recognized gains or losses related to the transaction with full amount.
The Company shall recognize the net losses of the invested enterprise until the book value of the long-term equity investment and other long-term rights and interests which substantially form the net investment made to the invested entity are reduced to zero. However, if the Company has the obligation to undertake extra losses, it shall be recognized as the estimated liabilities in accordance with the estimated duties and then recorded into investment losses at current period. If the invested entity realizes any net profits later, the Company shall, after the amount of its attributable share of profits offsets against its attributable share of the un-recognized losses, resume recognizing its attributable share of profits.
For the long-term equity investment held by the Company before the first execution of the new accounting criterion of the associated enterprises and joint ventures, if there is debit difference of the equity investment related to the investment, should be included in the current gains and losses according to the amount of the straight-line amortization during the original remained period.
③ Acquiring shares of minority interest
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Gujinggong Liquor Aged Original Liquor Interim Report 2018 In the preparation for the financial statements, the balance existed between the long-term equity investment increased by acquiring shares of minority interest and the attributable net assets on the subsidiary calculated by the increased shares held since the purchase date (or combination date), the capital reserves shall be adjusted, if the capital reserves are not sufficient to offset, the retained profits shall be adjusted.
④ Disposal of long-term equity investment
In the preparation of financial statements, the Company disposed part of the long-term equity investment on subsidiaries without losing its controlling right on them, the balance between the disposed price and attributable net assets of subsidiaries by disposing the long-term equity investment shall be recorded intoowners’ equity; where the Company losses the controlling right by disposing part of long-term equity investment on such subsidiaries, it shall treated in accordance with the relevant accounting policies in Note IV. 5 (2) “Method on preparation of combined financial statements”.
For other ways on disposal of long-term equity investment, the balance between the book value of the disposed equity and its actual payment gained shall be recorded into current profits and losses.
For the long-term equity investment measured by adopting equity method, if the remained equity after disposal still adopts the equity method for measurement, the other comprehensive income originally recorded intoowners’ equity should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees according to the corresponding proportion. Theowners’ equity recognized owning to the changes of the otherowners’ equity except for the net gains and losses, other comprehensive income and the profits distribution of the investees, should be transferred into the current gains and losses according to the proportion. For the long-term equity investment which adopts the cost method of measurement, if the remained equity still adopt the cost method, the other comprehensive income recognized owning to adopting the equity method for measurement or the recognition and measurement standards of financial instrument before acquiring the control of the investees, should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees and should be carried forward into the current gains and losses according to the proportion; the changes of the otherowners’ equity except for the net gains and losses, other comprehensive income and the profits distribution among the net assets of the investees which recognized by adopting the equity method for measurement, should be carried forward into the current gains and losses according to the proportion. For those the Company lost the control of the investees by disposing part of the equity investment as well as the remained equity after disposal could execute joint control or significant influences on the investees, should change to measure by equity method when compiling the individual financial statement and should adjust the measurement of the remained equity to equity method as adopted since the time acquired; if the remained equity after disposal could not execute joint control or significant influences on the investees, should change the accounting disposal according to the relevant regulations of the recognition and measurement standards of financial instrument, and its difference between the fair value and book value on the date lose the control right
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Gujinggong Liquor Aged Original Liquor Interim Report 2018 should be included in the current gains and losses. For the other comprehensive income recognized by adopting equity method for measurement or the recognition and measurement standards of financial instrument before the Company acquired the control of the investees, should execute the accounting disposal by adopting the same basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees when lose the control of them, while the changes of the otherowners’ equity except for the net gains and losses, other comprehensive income and the profits distribution among the net assets of the investees which recognized by adopting the equity method for measurement, should be carried forward into the current gains and losses according to the proportion. Of which, for the disposed remained equity which adopted the equity method for measurement, the other comprehensive income and the otherowners’ equity should be carried forward according to the proportion; for the disposed remained equity which changed to execute the accounting disposal according to the recognition and measurement standards of financial instrument, the other comprehensive income and the otherowners’ equity should be carried forward in full amount.
For those the Company lost the control of the investees by disposing part of the equity investment, the disposed remained equity should change to calculate according to the recognition and measurement standards of financial instrument, and difference between the fair value and book value on the date lose the control right should be included in the current gains and losses. For the other comprehensive income recognized from the original equity investment by adopting the equity method, should execute the accounting disposal by adopting the same basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees when terminate the equity method for measurement, while for theowners’ equity recognized owning to the changes of the otherowner’s equity except for the net gains and losses, other comprehensive income and the profits distribution of the investees, should be transferred into the current investment income with full amount when terminate adopting the equity method.
The Company respectively disposes the equity investment of the subsidiaries through multiple transactions until lose the control right, if the above transactions belongs to the package deal, should execute the accounting disposal by regarding each transaction as a deal of disposing the equity investment of the subsidiaries until lose the control right, while the difference between each expenses of the disposal and the book value of the long-term equity investment in accord with the disposed equity before losing the control right, should firstly be recognized as other comprehensive income then be transferred into the current gains and losses of losing the control right along until the time when lose it.
14. Investment Property
Investment property is held to earn rentals or for capital appreciation or for both. Investment property includes leased or ready to transfer after capital appreciation land use rights and leased buildings. Besides, for the idle constructions held by the Company for operation and lease, if the Board of Directors (or the similar institutions) made the written resolutions which affirmatively disclosed to use which for operation and lease with the intention
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Gujinggong Liquor Aged Original Liquor Interim Report 2018 would not change in the short term, should also be presented as the investment property.
Investment property is initially measured at cost. Subsequent expenditures related to an investment real estate are likely to flow about the economic benefits of the asset and its cost can be measured reliably, is included in the cost of investment real estate. Other subsequent expenditures of gains or losses should be recorded in the current gains and losses when occurred.
The Company uses the cost model for subsequent measurement of investment property, and in accordance with the depreciation or amortization of buildings or land use rights policy.
Investment property impairment test method and impairment accrual method described in Note IV. 20 “Long-term assets impairment”.
Occupied real estate for investment property or investment property is transferred to owner-occupied real estate or stock conversion as the recorded value after the conversion, according to the book value before the conversion. From the date of transference, investment properties shall be transferred into fixed assets or intangible assets when investment properties transfer into self-owned properties. From the date of transference, fixed assets or intangible assets shall be transferred into investment properties when the intention of self-owned properties changes to be earning rents. Upon transference, investment properties using cost modeling shall use its book value before transference as the entry value after transference; investment properties using fair value shall use its fair value in the date of transference as the entry value after transference.
As for investment property disposed or perpetually out of use, and estimated without economic benefits from the disposal, confirmation shall be terminated. Disposal consideration of the investment property after sale, transference, discard or damage deducting its book value and relating taxes shall be recorded into current gains and losses.
15. Fixed Assets
(1) Recognized standard of fixed assets
The term "fixed assets" refers to the tangible assets that simultaneously possess the features as follows: they are held for the sake of producing commodities, rendering labor service, renting or business management; and their useful life is in excess of one fiscal year.
(2) Depreciation methods of fixed assets
The initial measurement of a fixed asset shall be made at its cost after considering the effect of expected discard expenses. The Group shall withdraw the depreciation of fixed assets by adopting the straight-line method since the second month of its useful life. Useful life, expected net salvage value (refers to the expected amount that the Group may obtain from the current disposal of a fixed asset after deducting the expected disposal expenses at the expiration of its expected useful life) and annual depreciation rate of each fixed assets are as below:
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Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||||
|-|-|-|-|-|-|
|Category of fixed assets|Method|Useful life (Y)||Expected net salvage|Annual deprecation (%)|
|||||value (%)||
||Average method ofuseful life|8.00-35.00|3.00-5.00|||
||Average method ofuseful life|5.00-10.00|3.00-5.00|||
||Average method ofuseful life|4.00|3.00|||
||Average method ofuseful life|3.00|3.00|||

Expected net residual value of fixed assets is the balance of the Company currently obtained from the disposal of the asset less the estimated costs of disposal amount, assuming the asset is out of useful life and state the expected service life in the end.
(3) Measurement and recognition of fixed assets impairment
Impairment and provisions of fixed assets are disclosed on Note IV. 20 “Long-term assets impairment”.
(4) Fixed Assets under finance leases
A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership of an asset. Title may or may not eventually be transferred. Fixed assets that are held under finance leases shall be depreciated by applying the same policy as that for the fixed assets owned by the Company. If it can be reasonably determined that the ownership of the leased assets can be obtained at the end of the lease period, the leased assets are depreciated over their useful lives; otherwise, the leased assets are depreciated over the shorter of the lease terms and the useful lives of the leased assets.
(5) Others
A fixed asset is recognized only when the economic benefits associated with the asset will probably flow to the Company and the cost of the asset can be measured reliably. Subsequent expenditure incurred for a fixed asset that meet the recognition criteria shall be included in the cost of the fixed asset, and the carrying amount of the component of the fixed asset that is replaced shall be derecognized. Otherwise, such expenditure shall be recognized in profit or loss in the period in which they are incurred.
The revenue from selling or transferring, or disposing a fixed asset is booked into profit and loss after deduction of carrying value and related tax.
The Company conducts a review of useful life, expected net realizable value and depreciation methods of the fixed asset at least on an annual base. Any change is regarded as change in accounting estimates.
16. Construction in Progress
Construction in progress is measured at its actual cost. The actual costs include various construction expenditures
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Gujinggong Liquor Aged Original Liquor Interim Report 2018 during the construction period, borrowing costs capitalized before it is ready for intended use and other relevant costs. Construction in progress is transferred to a fixed asset when it is ready for intended use.
Testing method for provision impairment of construction in progress and accrued method for provision impairment please refer to Note IV. 20 “Long-term assets impairment”.
17. Borrowing Costs
Borrowing costs include interest, amortization of discounts or premiums related to borrowings, ancillary costs incurred in connection with the arrangement of borrowings, and exchange differences arising from foreign currency borrowings. The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized. The amounts of other borrowing costs incurred are recognized as an expense in the period in which they are incurred. Qualifying assets are asset (fixed assets, investment property and inventories, etc.) that necessarily take a substantial period of time for acquisition, construction or production to get ready for their intended use or sale.
Where funds are borrowed for a specific-purpose, the amount of interest to be capitalized is the actual interest expense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds before being used on the asset or any investment income on the temporary investment of those funds. Where funds are borrowed for a general-purpose, the amount of interest to be capitalized on such borrowings is determined by applying a weighted average interest rate to the weighted average of the excess amounts of accumulated expenditure on the asset over and above the amounts of specific-purpose borrowings.
During the capitalization period, exchange differences related to a specific-purpose borrowing denominating in foreign currency are all capitalized. Exchange differences in connection with general-purpose borrowings are recognized in profit or loss in the period in which they are incurred.
Assets qualified for capitalization are the fixed assets, investment properties or inventories which need a long time of construction or production activities before ready for intended used or sale.
Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or production of a qualifying asset is interrupted by activities other than those necessary to prepare the asset for its intended use or sale, when the interruption is for a continuous period of more than 3 months. Borrowing costs incurred during these periods recognized as an expense for the current period until the acquisition, construction or production is resumed.
18. Intangible Assets
(1) Intangible asset
The term “intangible asset” refers to the identifiable non-monetary assets without physical shape, possessed or controlled by enterprises.
The intangible assets are initially measured by its cost. Expenses related to intangible assets, if the economic
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Gujinggong Liquor Aged Original Liquor Interim Report 2018 benefits related to intangible assets are likely to flow into the enterprise and the cost of intangible assets can be measured reliably, shall be recorded as cost of intangible assets. The expenses other than this shall be booked in the profit or loss when they occur.
Land use rights that are purchased by the Company are accounted for as intangible assets. Buildings, such as plants that are developed and constructed by the Company, and relevant land use rights and buildings, are accounted for as intangible assets and fixed assets, respectively. Payments for the land and buildings purchased are allocated between the land use rights and the buildings; if they cannot be reasonably allocated all of the land use rights and buildings should accounted for as fixed assets.
When an intangible asset with a definite useful life is available for use, its original cost less net residual value and any accumulate impairment losses is amortized over its estimated useful life using the straight-line method. An intangible asset with an indefinite useful life is not amortized.
For an intangible asset with a definite useful life, the Company reviews the useful life and amortization method at the end of the period, and makes adjustment when necessary. An additional review is also carried out for useful life of the intangible assets with indefinite useful life. If there is evidence showing the foreseeable limit period of economic benefits generated to the enterprise by the intangible assets, then estimate its useful life and amortize according to the policy of intangible assets with definite useful life.
(2) Research and development cost
Cost of research and development is distinguished into the research phase and the development phases.
Cost of the research phase is recognized in the profit or loss in the period in which it is incurred.
Unless the following conditions are satisfied, cost of the development phase is recognized in the profit or loss in the period in which it is incurred:
① it is technically feasible to complete the intangible asset so as to use it or sell it;
② it is clearly invented to complete the intangible asset in order to use it or sell it;
③ it is probable that the intangible asset is capable of generating future economic benefit, such as the market for the product produced by the intangible asset or the intangible asset itself, it is objectively evidential that the intangible asset is economically usable if it is going to be used internally;
④ there are sufficient technical, financial and other resources to complete the intangible asset and to use it or sell it;
⑤ the cost of the development of the intangible can be measured reliably.
If the cost cannot be distinguished into the search phase and the development phase, it is recognized in the profit or loss for the period in which it is incurred.
(3) Impairment of intangible assets
Impairment and provisions of intangible assets are disclosed on Note IV. 20 “Long-term assets impairment”.
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Gujinggong Liquor Aged Original Liquor Interim Report 2018 19. Long-term Deferred Expenditure
An item long-term deferred expenses is an expense which has been incurred and which has a beneficial period (a period during which an expense is expected to bring economic benefits to an entity) which is longer than one year and which includes at least part of the reporting period during which the expense was incurred and subsequent reporting periods. An item of long-term deferred expenses is recognized at the actual amount of the expense incurred and allocated in each month of the beneficial period using the straight line method.
20. Long-term Assets Impairment
Non-financial assets with non-current nature include fixed assets, construction in progress, intangible assets with definite useful lives, investment properties measured by cost methods and long-term equity investment on subsidiaries, jointly operations. The Company assesses whether there are any indicators of impairment for all non-financial assets at the balance sheet date, and impairment test is carried out and recoverable value is estimated if such an indicator exits. Goodwill and intangible assets with indefinite useful lives, as well as intangible assets not ready for use, are tested for impairment annually regardless of indicators of impairment.
Impairment of loss is calculated and provisions taken by the difference if the recoverable value of the assets is lower than the book value. The recoverable value is the higher of estimated present value of the future expected cash flows from the asset and net fair value of the asset less disposed cost. The fair value of asset is determined by the sales agreement price within anarm’s length transaction. In case there is no sales agreement, but there is active market of assets, the fair value can be determined by the selling price. If there is neither sales agreement nor active market, the fair value of the asset can be estimated based on the best information obtained. Disposal expenses include expenses related to the legislation, taxes, transportations and the direct expense for the asset to be ready for sale. When calculating the present value of expected future cash flows from an asset or asset Group, the management shall estimate the expected future cash flows from the asset or asset Group and choose a suitable discount rate in order to calculate the present value of those cash flows.
Provision for asset impairment is calculated and determined on the individual basis. If the recoverable of individual asset is hard to estimate, the recoverable amount can be determined by the asset Group where subject asset belongs. Asset Group is the smallest set of assets that can have cash flow in independently.
The Company determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the present value of the future expected cash flows from the asset Groups or sets of asset Groups to which the goodwill is allocated. Estimating the present value requires the Company to make an estimate of the expected future cash flows from the asset Groups or sets of asset Groups and also choose a suitable discount rate in order to calculate the present value of those cash flows. Once the loss from above asset impairment is recognized, the recoverable part cannot be reserved in the subsequent periods.
21. Payroll
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Gujinggong Liquor Aged Original Liquor Interim Report 2018 The payroll of the Company mainly includes the short-term employee compensation, welfare after demission, demission welfare and other long-term employee benefits. Of which:
Short-term compensation mainly including salary, bonus, allowances and subsidies, employee services and benefits, medical insurance premiums, birth insurance premium, industrial injury insurance premium, housing fund, labor union expenditure and personnel education fund, non-monetary benefits etc. The short-term compensation actually happened during the accounting period when the active staff offering the service for the Group should be recognized as liabilities and is included in the current gains and losses or relevant assets cost. Of which the non-monetary benefits should be measured according to the fair value.
Welfare after demission mainly includes setting drawing plan. Of which setting the drawing plan mainly includes basic endowment insurance, unemployment insurance and annuity etc, and the corresponding payable and deposit amount should be included into the relevant assets cost or the current gains and losses when happen.
If an enterprise cancels the labor relationship with any employee prior to the expiration of the relevant labor contract or brings forward any compensation proposal for the purpose of encouraging the employee to accept a layoff, and should recognize the payroll liabilities occurred from the demission welfare base on the earlier date between the time when the Group could not one-sided withdraw the demission welfare which offered by the plan or layoff proposal owning to relieve the labor relationship and the date the Group recognizes the cost related to the reorganization of the payment of the demission welfare and at the same time includes which into the current gains and losses. But if the demission welfare is estimated that could not totally pay after the end of the annual report within 12 months, should be disposed according to other long-term payroll payment.
The inside employee retirement plan is treated by adopting the same principle with the above dismiss ion welfare. The group would recorded the salary and the social security insurance fees paid and so on from theemployee’s service terminative date to normal retirement date into current profits and losses (dismiss ion welfare) under the condition that they meet the recognition conditions of estimated liabilities.
The other long-term welfare that the Group offers to the staffs, if met with the setting drawing plan, should be accounting disposed according to the setting drawing plan, while the rest should be disposed according to the setting revenue plan.
22. Estimated Liabilities
Recognition of accrued liabilities:
Obligation with contingency factor such as external hypothecate, lawsuit or arbitrage in dispute, guarantee on quality of product, cut-down plan, loss of contract, recombine obligation, obligation on abandon fixed asset, and meet the follow condition simultaneously would determined as liabilities: (1) This obligation is current obligation of the Company; and, (2) The performance of this obligation will probably cause economic benefits outflow of the Company; and, (3) The amount of this obligation can be reliably measured.
~ 92~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 On balance sheet date the Company performed relate obligation that consider risk, incertitude, time value of currency of contingency factor. According to the best estimate of the expenditure required to settle the present obligation for estimated liabilities measured.
If the expenditure required to settle the liability is expected to be fully or partly compensated by a third party, to determine the amount of compensation will be received at the basic, separately recognized as an asset, and is recognized in the amount of compensation does not exceed the carrying value of estimated liabilities.
23. Revenues
(1) Commodity sales revenues
No revenue from selling goods may be recognized unless the following conditions are met simultaneously: the significant risks and rewards of ownership of the goods have been transferred to the buyer by the enterprise; the enterprise retains neither continuous management right that usually keeps relation with the ownership nor effective control over the sold goods; the relevant amount of revenue can be measured in a reliable way; the relevant economic benefits may flow into the enterprise; and the relevant costs incurred or to be incurred can be measured in a reliable way.
In theCompany’s daily accounting practices, as for the domestic sales, when the products had shipped out of the library and had handed over to the buyers, and the major risk as well as the reward on the ownership of the products had transferred to them, without keeping any continued management right which commonly related to the ownership nor carrying out any effective control of the products which had been sold, and at the same time the amounts received could be calculated reliably, and the relevant economic interest may flow into the enterprise, as well as the relevant costs which had occurred or is going to occur could be calculated reliably, should recognize the implementation of the commodity sales revenues. As for the overseas sales, should recognize the implementation of the revenues when the goods had made shipment and gained the customs export declaration. (2) Revenues from providing labor services
If an enterprise can reliably estimate the outcome of a transaction concerning the labor services it provides, it shall recognize the revenue from providing services employing the percentage-of-completion method on the balance sheet date. The percentage-of-completion is determined by the proportion of the costs incurred against the estimated total costs.
The outcome of a transaction concerning the providing of labor services can be measured in a reliable way, means that the following conditions shall be met simultaneously:① The amount of revenue can be measured in a reliable way;② The relevant economic benefits are likely to flow into the enterprise;③ The schedule of completion under the transaction can be confirmed in a reliable way;④ The costs incurred or to be incurred in the transaction can be measured in a reliable way.
If the Company can not measure the result of a transaction concerning the providing of labor services in a reliable way, it shall be conducted in accordance with the following circumstances, respectively: If the cost of labor
~ 93~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 services incurred is expected to be compensated, the compensation amount for the cost of labor services shall be recognized as the revenue from providing labor service, and the cost of labor service incurred shall be as the current cost; if the cost of labor services incurred is not expected to compensate, no revenue from the providing of labor services may be recognized.
Where a contract or agreement signed between Group and other enterprises concerns selling goods and providing of labor services, if the part of sale of goods and the part of providing labor services can be distinguished from each other and can be measured respectively, the part of sale of goods and the part of providing labor services shall be treated respectively. If the part of selling goods and the part of providing labor services can not be distinguished from each other, or if the part of sale of goods and the part of providing labor services can be distinguished from each other but can not be measured respectively, both parts shall be conducted as selling goods.
(3) Royalty revenue
In accordance with relevant contract or agreement, the amount of royalty revenue should be recognized as revenue on accrual basis. In theCompany’s daily accounting practices, it should be calculated and recognized according to the chargeable time and methods in accordance with the relevant contract or agreement.
(4) Interest revenue
In accordance with the time that others use theGroup’s monetary capital and the actual rate.
24. Government Subsidies
Government grants are transfer of monetary assets and non-monetary assets from the government to the Company at no consideration, excluding the capital invested by the government as equity owner. Government grant can be classified as grant related to the assets and grants related to the income. The government grants which were acquired by the Company will be used to purchase or otherwise form become long-term assets will be defined as grant related to the assets; the others will be defined as grants related to the income. If the files have not clearly defined government grants objects, it will be divided in the following manner compartmentalize the grants into rant related to the assets and grants related to the income: (1) government documents defined specific projects targets, according to the relative proportion of the budgets of specific items included the expenditure of to form assets and the expenditure will be charged into expense to be divided, the division ratio required at each balance sheet date for review and make changes if necessary; (2) government documents to make a general presentation purposes only, does not specify a particular project, as grants related to the income.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or receivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. If the fair value cannot be reliably determined, it is measured at a nominal amount. A government grant measured at a nominal amount is recognized immediately in profit or loss for the period.
When received the government grants actually, recognized and measured them by the actual amount received. However, there is strong evidence that the end of fiscal support policies able to meet the conditions specified in
~ 94~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 the relevant funds are expected to be able to receive financial support, measured at the amount receivable. Government grants are measured according to the amount receivable shall also comply with the following conditions: (1) grants receivable of government departments issued a document entitled have been confirmed, or could reasonably estimated in accordance with the relevant provisions of its own official release of financial resources management approach, and the expected amount of a material uncertainty which does not exist; (2) it is based on the local financial sector to be officially released and financial support for the project and its financial fund management approach voluntarily disclosed in accordance with the provisions of “Regulations on Disclosure Government Information”, and the management approach should be (inclusive of any compliance business conditions may apply), and not specifically formulated for specific businesses;(3) related grants approval has been clearly committed the deadline, and is financed by the proceeds of a corresponding budget as a guarantee, so that will be received within the prescribed period with the a reasonable assurance; (4) according to the specific circumstances of the Company and the subsidy matter, should satisfy the other conditions (if any).
A government grant related to an asset is recognised as deferred income, and evenly amortized to profit or loss over the useful life of the related assetin a reasonable and systematic manner. For a government grant related to income, if the grant is a compensation for related expenses or losses to be incurred in subsequent period, the grant is recognised as deferred income, and recognised in profit or loss over the periods in which the related costs are recognised. If the grant is a compensation for related expenses or losses already incurred, the grant is recognised immediately in profit or loss for the period.
Government subsidies including both assets-related parts and income-related parts should be treated separately. If it is difficult to seperate, the government subsidiesas a whole will be classified as income-related government grants.
The government grants related to the daily activities of the Company are included in other income or offset the related costs according to the essence of the economic business. The government grants unrelated to the daily activities are included in the non-operating income and expenses.
For repayment of a government grant already recognized, if there is a related deferred income, the repayment is offset against the carrying amount of the deferred income, and any excess is recognized in profit or loss for the period. If there is no related deferred income, the repayment is recognized immediately in profit or loss for the period.
25. Deferred Tax Assets and Deferred Tax Liabilities
(1) Income tax for the current period
At the balance sheet date, current income tax liabilities or assets for the current and prior periods are measured at the amount expected to be paid (or recovered) according to the requirements of tax laws. The calculation for income tax expenses in the current period is based on the taxable income according to the related tax laws after adjustment to the accounting profit of the reporting period.
~ 95~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 (2) Deferred income tax assets and liabilities
For temporary differences between the carrying amount of certain assets or liabilities and their tax base, or between the nil carrying amount of those items that are not recognized as assets or liabilities and their tax base that can be determined according to tax laws, deferred tax assets and liabilities are recognized using the balance sheet liability method.
For temporary differences associated with the initial recognition of goodwill and the initial recognition of an asset or liability arising from a transaction (not a business combination) that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of transaction, no deferred tax asset or liability is recognized. For taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, no deferred income tax liability related is recognized except where the Company is able to control the timing of reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. All deferred income tax liabilities arising from taxable temporary differences except the ones mentioned above are recognized.
For temporary deductible differences associated with the initial recognition of an asset or liability arising from a transaction (not a business combination) that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of transaction, no deferred tax asset is recognized. For taxable temporary deductible differences associated with investments in subsidiaries and associates, and interests in joint ventures, no deferred income tax asset related is recognized if it is impossible to reversal the temporary difference in the foreseeable future, or it is not probable to obtain taxable income which can be used for the deduction of the temporary difference in the future. Except mentioned above, the Company recognizes other deferred income tax assets that can deduct temporary differences to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be utilized.
For the deductible losses and tax credit that can be carried forward, deferred tax assets for deductible temporary differences are recognized to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be utilized.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates according to tax laws, which are expected to apply in the period in which the asset is realized or the liability is settled.
At the balance sheet date, the Company reviews the carrying amount of deferred tax assets. If it is no longer probable that sufficient taxable profit will be available in future periods to allow the benefits of the deferred tax assets to be used, the Company reduces the carrying amount of deferred tax assets. The amount of such reduction is reversed when it becomes probable that sufficient taxable profit will be available.
(3) Income tax expenses
Income tax expenses consist of current income tax and deferred income tax.
The expenses from income tax and deferred income tax, as well as the revenue, shall be recorded into profit or loss in current accounting period, except expense for income tax of the current period and deferred income tax
~ 96~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 that booked into other income or equity and adjusted carrying value of deferred income tax goodwill arose from business combination.
(4) Income tax offset
When we have the legal right, and have intended to, to make settlement with net amount or through the asset acquisition and liability fulfillment simultaneously, the Company shall present the net value from the offset between current income tax asset and current income tax liability in the financial statement.
When the Company has the legal right to make a settlement with the current income tax asset and current income tax liability, and the deferred income tax asset and deferred income tax liability are related to the same taxable subject under the same tax payer, or related to different taxable subject, but the intension of net value settlement in regard of the current income tax asset and current income tax liability, the Company shall present net value after the offset of deferred income tax asset and deferred income tax liability.
26. Leases
A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership of an asset. Title may or may not eventually be transferred. An operating lease is a lease other than a finance lease.
(1) The Company as Lessee under operating Lease
Lease payments under an operating lease are recognized by a lessee on a straight-line basis over the lease term, and either included in the cost of the related asset or charged to profit or loss for the current period. The contingent rents shall be recorded in the profit or loss of the period in which they actually arise.
(2) The Company as Leaser under operating Lease
Lease income from operating leases shall be recognized by the leaser in profit or loss on a straight-line basis over the lease term. Initial direct cost of significance in amount shall be capitalized when incurred. If another basis is more systematic and rational, that basis may be used. Contingent rents are credited to profit or loss in the period in which they actually arise.
(3) The Company as Lessee under financing Lease
For an asset that is held under a finance lease, at the lease commencement, the leased asset is recorded at the lower of its fair value at the lease commencement and the present value of the minimum lease payments, and the minimum lease payment is recorded as the carrying amount of the long-term payables; the difference between the recorded amount of the leased asset and the recorded amount of the payable is accounted for as unrecognized finance charge, Initial direct costs incurred by the lessee during the process of negotiating and securing the lease agreement shall be added to the amount recognized for the leased asset. The net amount of minimum lease payment deducted by the unrecognized finance shall be separated into long-term liabilities and long-term liability within one year for presentation.
Unrecognized finance charge shall be computed by the effective interest method during the lease term. Contingent rent shall be booked into profit or loss when actually incurred.
~ 97~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 (4) In the case of the lessor of a financing lease
For an asset that is leased out under a finance lease, the aggregate of the minimum lease receipts at the inception of the lease and the initial direct costs is recorded as a finance lease receivable, and unguaranteed residual value is recorded at the same time; the difference between the aggregate of the minimum lease receipt, initial direct costs, and unguaranteed residual value, and the aggregate of their present values, is recognized as unearned finance income, which is amortized using the effective interest rate method over each period during the lease term. Finance lease receivable less unearned finance income shall be separated into long-term liabilities and long-term liability within one year for presentation.
Unearned finance income shall be computed by the effective interest method during the lease term. Contingent rent shall be credited into profit or loss in which actually incurred.
27. Changes in Main Accounting Policies and Estimates
(1) Change of accounting policies
There was no any change of accounting policies
(2) Change of main accounting estimates
There was no any change of main accounting estimates.
28. Significant Account Judgment and Estimates
The Company is required to make judgments, estimates and assumptions about the carrying amounts of items in the financial statements that cannot be measured accurately, due to the internal uncertainties of operation activities. These judgments, estimates and assumptions are based on historical experiences of theCompany’s management as well as other factors that are considered to be relevant. These judgments, estimates and assumptions may affect value of the financial statements in revenue, expenses, assets and liabilities and the disclosure of contingency at the balance sheet date. However, the result derived from those uncertainties in estimates may lead significant adjustments to the carrying amounts of the assets or liabilities affected in the future.
The Company has reviews the judgments, estimates and assumptions regularly on the basis of going concern. Where the changes in accounting estimates only affect the period when changes occurred, and they are recognized within the same period. Where the changes in accounting estimates affect both current period and future period, the changes are recognized within the period of change and future period.
At balance sheet date, the followings are the significant areas where the Company needs to make judgment, estimates and assumptions over the value of items in the financial statements:
(1) Classification of lease
The Company classifies leases as operating lease and financing lease according to the rule stipulated in the Accounting Standard for Business Enterprises No.21—Leasing. The management shall make analysis and judgment on whether the risks and rewards related to the title of leased assets has been transferred to the leaser, or whether the Company has substantially held the risks and rewards related to the ownership of leased assets.
~ 98~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 (2) Allowance for bad debt
According to the relevant accounting policies of the Company in receivables, allowance method is used for baddebt’s calculation. The impairment of receivables is calculated based on the assessment of recoverable of receivables. Assurance of receivable impairment needs judgments and estimations from the management. The difference between actual results and original estimates shall have impact on the carrying amount of receivables and receivable bad debt provisions or the reverse during the change of estimation.
(3) Impairment of inventories
The Company measures inventories by the lower of cost and realizable net value according to the accounting policies in regard of inventories and provisions for decline in value of inventories are made if the cost is higher than their net realizable value and obsolete and slow-movement inventories. Inventories decline in value to net realizable value is the estimated selling price in the ordinary course of business. Net realizable value is determined on the basis of clear evidence obtained, and takes into consideration the purposes of holding inventories and effect of post balance sheet events. The difference between the actual result and the original estimates shall have impact on reverse of the carrying amount of the inventories and their decline in value or provisions during the period of change.
(4) The fair value of financial instruments
For a financial instrument which has no active market, the Company establishes fair value by using various valuation methods, including of discounted cash flow analysis model. The Company needs to estimate future cash flow, credit risk, volatility and relationship during the valuation and choose appropriate discount rate. Such assumptions have uncertainties and their changes shall have impact on the fair value of financial instruments. (5) Impairment of financial assets available-for-sale
The Company determine the available-for-sale financial asset is impaired relies on judgments and assumptions of management, to determine whether impairment loss is recognized in the income statement. The process of making the judgments and assumptions, the Company is required to assess the extent and duration of the fair value of the investment below cost, as well as investment financial position and short-term business outlook, including industry conditions, technological change, the credit rating, default rates and counterparty risk.
(6) Impairment of non-financial, non-current assets
The Company assesses whether there are any indicators of impairment for all non-current assets other than financial assets at the balance sheet date. For an intangible asset that has indefinite useful life, impairment test is made in addition to the annual impairment test if there is any indication of impairment. For non-current assets other than financial assets, impairment test is made when there is any indication that its account balance cannot be recovered.
Impairment exists when the recoverable amount of an asset is the higher of its fair value less cost of disposal and present value of the future cash flows expected to be derived from the asset.
Net value between the difference of fair value and disposal cost is determined by reference of the price of similar
~ 99~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 product in a sale agreement in anarm’s length transaction or an observable market price less the additional cost directly attributable to the disposal of the asset.
When estimating the present value of future cash flow, significant judgments are made over theasset’s production, selling price and relevant operating expenses, and discount rate used to calculate present value. All available materials that are considered to be relevant shall be used in the estimation of recoverable value. These materials include estimations of production, selling price and operating expenses based on reasonable and supportable assumptions.
The Company makes an impairment test for goodwill at least at each year end. This requires an estimation of present value of future cash flow of the assets or assets group where goodwill has been allocated. The Company shall makes estimation on the future cash flow derived from assets or assets group and determine an appropriate discount rate for the present value of future cash flow when the estimation of present value of future cash flow is made.
(7) Depreciation and amortization
Investment property, fixed assets and intangible assets are depreciated and amortized using the straight-line method over their useful lives after taking into account residual value. The useful lives are regularly reviewed to determine the depreciation and amortization costs charged in each reporting period. The useful lives are determined based on historical experience of similar assets and the estimated technical changes. If there is an indication that there has been a change in the factor used to determine the depreciation or amortization, the rate of depreciation or amortization is revised.
(8) Deferred tax assets
The group shall recognize all unused tax losses as deferred tax assets to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilized. This requires the management of the Company make a lot of judgments over the estimation of time period, value and tax planning strategies when future taxable profit incurs so that the value of deferred tax assets can be determined. (9) Income tax
There are some transactions where ultimate tax treatments and calculations have uncertainties in theCompany’s everyday operation. If it is possible for any item to make expenditure before tax that needs to be approved from competent tax authorities. If there is any difference between finalized determination value and their initial estimations value, the difference shall have the impact on the income tax and deferred income tax of the current period during the final determination.
(10) Accrued liabilities
According with the terms of the contract, the existing knowledge and historical experience, product quality assurance and expected contract losses, delay in delivery of liquidated damages are estimated and recognized as accrued liabilities. In these matters has been the formation of a current obligation, and fulfilling the duty is likely to lead to the outflow of economic benefits of the Company, the Company or the best estimate of the current
~ 100~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 obligation expenditure required recognized as a accrued liabilities. Recognition and measurement of accrued liabilities is dependent on the judgment of management. In the processing of judgment the company needed to appraise the related risks, uncertainties and time value of money and other factors.
V. Taxation
1. Main Taxes and Tax Rate
||||
|-|-|-|
||Category of taxes|Particulars about specific tax rate|
|VAT|||
|Consumption tax|||
||Urban maintenance and construction tax||
||Education expenses surcharge||
||Local education surcharge||
||Enterprise income tax||

Table of income tax rate of different entities:
|||
|-|-|
|Name of the entities|Income tax rate|

Anhui Longrui Glass Co., Ltd 15% Anhui Ruisiweier Technology Co., Ltd 15% Bozhou Gujin Rubbish Recycling Co., Ltd 10% Wuhan Yashibo Technology Co., Ltd 10% Hubei Hechuanyuan Trade Co., Ltd 10% Anhui Gujing Distillery Company Limited and its other
25% subsidiaries
2. Tax Preference and Approval
(1) On 5 December 2016, thecompany’s subsidiary Anhui Longrui Glass Co., Ltd. was attested to be qualified as a hi-tech enterprise and obtained Hi-tech Enterprise Certificate (NO.: GR201634001204) which shall be valid in 3 years. Corresponding corporate income tax was also paid at the rate of15% from January to June in 2018.
(2) On 21 October 2016, thecompany’s subsidiary Anhui Swisse Will Science& Technology Co., Ltd. was
attested to be qualified as a hi-tech enterprise and obtained Hi-tech Enterprise Certificate (NO.: GR201634000832)
~ 101~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 which shall be valid in 3 years. Corresponding corporate income tax was also paid at the rate of15% from January to June in 2018.
(3) According to Notification for extending coverage of preferential income tax policies for small enterprises with low profits (Financial and taxation (2017) No. 43), published by Ministry of Finance of thePeople’s Republic of China and State Administration of Taxation, from 1 January 2017 to 31 December 2019, for small enterprises with low profits, of which the annual taxable income amount is under RMB0.5 million (including RMB0.5 million), the income tax deduction shall be50% of the taxable income amount and the corporate income tax rate shall be reduced to20%. For subsidiaries of the Company, BozhouGujing Recycling Co., Ltd, Wuhan Yashibo Technology Co., Ltd and Hubei Hechuyuan Commercial& Trading Co., Ltd, which satisfy conditions for small enterprises with low profits, the actual prevailing tax shall be reduced to10% from January to June in 2018.
VI. Notes on Major Items in Consolidated Financial Statements of the Company
The following notes (including notes on major items in consolidated financial statements of the Company), unless otherwise noted, the opening period was 1 January 2018, the closing period was 30 June 2018.
1. Monetary Funds
|||||
|-|-|-|-|
|Item||Ending balance|Beginning balance|
||364,726.59|||
||921,933,834.69|||
||45,487,396.13|||
|Total|967,785,957.41|||
||0.00|||

 Note: At the end of this period, the amount of RMB45,000,000.00 was restricted for pledge due to the opening ofbank’s acceptance bill among the other monetary fund;there’s no limitation and restriction on the usage and remittance of funds deposited abroad due to pledge and mortgage etc.
2. Financial Assets at Fair Value through Profit or Loss
|||||
|-|-|-|-|
|Item||Ending balance|Beginning balance|
||1,057,659.73|||
||1,057,659.73|||
|Total|1,057,659.73|||

 3. Notes Receivable
(1) Notes receivable listed by category
||||
|-|-|-|
|Item|Ending balance|Beginning balance|

~ 102~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||
|-|-|-|-|
|Item||Ending balance|Beginning balance|
||1,896,811,744.49|||
||2,000,000.00|||
|Total|1,898,811,744.49|||

 (2) Notes receivable pledged at the period-end
Notes receivable pledged at the period-end was RMB99,930,600.
(3) Notes receivable which had endorsed by the Company or had discounted and had not due on the balance sheet date at the period-end
||||||
|-|-|-|-|-|
|Item|||Amount of recognition termination at the|Amount of not terminated recognition atthe period-end|
||||period-end||
|||415,100,060.67|||
||Total|415,100,060.67|||

 4. Accounts Receivable
(1) Accounts Receivable Classified by Category
|||||||
|-|-|-|-|-|-|
||Ending balance|||||
||Carrying amount||Bad debt provision|||
|Category|||||Carrying|
|||Proport||Withdrawal||
||Amount||Amount||value|
|||ion (%)||proportion (%)||
||0.00|0.00|0.00|0.00||
||20,644,132.48|100.00|1,151,556.41|5.58||
||0.00|0.00|0.00|0.00||
||20,644,132.48|100.00|1,151,556.41|5.58||
|Total||||||

 (Continued)
|||||
|-|-|-|-|
||Beginning balance|||
|Category||||
||Carrying amount|Bad debt provision|Carrying|

~ 103~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||||
|-|-|-|-|-|-|
|||Proport||Withdrawal|value|
||Amount||Amount|||
|||ion (%)||proportion (%)||
||0.00|0.00|0.00|0.00||
||23,800,576.11|100.00|1,334,433.05|5.61||
||0.00|0.00|0.00|0.00||
||23,800,576.11|100.00|1,334,433.05|5.61||
|Total||||||

 In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision:
|||||
|-|-|-|-|
||Ending balance|||
|Aging|||Withdrawal proportion|
||Account receivable|Bad debt provision||
||||(%)|
||19,477,898.54|273,272.84||
||17,515,552.21|175,155.52||
||1,962,346.33|98,117.32||
||307,078.19|30,707.82||
||23,160.00|11,580.00||
||835,995.75|835,995.75||
|Total|20,644,132.48|1,151,556.41||

 (2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
The reversed amount of the bad debt provision during the Reporting Period was of RMB 182,876.64.
(3) Particulars of the Actual Verification of Accounts Receivable during the Reporting Period
There was no actual verification of accounts receivable during the Reporting Period
(4) Top Five of the Ending Balance of the Accounts Receivable Collected According to the Arrears Party
The total amount of top five of account receivable of ending balance collected by arrears party was RMB7,494,637.60,36.30% of total closing balance of account receivable, the relevant ending balance of bad debt
provision withdrawn was RMB149,888.77.
5. Prepayment
~ 104~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 (1) List by Aging Analysis
||||||
|-|-|-|-|-|
||Ending balance||Beginning balance||
|Aging|||||
||Amount|Proportion|Amount|Proportion|
||79,562,981.71|96.79|40,817,554.03||
||2,319,508.00|2.82|82,115.23||
||36,520.00|0.04|828,648.08||
||290,000.00|0.35|1,320.00||
|Total|82,209,009.71|100.00|41,729,637.34||

 (2) Top Five of the Ending Balance of the Prepayment Collected According to the Prepayment Target
The total amount of top five of account receivable of ending balance collected by arrears party was RMB42,062,242.90,51.17% of total ending balance of account receivable.
6. Interest Receivable
|||||
|-|-|-|-|
|Item||Ending balance|Beginning balance|
||19,403,178.08|||
|Total|19,403,178.08|||

 7. Other Accounts Receivable
(1) Other Accounts Receivable Disclosed by Category
|||||||
|-|-|-|-|-|-|
||Ending balance|||||
||Carrying amount||Bad debt provision|||
|Category||Propor|||Carrying|
|||||Withdrawal||
||Amount|tion|Amount||value|
|||||proportion (%)||
|||(%)||||
||40,850,949.35|74.18|40,850,949.35|100.00||
||14,220,757.86|25.82|1,338,529.27|9.41||
||0.00|0.00|0.00|0.00||
||55,071,707.21|100.00|42,189,478.62|76.61||
|Total||||||

~ 105~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 (Continued)
|||||||
|-|-|-|-|-|-|
||Beginning balance|||||
||Carrying amount||Bad debt provision|||
|Category||Propor|||Carrying|
|||||Withdrawal||
||Amount|tion|Amount||value|
|||||proportion (%)||
|||(%)||||
||40,850,949.35|71.04|40,850,949.35|100.00||
||16,651,396.91|28.96|1,261,290.77|7.57||
||0.00|0.00|0.00|0.00||
||57,502,346.26|100.00|42,112,240.12|73.24||
|Total||||||

①Other receivable with single significant amount and withdrawal bad debt provision separately at end of period
||||||
|-|-|-|-|-|
||Ending balance||||
|Other accounts receivable (unit)|Other accounts|Bad debt|Withdrawal proportion||
|||||Withdrawal reason|
||receivable|provision|(%)||
||29,010,449.35|29,010,449.35|100.00||
||11,840,500.00|11,840,500.00|100.00||
|Total|40,850,949.35|40,850,949.35|100.00|--|

②In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision
|||||
|-|-|-|-|
||Ending balance|||
|Aging||||
||Other accounts receivable|Bad debt provision|Withdrawal proportion (%)|
||12,128,336.42|204,974.58||
||10,036,055.96|100,360.56||
||2,092,280.46|104,614.02||
||1,054,178.94|105,417.89||

~ 106~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||
|-|-|-|-|
||Ending balance|||
|Aging||||
||Other accounts receivable|Bad debt provision|Withdrawal proportion (%)|
||20,211.41|10,105.71||
||1,018,031.09|1,018,031.09||
|Total|14,220,757.86|1,338,529.27||

 (2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
The withdrawn bad debt provision of Reporting Period was of RMB77,238.50.
(3) Particulars of the Actual Verification of Other Accounts Receivable during the Reporting Period
There was no actual verification of other accounts receivable during the Reporting Period
(4) Other Account Receivable Classified by Account Nature
||||
|-|-|-|
|Nature|Ending carrying amount|Beginning carrying amount|
||40,850,949.35||
||6,064,299.92||
||2,228,900.64||
||2,330,083.24||
||3,597,474.06||
|Total|55,071,707.21||

 (5) Top 5 of the Ending Balance of the Other Accounts Receivable Collected According to the Arrears Party
|||||||
|-|-|-|-|-|-|
||||||Bad debt|
|Name of the||||||
||Nature|Ending balance|Aging|Proportion (%)|provision|
|entity||||||
||||||Ending balance|
||Securities investment|2,901,0449.35|Over 3 years|52.68||
||Securities investment|1,1840,500.00|Over 3 years|21.50||
||Cash deposit|500,000.00|Within 6 months|0.91||
||Others|415,000.00|Within 6 months|0.75||
||Prepayment of oil fee|369,185.37|Within 6 months|0.67||
|Total|--|42,135,134.72|--|76.51||

8. Inventory
~ 107~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 (1) Category of Inventory
|||||||
|-|-|-|-|-|-|
|Item|||Ending balance|||
||||Carrying amount|Falling price reserves|Carrying value|
|||113,213,102.26||16,779,560.13||
|||1,832,857,138.37||0.00||
|||227,219,100.50||15,923,325.41||
||Total|2,173,289,341.13||32,702,885.54||

 (Continued)
|||||||
|-|-|-|-|-|-|
|Item|||Beginning balance|||
||||Carrying amount|Falling price reserves|Carrying value|
|||132,151,695.59||17,029,623.45||
|||1,705,396,599.74||0.00||
|||258,007,338.23||14,395,712.60||
||Total|2,095,555,633.56||31,425,336.05||

 (2) Falling Price Reserves of Inventory
||||||||
|-|-|-|-|-|-|-|
|||Increase||Decrease|||
|Item|Beginning balance|||||Ending balance|
|||Withdrawal|Others|Reverse or write-off|Others||
||17,029,623.45|0.00|0.00|250,063.32|0.00||
||14,395,712.60|1,527,612.81|0.00|0.00|0.00||
|Total|31,425,336.05|1,527,612.81|0.00|250,063.32|0.00||

 (3) Withdrawal Provision Basis of the Falling Price of the Inventory and the Reasons of the Reserve or Write-off
|||||
|-|-|-|-|
|Item|Specific basis of withdrawal of fallingprice reserves of inventory|Reaso|Reasons for write-off|
|||ns for||
|||revers||
|||al||
||The realizable net value was lower|||

~ 108~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||
|-|-|-|-|
|Item|Specific basis of withdrawal of fallingprice reserves of inventory|Reaso|Reasons for write-off|
|||ns for||
|||revers||
|||al||
||than the cost|||
||The realizable net value was lowerthan the cost|||

9. Other Current Assets
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
||2,100,110,858.42||
||66,930,195.24||
|Total|2,167,041,053.66||

 10. Available-for-sale Financial Assets
(1) List of Available-for-sale Financial Assets
||||||||
|-|-|-|-|-|-|-|
||Ending balance|||Beginning balance|||
|Item||Depreciation|||Depreciation||
||Carrying amount||Carrying value|Carrying amount||Carrying value|
|||reserves|||reserves||
||267,197,036.68|0.00|267,197,036.68|517,086,347.91|0.00||
||267,197,036.68|0.00|267,197,036.68|517,086,347.91|0.00||
||0.00|0.00|0.00|0.00|0.00||
|Total|267,197,036.68|0.00|267,197,036.68|517,086,347.91|0.00||

 (2) Available-for-sale Financial Assets at Fair Value at the Period-end
|||||||
|-|-|-|-|-|-|
|Category||Available-for-saleequity instruments||Available-for-sale|Total|
|||||debt instruments||
||255,972,300.88||0.00|||
||267,197,036.68||0.00|||
||11,224,735.80||0.00|||
||0.00||0.00|||

Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||||
|-|-|-|-|-|-|
|Item||Houses and buildings||Land use right|Total|
||8,680,555.75||2,644,592.00|||
||0.00||0.00|||
||146,888.55||0.00|||
||146,888.55||0.00|||
||0.00||0.00|||
||8,533,667.20||2,644,592.00|||
||5,393,723.68||587,646.74|||
||140,899.80||28,013.28|||
||140,899.80||28,013.28|||
||27,093.97||0.00|||
||27,093.97||0.00|||
||0.00||0.00|||
||5,507,529.51||615,660.02|||
||0.00||0.00|||
||0.00||0.00|||
||0.00||0.00|||
||0.00||0.00|||
||0.00||0.00|||
||0.00||0.00|||
||0.00||0.00|||
||3,026,137.69||2,028,931.98|||
||3,286,832.07||2,056,945.26|||

12. Fixed Assets
~ 110~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 (1) List of Fixed Assets
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Item||Houses and||Machinery||Transportation||Office equipment|Total|
|||buildings||equipment||equipment||and other||
||1,994,106,003.80||885,870,116.23||63,990,533.99||119,237,780.37|||
||2,700,436.19||8,303,581.15||1,351,123.42||19,660,845.87|||
||0.00||3,769,485.95||1,351,123.42||1,799,553.67|||
||2,553,547.64||4,534,095.20||0.00||17,861,292.20|||
||146,888.55||0.00||0.00||0.00|||
||23,309,796.95||26,063,847.16||3,950,265.71||15,443,005.41|||
||17,395,203.59||26,063,847.16||3,950,265.71||15,443,005.41|||
||5,914,593.36||0.00||0.00||0.00|||
||1,973,496,643.04||868,109,850.22||61,391,391.70||123,455,620.83|||
||673,130,286.33||441,060,956.92||50,053,304.86||90,358,146.27|||
||35,933,032.13||46,846,937.31||2,726,849.95||11,041,043.53|||
||35,905,938.16||46,846,937.31||2,726,849.95||11,041,043.53|||
||27,093.97||0.00||0.00||0.00|||
||13,625,432.00||16,424,122.62||3,782,097.06||12,815,760.29|||
||13,625,432.00||16,424,122.62||3,782,097.06||12,815,760.29|||

~ 111~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Item||Houses and||Machinery||Transportation||Office equipment|Total|
|||buildings||equipment||equipment||and other||
||695,437,886.46||471,483,771.61||48,998,057.75||88,583,429.51|||
||7,061,980.08||8,691,493.68||7,047.07||587,040.62|||
||0.00||0.00||0.00||0.00|||
||0.00||0.00||0.00||0.00|||
||3,665,687.29||7,775,414.38||0.00||0.00|||
||3,665,687.29||7,775,414.38||0.00||0.00|||
||3,396,292.79||916,079.30||7,047.07||587,040.62|||
||1,274,662,463.79||395,709,999.31||12,386,286.88||34,285,150.70|||
||1,313,913,737.39||436,117,665.63||13,930,182.06||28,292,593.48|||

 (2) List of Temporarily Idle Fixed Assets
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Item|||Original carrying||Accumulative||Impairment|Carrying value|Notes|
||||value||depreciation||provision|||
|||10,740,209.84||7,238,483.71||3,396,292.79||105,433.34||
|||8,203,103.85||7,235,401.18||916,079.30||51,623.37||
|||58,119.66||49,329.00||7,047.07||1,743.59||
|||900,605.02||286,559.74||587,040.62||27,004.66||
||Total|19,902,038.37||14,809,773.63||4,906,459.78||185,804.96||

(3) Details of Fixed Assets Failed to Accomplish Certification of Property
||||
|-|-|-|
|Item|Carrying value|Reason|

~ 112~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|Item|Carrying value|Reason|
||797,896,268.71||
|Total|797,896,268.71|--|

13. Construction in Progress
(1) List of Construction in Progress
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Item|Ending balance||||||Beginning balance||||
||Carryingamount||Depreciation||Carryingvalue||Carrying||Depreciation|Carrying|
||||reserves||||amount||reserves|value|
||0.00|0.00||0.00||5,272,286.37||0.00|||
||3,486,657.81|0.00||3,486,657.81||20,643,371.11||0.00|||
||1,876,678.16|0.00||1,876,678.16||1,876,678.16||0.00|||
||8,529,729.73|0.00||8,529,729.73||8,529,729.73||0.00|||
||0.00|0.00||0.00||1,025,641.03||0.00|||
||878,152.15|0.00||878,152.15||878,152.15||0.00|||
||895,690.29|0.00||895,690.29||99,622.64||0.00|||
||0.00|0.00||0.00||113,207.55||0.00|||
||8,374,584.66|0.00||8,374,584.66||113,207.55||0.00|||
||28,060,455.11|0.00||28,060,455.11||1,127,033.31||0.00|||
||3,634,231.28|0.00||3,634,231.28||3,634,231.28||0.00|||

~ 113~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Item|Ending balance||||||Beginning balance||||
||Carryingamount||Depreciation||Carrying||Carrying||Depreciation|Carrying|
||||reserves||value||amount||reserves|value|
||0.00|0.00||0.00||2,726,775.89||0.00|||
||0.00|0.00||0.00||1,096,197.71||0.00|||
||14,531,206.65|0.00||14,531,206.65||7,360,664.08||0.00|||
||1,162,393.16|0.00||1,162,393.16||0.00||0.00|||
||1,867,356.20|0.00||1,867,356.20||0.00||0.00|||
||668,437.01|0.00||668,437.01||0.00||0.00|||
||1,521,295.56|0.00||1,521,295.56||0.00||0.00|||
||589,185.45|0.00||589,185.45||0.00||0.00|||
|Total|76,076,053.22|0.00||76,076,053.22||54,496,798.56||0.00|||

 (2) Changes of Significant Construction in Progress
||||||||||
|-|-|-|-|-|-|-|-|-|
|Name o f item|Estimatednumber|Beginningbalance|IncreaseAmount||Amount that||Other|Endingbalance|
||||||transferred to||decreased||
||||||fixed assets of||amount of the||
||||||the period||period||
||8,350,000.00|5,272,286.37|942,121.54|0.00||6,214,407.91|||
||180,107,600.00|20,643,371.11|350,137.01|17,506,850.31||0.00|||
||2,300,000.00|1,876,678.16|0.00|0.00||0.00|||

Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||||
|-|-|-|-|-|
|10,520,000.00|8,529,729.73|0.00|0.00|0.00|
|2,600,000.00|1,025,641.03|683,760.68|0.00|1,709,401.71|
|2,100,000.00|878,152.15|0.00|0.00|0.00|
|7,000,000.00|99,622.64|796,067.65|0.00|0.00|
|5,600,000.00|113,207.55|2,170,915.12|0.00|2,284,122.67|
|274,300,000.00|113,207.55|8,261,377.11|0.00|0.00|
|109,916,500.00|1,127,033.31|26,933,421.80|0.00|0.00|
|8,500,000.00|3,634,231.28|0.00|0.00|0.00|
|26,000,000.00|2,726,775.89|0.00|0.00|2,726,775.89|
|3,400,000.00|1,096,197.71|838,290.60|1,934,488.31|0.00|
|69,885,610.00|7,360,664.08|13,127,144.67|5,507,596.42|449,005.68|
|13,411,600.00|0.00|1,162,393.16|0.00|0.00|
|8,000,000.00|0.00|1,867,356.20|0.00|0.00|
|1,252,920.43|0.00|668,437.01|0.00|0.00|
|8,000,000.00|0.00|1,521,295.56|0.00|0.00|

~ 115~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||||
|-|-|-|-|-|-|
||25,000,000.00|0.00|589,185.45|0.00|0.00|
|Total|766,244,230.43|54,496,798.56|59,911,903.56|24,948,935.04|13,383,713.86|

 (Continued)
||||||||
|-|-|-|-|-|-|-|
|Project name|Proportionestimated ofthe projectaccumulativeinput (%)|ProjectProgress(%)|Accumulativeamount ofcapitalizedinterests|Of which:|Capitalizationrate of theinterests ofthe period(%)|Capitalresources|
|||||the amount|||
|||||of the|||
|||||capitalized|||
|||||interests of|||
|||||the period|||
||74.42|100.00|||||
||72.19|95.00|||||
||81.59|97.00|||||
||81.08|95.00|||||
||65.75|100.00|||||
||41.82|90.00|||||
||12.80|90.00|||||
||40.79|100.00|||||
||3.05|5.00|||||
||27.82|70.00|||||
||42.76|95.00|||||
||57.69|100.00|||||
||56.90|50.00|||||
||29.32|50.00|||||

Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||||||||
|-|-|-|-|-|-|-|-|-|
|Project name||Proportionestimated ofthe projectaccumulativeinput (%)|ProjectProgress(%)|Accumulativeamount ofcapitalizedinterests|Of which:|Capitalizationrate of theinterests ofthe period(%)|Capitalresources||
||||||the amount||||
||||||of the||||
||||||capitalized||||
||||||interests of||||
||||||the period||||
|||8.67|10.00||||||
|||23.34|30.00||||||
|||53.35|60.00||||||
|||19.02|80.00||||||
|||2.36|10.00||||||
||Total|||||||--|

 14. Intangible Assets
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Item||Land use right||Patent right||Software||Trademark|Total|
||628,279,302.56||45,889,466.19||16,616,834.45||169,116,600.00|||
||55,254,656.00||0.00||9,215,354.37||0.00|||
||55,254,656.00||0.00||1,250,519.12||0.00|||
||0.00||0.00||0.00||0.00|||
||0.00||0.00||7,964,835.25||0.00|||
||0.00||0.00||0.00||0.00|||
||0.00||0.00||0.00||0.00|||

Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Item||Land use right||Patent right||Software||Trademark|Total|
||683,533,958.56||45,889,466.19||25,832,188.82||169,116,600.00|||
||115,286,620.37||45,721,513.97||7,162,253.07||350,373.12|||
||6,916,352.72||24,038.88||1,548,668.39||0.00|||
||6,916,352.72||24,038.88||1,548,668.39||0.00|||
||0.00||0.00||0.00||0.00|||
||0.00||0.00||0.00||0.00|||
||122,202,973.09||45,745,552.85||8,710,921.46||350,373.12|||
||0.00||0.00||0.00||0.00|||
||0.00||0.00||0.00||0.00|||
||0.00||0.00||0.00||0.00|||
||0.00||0.00||0.00||0.00|||
||0.00||0.00||0.00||0.00|||
||0.00||0.00||0.00||0.00|||
||561,330,985.47||143,913.34||17,121,267.36||168,766,226.88|||
||512,992,682.19||167,952.22||9,454,581.38||168,766,226.88|||

15. Goodwill
||||||
|-|-|-|-|-|
|Item|Beginning balance|Increase|Decrease|Ending balance|

~ 118~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||||
|-|-|-|-|-|-|
|||Generated from||||
|||enterprise|Other|disposal|Disposal|
|||merger||||
||478,283,495.29|0.00|0.00|0.00|0.00|
|Total|478,283,495.29|0.00|0.00|0.00|0.00|

 16. Long-term Unamortized Expenses
||||||||
|-|-|-|-|-|-|-|
|Item|Beginningbalance|Increasedamount|Amortizationamount|Otherdecrease|Endingbalance|Other|
|||||||reasons for|
|||||||decrease|
||293,193.37|0.00|293,193.37|0.00|0.00||
||0.00|0.00|0.00|0.00|0.00||
||281,780.60|0.00|281,780.60|0.00|0.00||
||0.00|0.00|0.00|0.00|0.00||
||17,095,147.21|0.00|1,221,548.10|0.00|15,873,599.11||
||8,625,000.00|0.00|750,000.00|0.00|7,875,000.00||
||10,652,526.78|0.00|2,203,971.00|0.00|8,448,555.78||
||179,544.67|0.00|179,544.67|0.00|0.00||
||3,650,000.00|0.00|300,000.00|0.00|3,350,000.00||
||241,885.66|0.00|121,885.18|0.00|120,000.48||
||805,933.61|0.00|805,933.61|0.00|0.00||
||3,552,763.50|134,384.47|676,097.56|0.00|3,011,050.41||
||3,671,221.27|29,203.60|494,317.69|0.00|3,206,107.18||
||1,963,083.52|0.00|512,108.76|0.00|1,450,974.76||
||4,174,238.80|0.00|263,636.16|0.00|3,910,602.64||

Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||||||
|-|-|-|-|-|-|-|-|
|Item||Beginningbalance|Increasedamount|Amortizationamount|Otherdecrease|Endingbalance|Other|
||||||||reasons for|
||||||||decrease|
|||2,412,303.20|0.00|629,296.50|0.00|1,783,006.70||
|||1,945,119.27|0.00|466,828.62|0.00|1,478,290.65||
|||1,025,154.32|0.00|246,037.02|0.00|779,117.30||
|||651,423.70|0.00|55,049.82|0.00|596,373.88||
|||450,450.45|18,078.94|46,852.98|0.00|421,676.41||
|||0.00|407,980.05|45,331.12|0.00|362,648.93||
|||0.00|2,284,122.67|76,137.42|0.00|2,207,985.25||
|||7,567,753.85|12,933,525.46|1,174,692.46|0.00|19,326,586.85||
||Total|69,238,523.78|15,807,295.19|10,844,242.64|0.00|74,201,576.33||

17. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) List of Deferred Income Tax Assets
||||||
|-|-|-|-|-|
||Ending balance||Beginning balance||
|Item|||||
||Deductible temporary||Deductible temporary|Deferred income tax|
|||Deferred income tax assets|||
||Differences||Differences|assets|
||43,341,035.03|10,835,258.76|43,446,673.17||
||32,676,185.64|8,169,046.41|31,398,636.15||
||4,906,459.78|1,226,614.95|16,319,563.99||
||41,140,119.46|10,285,029.86|43,706,503.22||
||751,867,337.27|187,966,834.32|170,866,990.79||
||9,959,599.85|2,489,899.96|36,422,859.63||
||11,070,788.80|2,767,697.20|8,947,215.47||
||0.00|0.00|19,804,188.04||

Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||
|-|-|-|-|
|Total|894,961,525.83|223,740,381.46|370,912,630.46|

 (2) Lists of Deferred Income Tax Liabilities
||||||
|-|-|-|-|-|
||Ending balance||Beginning balance||
|Item|Taxable temporary|Deferred income tax|Taxable temporary|D eferred income tax|
||differences|liabilities|differences|liabilities|
||l281,087.04|70,271.76|44,379.27||
||e11,224,735.80|2,806,183.95|71,361,103.28||
||d12,915,766.17|3,228,941.54|7,851,477.60||
||s395,728,044.05|98,932,011.01|399,859,463.44||
|Total|420,149,633.06|105,037,408.26|479,116,423.59||

 (3) List of Unrecognized Deferred Income Tax Assets
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
||26,699.90||
||4,729,929.29||
|Total|4,756,629.19||

 18. Other Non-current Assets
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
||300,000,000.00||
||12,474,025.99||
|Total|312,474,025.99||

 19. Notes Payable
||||
|-|-|-|
|Category|Ending balance|Beginning balance|
||141,790,230.00||
||46,282,864.09||

~ 121~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|Category|Ending balance|Beginning balance|
|Total|188,073,094.09||

 20. Accounts Payable
(1) List of Accounts Payable
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
||180,724,444.02||
||57,035,111.24||
||54,842,512.43||
|Total|292,602,067.69||

 (2) Significant Accounts Payable Aging over One Year
||||
|-|-|-|
|Item|Ending balance|Unpaid/ Un-carry-over reason|
||2,252,093.02||
||1,090,000.00||
||769,163.75||
||577,691.84||
||393,392.70||
|Total|5,082,341.31|--|

21. Advance from Customers
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
||803,222,097.92||
|Total|803,222,097.92||

 22. Payroll Payable
(1) List of Payroll Payable
||||||
|-|-|-|-|-|
|Item|Beginning balance|Increase|Decrease|Ending balance|
||371,459,202.44|612,262,256.05|734,646,283.48||
||914,811.93|60,856,284.57|60,886,100.79||
||0.00|0.00|0.00||
||0.00|0.00|0.00||

~ 122~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||
|-|-|-|-|
|Total|372,374,014.37|673,118,540.62|795,532,384.27|

 (2) List of Short-term Salary
||||||
|-|-|-|-|-|
|Item|Beginning balance|Increase|Decrease|Ending balance|
||298,131,004.17|540,715,242.30|670,816,860.60||
||3,692,980.00|5,249,944.98|8,942,924.98||
||236,208.08|23,336,040.33|23,332,954.33||
||196,904.35|20,334,551.37|20,331,465.37||
||20,069.87|1,243,369.69|1,243,369.69||
||19,233.86|1,758,119.27|1,758,119.27||
||9,051,999.88|24,981,359.37|24,018,883.07||
||60,347,010.31|17,979,669.07|7,534,660.50||
||0.00|0.00|0.00||
||0.00|0.00|0.00||
|Total|371,459,202.44|612,262,256.05|734,646,283.48||

 (3) List of Drawing Scheme
||||||||
|-|-|-|-|-|-|-|
|Item|Beginning balance||Increase||Decrease|Ending balance|
||867,739.31|58,763,572.31||58,793,391.53|||
||47,072.62|2,092,712.26||2,092,709.26|||
|Total|914,811.93|60,856,284.57||60,886,100.79|||

 23. Taxes Payable
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
||18,061,149.68||
||19,628,722.12||
||333,472,335.50||
||6,210,976.43||

~ 123~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
||12,851,793.29||
||661,823.10||
||11,943,990.42||
||11,107,919.90||
|Total|413,938,710.44||

 24. Other Accounts Payable
||||
|-|-|-|
|Nature|Ending balance|Beginning balance|
||934,758,741.09||
||42,694,470.42||
||10,014,476.18||
||36,395,275.05||
||80,123,743.71||
|Total|1,103,986,706.45||

 25. Other Current Liabilities
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
||804,829,022.62||
|Total|804,829,022.62||

 26. Deferred Revenue
|||||||
|-|-|-|-|-|-|
|Item|Beginning balance|Increase|Decrease|Ending balance|Formed reason|
||43,706,503.22|0.00|2,566,383.76|41,140,119.46||
|Total|43,706,503.22|0.00|2,566,383.76|41,140,119.46|--|

 Of which, items involved in government subsidies:
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Item|Beginningbalance|Increase||Decrease||||Endingbalance|Relatedtoassets/income|
|||||Recorded into|Recorded|Offsetcosts|Otherdecrease|||
|||||non-operating|into other|||||
|||||revenue|income|||||
||317,708.39|0.00|0.00||31,249.98|0.00|0.00|286,458.41||

Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Item|Beginningbalance|Increase||Decrease|||||Endingbalance|Relatedtoassets/income|
|||||Recorded into||Recorded|Offsetcosts|Otherdecrease|||
|||||non-operating||into other|||||
|||||revenue||income|||||
||1,212,750.00|0.00|0.00||110,250.00||0.00|0.00|1,102,500.00||
||182,291.61|0.00|0.00||15,625.02||0.00|0.00|166,666.59||
||1,380,487.88|0.00|0.00||146,341.44||0.00|0.00|1,234,146.44||
||3,409,210.00|0.00|0.00||365,272.50||0.00|0.00|3,043,937.50||
||165,750.00|0.00|0.00||76,500.00||0.00|0.00|89,250.00||
||120,000.00|0.00|0.00||30,000.00||0.00|0.00|90,000.00||

Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Item|Beginningbalance|Increase||Decrease|||||Endingbalance|Relatedtoassets/income|
|||||Recorded into||Recorded|Offsetcosts|Otherdecrease|||
|||||non-operating||into other|||||
|||||revenue||income|||||
||865,168.63|0.00|0.00||71,769.86||0.00|0.00|793,398.77||
||465,956.93|0.00|0.00||265,811.76||0.00|0.00|200,145.17||
||950,152.42|0.00|0.00||267,110.76||0.00|0.00|683,041.66||
||82,500.00|0.00|0.00||15,000.00||0.00|0.00|67,500.00||
||4,083,750.00|0.00|0.00||556,875.00||0.00|0.00|3,526,875.00||
||23,663,240.29|0.00|0.00||275,103.09||0.00|0.00|23,388,137.20||
||550,000.16|0.00|0.00||68,749.98||0.00|0.00|481,250.18||
||453,125.00|0.00|0.00||46,875.00||0.00|0.00|406,250.00||
||563,400.00|0.00|0.00||0.00||0.00|0.00|563,400.00||

Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Item||Beginningbalance|Increase||Decrease|||||Endingbalance|Relatedtoassets/income|
||||||Recorded into||Recorded|Offsetcosts|Otherdecrease|||
||||||non-operating||into other|||||
||||||revenue||income|||||
|||930,208.35|0.00|0.00||23,749.98||0.00|0.00|906,458.37||
|||480,000.00|0.00|0.00||0.00||0.00|0.00|480,000.00||
|||965,517.25|0.00|0.00||68,965.50||0.00|0.00|896,551.75||
|||2,865,286.31|0.00|0.00||131,133.89||0.00|0.00|2,734,152.42||
||Total|43,706,503.22|0.00|0.00||2,566,383.76||0.00|0.00|41,140,119.46||

 27. Share Capital
|||||||||
|-|-|-|-|-|-|-|-|
|||Increase/decrease in Reporting Period (+,-)||||||
|Item|Beginning balance||||||Ending balance|
|||Newly|Bonus|Bonus issue||||
||||||Others|Subtotal||
|||issue share|shares|from profit||||
||503,600,000.00|0.00|0.00|0.00|0.00|0.00||

 28. Capital Reserves
||||||
|-|-|-|-|-|
|Item|Beginning balance|Increase|Decrease|Ending balance|
||1,262,552,456.05|0.00|0.00||
||32,853,136.20|0.00|0.00||
|Total|1,295,405,592.25|0.00|0.00||

Gujinggong Liquor Aged Original Liquor Interim Report 2018 29. Other Comprehensive Income
|||||||||
|-|-|-|-|-|-|-|-|
|Item|Beginningbalance|Reporting Period|||||Endingbalance|
|||Income beforetaxation in theCurrent Period|Less: recorded|Less: Incometax expense||||
||||in other|||||
||||comprehensive|||||
||||||Attributable to|||
||||income in|||Attributable to||
||||||owners of the|||
||||prior period|||non-controlling||
||||||Company as|||
||||and transferred|||interests after||
||||||the parent after|||
||||in profit or|||tax||
||||||tax|||
||||loss in the|||||
||||Current|||||
||||Period|||||
||0.00|0.00|0.00|0.00|0.00|0.00||
||53,520,827.44|-41,442,155.53|14,020,658.94|-10,360,538.89|-45,102,275.58|0.00||
||53,520,827.44|-41,442,155.53|14,020,658.94|-10,360,538.89|-45,102,275.58|0.00||
||53,520,827.44|-41,442,155.53|14,020,658.94|-10,360,538.89|-45,102,275.58|0.00||

 30. Surplus Reserves
||||||
|-|-|-|-|-|
|Item|Beginning balance|Increase|Decrease|Ending balance|
||256,902,260.27|0.00|0.00||
|Total|256,902,260.27|0.00|0.00||

 Notes: Based on the regulations of the Corporation Law and Article of Association, the Company should withdraw10% of the statutory surplus reserves according to the net profits. If the accumulated amount of the statutory surplus reserves exceeded the50% of the registered capital, the Company could no more withdraw.
31. Retained Profits
~ 128~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|||Same period of last|
|Item|Reporting Period||
|||year|
||4,349,649,698.42||
||0.00||
||4,349,649,698.42||
||892,422,337.64||
||0.00||
||0.00||
||0.00||
||503,600,000.00||
||0.00||
||4,738,472,036.06||

 32. Operating Revenues and Costs
||||||
|-|-|-|-|-|
||Reporting Period||Same period of last year||
|Item|||||
||Sales revenue|Cost of sales|Sales revenue|Cost of sales|
||4,761,127,411.98|1,030,168,914.20|3,640,782,146.34||
||21,956,483.35|12,506,554.04|29,345,618.25||
|Total|4,783,083,895.33|1,042,675,468.24|3,670,127,764.59||

 33. Business Taxes and Surcharges
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
||563,325,650.24||
||142,213,013.80||
||6,015,282.37||
||8,375,687.33||
||3,804,040.42||
||5,733,499.37||
|Total|729,467,173.53||

Notes: the measurement standards of business tax and surcharges see Notes V. Taxation
34. Sales Expenses
~ 129~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
||136,422,226.05||
||46,668,654.04||
||340,669,501.89||
||26,869,004.77||
||661,443,573.05||
||153,728,608.24||
||194,269,250.64||
||37,229,496.49||
|Total|1,597,300,315.17||

 35. Administration Expenses
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
||156,429,758.02||
||15,386,308.57||
||30,444,032.33||
||29,064,059.09||
||8,489,059.99||
||6,066,176.72||
||1,093,709.89||
||5,668,025.21||
||27,859,207.90||
|Total|280,500,337.72||

 36. Financial Expenses
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
||0.00||
||21,644,883.48||
||608,331.71||
||751,645.22||

~ 130~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
|Total|-20,284,906.55||

 37. Asset Impairment Loss
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
||-105,638.14||
||1,277,549.50||
|Total|1,171,911.36||

 38. Gain on Changes in Fair Value
||||
|-|-|-|
|Sources|Reporting Period|Same period of last year|
||236,707.77||
||0.00||
|Total|236,707.77||

 39. Investment Income
||||
|-|-|-|
|||Same Period of last|
|Item|Reporting Period||
|||year|
||1,271,471.00||
||50,743,630.89||
||10,999,123.54||
||5,760,794.52||
|Total|68,775,019.95||

 40. Asset Disposal Income
|||||||
|-|-|-|-|-|-|
|Item||Reporting Period||Same Period of|Amount recorded in the current non-recurring profit or loss|
|||||last year||
|||154,437.81|487,886.67|||
||Total|154,437.81|487,886.67|||

 41. Other Income
||||||
|-|-|-|-|-|
|Item|ReportingPeriod||Same|Amount recorded in the current non-recurringprofit or loss|
||||Period of||
||||last year||
||4,487,036.05|23,716,926.49|||

Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||||
|-|-|-|-|-|
|Item|ReportingPeriod||Same|Amount recorded in the current non-recurringprofit or loss|
||||Period of||
||||last year||
|Total|4,487,036.05|23,716,926.49|||

42. Non-operating Income
|||||
|-|-|-|-|
||||Amount recorded in the|
|||Same Period of last||
|Item|Reporting Period||current non-recurring|
|||year||
||||profit or loss|
||728,876.14|0.00||
||221,000.00|600,000.00||
||7,587,991.61|7,861,891.12||
||5,808,369.37|3,475,474.77||
||412,560.64|3,024,423.78||
|Total|14,758,797.76|14,961,789.67||

 43. Non-operating Expense
|||||
|-|-|-|-|
||||Amount recorded in the|
|Item|Reporting Period|Same Period of last year|current non-recurring profit|
||||or loss|
||4,303,286.91|1,193,100.98||
||134,726.13|995,921.03||
|Total|4,438,013.04|2,189,022.01||

 44. Income Tax Expense
(1) List of Income Tax Expense
||||
|-|-|-|
|Item|Reporting Period|Same Period of last year|
||452,080,424.72||
||-131,290,509.48||
|Total|320,789,915.24||

Gujinggong Liquor Aged Original Liquor Interim Report 2018 46. Cash Flow Statement
(1) Cash Generated from Other Operating Activities
||||
|-|-|-|
|Item|Reporting Period|Same Period of last year|
||52,007,634.47||
||615,100.00||
||21,644,883.48||
||460,000,000.00||
||43,953,555.36||
|Total|578,221,173.31||

 (2) Cash Used in Other Operating Activities
||||
|-|-|-|
|||Same Period of lastyear|
|Item|Reporting Period||
||526,682,839.55||
||45,000,000.00||
||49,502,450.93||
|Total|621,185,290.48||

 (3) Cash Generated from Other Investing Activities
||||
|-|-|-|
|Item|Reporting Period|Same Period of last year|
||0.00||
|Total|0.00||

 47. Supplemental Information for Cash Flow Statement
(1) Supplemental Information for Cash Flow Statement
||||
|-|-|-|
|Supplemental information|Reporting Period|Same period of last|
|||year|
||915,437,666.92||
||1,171,911.36||
||96,520,768.95||

~ 133~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|Supplemental information|Reporting Period|Same period of last|
|||year|
||168,913.08||
||8,489,059.99||
||10,844,242.64||
||154,437.81||
||3,574,410.77||
||-236,707.77||
||608,331.71||
||-68,775,019.95||
||-131,582,903.72||
||292,394.23||
||-77,733,707.57||
||-1,205,967,657.32||
||708,414,366.71||
||2,566,383.76||
||405,000,000.00||
||668,946,891.61||
||0.00||
||0.00||
||0.00||
||922,785,957.41||
||1,024,088,626.40||
||0.00||

~ 134~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|Supplemental information|Reporting Period|Same period of last|
|||year|
||0.00||
||-101,302,668.99||

 (2) Cash and Cash Equivalent
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
||922,785,957.41||
||364,726.59||
||921,933,834.69||
||487,396.13||
||0.00||
||0.00||
||922,785,957.41||

 (3) Non-cash Negotiability Amount of Trade Bills
|||
|-|-|
|Item|Reporting Period|

Negotiability amount of trade bills 409,809,334.11 Of which: payment for goods 409,809,334.11 48. Assets with Restricted Ownership or Use Right
||||
|-|-|-|
|Item|Ending carrying value|Restriction reason|
||45,000,000.00||
||99,930,600.00||
|Total|144,930,600.00|--|

VII. Changes of Consolidation Scope
There was no subsidiary newly set up during the Reporting Period.
VIII. Equity in Other Entities
1. Equity in Subsidiary
(1) Subsidiaries
||||||||
|-|-|-|-|-|-|-|
||Main|||Holding percentage|||
|||Registration|Nature of||||
|Name|operating|||(%)||Way of gaining|
|||place|business||||
||place|||Directly|Indirectly||

~ 135~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||||||
|-|-|-|-|-|-|-|
||Main|||Holding percentage|||
|||Registration|Nature of||||
|Name|operating|||(%)||Way of gaining|
|||place|business||||
||place|||Directly|Indirectly||
||Bozhou,Anhui|Bozhou, Anhui|Business trading|100.00|||
||Bozhou,Anhui|Bozhou, Anhui|Transportation|99.00|1.00||
||Bozhou,Anhui|Bozhou, Anhui|Production|100.00|||
||Bozhou,Anhui|Bozhou, Anhui|Waste cycled|100.00|||
||Hefei Anhui|Hefei Anhui|Ads marketing|100.00|||
||Bozhou,Anhui|Bozhou, Anhui|Technologyresearch|100.00|||
||Bozhou,Anhui|Bozhou, Anhui|Production|100.00|||
||Shanghai|Shanghai|Hotelmanagement|100.00|||
||Bozhou,Anhui|Bozhou, Anhui|Hotel operating|100.00|||
||Bozhou,Anhui|Bozhou, Anhui|SewageTreatment|100.00|||
||Hefei, Anhui|Hefei, Anhui|E-commerce|100.00|||
||Bozhou,Anhui|Bozhou, Anhui|Engineeringconstruction|100.00|||
||Bozhou,Anhui|Bozhou, Anhui|Food detection|100.00|||
||Wuhan, Hubei|Wuhan, Hubei|Production|51.00|||

~ 136~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||||||
|-|-|-|-|-|-|-|
||Main|||Holding percentage|||
|||Registration|Nature of||||
|Name|operating|||(%)||Way of gaining|
|||place|business||||
||place|||Directly|Indirectly||
||Xianning,Hubei|Xianning, Hubei|Production||51.00||
||Suizhou,Hubei|Suizhou, Hubei|Production||51.00||
||Wuhan, Hubei|Wuhan, Hubei|Commercialtrade||51.00||
||Xianning,Hubei|Xianning, Hubei|Commercialtrade||51.00||
||Wuhan, Hubei|Wuhan, Hubei|Ads marketing||51.00||
||Wuhan, Hubei|Wuhan, Hubei|Technologydevelopment||51.00||
||Wuhan, Hubei|Wuhan, Hubei|Commercialtrade||51.00||
||Suizhou,Hubei|Suizhou, Hubei|Business trading||51.00||
||Wuhan, Hubei|Wuhan, Hubei|Business trading||51.00||

~ 137~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 (2) Significant Not Wholly-owned Subsidiary
||||||
|-|-|-|-|-|
||Shareholdingproportion ofnon-controllinginterests|The profit or loss|Declaring dividends||
|||||Ending balance of|
|||attributable to|distributed to||
|Name||||non-controlling|
|||non-controlling|non-controlling||
|||||interests|
|||interests|interests||
||49.00|23,015,329.28|0.00||

(3) The Main Financial Information of Significant Not Wholly-owned Subsidiary
||||||||
|-|-|-|-|-|-|-|
||Ending balance||||||
|Name|Current assets|Non-current|||Non-currentliability||
||||Total assets|Current liabilities||Total liabilities|
|||assets|||||
||472,762,807.51|724,685,605.19|1,197,448,412.70|271,205,313.30|99,493,197.97||

(Continued 1)
||||||||
|-|-|-|-|-|-|-|
||Beginning balance||||||
|Name|||||||
|||||Currentliabilities|||
||Current assets|Non-current assets|Total assets||Non-current liability|Total liabilities|
||441,615,299.44|678,572,840.91|1,120,188,140.35|239,818,614.70|100,576,052.97||

(Continued 2)
||||||||||
|-|-|-|-|-|-|-|-|-|
||Reporting Period||||Same period of last year||||
|||Net profit||Cash flows|Operatingrevenue|||Cash flows|
||||Total||||Total||
|Name|Operating|||from||||from|
||||comprehensiv|||Net profit|comprehensiv||
||revenue|||operating||||operating|
||||e income||||e income||
|||||activities||||activities|
||429,495,365.21|46,956,428.75 4|6,956,428.75|73,102,943.91|347,068,706.22|42,796,425.53|42,796,425.53||

~ 138~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|Name|Reporting Period|Same period of last year|

IX. The Risk Related to Financial Instruments
The main financial instruments of the Company are equity investment, financial product, trust investment, accounts receivable and accounts payable, etc, the specific explanation of each financial instrument are in relevant item of Note VI. Risk related to these financial instruments and the risk management policies the Company adopted to reduce the risk is as follows: the management of the Company monitors and manages the risk exposure to ensure the aforesaid risk within the limit scope of control.
(I) Risk Management Objectives and Policies
The goals of the Company is to maintain a proper balance between the risk and the income, reduce the negative influence of risk to the operation performance of the Company to a minimum, and maximize profits of shareholders and other equity investors, basing on the risk management goal, the Company basis policies are to recognize and analyze each risk the Company faced, establish proper risk bottom line and conduct risk management, timely and reliably supervise each risk, control the risks within the limit scope .
1. Market Risk
(1) Foreign Exchange Risk
Foreign exchange risk is referred to the risk incurred due to loss of changes in exchange rate. Foreign exchange risk is referred to the risk of loss from the change of exchange rate. The main operation of the Company is within the territory of China, mainly settled by RMB, only small amount of export business and the influence of the proportion in the total income is rather small; the exchange rate risk is very little. (2) Interest Rate Risk- Cash Flow Change Risk
The operation capital of the Company is sufficient, there is no external borrowing in the Company; the interest rate risk is very little.
(3) Other Price Risk
What the Company held are classified as available-for-sale financial assets and trading financial assets measured at fair value on balance sheet date. Thus, the Company bares the risk change of securities market. The Company adopts variety of equity group to reduce the price risk in equity security investment.
2. Credit Risk
On 30 June 2018, the largest credit risk exposure what may lead to the financial losses was the other party of the contract failed to fulfill the obligations and causes loss of theCompany’s financial assets and financial guarantee, which including: carrying value of financial assets recognized in consolidated balance sheet; as for the financial instruments measured at fair value, the carrying value reflects its risk exposure, but not the
largest one, the largest risk exposure will change when the future fair value changes.
The Company only trade with the third party authorized with good credit and large scale. In line with the
~ 139~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 policies of the Company and the items of sale contracts, the Company gives priority to first payment shipment, only small amount of credit transactions and examines and verifies the credit of the client who trading with by credit way.
The Company's working capital was in bank with higher credit rating, so credit risk of working capital was low.
3. Liquidity Risk
When managing liquidity risk, the Company maintained themanagement’s believe that supervising the sufficient cash and cash equivalents to meet the operating demand of the Company and reduce the influence of the fluctuation of cash flow.
X. The Disclosure of Fair Value
1. Ending Fair Value of Assets and Liabilities at Fair Value
||||||||
|-|-|-|-|-|-|-|
|Item|||Ending fair value||||
|||Fair valuemeasurement items atlevel 1||Fair valuemeasurementitems at level 2|Fair value|Total|
||||||measurement||
||||||items at level||
||||||3||
|||1,057,659.73|||||
|||1,057,659.73|||||
|||1,057,659.73|||||
|||267,197,036.68|||||
|||267,197,036.68|||||
||Total assets consistently measured at fair value|267,197,036.68|||||

Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||||
|-|-|-|-|-|-|
|||||Proportion of||
||||||Proportion of voting|
|||||share held by||
||||||rights owned by the|
||Registration|||the Company as||
|Name||Nature of business|Registered capital||Company as the|
||place|||the parent||
||||||parent against the|
|||||against the||
||||||Company (%)|
|||||Company (%)||
||Anhui|Beverage,Construction materials,and plasticproductionsmanufacture|1,000,000,000.00|53.89||

Notes: The finial controller of the Company wasPeople’s Government of Bozhou, Anhui
2. Subsidiaries of the Company
Refer to Note VIII-1. Equity in Subsidiaries.
3. Information on Other Connected Parties
|||
|-|-|
|Name|Relationship|

Anhui Ruifuxiang Food Co., Ltd Affiliated enterprise of controlling shareholder and actual controller Anhui Ruijing Restaurant Management Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller Anhui Haochidian Catering Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller Shanghai Ruiyao Hotel Management Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller Shanghai Beihai Restaurant Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller Anhui Ruijing Trade Travel (Group) Co., Ltd Affiliated enterprise of controlling shareholder and actual controller Bozhou Hotel Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller Anhui Gujing Real Estates Group Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller East Ruijing Enterprise Investment Development Co.,
Affiliated enterprise of controlling shareholder and actual controller Ltd
Anhui Hengxin Pawn Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller Bozhou Ruineng Thermoelectricity Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller Holiday Inn Hefei Affiliated enterprise of controlling shareholder and actual controller Bozhou Rufuxiang High-protein Feed Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller Anhui Gujing Hotel Development Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller
Anhui Ruixin Pawn Co., Ltd Affiliated enterprise of controlling shareholder and actual controller
~ 141~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||
|-|-|
|Name|Relationship|

Anhui Zhongxin Financial Leasing Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller Anhui Huixin Finance Investment Group Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller Hefei Longxin Financial Management Consulting Co.,
Affiliated enterprise of controlling shareholder and actual controller Ltd.
Bozhou Anxin Microcredit Co., Ltd Affiliated enterprise of controlling shareholder and actual controller Large Central Plain Wine Valley Culture Tourism Affiliated enterprise of controlling shareholder and actual controller Development Co., Ltd.
Anhui Xinyuan Government Landscape Engineering Co., Affiliated enterprise of controlling shareholder and actual controller Ltd.
Bozhou Gujing Hotel Co., Ltd Affiliated enterprise of controlling shareholder and actual controller Anhui Youxin Financing Guarantee Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller Anhui Aoxin Real Estate Development Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller Anhui Lixin E-Commerce Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller Anhui Xinxin Property Management Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller Bozhou Huisheng Building Catering Company Affiliated enterprise of controlling shareholder and actual controller Bozhou Gujing Junlai Hotel Management Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller Bozhou Gujing Real Estates Management Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller Bozhou Gujing Real Estates Development Co., Ltd. Affiliated enterprise of controlling shareholder and actual controller Anhui Gujing International Travel Co., Ltd.
Affiliated enterprise of controlling shareholder and actual controller Anhui Jinzhai Gujing Real Estate Development Co., Ltd.
Affiliated enterprise of controlling shareholder and actual controller Anhui Shenglong Trading Co., Ltd.
Affiliated enterprise of controlling shareholder and actual controller Anhui Zhonggu Tourism Development Co., Ltd.
Affiliated enterprise of controlling shareholder and actual controller Anhui Gujing Health Industry Co., Ltd.
Affiliated enterprise of controlling shareholder and actual controller 4. List of Connected Transactions
(1) Information on Acquisition of Goods and Reception of Labor Service (Unit:RMB’0,000)
①Information on Acquisition of Goods and Reception of Labor Service
|||||
|-|-|-|-|
||||Same period of last|
|Connected party|Content|Reporting Period||
||||year|

~ 142~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||
|-|-|-|-|
||||Same period of last|
|Connected party|Content|Reporting Period||
||||year|
||Purchase of raw material|0.00||
||Accepting food andaccommodation services|1,859,506.20||
||Accepting catering services|23,043.00||
||Afforestation fees|482,050.39||
||Purchase of goods|132,717.52||
||Accepting food andaccommodation services|41,549.36||
||Accepting labor service|156.04||
||Purchase of materials|0.00||
||Accepting food andaccommodation services|259,021.00||
||Accepting food andaccommodation services|4,819.00||
||Accepting food andaccommodation services|1,349,445.00||
||Accepting food andaccommodation services|30,300.00||
||Accepting labor service|38,228.00||
||Purchase of commercialresidential buildings|0.00||
||Accepting labor service|134,803.75||
|Total|--|4,355,639.26||

②Information of Sales of Goods and Provision of Labor Service
|||||
|-|-|-|-|
||||Same period of last|
|Connected party|Content|Reporting Period||
||||year|
||Sales of white spirit|3,683.59||

~ 143~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||
|-|-|-|-|
||||Same period of last|
|Connected party|Content|Reporting Period||
||||year|
||Sales of small sized materials|19,624.03||
||Providing labor service|0.00||
||Providing catering andaccommodation services|124,239.79||
||Sales of white spirit|34,082.23||
||Sales of white spirit|47,383.29||
||Sales of white spirit|5,718,162.07||
||Providing catering andaccommodation services|12,388.57||
||Sales of materials|356.00||
||Sales of white spirit|331,900.64||
||S a les of white spirit|1,236,821.89||
||Sales of white spirit|73,937.00||
||Sales of white spirit|531,449.33||
||Providing labor service|6,756.76||
||Sales of white spirit|11,475.45||
||Providing catering andaccommodation services|0.00||
||Sales of white spirit|145,564.41||
||Providing labor service|252,252.25||
||Sales of white spirit|18,051.34||
||Sales of white spirit|7,553.44||
||Sales of white spirit|64,181.89||
||Sales of white spirit|9,755.53||
||Sales of white spirit|23,587.69||
||Sales of white spirit|4,374.98||
||Sales of white spirit|7,026.79||

~ 144~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||
|-|-|-|-|
||||Same period of last|
|Connected party|Content|Reporting Period||
||||year|
||Sales of white spirit|7,399.60||
||Sales of white spirit|9,363.27||
||Sales of white spirit|9,270.55||
||Sales of white spirit|39,987.82||
||Providing labor service|15,057.68||
||Utilities|39,974.95||
||Providing catering andaccommodation services|10,818.00||
||Sales of small sizedmaterials|2,516.56||
||Sales of white spirit|1,135,798.58||
||Sales of white spirit|25,571.62||
||Providing catering andaccommodation services|6,900.00||
||Sales of white spirit|247,600.01||
||Sales of small sizedmaterials|8,100.01||
||Providing catering andaccommodation services|46,824.00||
||Sales of small sized materials|470.95||
||Providing labor service|0.00||
||Sales of white spirit|1,510.68||
||Sales of small sized materials|120.85||

~ 145~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||
|-|-|-|-|
||||Same period of last|
|Connected party|Content|Reporting Period||
||||year|
||Providing catering andaccommodation services|13,125.00||
||Sales of small sized materials|10,061.26||
||Sales of white spirit|3,103.45||
||Sales of white spirit|95,255.39||
||Providing catering andaccommodation services|56,825.49||
|Total|--|10,470,264.68||

 (2) Information on Connected Lease
The Company serves as the leasee
|||||
|-|-|-|-|
||||The lease income confirmed|
|||The lease income confirmed||
|Name of lessor|Category of leased assets|||
|||in the Reporting Period|in the same period of last year|
||Houses and buildings|1,095,238.10||

 The Company serves as the lessor
|||||
|-|-|-|-|
||||The lease income|
|||The lease income confirmed||
|Name of lessee|Category of leased assets||confirmed in the same|
|||in the Reporting Period||
||||period of last year|
||Houses and buildings|246,190.48||

 5. Accounts Receivable and Payable of Connected Party
(1) Accounts Receivable
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
||5,257.31||
||0.00||
||0.00||
||14,000.00||
|Total|19,257.31||

~ 146~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
||25,342.50||
||19,450.00||
|Total|44,792.50||

 (2) Accounts Payable
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
||0.00||
||1,372,380.00||
||75,936.30||
||49,890.32||
|Total|1,498,206.62||
||0.00||
||0.00||
||2,742.45||
|Total|2,742.45||

 XII. Commitments and Contingency
1. Significant Commitments
Operating Lease Commitments
As of the balance sheet date, the irrevocable operating lease contracts the Company signed were listed as follows:
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
||2,300,000.00||
||2,300,000.00||
||2,300,000.00||

~ 147~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
||20,508,333.33||
|Total|27,408,333.33||

 2. Contingency
(1) Due to the infringement behaviors on theCompany’s trademark in the market, the Company filed lawsuits against such infringement acts. Since the individual and overall amount of action was relatively small, the contingency is expected to have no significant impacts on the Company.
(2) There was no other contingency of the Company other than the above-mentioned event.
XIII. Events after the Balance Sheet Date
As of 30 June 2018, there was no significant event of the Company after the balance sheet date.
XIV. Other Significant Events
Segment Information
There was no segment information based on operating segments to disclose, since the Companydidn’t determine operating segments in accordance with internal organizational structure, management requirements and internal report systems.
XV. Notes of Main Items in the Financial Statements of the Company
1. Accounts Receivable
(1) Accounts Receivable Disclosed by Category
|||||||
|-|-|-|-|-|-|
||Ending balance|||||
||Carrying amount||Bad debt provision|||
|Category||||||
|||||Withdrawal||
|||Proportion|||Carrying value|
||Amount||Amount|proportion||
|||(%)||||
|||||(%)||
||0.00|0.00|0.00|0.00||
||8,343,188.95|100.00|728,892.87|8.74||
||0.00|0.00|0.00|0.00||
|Total|8,343,188.95|100.00|728,892.87|8.74||

(Continued)
~ 148~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||||
|-|-|-|-|-|-|
||Beginning balance|||||
||Carrying amount||Bad debt provision|||
|Category||||||
|||Proportion(%)||Withdrawal||
||||||Carrying value|
||Amount||Amount|proportion||
|||||(%)||
||0.00|0.00|0.00|0.00||
||9,168,249.97|100.00|658,331.94|7.18||
||0.00|0.00|0.00|0.00||
|Total|9,168,249.97|100.00|658,331.94|7.18||

①In the groups, accounts receivable adopted aging analysis method to withdraw bad debt provision
|||||
|-|-|-|-|
||Ending balance|||
|Aging||||
||Accounts receivable|Bad debt provision|Withdrawal proportion (%)|
||0.00|0.00||
||0.00|0.00||
||0.00|0.00||
||0.00|0.00||
||0.00|0.00||
||728,892.87|728,892.87||
|Total|728,892.87|728,892.87||

②In the groups, accounts receivable adopted other methods to withdraw bad debt provision
|||||||
|-|-|-|-|-|-|
|Name of the group|||Ending balance|||
||||Accounts receivable|Bad debt provision|Withdrawal proportion (%)|
|||7,614,296.08||0.00||
||Total|7,614,296.08||0.00||

(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
~ 149~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 The amount of bad debt provision withdrawn during the Reporting Period was RMB70,560.93.
(3) Particulars of Accounts Receivable with Actual Verification during the Reporting Period
No such cases in the Reporting Period.
(4) Top 5 Accounts Receivable in Ending Balance Collected according to the Arrears Party
Total amount of the Top 5 accounts receivable in ending balance collected according to the arrears party was RMB7,413,311.01, accounting for88.85% of the total ending balance of accounts receivable, and the total of ending balance of bad debt provision withdrawn was RMB0.00.
2. Other Accounts Receivable
(1) Other Accounts Receivable Disclosed by Category
|||||||
|-|-|-|-|-|-|
||Ending balance|||||
||Carrying amount||Bad debt provision|||
|||||Withdrawa||
|Category||||||
||||||Carrying value|
|||Proporti||l||
||Amount||Amount|||
|||on (%)||proportion||
|||||(%)||
||40,850,949.35|28.08|40,850,949.35|100.00||
||104,616,570.41|71.92|768,478.79|0.73||
||0.00|0.00|0.00|0.00||
|Total|145,467,519.76|100.00|41,619,428.14|28.61||

 (Continued)
|||||||
|-|-|-|-|-|-|
||Beginning balance|||||
||Carrying amount||Bad debt provision|||
|Category||||||
|||||Withdrawal||
||||||Carrying value|
|||Proportio||||
||Amount||Amount|proportion||
|||n (%)||||
|||||(%)||
||40,850,949.35|23.76|40,850,949.35|100.00||
||131,103,824.99|76.24|746,046.24|0.57||

~ 150~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||||
|-|-|-|-|-|-|
||Beginning balance|||||
||Carrying amount||Bad debt provision|||
|Category||||||
|||||Withdrawal||
||||||Carrying value|
|||Proportio||||
||Amount||Amount|proportion||
|||n (%)||||
|||||(%)||
||0.00|0.00|0.00|0.00||
|Total|171,954,774.34|100.00|41,596,995.59|24.19||

①Other receivable with single significant amount for which bad debt provision separately accrued at the end of the period
||||||
|-|-|-|-|-|
||Ending balance||||
|Other accounts receivable (unit)|Other accounts|Bad debt|Withdrawal proportion|Withdrawal reason|
||receivable|provision|(%)||
||29,010,449.35|29,010,449.35|100.00||
||11,840,500.00|11,840,500.00|100.00||
|Total|40,850,949.35|40,850,949.35|||

②In the groups, other accounts receivable adopted aging analysis method to withdraw bad debt provision
|||||
|-|-|-|-|
||Ending balance|||
|Aging||||
||Other accounts receivable|Bad debt provision|Withdrawal proportion (%)|
||2,593,577.25|32,291.80||
||2,434,676.49|24,346.76||
||158,900.76|7,945.04||
||465,288.96|46,528.90||
||0.00|0.00||
||689,658.09|689,658.09||
|Total|3,748,524.30|768,478.79||

③In the groups, other accounts receivable adopted other methods to withdraw bad debt provision
~ 151~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||||||
|-|-|-|-|-|-|-|
|Name of the group|||Ending balance||||
||||Other accounts receivable||Bad debt provision|Withdrawal proportion (%)|
|||100,868,046.11||0.00|||
||Total|100,868,046.11||0.00|||

 (2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
The amount of bad debt provision withdrawn during the Reporting Period was RMB22,432.55.
(3) Particulars about Other Accounts Receivable with Actual Verification during the Reporting Period No such cases in the Reporting Period.
(4) Other Accounts Receivable Classified by Account Nature
||||
|-|-|-|
|Nature|Ending carrying amount|Beginning carrying amount|
||100,868,046.11||
||40,850,949.35||
||1,658,139.09||
||115,000.00||
||505,321.35||
||1,470,063.86||
|Total|145,467,519.76||

 (5) Top 5 Other Accounts Receivable in Ending Balance Collected according to the Arrears Party
||||||||
|-|-|-|-|-|-|-|
|Name of|||||Proportion to total||
|||||||Ending balance|
||||||ending balance of||
|the|Relationship|Nature|Ending balance|Aging||of bad debt|
||||||other accounts||
|entity||||||provision|
||||||receivable (%)||
||The Company’ssubsidiary|Intercourse fundsbetween entitieswithin combinationscope|94,808,659.13|Within 6 months|65.18||
||Non-connected party|Securitiesinvestment|29,010,449.35|Over 3 years|19.94||

~ 152~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||||||
|-|-|-|-|-|-|-|
|Name of|||||Proportion to total||
|||||||Ending balance|
||||||ending balance of||
|the|Relationship|Nature|Ending balance|Aging||of bad debt|
||||||other accounts||
|entity||||||provision|
||||||receivable (%)||
||Non-connected party|Securitiesinvestment|11,840,500.00|Over 3 years|8.14||
||The Company’ssubsidiary|Intercourse fundsbetween entitieswithin combinationscope|6,059,386.98|Within 1 year|4.17||
||Non-connected party|Margin &cashpledge|500,000.00|Within 6 months|0.34||
|Total|--|--|142,218,995.46||97.77||

 3. Long-term Equity Investment
(1) Category of Long-term Equity Investment
||||||||||
|-|-|-|-|-|-|-|-|-|
|Item||Ending balance|||Beginning balance||||
|||Carrying amount|Depreciationreserve|Carrying value|Carrying amount||Depre|Carrying value|
||||||||ciation||
||||||||reserv||
||||||||e||
|||1,155,089,408.32|0.00|1,155,089,408.32|1,155,089,408.32|0.00|||
||Total|1,155,089,408.32|0.00|1,155,089,408.32|1,155,089,408.32|0.00|||

 (2) Investment to Subsidiaries
||||||||
|-|-|-|-|-|-|-|
|Investee|Beginning balance|Increase|Decrease|Ending balance|Depreciation reservewithdrawn|Ending|
|||||||balance of|
|||||||depreciation|
|||||||reserve|
||68,949,286.89|0.00|0.00|68,949,286.89|0.00||
||85,267,453.06|0.00|0.00|85,267,453.06|0.00||
||49,906,854.63|0.00|0.00|49,906,854.63|0.00||

Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||||||
|-|-|-|-|-|-|-|
|Investee|Beginning balance|Increase|Decrease|Ending balance|Depreciation reservewithdrawn|Ending|
|||||||balance of|
|||||||depreciation|
|||||||reserve|
||648,646.80|0.00|0.00|648,646.80|0.00||
||6,875,743.00|0.00|0.00|6,875,743.00|0.00||
||40,000,000.00|0.00|0.00|40,000,000.00|0.00||
||30,000,000.00|0.00|0.00|30,000,000.00|0.00||
||16,000,000.00|0.00|0.00|16,000,000.00|0.00||
||5,000,000.00|0.00|0.00|5,000,000.00|0.00||
||10,000,000.00|0.00|0.00|10,000,000.00|0.00||
||816,000,000.00|0.00|0.00|816,000,000.00|0.00||

Gujinggong Liquor Aged Original Liquor Interim Report 2018
|||||||||
|-|-|-|-|-|-|-|-|
|Investee||Beginning balance|Increase|Decrease|Ending balance|Depreciation reservewithdrawn|Ending|
||||||||balance of|
||||||||depreciation|
||||||||reserve|
|||15,000,000.00|0.00|0.00|15,000,000.00|0.00||
|||1,441,423.94|0.00|0.00|1,441,423.94|0.00||
|||10,000,000.00|0.00|0.00|10,000,000.00|0.00||
||Total|1,155,089,408.32|0.00|0.00|1,155,089,408.32|0.00||

 4. Operating Revenue and Cost of Sales
||||||
|-|-|-|-|-|
||Reporting Period||Same period of last year||
|Item|||||
||Operating revenue|Cost of sales|Operating revenue|Cost of sales|
||2,331,145,973.42|930,097,754.58|1,996,798,133.21||
||42,363,746.54|32,348,972.74|35,252,699.27||
|Total|2,373,509,719.96|962,446,727.32|2,032,050,832.48||

 5. Investment Income
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
||0.00||
||1,271,471.00||
||49,031,673.79||
||10,999,123.54||

Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|Item|Reporting Period|Same period of last year|
|Total|61,302,268.33||

 XVI. Supplementary Materials
1. Items and Amounts of Non-recurring Profit or Loss
||||
|-|-|-|
|Item|Amount|Explanation|
||-3,419,972.96||
||0.00||
||4,708,036.05||
||0.00||
||0.00||
||0.00||
||0.00||
||0.00||
||0.00||
||0.00||
||0.00||
||0.00||
||0.00||
||12,507,302.31||
||0.00||
||0.00||

~ 156~
Gujinggong Liquor Aged Original Liquor Interim Report 2018
||||
|-|-|-|
|Item|Amount|Explanation|
||0.00||
||0.00||
||0.00||
||13,674,195.49||
||0.00||
|Subtotal|27,469,560.89||
||6,827,920.31||
||567,777.06||
|Total|20,073,863.52||

Notes: the number“+” among the non-current gains and losses items refers to profits and revenues, while “-”referred to losses or expenditure.
The recognition of the non-current gains and losses items was executed according to the regulations of No.1 of the Information Disclosure Explanatory Notice of the Companies Public Offering Securities-Non-current Gains and losses (Z-J-H-Announcement[2008] No. 43) .
2. Return on Equity and Earnings Per Share
|||||
|-|-|-|-|
|||EPS (Yuan/share)||
|Profit as of Reporting Period|Weighted average ROE (%)|||
|||EPS-basic|EPS-diluted|
||13.94|1.77||
||13.63|1.73||

~ 157~
Gujinggong Liquor Aged Original Liquor Interim Report 2018 Part XI Documents Available for Reference
(I) Financial statements signed and sealed by theCompany’s legal representative, theCompany’s Chief Accountant and the head of theCompany’s financial department (equivalent to financial manager); and
(II) All originals of theCompany’s documents and announcements that have been publicly disclosed in the Reporting Period on the media designated by the China Securities Regulatory Commission.
Chairman of the Board: (Liang Jinhui)
Anhui Gujing Distillery Company Limited
27 August 2018
~ 158~