ANHUI GUJING DISTILLERY COMPANY LIMITED SEMI-ANNUAL FINANCIAL REPORT 2023 August 2023Semi annual financial report 2023 I Independent Auditor’s Report Are these interim financial statements audited by an independent auditor □ Yes □ No These interim financial statements have not been audited by an independent auditor.II Financial Statements Currency unit for the financial statements and the notes thereto: RMB 1. Consolidated Balance Sheet Prepared by Anhui Gujing Distillery Company Limited 30 June 2023 Unit: RMB Item 30 June 2023 1 January 2023 Current assets: Monetary assets 16852310217.36 13772561141.30 Settlement reserve Interbank loans granted Held-for-trading financial assets 1790678478.17 1782687769.66 Derivative financial assets Notes receivable Accounts receivable 101188559.18 62688668.94 Accounts receivable financing 835279520.98 217419441.32 Prepayments 98003390.46 233995661.69 Premiums receivable Reinsurance receivables Receivable reinsurance contract reserve Other receivables 65401034.51 73337415.74 Including: Interest receivable Dividends receivable Financial assets purchased under resale agreements Inventories 6175047719.12 6058106090.88 Contract assets 546215.81 1855188.15 Assets held for sale Current portion of non-current assets Other current assets 106351403.36 125568725.51 Total current assets 26024806538.95 22328220103.19 Non-current assets: ~ 2 ~Semi annual financial report 2023 Loans and advances to customers Investments in debt obligations Investments in other debt obligations Long-term receivables Long-term equity investments 10200382.24 10154235.98 Investments in other equity 60753939.2856447789.94 instruments Other non-current financial assets Investment property 48535817.21 13396881.96 Fixed assets 2917327570.54 2741844586.30 Construction in progress 3007948340.56 2454703251.44 Productive living assets Oil and gas assets Right-of-use assets 25290923.22 32562171.10 Intangible assets 1118011558.93 1108125157.05 Development costs Goodwill 561364385.01 561364385.01 Long-term prepaid expense 45675216.78 51012977.31 Deferred income tax assets 559368861.45 425120227.37 Other non-current assets 5834000.00 6870532.00 Total non-current assets 8360310995.22 7461602195.46 Total assets 34385117534.17 29789822298.65 Current liabilities: Short-term borrowings 0.00 83232176.31 Borrowings from the central bank Interbank loans obtained Held-for-trading financial liabilities Derivative financial liabilities Notes payable 212480000.00 695740000.00 Accounts payable 1856969204.46 2054063559.15 Advances from customers Contract liabilities 3025229971.79 826636478.35 Financial assets sold under repurchase agreements Customer deposits and interbank deposits Payables for acting trading of securities Payables for underwriting of securities Employee benefits payable 876644424.31 795138305.63 Taxes payable 1032068219.10 1205028130.02 ~ 3 ~Semi annual financial report 2023 Other payables 4527536360.10 3261763838.80 Including: Interest payable Dividends payable 1585800000.00 0.00 Handling charges and commissions payable Reinsurance payables Liabilities directly associated with assets held for sale Current portion of non-current 9907322.5442237345.11 liabilities Other current liabilities 1667679631.26 1044664441.58 Total current liabilities 13208515133.56 10008504274.95 Non-current liabilities: Insurance contract reserve Long-term borrowings 179053388.89 44944737.91 Bonds payable Including: Preferred shares Perpetual bonds Lease liabilities 13441957.10 18631395.93 Long-term payables Long-term employee benefits payable Provisions Deferred income 100910143.95 103714978.95 Deferred income tax liabilities 293098621.11 281173154.70 Other non-current liabilities Total non-current liabilities 586504111.05 448464267.49 Total liabilities 13795019244.61 10456968542.44 Owners’ equity: Share capital 528600000.00 528600000.00 Other equity instruments Including: Preferred shares Perpetual bonds Capital reserves 6224747667.10 6224747667.10 Less: Treasury stock Other comprehensive income 658883.79 408739.61 Specific reserve Surplus reserves 269402260.27 269402260.27 General reserve Retained earnings 12691273674.05 11497599306.54 Total equity attributable to owners of the 19714682485.2118520757973.52 Company as the parent Non-controlling interests 875415804.35 812095782.69 ~ 4 ~Semi annual financial report 2023 Total owners’ equity 20590098289.56 19332853756.21 Total liabilities and owners’ equity 34385117534.17 29789822298.65 Legal representative: Liang Jinhui The Company’s chief accountant: Zhu Jiafeng Head of the Company’s financial department: Zhu Jiafeng 2. Balance Sheet of the Company as the Parent Unit: RMB Item 30 June 2023 1 January 2023 Current assets: Monetary assets 8314231562.07 7338284192.52 Held-for-trading financial assets 1790678478.17 1267195966.38 Derivative financial assets Notes receivable Accounts receivable Accounts receivable financing 763560940.83 233465242.96 Prepayments 50463721.87 39599180.34 Other receivables 315299233.76 202279154.63 Including: Interest receivable Dividends receivable Inventories 4757417302.70 4670562760.80 Contract assets Assets held for sale Current portion of non-current assets Other current assets 49404468.34 63929024.28 Total current assets 16041055707.74 13815315521.91 Non-current assets: Investments in debt obligations Investments in other debt obligations Long-term receivables Long-term equity investments 1602792715.28 1586749613.68 Investments in other equity instruments Other non-current financial assets Investment property 48535817.21 13396881.96 Fixed assets 1823715954.46 1715114776.31 Construction in progress 2369477803.71 1597185086.35 Productive living assets Oil and gas assets ~ 5 ~Semi annual financial report 2023 Right-of-use assets 24512082.87 31004490.39 Intangible assets 495965895.33 483601950.48 Development costs Goodwill Long-term prepaid expense 13739526.29 22817228.71 Deferred income tax assets 36402716.22 28512224.61 Other non-current assets Total non-current assets 6415142511.37 5478382252.49 Total assets 22456198219.11 19293697774.40 Current liabilities: Short-term borrowings Held-for-trading financial liabilities Derivative financial liabilities Notes payable Accounts payable 978174656.49 950887301.03 Advances from customers Contract liabilities 1499003266.18 3432162.83 Employee benefits payable 345823740.08 276482563.00 Taxes payable 528967559.45 548241724.13 Other payables 2312285403.33 726494649.90 Including: Interest payable Dividends payable 1585800000.00 0.00 Liabilities directly associated with assets held for sale Current portion of non-current 9082789.9510574121.12 liabilities Other current liabilities 202536122.23 16403036.11 Total current liabilities 5875873537.71 2532515558.12 Non-current liabilities: Long-term borrowings Bonds payable Including: Preferred shares Perpetual bonds Lease liabilities 13441957.10 18631395.93 Long-term payables Long-term employee benefits payable Provisions Deferred income 37839957.48 38926909.02 Deferred income tax liabilities 52487213.61 43726162.12 Other non-current liabilities Total non-current liabilities 103769128.19 101284467.07 ~ 6 ~Semi annual financial report 2023 Total liabilities 5979642665.90 2633800025.19 Owners’ equity: Share capital 528600000.00 528600000.00 Other equity instruments Including: Preferred shares Perpetual bonds Capital reserves 6176504182.20 6176504182.20 Less: Treasury stock Other comprehensive income -1662634.78 -529354.77 Specific reserve Surplus reserves 264300000.00 264300000.00 Retained earnings 9508814005.79 9691022921.78 Total owners’ equity 16476555553.21 16659897749.21 Total liabilities and owners’ equity 22456198219.11 19293697774.40 3. Consolidated Income Statement Unit: RMB Item H1 2023 H1 2022 1. Revenue 11310016495.10 9002005923.42 Including: Operating revenue 11310016495.10 9002005923.42 Interest income Insurance premium income Handling charge and commission income 2. Costs and expenses 7533156217.79 6352382128.23 Including: Cost of sales 2388610838.28 2023003861.36 Interest expense Handling charge and commission expense Surrenders Net insurance claims paid Net amount provided as insurance contract reserve Expenditure on policy dividends Reinsurance premium expense Taxes and surcharges 1605442141.06 1276738897.80 Selling expense 3048015143.61 2595105420.46 Administrative expense 583974559.37 559320542.66 R&D expense 29964175.22 27837365.94 ~ 7 ~Semi annual financial report 2023 Finance costs -122850639.75 -129623959.99 Including: Interest 771499.922498008.94 expense Interest 122996635.75131378962.32 income Add: Other income 27104577.88 26209081.15 Return on investment (“-” for loss) -27346113.37 -17449121.42 Including: Share of profit or loss 46146.26144074.52 of joint ventures and associates Income from the derecognition of financial assets at amortized cost (“-” for loss) Exchange gain (“-” for loss) Net gain on exposure hedges (“-” for loss) Gain on changes in fair value (“-” 25168981.30318569.02 for loss) Credit impairment loss (“-” for 84454.20-1258781.36 loss) Asset impairment loss (“-” for -17556673.874343131.74 loss) Asset disposal income (“-” for 203366.67191652.74 loss) 3. Operating profit (“-” for loss) 3784518870.12 2661978327.06 Add: Non-operating income 44676493.06 24988936.35 Less: Non-operating expense 20358442.79 8351463.17 4. Profit before tax (“-” for loss) 3808836920.39 2678615800.24 Less: Income tax expense 964656318.72 706053183.61 5. Net profit (“-” for net loss) 2844180601.67 1972562616.63 5.1 By operating continuity 5.1.1 Net profit from continuing 2844180601.671972562616.63 operations (“-” for net loss) 5.1.2 Net profit from discontinued operations (“-” for net loss) 5.2 By ownership 5.2.1 Net profit attributable to shareholders of the Company as the 2779474367.51 1918821503.75 parent (“-” for net loss) 5.2.1 Net profit attributable to 64706234.1653741112.88 non-controlling interests (“-” for net loss) 6. Other comprehensive income net of 1494571.292228819.05 tax ~ 8 ~Semi annual financial report 2023 Attributable to owners of the 250144.181836134.17 Company as the parent 6.1 Items that will not be 1937767.20911837.54 reclassified to profit or loss 6.1.1 Changes caused by remeasurements on defined benefit schemes 6.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method 6.1.3 Changes in the fair value of 1937767.20911837.54 investments in other equity instruments 6.1.4 Changes in the fair value arising from changes in own credit risk 6.1.5 Other 6.2 Items that will be reclassified to -1687623.02924296.63 profit or loss 6.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method 6.2.2 Changes in the fair value of investments in other debt obligations 6.2.3 Other comprehensive income arising from the reclassification -1687623.02 924296.63 of financial assets 6.2.4 Credit impairment allowance for investments in other debt obligations 6.2.5 Reserve for cash flow hedges 6.2.6 Differences arising from the translation of foreign currency-denominated financial statements 6.2.7 Other Attributable to non-controlling 1244427.11392684.88 interests 7. Total comprehensive income 2845675172.96 1974791435.68 Attributable to owners of the 2779724511.691920657637.92 Company as the parent Attributable to non-controlling 65950661.2754133797.76 interests 8. Earnings per share ~ 9 ~Semi annual financial report 2023 8.1 Basic earnings per share 5.26 3.63 8.2 Diluted earnings per share 5.26 3.63 Legal representative: Liang Jinhui The Company’s chief accountant: Zhu Jiafeng Head of the Company’s financial department: Zhu Jiafeng 4. Income Statement of the Company as the Parent Unit: RMB Item H1 2023 H1 2022 1. Operating revenue 5688977006.98 4472856893.79 Less: Cost of sales 2033053131.03 1613199963.51 Taxes and surcharges 1375276190.77 1082081569.06 Selling expense 18124000.75 29981877.64 Administrative expense 390026657.42 371905439.74 R&D expense 11525750.69 11378186.74 Finance costs -90964543.78 -75657865.69 Including: Interest expense 637086.51 847873.69 Interest income 91541910.22 76111832.12 Add: Other income 1828952.83 4509784.26 Return on investment (“-” for loss) -18401784.46 -17430120.00 Including: Share of profit or loss 43101.600.00 of joint ventures and associates Income from the derecognition of financial assets at amortized cost (“-” for loss) Net gain on exposure hedges (“-” for loss) Gain on changes in fair value (“-” 25168981.30318569.02 for loss) Credit impairment loss (“-” for 148348.99-165730.36 loss) Asset impairment loss (“-” for -17141448.761913585.91 loss) Asset disposal income (“-” for 14302.240.00 loss) 2. Operating profit (“-” for loss) 1943553172.24 1429113811.62 Add: Non-operating income 15599716.85 18141888.35 Less: Non-operating expense 17213516.15 5121167.93 3. Profit before tax (“-” for loss) 1941939372.94 1442134532.04 Less: Income tax expense 538348288.93 358374033.46 4. Net profit (“-” for net loss) 1403591084.01 1083760498.58 ~ 10 ~Semi annual financial report 2023 4.1 Net profit from continuing 1403591084.011083760498.58 operations (“-” for net loss) 4.2 Net profit from discontinued operations (“-” for net loss) 5. Other comprehensive income net of -1133280.01109851.14 tax 5.1 Items that will not be reclassified to profit or loss 5.1.1 Changes caused by remeasurements on defined benefit schemes 5.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method 5.1.3 Changes in the fair value of investments in other equity instruments 5.1.4 Changes in the fair value arising from changes in own credit risk 5.1.5 Other 5.2 Items that will be reclassified to -1133280.01109851.14 profit or loss 5.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method 5.2.2 Changes in the fair value of investments in other debt obligations 5.2.3 Other comprehensive income arising from the reclassification of -1133280.01 109851.14 financial assets 5.2.4 Credit impairment allowance for investments in other debt obligations 5.2.5 Reserve for cash flow hedges 5.2.6 Differences arising from the translation of foreign currency-denominated financial statements 5.2.7 Other 6. Total comprehensive income 1402457804.00 1083870349.72 7. Earnings per share 7.1 Basic earnings per share 2.66 2.05 7.2 Diluted earnings per share 2.66 2.05 ~ 11 ~Semi annual financial report 2023 5. Consolidated Cash Flow Statement Unit: RMB Item H1 2023 H1 2022 1. Cash flows from operating activities: Proceeds from sale of commodities 12967342850.8110536436947.68 and rendering of services Net increase in customer deposits and interbank deposits Net increase in borrowings from the central bank Net increase in loans from other financial institutions Premiums received on original insurance contracts Net proceeds from reinsurance Net increase in deposits and investments of policy holders Interest handling charges and commissions received Net increase in interbank loans obtained Net increase in proceeds from repurchase transactions Net proceeds from acting trading of securities Tax rebates 1875811.35 3593014.59 Cash generated from other operating 1056647876.21416874433.62 activities Subtotal of cash generated from 14025866538.3710956904395.89 operating activities Payments for commodities and 2160026046.331429207252.95 services Net increase in loans and advances to customers Net increase in deposits in the central bank and in interbank loans granted Payments for claims on original insurance contracts Net increase in interbank loans granted Interest handling charges and commissions paid Policy dividends paid ~ 12 ~Semi annual financial report 2023 Cash paid to and for employees 1885616624.31 1636020699.63 Taxes paid 3995204357.05 2928271586.95 Cash used in other operating activities 1257182813.95 772158056.57 Subtotal of cash used in operating 9298029841.646765657596.10 activities Net cash generated from/used in 4727836696.734191246799.79 operating activities 2. Cash flows from investing activities: Proceeds from disinvestment 760098239.02 4587477639.71 Return on investment 1221108.96 1067121.16 Net proceeds from the disposal of fixed assets intangible assets and other 276793.00 1244063.80 long-lived assets Net proceeds from the disposal of subsidiaries and other business units Cash generated from other investing activities Subtotal of cash generated from 761596140.984589788824.67 investing activities Payments for the acquisition of fixed assets intangible assets and other 1027930984.35 714217547.21 long-lived assets Payments for investments 720000000.00 1464575094.67 Net increase in pledged loans granted Net payments for the acquisition of 13439262.050.00 subsidiaries and other business units Cash used in other investing activities Subtotal of cash used in investing 1761370246.402178792641.88 activities Net cash generated from/used in -999774105.422410996182.79 investing activities 3. Cash flows from financing activities: Capital contributions received 4000000.00 0.00 Including: Capital contributions by 4000000.000.00 non-controlling interests to subsidiaries Borrowings raised 134000000.00 20000000.00 Cash generated from other financing activities Subtotal of cash generated from 138000000.0020000000.00 financing activities Repayment of borrowings 113000000.00 94851054.01 Interest and dividends paid 7626554.97 1166060059.13 Including: Dividends paid by 5304511.69 0.00 ~ 13 ~Semi annual financial report 2023 subsidiaries to non-controlling interests Cash used in other financing activities 8506249.20 9257885.61 Subtotal of cash used in financing 129132804.171270168998.75 activities Net cash generated from/used in 8867195.83-1250168998.75 financing activities 4. Effect of foreign exchange rates changes on cash and cash equivalents 5. Net increase in cash and cash 3736929787.145352073983.83 equivalents Add: Cash and cash equivalents 13105373435.226057550178.60 beginning of the period 6. Cash and cash equivalents end of the 16842303222.3611409624162.43 period 6. Cash Flow Statement of the Company as the Parent Unit: RMB Item H1 2023 H1 2022 1. Cash flows from operating activities: Proceeds from sale of commodities 9423877589.299789484776.84 and rendering of services Tax rebates Cash generated from other operating 684649476.89849250330.86 activities Subtotal of cash generated from 10108527066.1810638735107.70 operating activities Payments for commodities and 1600410168.911357709777.54 services Cash paid to and for employees 579079631.71 535086542.33 Taxes paid 2341187694.15 1871802206.80 Cash used in other operating activities 3320490019.02 5008612241.81 Subtotal of cash used in operating 7841167513.798773210768.48 activities Net cash generated from/used in 2267359552.391865524339.22 operating activities 2. Cash flows from investing activities: Proceeds from disinvestment 210098239.02 4436593245.00 Return on investment 92948040.53 78111847.94 Net proceeds from the disposal of fixed assets intangible assets and other 14800.00 0.00 long-lived assets Net proceeds from the disposal of ~ 14 ~Semi annual financial report 2023 subsidiaries and other business units Cash generated from other investing activities Subtotal of cash generated from 303061079.554514705092.94 investing activities Payments for the acquisition of fixed assets intangible assets and other 854427751.14 592574549.94 long-lived assets Payments for investments 719000000.00 713900000.00 Net payments for the acquisition of 13439262.050.00 subsidiaries and other business units Cash used in other investing activities Subtotal of cash used in investing 1586867013.191306474549.94 activities Net cash generated from/used in -1283805933.643208230543.00 investing activities 3. Cash flows from financing activities: Capital contributions received Borrowings raised Cash generated from other financing activities Subtotal of cash generated from financing activities Repayment of borrowings Interest and dividends paid 0.00 1162518220.56 Cash used in other financing activities 7606249.20 7907885.61 Subtotal of cash used in financing 7606249.201170426106.17 activities Net cash generated from/used in -7606249.20-1170426106.17 financing activities 4. Effect of foreign exchange rates changes on cash and cash equivalents 5. Net increase in cash and cash 975947369.553903328776.05 equivalents Add: Cash and cash equivalents 7338284192.521571949499.06 beginning of the period 6. Cash and cash equivalents end of the 8314231562.075475278275.11 period ~ 15 ~Semi annual financial report 2023 7. Consolidated Statements of Changes in Owners’ Equity H1 2023 Unit: RMB H1 2023 Equity attributable to owners of the Company as the parent Other equity Item Gener instruments Less: Other Specifi Non-controlli Total owners’ Capital Surplus al Retained Othe Share capital Perpetu Treasur comprehensi c Subtotal ng interests equity Preferre Othe reserves reserves reserv earnings r al y stock ve income reserve d shares r e bonds 1. Balance as at the end of 528600000. 6224747667. 269402260. 11497599306. 18520757973. 812095782. 19332853756. 408739.61 the period of 00 10 27 54 52 69 21 prior year Add: Adjustment for change in accounting policy Adjustment for correction of previous error ~ 16 ~Semi annual financial report 2023 Adjustment for business combination under common control Other adjustments 2. Balance as at the beginning of 528600000. 6224747667. 269402260. 11497599306. 18520757973. 812095782. 19332853756. 408739.61 the 00 10 27 54 52 69 21 Reporting Period 3. Increase/ decrease in 1193674367.51193924511.663320021.61257244533.3 the period 250144.18 1965 (“-” for decrease) 3.1 Total 2779474367.52779724511.665950661.22845675172.9 comprehensi 250144.18 1976 ve income 3.2 Capital increased 4000000.00 4000000.00 and reduced by owners 3.2.1 4000000.004000000.00 Ordinary ~ 17 ~Semi annual financial report 2023 shares increased by owners 3.2.2 Capital increased by holders of other equity instruments 3.2.3 Share-based payments included in owners’ equity 3.2.4 Other 3.3 Profit -1585800000. -1585800000. -1592430639. -6630639.61 distribution 00 00 61 3.3.1 Appropriatio n to surplus reserves 3.3.2 Appropriatio n to general reserve 3.3.3 -1585800000.-1585800000.-6630639.61-1592430639.Appropriatio ~ 18 ~Semi annual financial report 2023 n to owners 00 00 61 (or shareholders ) 3.3.4 Other 3.4 Transfers within owners’ equity 3.4.1 Increase in capital (or share capital) from capital reserves 3.4.2 Increase in capital (or share capital) from surplus reserves 3.4.3 Loss offset by surplus reserves ~ 19 ~Semi annual financial report 2023 3.4.4 Changes in defined benefit schemes transferred to retained earnings 3.4.5 Other comprehensi ve income transferred to retained earnings 3.4.6 Other 3.5 Specific reserve 3.5.1 Increase in the period 3.5.2 Used in the period 3.6 Other 4. Balance as 528600000.6224747667.658883.79269402260.12691273674.19714682485.875415804.20590098289. at the end of ~ 20 ~Semi annual financial report 2023 the 00 10 27 05 21 35 56 Reporting Period H1 2022 Unit: RMB H1 2022 Equity attributable to owners of the Company as the parent Other equity Item Gener instruments Less: Other Specifi Non-controlli Total owners’ Capital Surplus al Retained Othe Share capital Treasur comprehensi c Subtotal ng interests equity Perpetu Preferre Othe reserves reserves reserv earnings r al y stock ve income reserve d shares r e bonds 1. Balance as at the end of 528600000. 6224747667. -2735058.1 269402260. 9517374574.4 16537389443. 715471437. 17252860881.the period of 00 10 9 27 6 64 89 53 prior year Add: Adjustment for change in accounting policy Adjustment for correction of previous error ~ 21 ~Semi annual financial report 2023 Adjustment for business combination under common control Other adjustments 2. Balance as at the beginning of 528600000. 6224747667. -2735058.1 269402260. 9517374574.4 16537389443. 715471437. 17252860881.the 00 10 9 27 6 64 89 53 Reporting Period 3. Increase/ decrease in 54133797.7 the period 1836134.17 755901503.75 757737637.92 811871435.68 6 (“-” for decrease) 3.1 Total 1918821503.71920657637.954133797.71974791435.6 comprehensi 1836134.17 5268 ve income 3.2 Capital increased and reduced by owners 3.2.1 Ordinary ~ 22 ~Semi annual financial report 2023 shares increased by owners 3.2.2 Capital increased by holders of other equity instruments 3.2.3 Share-based payments included in owners’ equity 3.2.4 Other 3.3 Profit -1162920000. -1162920000. -1162920000. distribution 00 00 00 3.3.1 Appropriatio n to surplus reserves 3.3.2 Appropriatio n to general reserve 3.3.3 -1162920000.-1162920000.-1162920000.Appropriatio ~ 23 ~Semi annual financial report 2023 n to owners 00 00 00 (or shareholders ) 3.3.4 Other 3.4 Transfers within owners’ equity 3.4.1 Increase in capital (or share capital) from capital reserves 3.4.2 Increase in capital (or share capital) from surplus reserves 3.4.3 Loss offset by surplus reserves ~ 24 ~Semi annual financial report 2023 3.4.4 Changes in defined benefit schemes transferred to retained earnings 3.4.5 Other comprehensi ve income transferred to retained earnings 3.4.6 Other 3.5 Specific reserve 3.5.1 Increase in the period 3.5.2 Used in the period 3.6 Other 4. Balance as 528600000.6224747667.-898924.02269402260.10273276078.17295127081.769605235.18064732317. at the end of ~ 25 ~Semi annual financial report 2023 the 00 10 27 21 56 65 21 Reporting Period 8. Statements of Changes in Owners’ Equity of the Company as the Parent H1 2023 Unit: RMB H1 2023 Other equity instruments Less: Other Specifi Item Surplus Retained Othe Total owners’ Share capital Preferre Perpetua Othe Capital reserves Treasur comprehensiv c reserves earnings r equity d shares l bonds r y stock e income reserve 1. Balance as at the end of 528600000.0 6176504182.2 264300000.0 16659897749.2 -529354.779691022921.78 the period of 0 0 0 1 prior year Add: Adjustment for change in accounting policy Adjustment for correction of previous error Other adjustments 528600000.06176504182.2264300000.016659897749.2 2. Balance as -529354.77 9691022921.78 0001 ~ 26 ~Semi annual financial report 2023 at the beginning of the Reporting Period 3. Increase/ decrease in -1133280.01-182208915.99-183342196.00 the period (“-” for decrease) 3.1 Total comprehensiv -1133280.01 1403591084.01 1402457804.00 e income 3.2 Capital increased and reduced by owners 3.2.1 Ordinary shares increased by owners 3.2.2 Capital increased by holders of other equity instruments 3.2.3 Share-based payments ~ 27 ~Semi annual financial report 2023 included in owners’ equity 3.2.4 Other 3.3 Profit -1585800000.0 -1585800000.0 distribution 0 0 3.3.1 Appropriation to surplus reserves 3.3.2 Appropriation -1585800000.0 -1585800000.0 to owners (or 0 0 shareholders) 3.3.3 Other 3.4 Transfers within owners’ equity 3.4.1 Increase in capital (or share capital) from capital reserves 3.4.2 ~ 28 ~Semi annual financial report 2023 Increase in capital (or share capital) from surplus reserves 3.4.3 Loss offset by surplus reserves 3.4.4 Changes in defined benefit schemes transferred to retained earnings 3.4.5 Other comprehensiv e income transferred to retained earnings 3.4.6 Other 3.5 Specific reserve 3.5.1 ~ 29 ~Semi annual financial report 2023 Increase in the period 3.5.2 Used in the period 3.6 Other 4. Balance as at the end of 528600000.0 6176504182.2 264300000.0 16476555553.2 -1662634.789508814005.79 the Reporting 0 0 0 1 Period H1 2022 Unit: RMB H1 2022 Other equity instruments Less: Other Item Specific Surplus Total owners’ Share capital Preferred Perpetual Capital reserves Treasury comprehensive Retained earnings Other Other reserve reserves equity shares bonds stock income 1. Balance as at the end of the period of 528600000.00 6176504182.20 -1385311.78 264300000.00 8904467073.30 15872485943.72 prior year Add: Adjustment for change in accounting policy Adjustment for correction of previous error Other adjustments 2. Balance as at the 528600000.006176504182.20-1385311.78264300000.008904467073.3015872485943.72 beginning of the ~ 30 ~Semi annual financial report 2023 Reporting Period 3. Increase/ decrease in the period (“-” for 109851.14 -79159501.42 -79049650.28 decrease) 3.1 Total 109851.141083760498.581083870349.72 comprehensive income 3.2 Capital increased and reduced by owners 3.2.1 Ordinary shares increased by owners 3.2.2 Capital increased by holders of other equity instruments 3.2.3 Share-based payments included in owners’ equity 3.2.4 Other 3.3 Profit -1162920000.00-1162920000.00 distribution 3.3.1 Appropriation to surplus reserves 3.3.2 Appropriation to -1162920000.00-1162920000.00 owners (or shareholders) ~ 31 ~Semi annual financial report 2023 3.3.3 Other 3.4 Transfers within owners’ equity 3.4.1 Increase in capital (or share capital) from capital reserves 3.4.2 Increase in capital (or share capital) from surplus reserves 3.4.3 Loss offset by surplus reserves 3.4.4 Changes in defined benefit schemes transferred to retained earnings 3.4.5 Other comprehensive income transferred to retained earnings 3.4.6 Other 3.5 Specific reserve 3.5.1 Increase in the period 3.5.2 Used in the period 3.6 Other ~ 32 ~Semi annual financial report 2023 4. Balance as at the end of the Reporting 528600000.00 6176504182.20 -1275460.64 264300000.00 8825307571.88 15793436293.44 Period ~ 33 ~Anhui Gujing Distillery Company Limited Notes to Financial Statements for H1 2023 (Currency Unit Is RMB Unless Otherwise Stated) 1. BASIC INFORMATION ABOUT THE COMPANY 1.1 Corporate Information Authorized by document WGZGZ (1996) No.053 of Anhui Administrative Bureau of State-owned Property Anhui Gujing Distillery Company Limited (“the Company”) was established as a limited liability company with net assets of RMB377167700 and state-owned shares of 155000000 shares and considered Anhui Gujing Company as the only promoter. The registration place was Bozhou Anhui China. The Company was established on 5 March 1996 by document of WZM (1996) No.42 of Anhui People’s Government. The Company set up plenary session on 28 May 1996 and registered in Anhui on 30 May 1996.The Company has issued 60000000 domestic listed foreign shares (“B” shares) in June 1996 and 20000000ordinary shares (“A shares) on September 1996 ordinary shares are listed in national and par value is RMB1.00per share. Those A shares and B shares are listed in Shenzhen Stock exchange.Headquarter of the Company is located in Gujing Bozhou Anhui. The Company and its subsidiaries (the Company) specialize in producing and selling baijiu and belong to food manufacturing industry.Registered capitals of the Company were RMB235000000 with stocks of 235000000 of which 155000000 shares were issued in China B shares of 60000000 shares and A shares of 20000000 shares. The book value of the stocks of the Company was of RMB1 per share.On 29 May 2006 a shareholder meeting was held to discuss and approval a program of equity division of A share the program was implement in June 2006. After implementation all shares are outstanding share which include 147000000 shares with restrict condition on disposal represent 62.55% of total equity and 88000000 shares without restrict condition on disposal represent 37.45% of total equity.The Company issued on 27 June 2007 11750000 outstanding shares with restrict condition on disposal are listed in stock market on 29 June 2007. Up to that day outstanding shares with restrict condition on disposal are 135250000 representing 57.55% of total equity the share without restrict condition are 99750000 representing 42.45% of total equity. The Company issued on 17 July 2008 11750000 outstanding shares with restrict condition on disposal are listed in stock market on 18 July 2008. Up to that day outstanding shares with restrict condition on disposal are 123500000 representing 52.55% of total equity the share without restrict condition are 111500000 representing 47.45% of total equity. The Company issued on 24 July 2009 123500000 outstanding shares with restrict condition on disposal are listed in stock market on29 July 2009. Up to that day the Company’s all shares are all tradable.Approved by the CSRC Document Zheng-Jian-Xu-Ke [2011] No. 943 the Company privately offered 16800000 ordinary shares (A-shares) to special investors on 15 July 2011 with a par value of RMB1 and the price of RMB75.00 per share raising RMB1260000000.00 in total the net amount of raised funds stood at RMB1227499450.27 after deducting RMB32500549.73 of various issuance expenses. Certified Public Accountants verified the raised capital upon its arrival and issued the Capital Verification Report Reanda-Yan-Zi [2011] No. 1065. After private issuance the share capital of the Company increased to RMB251.8 million.Pursuant to the Resolution of The 2011 Annual General Meeting the Company that considered 251800000shares as base number on 31 December 2011 transferred capital reserve into share capital at a rate of “10 sharesfor per 10 shares” accounting for 251800000 shares and implemented in the year of 2012. Upon the transference the registered capitals increased to RMB503600000.Approved by the China Securities Regulatory Commission under CSRC Permit [2021] No. 1422 the Company privately issued RMB25000000 ordinary shares (A shares) with the par value of RMB1 per share to specific targets on 22 July 2021 at an issuing price of RMB200.00 per share raising total proceeds of RMB5000000000.00. After deducting the expenses related to the issue of RMB45657925.15 the actual net proceeds raised were RMB4954342074.85. RSM (special ordinary partnership) has audited the availability of the funds raised from the non-public offering of shares of the Company and issued Capital Verification Report R.C.Y.Z [2021] No. 518Z0050. The share capital of the Company increased to RMB528600000 after the non-public offering.By 30 June 2023 the Company issued 528600000 shares. See Note 5.33 for details.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 baijiu 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.Disclosure date of financial statement approved: Financial statement of the Company will be released on 30 August 2023 by the Board of Directors. 1.2 Scope of Consolidation and Changes Thereof (1) Incorporated subsidiaries of the Company Proportion of Shareholding (or No. Name of Subsidiaries Abbreviation similar equity interest) (%) Direct Indirect 1 Bozhou Gujing Sales Co. Ltd. Gujing Sales 100.00 2 Anhui Jinyunlai Culture & Media Co. Ltd. Jinyunlai 100.00 ~ 35 ~3 Anhui Ruisiweier Technology Co. Ltd. Ruisiweier 100.00 4 Anhui Longrui Glass Co. Ltd Longrui Glass 100.00 5 Shanghai Gujing Jinhao Hotel Management Co. Ltd. Jinhao Hotel 100.00 6 Bozhou Gujing Hotel Co. Ltd Gujing Hotel 100.00 Yuanqing 7 Anhui Yuanqing Environmental Protection Co. Ltd. Environmental 100.00 - Protection 8 Anhui Gujing Yunshang E-commerce Co. Ltd. Gujing E-commerce 100.00 9 Anhui RunAnXinKe Testing Technology Co. Ltd. RunAnXinKe 100.00 Jiuan Mechanical 10 Anhui Jiuan Mechanical Electrical Equipment Co. Ltd. 100.00 Electrical 11 Anhui Jiudao Culture Media Co. Ltd. Jiudao Culture 100.00 Anhui Gujinggong Liquor Original Vintage Theme Hotel 12 Theme Hotel 100.00 Management Co. Ltd. 13 Anhui Anjie Technology Co. Ltd. Anjie Technology 70.00 14 Anhui Guqi Distillery Co. Ltd. Guqi Distillery 60.00 Anhui Jiuhao China Railway Construction Engineering 15 Jiuhao China Railway 52.00 Co. Ltd. 16 Anhui Zhenrui Construction Engineering Co. Ltd Zhenrui Engineering 52.00 Yellow Crane Tower 17 Yellow Crane Tower Distillery Co. Ltd. 51.00 Distillery Yellow Crane Tower 18 Yellow Crane Tower Distillery (Suizhou) Co. Ltd. 51.00 (Suizhou) 19 Hubei Junlou Cultural Tourism Co. Ltd. Junlou Cultural 51.00 Yellow Crane Tower 20 Hubei Yellow Crane Tower Beverage Co. Ltd. 51.00 Beverage Yellow Crane Tower 21 Yellow Crane Tower Distillery (Xianning) Co. Ltd. 51.00 (Xianning) 22 Wuhan Yashibo Technology Co. Ltd. Yashibo 51.00 23 Hubei Xinjia Testing Technology Co. Ltd. Xinjia Testing 51.00 24 Wuhan Tianlong Jindi Technology Development Co. Tianlong Jindi 51.00 25 LWtdu han Junya Sales Co. Ltd Junya Sales 51.00 26 Xianning Junhe Sales Co. Ltd. Xianning Junhe 51.00 27 Suizhou Junhe Commercial Co. Ltd. Suizhou Junhe 51.00 28 Huanggang Junya Trading Co. Ltd. Huanggang Junya 51.00 ~ 36 ~29 Wuhan Gulou Junhe Trading Co. Ltd. Gulou Junhe 51.00 30 Wuhan Gulou Juntai Trading Co. Ltd. Gulou Juntai 51.00 Renhuai Maotai Town Zhencang Winery Industry Co. Zhencang Winery 3160.00 Ltd. Industry 32 Anhui Mingguang Wine Co. Ltd. Mingguang Wine 60.00 33 Mingguang Tiancheng Ming Wine Sales Co. Ltd. Tiancheng Sales 60.00 Fengyang Xiaogang Village Ming Wine Distillery Co. Fengyang Xiaogang 3442.00 Ltd. Village 35 Anhui Gujing Health Technology Co. Ltd. Health Technology 60.00 36 Anhui Maiqi Biotechnology Co. Ltd. Maiqi Biotechnology 60.00 37 Anhui Yangshengtianxia Brand Operation Co. Ltd. Brand Operation 60.00 38 Hainan Yangshengtianxia Biotechnology Development Biotechnology 60.00 Co. Ltd.For details of the subsidiaries mentioned above please refer to Note 7 INTEREST IN OTHER ENTITIES (2) Change of the scope of consolidation Compared with the previous period the newly incorporated subsidiaries during the reporting period were Guqi Distillery Gulou Junhe and Gulou Juntai. 2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS 2.1 Basis for Preparation On the basis of continuous operations the Company shall confirm and measure actual transactions and events in accordance with the Accounting Standards for Business Enterprises and its Application Guidelines and Interpretation of the Standards and prepare financial statements. Besides the Company also discloses relevant financial information in accordance with the China Securities Regulatory Commission (CSRC) Rules No. 15 on the Compilation and Reporting of Corporate Information on Public Offerings -- General Provisions on Financial Reports (2014 Revision). 2.2 Continuation The Company has assessed its ability to continually operate for the next twelve months from the end of the reporting period and no any matters that may result in doubt on its ability as a going concern were noted.Therefore it is reasonable for the Company to prepare financial statements on the going concern basis. 3. IMPORTANT ACCOUNTING POLICIES AND ESTIMATIONS It is required to comply with disclosure requirements for food and liquor & wine production industry in the Guideline No. 3 of the Shenzhen Stock Exchange for Self-regulation of Listed Companies—Industry-specific ~ 37 ~Information Disclosure.Specific accounting policies and accounting estimates: The contents disclosed below cover the specific accounting policies and accounting estimates formulated by the Company according to the actual production and operation characteristics. 3.1 Statement of Compliance with the Accounting Standards for Business Enterprises The financial statements prepared by the Company are in compliance with in compliance with the Accounting Standards for Business Enterprises which factually and completely present the Company’s financial positions changes of owners’ equity business results and cash flows and other relevant information. 3.2 Fiscal Period The accounting year of the Company is from January 1 to December 31 in calendar year. 3.3 Operating Cycle The normal operating cycle of the Company is one year. 3.4 Currency Used in Bookkeeping The Company's functional currency is RMB and its overseas subsidiaries are operated in the currency of the main economic environment in which they operate. 3.5 Accounting Treatment of Business Combinations under and not under Common Control (a) Business combinations under common control The assets and liabilities that the Company obtains in a business combination under common control shall be measured at their carrying amount of the acquired entity at the combination date. If the accounting policy adopted by the acquired entity is different from that adopted by the acquiring entity the acquiring entity shall according to accounting policy it adopts adjust the relevant items in the financial statements of the acquired party based on the principal of materiality. As for the difference between the carrying amount of the net assets obtained by the acquiring entity and the carrying amount of the consideration paid by it the capital reserve (capital premium or share premium) shall be adjusted. If the capital reserve (capital premium or share premium) is not sufficient to absorb the difference any excess shall be adjusted against retained earnings.For the accounting treatment of business combination under common control by step acquisitions please refer to Note 3.6 (6).(b) Business combinations not under common control The assets and liabilities that the Company obtains in a business combination not under common control shall be measured at their fair value at the acquisition date. If the accounting policy adopted by the acquired entity is different from that adopted by the acquiring entity the acquiring entity shall according to accounting policy it adopts adjust the relevant items in the financial statements of the acquired entity based on the principal of materiality. The acquiring entity shall recognise the positive balance between the combination costs and the fair ~ 38 ~value of the identifiable net assets it obtains from the acquired entity as goodwill. The acquiring entity shall pursuant to the following provisions treat the negative balance between the combination costs and the fair value of the identifiable net assets it obtains from the acquired entity: (i) It shall review the measurement of the fair values of the identifiable assets liabilities and contingent liabilities it obtains from the acquired entity as well as the combination costs; (ii) If after the review the combination costs are still less than the fair value of the identifiable net assets it obtains from the acquired entity the balance shall be recognised in profit or loss of the reporting period.For the accounting treatment of business combination under the same control by step acquisitions please refer to Note 3.6 (f).(c) Treatment of business combination related costs The intermediary costs such as audit legal services and valuation consulting and other related management costs that are directly attributable to the business combination shall be charged in profit or loss in the period in which they are incurred. The costs to issue equity or debt securities for the consideration of business combination shall be recorded as a part of the value of the respect equity or debt securities upon initial recognition. 3.6 Method of Preparing the Consolidated Financial Statements (a) Scope of consolidation The scope of consolidated financial statements shall be determined on the basis of control. It not only includes subsidiaries determined based on voting power (or similar) or other arrangement but also structured entities under one or several contract arrangements.Control exists when the Company has all the following: power over the investee; exposure or rights to variable returns from the Company’s involvement with the investee; and the ability to use its power over the investee to affect the amount of the investor’s returns. Subsidiaries are the entities that controlled by the Company (including enterprise a divisible part of the investee and structured entity controlled by the enterprise). A structured entity (sometimes called a Special Purpose Entity) is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity.(b) Special requirement as the parent company is an investment entity If the parent company is an investment entity it should measure its investments in particular subsidiaries as financial assets at fair value through profit or loss instead of consolidating those subsidiaries in its consolidated and separate financial statements. However as an exception to this requirement if a subsidiary provides investment-related services or activities to the investment entity it should be consolidated.The parent company is defined as investment entity when meets following conditions: a. Obtains funds from one or more investors for the purpose of providing those investors with investment management services; b. Commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation ~ 39 ~investment income or both; and c. Measures and evaluates the performance of substantially all of its investments on a fair value basis.If the parent company becomes an investment entity it shall cease to consolidate its subsidiaries at the date of the change in status except for any subsidiary which provides investment-related services or activities to the investment entity shall be continued to be consolidated. The deconsolidation of subsidiaries is accounted for as though the investment entity partially disposed subsidiaries without loss of control.When the parent company previously classified as an investment entity ceases to be an investment entity subsidiary that was previously measured at fair value through profit or loss shall be included in the scope of consolidated financial statements at the date of the change in status. The fair value of the subsidiary at the date of change represents the transferred deemed consideration in accordance with the accounting for business combination not under common control.(c) Method of preparing the consolidated financial statements The consolidated financial statements shall be prepared by the Company based on the financial statements of the Company and its subsidiaries and using other related information.When preparing consolidated financial statements the Company shall consider the entire group as an accounting entity adopt uniform accounting policies and apply the requirements of Accounting Standard for Business Enterprises related to recognition measurement and presentation. The consolidated financial statements shall reflect the overall financial position operating results and cash flows of the group.(i) Like items of assets liabilities equity income expenses and cash flows of the parent are combined with those of the subsidiaries.(ii) The carrying amount of the parent’s investment in each subsidiary is eliminated (off-set) against the parent’s portion of equity of each subsidiary.(iii) Eliminate the impact of intragroup transactions between the Company and the subsidiaries or between subsidiaries and when intragroup transactions indicate an impairment of related assets the losses shall be recognised in full.(iv) Make adjustments to special transactions from the perspective of the group.(d) Method of preparation of the consolidated financial statements when subsidiaries are acquired or disposed in the reporting period (i) Acquisition of subsidiaries or business Subsidiaries or business acquired through business combination under common control When preparing consolidated statements of financial position the opening balance of the consolidated balance sheet shall be adjusted. Related items of comparative financial statements shall be adjusted as well deeming that the combined entity has always existed ever since the ultimate controlling party began to control.Incomes expenses and profits of the subsidiary incurred from the beginning of the reporting period to the end of ~ 40 ~the reporting period shall be included into the consolidated statement of profit or loss. Related items of comparative financial statements shall be adjusted as well deeming that the combined entity has always existed ever since the ultimate controlling party began to control.Cash flows from the beginning of the reporting period to the end of the reporting period shall be included into the consolidated statement of cash flows. Related items of comparative financial statements shall be adjusted as well deeming that the combined entity has always existed ever since the ultimate controlling party began to control.Subsidiaries or business acquired through business combination not under common control When preparing the consolidated statements of financial position the opening balance of the consolidated statements of financial position shall not be adjusted.Incomes expenses and profits of the subsidiary incurred from the acquisition date to the end of the reporting period shall be included into the consolidated statement of profit or loss.Cash flows from the acquisition date to the end of the reporting period shall be included into the consolidated statement of cash flows.(ii) Disposal of subsidiaries or business When preparing the consolidated statements of financial position the opening balance of the consolidated statements of financial position shall not be adjusted.Incomes expenses and profits incurred from the beginning of the subsidiary to the disposal date shall be included into the consolidated statement of profit or loss.Cash flows from the beginning of the subsidiary to the disposal date shall be included into the consolidated statement of cash flows.(e) Special consideration in consolidation elimination (i) Long-term equity investment held by the subsidiaries to the Company shall be recognised as treasury stock of the Company which is offset with the owner’s equity represented as “treasury stock” under “owner’s equity” in the consolidated statement of financial position.Long-term equity investment held by subsidiaries between each other is accounted for taking long-term equity investment held by the Company to its subsidiaries as reference. That is the long-term equity investment is eliminated (off- set) against the portion of the corresponding subsidiary’s equity.(ii) Due to not belonging to paid-in capital (or share capital) and capital reserve and being different from retained earnings and undistributed profit “Specific reserves” and “General risk provision” shall be recovered based on the proportion attributable to owners of the parent company after long-term equity investment to the subsidiaries is eliminated with the subsidiaries’ equity.(iii) If temporary timing difference between the book value of the assets and liabilities in the consolidated statement of financial position and their tax basis is generated as a result of elimination of unrealized inter-company transaction profit or loss deferred tax assets of deferred tax liabilities shall be recognised and ~ 41 ~income tax expense in the consolidated statement of profit or loss shall be adjusted simultaneously excluding deferred taxes related to transactions or events directly recognised in owner’s equity or business combination.(iv) Unrealised inter-company transactions profit or loss generated from the Company selling assets to its subsidiaries shall be eliminated against “net profit attributed to the owners of the parent company” in full.Unrealized inter-company transactions profit or loss generated from the subsidiaries selling assets to the Company shall be eliminated between “net profit attributed to the owners of the parent company” and “non-controllinginterests” pursuant to the proportion of the Company in the related subsidiaries. Unrealized inter-company transactions profit or loss generated from the assets sales between the subsidiaries shall be eliminated between “net profit attributed to the owners of the parent company” and “non-controlling interests” pursuant to the proportion of the Company in the selling subsidiaries.(v) If loss attributed to the minority shareholders of a subsidiary in current period is more than the proportion of non-controlling interest in this subsidiary at the beginning of the period non-controlling interest is still to be written down.(f) Accounting for Special Transactions (i) Purchasing of non-controlling interests Where the Company purchases non-controlling interests of its subsidiary in the separate financial statements of the Company the cost of the long-term equity investment obtained in purchasing non-controlling interests is measured at the fair value of the consideration paid. In the consolidated financial statements difference between the cost of the long-term equity investment newly obtained in purchasing non-controlling interests and share of the subsidiary’s net assets from the acquisition date or combination date continuingly calculated pursuant to the newly acquired shareholding proportion shall be adjusted into capital reserve (capital premium or share premium).If capital reserve is not enough to be offset surplus reserve and undistributed profit shall be offset in turn.(ii) Gaining control over the subsidiary in stages through multiple transactions Business combination under common control in stages through multiple transactions On the combination date in the separate financial statement initial cost of the long-term equity investment is determined according to the share of carrying amount of the acquiree’s net assets in the ultimate controlling entity’s consolidated financial statements after combination. The difference between the initial cost of the long-term equity investment and the carrying amount of the long -term investment held prior of control plus book value of additional consideration paid at acquisition date is adjusted into capital reserve (capital premium or share premium). If the capital reserve is not enough to absorb the difference any excess shall be adjusted against surplus reserve and undistributed profit in turn.In the consolidated financial statements the assets and liabilities acquired during the combination should be recognized at their carrying amount in the ultimate controlling entity’s consolidated financial statements on the combination date unless any adjustment is resulted from the difference in accounting policies. The difference ~ 42 ~between the carrying amount of the investment held prior of control plus book value of additional consideration paid on the acquisition date and the net assets acquired through the combination is adjusted into capital reserve (capital premium or share premium). If the capital reserve is not enough to absorb the difference any excess shall be adjusted against retained earnings.If the acquiring entity holds equity investment in the acquired entity prior to the combination date and the equity investment is accounted for under the equity method related profit or loss other comprehensive income and other changes in equity which have been recognised during the period from the later of the date of the Company obtaining original equity interest and the date of both the acquirer and the acquiree under common control of the same ultimate controlling party to the combination date should be offset against the opening balance of retained earnings at the comparative financial statements period respectively.Business combination not under common control in stages through multiple transactions On the consolidation date in the separate financial statements the initial cost of long-term equity investment is determined according to the carrying amount of the original long-term investment plus the cost of new investment.In the consolidated financial statements the equity interest of the acquired entity held prior to the acquisition date shall be re-measured at its fair value on the acquisition date. Difference between the fair value of the equity interest and its book value is recognised as investment income. The other comprehensive income related to the equity interest held prior to the acquisition date calculated through equity method should be transferred to current investment income of the acquisition period excluding other comprehensive income resulted from the remeasurement of the net assets or net liabilities under defined benefit plan. The Company shall disclose acquisition-date fair value of the equity interest held prior to the acquisition date and the related gains or losses due to the remeasurement based on fair value.(iii) Disposal of investment in subsidiaries without a loss of control For partial disposal of the long-term equity investment in the subsidiaries without a loss of control when the Company prepares consolidated financial statements difference between consideration received from the disposal and the corresponding share of subsidiary’s net assets cumulatively calculated from the acquisition date or combination date shall be adjusted into capital reserve (capital premium or share premium). If the capital reserve is not enough to absorb the difference any excess shall be offset against retained earnings.(iv) Disposal of investment in subsidiaries with a loss of control Disposal through one transaction If the Company loses control in an investee through partial disposal of the equity investment when the consolidated financial statements are prepared the retained equity interest should be re-measured at fair value at the date of loss of control. The difference between i) the fair value of consideration received from the disposal plus non-controlling interest retained; ii) share of the former subsidiary’s net assets cumulatively calculated from ~ 43 ~the acquisition date or combination date according to the original proportion of equity interest shall be recognised in current investment income when control is lost.Moreover other comprehensive income and other changes in equity related to the equity investment in the former subsidiary shall be transferred into current investment income when control is lost excluding other comprehensive income resulted from the remeasurement of the movement of net assets or net liabilities under defined benefit plan.Disposal in stages In the consolidated financial statements whether the transactions should be accounted for as “a single transaction” needs to be decided firstly.If the disposal in stages should not be classified as “a single transaction” in the separate financial statements for transactions prior of the date of loss of control carrying amount of each disposal of long-term equity investment need to be recognized and the difference between consideration received and the carrying amount of long-term equity investment corresponding to the equity interest disposed should be recognized in current investment income; in the consolidated financial statements the disposal transaction should be accounted for according to related policy in “Disposal of long-term equity investment in subsidiaries without a loss of control”.If the disposal in stages should be classified as “a single transaction” these transactions should be accounted for as a single transaction of disposal of subsidiary resulting in loss of control. In the separate financial statements for each transaction prior of the date of loss of control difference between consideration received and the carrying amount of long-term equity investment corresponding to the equity interest disposed should be recognised as other comprehensive income firstly and transferred to profit or loss as a whole when control is lost; in the consolidated financial statements for each transaction prior of the date of loss of control difference between consideration received and proportion of the subsidiary’s net assets corresponding to the equity interest disposed should be recognised in profit or loss as a whole when control is lost.In considering of the terms and conditions of the transactions as well as their economic impact the presence of one or more of the following indicators may lead to account for multiple transactions as a single transaction: (a) The transactions are entered into simultaneously or in contemplation of one another.(b) The transactions form a single transaction designed to achieve an overall commercial effect.(c) The occurrence of one transaction depends on the occurrence of at least one other transaction.(d) One transaction when considered on its own merits does not make economic sense but when considered together with the other transaction or transactions would be considered economically justifiable.(v) Diluting equity share of parent company in its subsidiaries due to additional capital injection by the subsidiaries’ minority shareholders.Other shareholders (minority shareholders) of the subsidiaries inject additional capital in the subsidiaries which resulted in the dilution of equity interest of parent company in these subsidiaries. In the consolidated financial ~ 44 ~statements difference between share of the corresponding subsidiaries’ net assets calculated based on the parent’s equity interest before and after the capital injection shall be adjusted into capital reserve (capital premium or share premium). If the capital reserve is not enough to absorb the difference any excess shall be adjusted against retained earnings. 3.7 Classification of Joint Arrangements and Accounting for Joint Operation A joint arrangement is an arrangement of which two or more parties have joint control. Joint arrangement of the Company is classified as either a joint operation or a joint venture.(a) Joint operation A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities relating to the arrangement.The Company shall recognise the following items in relation to shared interest in a joint operation and account for them in accordance with relevant accounting standards of the Accounting Standards for Business Enterprises: (i) its assets including its share of any assets held jointly; (ii) its liabilities including its share of any liabilities incurred jointly; (iii) its revenue from the sale of its share of the output arising from the joint operation; (iv) its share of the revenue from the sale of the output by the joint operation; and (v) its expenses including its share of any expenses incurred jointly.(b) Joint venture A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.The Company accounts for its investment in the joint venture by applying the equity method of long-term equity investment. 3.8 Cash and Cash Equivalents Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents include short-term (generally within three months of maturity at acquisition) highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. 3.9 Foreign Currency Transactions and Translation of Foreign Currency Financial Statements (a) Determination of the exchange rate for foreign currency transactions At the time of initial recognition of a foreign currency transaction the amount in the foreign currency shall be translated into the amount in the functional currency at the spot exchange rate of the transaction date or at an exchange rate which is determined through a systematic and reasonable method and is approximate to the spot exchange rate of the transaction date (hereinafter referred to as the approximate exchange rate).(b) Translation of monetary items denominated in foreign currency on the balance sheet date The foreign currency monetary items shall be translated at the spot exchange rate on the balance sheet date. The ~ 45 ~balance of exchange arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate at the time of initial recognition or prior to the balance sheet date shall be recorded into the profits and losses at the current period. The foreign currency non-monetary items measured at the historical cost shall still be translated at the spot exchange rate on the transaction date; for the foreign currency non-monetary items restated to a fair value measurement shall be translated into the at the spot exchange rate at the date when the fair value was determined the difference between the restated functional currency amount and the original functional currency amount shall be recorded into the profits and losses at the current period.(c) Translation of foreign currency financial statements Before translating the financial statements of foreign operations the accounting period and accounting policy shall be adjusted so as to conform to the Company. The adjusted foreign operation financial statements denominated in foreign currency (other than functional currency) shall be translated in accordance with the following method: (i) The asset and liability items in the statement of financial position shall be translated at the spot exchange rates at the date of that statement of financial position. The owners’ equity items except undistributed profit shall be translated at the spot exchange rates when they are incurred.(ii) The income and expense items in the statement of profit and other comprehensive income shall be translated at the spot exchange rates or approximate exchange rate at the date of transaction.(iii)Foreign currency cash flows and cash flows of foreign subsidiaries shall be translated at the spot exchange rate or approximate exchange rate when the cash flows are incurred. The effect of exchange rate changes on cash is presented separately in the statement of cash flows as an adjustment item.(iv) The differences arising from the translation of foreign currency financial statements shall be presented separately as “other comprehensive income” under the owners’ equity items of the consolidated statement of financial position.When disposing a foreign operation involving loss of control the cumulative amount of the exchange differences relating to that foreign operation recognised under other comprehensive income in the statement of financial position shall be reclassified into current profit or loss according to the proportion disposed. 3.10 Financial Instruments Financial instrument is any contract which gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity.(a) Recognition and derecognition of financial instrument A financial asset or a financial liability should be recognised in the statement of financial position when and only when an entity becomes party to the contractual provisions of the instrument.A financial asset can only be derecognised when meets one of the following conditions: (i) The rights to the contractual cash flows from a financial asset expire ~ 46 ~(ii) The financial asset has been transferred and meets one of the following derecognition conditions: Financial liabilities (or part thereof) are derecognised only when the liability is extinguished—i.e. when the obligation specified in the contract is discharged or cancelled or expires. An exchange of the Company (borrower) and lender of debt instruments that carry significantly different terms or a substantial modification of the terms of an existing liability are both accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability.Purchase or sale of financial assets in a regular-way shall be recognised and derecognised using trade date accounting. A regular-way purchase or sale of financial assets is a transaction under a contract whose terms require delivery of the asset within the time frame established generally by regulations or convention in the market place concerned. Trade date is the date at which the entity commits itself to purchase or sell an asset.(b) Classification and measurement of financial assets At initial recognition the Company classified its financial asset based on both the business model for managing the financial asset and the contractual cash flow characteristics of the financial asset: financial asset at amortised cost financial asset at fair value through profit or loss (FVTPL) and financial asset at fair value through other comprehensive income (FVTOCI). Reclassification of financial assets is permitted if and only if the objective of the entity’s business model for managing those financial assets changes. In this circumstance all affected financial assets shall be reclassified on the first day of the first reporting period after the changes in business model; otherwise the financial assets cannot be reclassified after initial recognition.Financial assets shall be measured at initial recognition at fair value. For financial assets measured at FVTPL transaction costs are recognised in current profit or loss. For financial assets not measured at FVTPL transaction costs should be included in the initial measurement. Notes receivable or accounts receivable that arise from sales of goods or rendering of services are initially measured at the transaction price defined in the accounting standard of revenue where the transaction does not include a significant financing component.Subsequent measurement of financial assets will be based on their categories: (i)Financial asset at amortised cost The financial asset at amortised cost category of classification applies when both the following conditions are met: the financial asset is held within the business model whose objective is to hold financial assets in order to collect contractual cash flows and the contractual term of the financial asset gives rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding. These financial assets are subsequently measured at amortised cost by adopting the effective interest rate method. Any gain or loss arising from derecognition according to the amortization under effective interest rate method or impairment are recognised in current profit or loss.(ii)Financial asset at fair value through other comprehensive income (FVTOCI) The financial asset at FVTOCI category of classification applies when both the following conditions are met: the ~ 47 ~financial asset is held within the business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual term of the financial asset gives rise on specified dates to cash flows that are solely payment of principle and interest on the principal amount outstanding. All changes in fair value are recognised in other comprehensive income except for gain or loss arising from impairment or exchange differences which should be recognised in current profit or loss. At derecognition cumulative gain or loss previously recognised under OCI is reclassified to current profit or loss. However interest income calculated based on the effective interest rate is included in current profit or loss.The Company make an irrevocable decision to designate part of non-trading equity instrument investments as measured through FVTOCI. All changes in fair value are recognised in other comprehensive income except for dividend income recognised in current profit or loss. At derecognition cumulative gain or loss are reclassified to retained earnings.(iii)Financial asset at fair value through profit or loss (FVTPL) Financial asset except for above mentioned financial asset at amortised cost or financial asset at fair value through other comprehensive income (FVTOCI) should be classified as financial asset at fair value through profit or loss (FVTPL). These financial assets should be subsequently measured at fair value. All the changes in fair value are included in current profit or loss.(c) Classification and measurement of financial liabilities The Company classified the financial liabilities as financial liabilities at fair value through profit or loss (FVTPL) loan commitments at a below-market interest rate and financial guarantee contracts and financial asset at amortised cost.Subsequent measurement of financial assets will be based on the classification: (i)Financial liabilities at fair value through profit or loss (FVTPL) Held-for-trading financial liabilities (including derivatives that are financial liabilities) and financial liabilities designated at FVTPL are classified as financial liabilities at FVTP. After initial recognition any gain or loss (including interest expense) are recognised in current profit or loss except for those hedge accounting is applied.For financial liability that is designated as at FVTPL changes in the fair value of the financial liability that is attributable to changes in the own credit risk of the issuer shall be presented in other comprehensive income. At derecognition cumulative gain or loss previously recognised under OCI is reclassified to retained earnings.(ii)Loan commitments and financial guarantee contracts Loan commitment is a commitment by the Company to provide a loan to customer under specified contract terms.The provision of impairment losses of loan commitments shall be recognised based on expected credit losses model.Financial guarantee contract is a contract that requires the Company to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the ~ 48 ~original or modified terms of a debt instrument. Financial guarantee contracts liability shall be subsequently measured at the higher of: The amount of the loss allowance recognised according to the impairment principles of financial instruments; and the amount initially recognised less the cumulative amount of income recognised in accordance with the revenue principles.(iii)Financial liabilities at amortised cost After initial recognition the Company measured other financial liabilities at amortised cost using the effective interest method.Except for special situation financial liabilities and equity instrument should be classified in accordance with the following principles: (i) If the Company has no unconditional right to avoid delivering cash or another financial instrument to fulfill a contractual obligation this contractual obligation meet the definition of financial liabilities. Some financial instruments do not comprise terms and conditions related to obligations of delivering cash or another financial instrument explicitly they may include contractual obligation indirectly through other terms and conditions.(ii) If a financial instrument must or may be settled in the Company's own equity instruments it should be considered that the Company’s own equity instruments are alternatives of cash or another financial instrument or to entitle the holder of the equity instruments to sharing the remaining rights over the net assets of the issuer. If the former is the case the instrument is a liability of the issuer; otherwise it is an equity instrument of the issuer.Under some circumstances it is regulated in the contract that the financial instrument must or may be settled in the Company's own equity instruments where amount of contractual rights and obligations are calculated by multiplying the number of the equity instruments to be available or delivered by its fair value upon settlement.Such contracts shall be classified as financial liabilities regardless that the amount of contractual rights and liabilities is fixed or fluctuate totally or partially with variables other than market price of the entity’s own equity instruments (d) Derivatives and embedded derivatives At initial recognition derivatives shall be measured at fair value at the date of derivative contracts are signed and subsequently measured at fair value. The derivative with a positive fair value shall be recognized as an asset and with a negative fair value shall be recognised as a liability.Gains or losses arising from the changes in fair value of derivatives shall be recognised directly into current profit or loss except for the effective portion of cash flow hedges which shall be recognised in other comprehensive income and reclassified into current profit or loss when the hedged items affect profit or loss.An embedded derivative is a component of a hybrid contract with a financial asset as a host the Company shall apply the requirements of financial asset classification to the entire hybrid contract. If a host that is not a financial asset and the hybrid contract is not measured at fair value with changes in fair value recognised in profit or loss and the economic characteristics and risks of the embedded derivative are not closely related to the economic ~ 49 ~characteristics and risks of the host and a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative the embedded derivative shall be separated from the hybrid instrument and accounted for as a separate derivative instrument. If the Company is unable to measure the fair value of the embedded derivative at the acquisition date or subsequently at the balance sheet date the entire hybrid contract is designated as financial assets or financial liabilities at fair value through profit or loss.(e) Impairment of financial instrument The Company shall recognise a loss allowance based on expected credit losses on a financial asset that is measured at amortised cost a debt investment at fair value through other comprehensive income a contract asset a lease receivable a loan commitment and a financial guarantee contract.(i) Measurement of expected credit losses Expected credit losses are the weighted average of credit losses of the financial instruments with the respective risks of a default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive discounted at the original effective interest rate or credit- adjusted effective interest rate for purchased or originated credit-impaired financial assets.Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument. 12-month expected credit losses are the portion of lifetime expected credit losses that represent the expected credit losses that result from default events on a financial instrument that are possible within the 12 months after the reporting date (or the expected lifetime if the expected life of a financial instrument is less than 12 months).At each reporting date the Company classifies financial instruments into three stages and makes provisions for expected credit losses accordingly. A financial instrument of which the credit risk has not significantly increased since initial recognition is at stage 1. The Company shall measure the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. A financial instrument with a significant increase in credit risk since initial recognition but is not considered to be credit-impaired is at stage 2. The Company shall measure the loss allowance for that financial instrument at an amount equal to the lifetime expected credit losses. A financial instrument is considered to be credit-impaired as at the end of the reporting period is at stage 3. The Company shall measure the loss allowance for that financial instrument at an amount equal to the lifetime expected credit losses.The Company may assume that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date and measure the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses.For financial instrument at stage 1 stage 2 and those have low credit risk the interest revenue shall be calculated by applying the effective interest rate to the gross carrying amount of a financial asset. For financial instrument at ~ 50 ~stage 3 interest revenue shall be calculated by applying the effective interest rate to the amortised cost after deducting of impairment loss.For notes receivable accounts receivable and accounts receivable financing no matter it contains a significant financing component or not the Company shall measure the loss allowance at an amount equal to the lifetime expected credit losses.Receivables For the notes receivable accounts receivable other receivables accounts receivable financing and long-term receivables which are demonstrated to be impaired by any objective evidence or applicable for individual assessment the Company shall individually assess for impairment and recognise the loss allowance for expected credit losses. If the Company determines that no objective evidence of impairment exists for notes receivable accounts receivable other receivables accounts receivable financing and long-term receivables or the expected credit loss of a single financial asset cannot be assessed at reasonable cost such notes receivable accounts receivable other receivables accounts receivable financing and long-term receivables shall be divided into several groups with similar credit risk characteristics and collectively calculated the expected credit loss. The determination basis of groups is as following: Determination basis of notes receivable is as following: Group 1: Commercial acceptance bills Group 2: Bank acceptance bills For each group the Company calculates expected credit losses through default exposure and the lifetime expected credit losses rate taking reference to historical experience for credit losses and considering current condition and expectation for the future economic situation.Determination basis of accounts receivable is as following: Group 1: Accounts receivables due from the company within the scope of consolidation Group 2: Accounts receivables due from other customers For each group the Company calculates expected credit losses through preparing an aging analysis schedule with the lifetime expected credit losses rate taking reference to historical experience for credit losses and considering current condition and expectation for the future economic situation.Determination basis of other receivables is as following: Group 1: Other receivables due from the company within the scope of consolidation Group 2: Other receivables due from others For each group the Company calculates expected credit losses through default exposure and the 12-months or lifetime expected credit losses rate taking reference to historical experience for credit losses and considering current condition and expectation for the future economic situation.Debt investment and other debt investment ~ 51 ~For debt investment and other debt investment the Company shall calculate the expected credit loss through the default exposure and the 12-month or lifetime expected credit loss rate based on the nature of the investment counterparty and the type of risk exposure.(ii) Low credit risk If the financial instrument has a low risk of default the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and adverse changes in economic and business conditions in the longer term may but will not necessarily reduce the ability of the borrower to fulfill its contractual cash flow obligations.(iii) Significant increase in credit risk The Company shall assess whether the credit risk on a financial instrument has increased significantly since initial recognition using the change in the risk of a default occurring over the expected life of the financial instrument through the comparison of the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition.To make that assessment the Company shall consider reasonable and supportable information that is available without undue cost or effort and that is indicative of significant increases in credit risk since initial recognition including forward-looking information. The information considered by the Company are as following: * Significant changes in internal price indicators of credit risk as a result of a change in credit risk since inception * Existing or forecast adverse change in the business financial or economic conditions of the borrower that results in a significant change in the borrower’s ability to meet its debt obligations； * An actual or expected significant change in the operating results of the borrower; An actual or expected significant adverse change in the regulatory economic or technological environment of the borrower； * Significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements which are expected to reduce the borrower’s economic incentive to make scheduled contractual payments or to otherwise have an effect on the probability of a default occurring; * Significant change that are expected to reduce the borrower’s economic incentive to make scheduled contractual payments; * Expected changes in the loan documentation including an expected breach of contract that may lead to covenant waivers or amendments interest payment holidays interest rate step-ups requiring additional collateral or guarantees or other changes to the contractual framework of the instrument； * Significant changes in the expected performance and behaviour of the borrower； * Contractual payments are more than 30 days past due.Depending on the nature of the financial instruments the Company shall assess whether the credit risk has increased significantly since initial recognition on an individual financial instrument or a group of financial instruments. When assessed based on a group of financial instruments the Company can group financial ~ 52 ~instruments on the basis of shared credit risk characteristics for example past due information and credit risk rating.Generally the Company shall determine the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 30 days past due. The Company can only rebut this presumption if the Company has reasonable and supportable information that is available without undue cost or effort that demonstrates that the credit risk has not increased significantly since initial recognition even though the contractual payments are more than 30 days past due.(iv) Credit-impaired financial asset The Company shall assess at each reporting date whether the credit impairment has occurred for financial asset at amortised cost and debt investment at fair value through other comprehensive income. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidences that a financial asset is credit-impaired include observable data about the following events: Significant financial difficulty of the issuer or the borrower；a breach of contract such as a default or past due event; the lender(s) of the borrower for economic or contractual reasons relating to the borrower’s financial difficulty having granted to the borrower a concession(s) that the lender(s) would not otherwise consider；it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation；the disappearance of an active market for that financial asset because of financial difficulties；the purchase or origination of a financial asset at a deep discount that reflects the incurred credit losses.(v) Presentation of impairment of expected credit loss In order to reflect the changes of credit risk of financial instrument since initial recognition the Company shall at each reporting date remeasure the expected credit loss and recognise in profit or loss as an impairment gain or loss the amount of expected credit losses addition (or reversal). For financial asset at amortised cost the loss allowance shall reduce the carrying amount of the financial asset in the statement of financial position; for debt investment at fair value through other comprehensive income the loss allowance shall be recognised in other comprehensive income and shall not reduce the carrying amount of the financial asset in the statement of financial position.(vi) Write-off The Company shall directly reduce the gross carrying amount of a financial asset when the Company has no reasonable expectations of recovering the contractual cash flow of a financial asset in its entirety or a portion thereof. Such write-off constitutes a derecognition of the financial asset. This circumstance usually occurs when the Company determines that the debtor has no assets or sources of income that could generate sufficient cash flow to repay the write-off amount.Recovery of financial asset written off shall be recognised in profit or loss as reversal of impairment loss.~ 53 ~(f) Transfer of financial assets Transfer of financial assets refers to following two situations: * Transfers the contractual rights to receive the cash flows of the financial asset; * Transfers the entire or a part of a financial asset and retains the contractual rights to receive the cash flows of the financial asset but assumes a contractual obligation to pay the cash flows to one or more recipients.(i) Derecognition of transferred assets If the Company transfers substantially all the risks and rewards of ownership of the financial asset or neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset but has not retained control of the financial asset the financial asset shall be derecognised.Whether the Company has retained control of the transferred asset depends on the transferee’s ability to sell the asset. If the transferee has the practical ability to sell the asset in its entirety to an unrelated third party and is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer the Company has not retained control.The Company judges whether the transfer of financial asset qualifies for derecognition based on the substance of the transfer.If the transfer of financial asset qualifies for derecognition in its entirety the difference between the following shall be recognised in profit or loss: * The carrying amount of transferred financial asset; * The sum of consideration received and the part derecognised of the cumulative changes in fair value previously recognised in other comprehensive income (The financial assets involved in the transfer are classified as financial assets at fair value through other comprehensive income in accordance with Article 18 of the Accounting Standards for Business Enterprises No.22 - Recognition and Measurement of Financial Instruments).If the transferred asset is a part of a larger financial asset and the part transferred qualifies for derecognition the previous carrying amount of the larger financial asset shall be allocated between the part that continues to be recognised (For this purpose a retained servicing asset shall be treated as a part that continues to be recognised) and the part that is derecognised based on the relative fair values of those parts on the date of the transfer. The difference between following two amounts shall be recognised in profit or loss: * The carrying amount (measured at the date of derecognition) allocated to the part derecognised； * The sum of the consideration received for the part derecognised and part derecognised of the cumulative changes in fair value previously recognised in other comprehensive income (The financial assets involved in the transfer are classified as financial assets at fair value through other comprehensive income in accordance with Article 18 of the Accounting Standards for Business Enterprises No.22 - Recognition and Measurement of Financial Instruments).~ 54 ~(ii) Continuing involvement in transferred assets If the Company neither transfers nor retains substantially all the risks and rewards of ownership of a transferred asset and retains control of the transferred asset the Company shall continue to recognise the transferred asset to the extent of its continuing involvement and also recognise an associated liability.The extent of the Company’s continuing involvement in the transferred asset is the extent to which it is exposed to changes in the value of the transferred asset (iii) Continue to recognise the transferred assets If the Company retains substantially all the risks and rewards of ownership of the transferred financial asset the Company shall continue to recognise the transferred asset in its entirety and the consideration received shall be recognised as a financial liability.The financial asset and the associated financial liability shall not be offset. In subsequent accounting period the Company shall continuously recognise any income (gain) arising from the transferred asset and any expense (loss) incurred on the associated liability.(g) Offsetting financial assets and financial liabilities Financial assets and financial liabilities shall be presented separately in the statement of financial position and shall not be offset. When meets the following conditions financial assets and financial liabilities shall be offset and the net amount presented in the statement of financial position: The Company currently has a legally enforceable right to set off the recognised amounts; The Company intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.In accounting for a transfer of a financial asset that does not qualify for derecognition the Company shall not offset the transferred asset and the associated liability.(h) Determination of fair value of financial instruments Determination of financial assets and financial liabilities please refer to Note 3.11 3.11 Fair Value Measurement Fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.The Company determines fair value of the related assets and liabilities based on market value in the principal market or in the absence of a principal market in the most advantageous market price for the related asset or liability. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability assuming that market participants act in their economic best interest.The principal market is the market in which transactions for an asset or liability take place with the greatest volume and frequency. The most advantageous market is the market which maximizes the value that could be received from selling the asset and minimizes the value which is needed to be paid in order to transfer a liability considering the effect of transport costs and transaction costs both.~ 55 ~If the active market of the financial asset or financial liability exists the Company shall measure the fair value using the quoted price in the active market. If the active market of the financial instrument is not available the Company shall measure the fair value using valuation techniques.A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.* Valuation techniques The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value including the market approach the income approach and the cost approach. The Company shall use valuation techniques consistent with one or more of those approaches to measure fair value. If multiple valuation techniques are used to measure fair value the results shall be evaluated considering the reasonableness of the range of values indicated by those results. A fair value measurement is the point within that range that is most representative of fair value in the circumstances.When using the valuation technique the Company shall give the priority to relevant observable inputs. The unobservable inputs can only be used when relevant observable inputs is not available or practically would not be obtained. Observable inputs refer to the information which is available from market and reflects the assumptions that market participants would use when pricing the asset or liability. Unobservable Inputs refer to the information which is not available from market and it has to be developed using the best information available in the circumstances from the assumptions that market participants would use when pricing the asset or liability.* Fair value hierarchy To Company establishes a fair value hierarchy that categorises into three levels the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to Level 1 inputs and second to the Level 2 inputs and the lowest priority to Level 3 inputs. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. 3.12 Inventories (a) Classification of inventories Inventories are finished goods or products held for sale in the ordinary course of business in the process of production for such sale or in the form of materials or supplies to be consumed in the production process or in the rendering of services including raw materials work in progress semi-finished goods finished goods goods in stock turnover material etc.(b) Measurement method of cost of inventories sold or used ~ 56 ~Inventories are initially measured at the actual cost. Cost of inventories includes purchase cost processing cost and other costs. Cost of the issue is measured using the weighted average method.(c) Inventory system The perpetual inventory system is adopted. The inventories should be counted at least once a year and surplus or losses of inventory stocktaking shall be included in current profit and loss.(d) Provision for impairment of inventory Inventories are stated at the lower of cost and net realizable value. The excess of cost over net realizable value of the inventories is recognised as provision for impairment of inventory and recognised in current profit or loss.Net realizable value of the inventory should be determined on the basis of reliable evidence obtained and factors such as purpose of holding the inventory and impact of post balance sheet event shall be considered.(i) In normal operation process finished goods products and materials for direct sale their net realizable values are determined at estimated selling prices less estimated selling expenses and relevant taxes and surcharges; for inventories held to execute sales contract or service contract their net realizable values are calculated on the basis of contract price. If the quantities of inventories specified in sales contracts are less than the quantities held by the Company the net realizable value of the excess portion of inventories shall be based on general selling prices. Net realizable value of materials held for sale shall be measured based on market price.(ii) For materials in stock need to be processed in the ordinary course of production and business net realisable value is determined at the estimated selling price less the estimated costs of completion the estimated selling expenses and relevant taxes. If the net realisable value of the finished products produced by such materials is higher than the cost the materials shall be measured at cost; if a decline in the price of materials indicates that the cost of the finished products exceeds its net realisable value the materials are measured at net realisable value and differences shall be recognised at the provision for impairment.(iii) Provisions for inventory impairment are generally determined on an individual basis. For inventories with large quantity and low unit price the provisions for inventory impairment are determined on a category basis.(iv) If any factor rendering write-downs of the inventories has been eliminated at the reporting date the amounts written down are recovered and reversed to the extent of the inventory impairment which has been provided for.The reversal shall be included in profit or loss.(e) Amortization method of low-value consumables Low-value consumables: One-off writing off method is adopted Package material: One-off writing off method is adopted 3.13 Contract assets and contract liabilities Contract assets and contract liabilities are reocgnised on the basis of fulfilment of performance obligations and payment received from clients. A right to receive a promised consideration from a client resulting from goods transferred to or services provided to the client (where the right to consideration is dependent on factors other than ~ 57 ~the passage of time) is reocgnised a contract asset. A payment received from a client for which goods shall be transferred to or services shall be provided to the client is recognised as a contract liability.See Note 3.10 for the determination method and accounting treatment method of impairment of contract assets.Contract assets and contract liabilities are presentd as line items on the statement of financial position. A contract asset and contract liability arising from one contract are presented in net; while the net amount is a debit balance it is presented in contract assets or other non-current assets depending on liquidity; while the net amount is a credit balance it is presented in contract liabilities or other non-current liabilities depending on liquidity. Contract assets and contract liabilities arising form different contracts are not be offset. 3.14 Contract costs Costs for a contract include costs to fulfill the contract and costs to obtain the contract.An asset is recognised for the costs incurred to fulfill a contract on if those costs meet all of the following criteria: I. the costs are directly associated with a contract or an anticipated contract explicitly chargeable to the client under the contract incurred only for the contract; II. the costs generate or enhance resouces of the Company that will be used in satisfying performance obligations in the future; and III. the costs are expected to be recovered.An asset is recognised for the costs incurred to obtained a contract with a client if those costs are expected to be recovered.An asset recognised for the costs of a contract are amortised on a systematic basis that is consistent with recognition of revenue arising from the contract. Where the costs incurred to obtain a contract would be amortised for a period less than one year should they be recognised as an asset the costs are recognised in the current profit or loss as incurred.An impairment is recognised for an asset recognised for the costs of a contract to the extent that the carrying amount of the asset exceeds: I. the remaining amount of consideration that is expected to be received in exchange for the goods or services to which the asset relates; less II. the costs that relate directly to providing those goods or services and that have not been recognised as expenses.Upon recognition of the impairment further consideration is given for provision for an onerous contract in necessary.A reversal of some or all of an impairment loss previously recognised for an asset for the costs of a contract when ~ 58 ~the impairment conditions no longer exist or have improved. The increased carrying amount of the asset is cappted by the amount that would have been determined (net of amortisation) if no impairment loss had been recognised previously.An asset recognised for the costs to fulfill a contract is presented in inventories if its amortisation is not longer than 1 year or an operating cycle upon initial recognition; otherwise it is presented in other non-current assets.An asset recognised for the costs to obtain a contract is presented in other current assets if its amortisation is not longer than 1 year or an operating cycle upon initial recognition; otherwise it is presented in other non-current assets. 3.15 Long-term Equity Investments Long-term equity investments refer to equity investments where an investor has control of or significant influence over an investee as well as equity investments in joint ventures. Associates of the Company are those entities over which the Company has significant influence.(a) Determination basis of joint control or significant influence over the investee Joint control is the relevant agreed sharing of control over an arrangement and the arranged relevant activity must be decided under unanimous consent of the parties sharing control. In assessing whether the Company has joint control of an arrangement the Company shall assess first whether all the parties or a group of the parties control the arrangement. When all the parties or a group of the parties considered collectively are able to direct the activities of the arrangement the parties control the arrangement collectively. Then the Company shall assess whether decisions about the relevant activities require the unanimous consent of the parties that collectively control the arrangement. If two or more groups of the parties could control the arrangement collectively it shall not be assessed as have joint control of the arrangement. When assessing the joint control the protective rights are not considered.Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control of those policies. In determination of significant influence over an investee the Company should consider not only the existing voting rights directly or indirectly held but also the effect of potential voting rights held by the Company and other entities that could be currently exercised or converted including the effect of share warrants share options and convertible corporate bonds that issued by the investee and could be converted in current period.If the Company holds directly or indirectly 20% or more but less than 50% of the voting power of the investee it is presumed that the Company has significant influence of the investee unless it can be clearly demonstrated that in such circumstance the Company cannot participate in the decision-making in the production and operating of the investee.(b) Determination of initial investment cost ~ 59 ~(i) Long-term equity investments generated in business combinations For a business combination involving enterprises under common control if the Company makes payment in cash transfers non-cash assets or bears liabilities as the consideration for the business combination the share of carrying amount of the owners’ equity of the acquiree in the consolidated financial statements of the ultimate controlling party is recognised as the initial cost of the long-term equity investment on the combination date. The difference between the initial investment cost and the carrying amount of cash paid non-cash assets transferred and liabilities assumed shall be adjusted against the capital reserve; if capital reserve is not enough to be offset undistributed profit shall be offset in turn.For a business combination involving enterprises under common control if the Company issues equity securities as the consideration for the business combination the share of carrying amount of the owners’ equity of the acquiree in the consolidated financial statements of the ultimate controlling party is recognised as the initial cost of the long-term equity investment on the combination date. The total par value of the shares issued is recognised as the share capital. The difference between the initial investment cost and the carrying amount of the total par value of the shares issued shall be adjusted against the capital reserve; if capital reserve is not enough to be offset undistributed profit shall be offset in turn.For business combination not under common control the assets paid liabilities incurred or assumed and the fair value of equity securities issued to obtain the control of the acquiree at the acquisition date shall be determined as the cost of the business combination and recognised as the initial cost of the long-term equity investment. The audit legal valuation and advisory fees other intermediary fees and other relevant general administrative costs incurred for the business combination shall be recognised in profit or loss as incurred.(ii) Long-term equity investments acquired not through the business combination the investment cost shall be determined based on the following requirements: For long-term equity investments acquired by payments in cash the initial cost is the actually paid purchase cost including the expenses taxes and other necessary expenditures directly related to the acquisition of long-term equity investments.For long-term equity investments acquired through issuance of equity securities the initial cost is the fair value of the issued equity securities.For the long-term equity investments obtained through exchange of non-monetary assets if the exchange has commercial substance and the fair values of assets traded out and traded in can be measured reliably the initial cost of long-term equity investment traded in with non-monetary assets are determined based on the fair values of the assets traded out together with relevant taxes. Difference between fair value and book value of the assets traded out is recorded in current profit or loss. If the exchange of non-monetary assets does not meet the above criterion the book value of the assets traded out and relevant taxes are recognised as the initial investment cost.For long-term equity investment acquired through debt restructuring the initial cost is determined based on the ~ 60 ~fair value of the equity obtained and the difference between initial investment cost and carrying amount of debts shall be recorded in current profit or loss.(c) Subsequent measurement and recognition of profit or loss Long-term equity investment to an entity over which the Company has ability of control shall be accounted for at cost method. Long-term equity investment to a joint venture or an associate shall be accounted for at equity method.(i) Cost method For Long-term equity investment at cost method cost of the long-term equity investment shall be adjusted when additional amount is invested or a part of it is withdrawn. The Company recognises its share of cash dividends or profits which have been declared to distribute by the investee as current investment income.(ii) Equity method If the initial cost of the investment is in excess of the share of the fair value of the net identifiable assets in the investee at the date of investment the difference shall not be adjusted to the initial cost of long-term equity investment; if the initial cost of the investment is in short of the share of the fair value of the net identifiable assets in the investee at the date investment the difference shall be included in the current profit or loss and the initial cost of the long-term equity investment shall be adjusted accordingly.The Company recognises the share of the investee’s net profits or losses as well as its share of the investee’s other comprehensive income as investment income or losses and other comprehensive income respectively and adjusts the carrying amount of the investment accordingly. The carrying amount of the investment shall be reduced by the share of any profit or cash dividends declared to distribute by the investee. The investor’s share of the investee’s owners’ equity changes other than those arising from the investee’s net profit or loss other comprehensive income or profit distribution shall be recognised in the investor’s equity and the carrying amount of the long-term equity investment shall be adjusted accordingly. The Company recognises its share of the investee’s net profits or losses after making appropriate adjustments of investee’s net profit based on the fair values of the investee’s identifiable net assets at the investment date. If the accounting policy and accounting period adopted by the investee is not in consistency with the Company the financial statements of the investee shall be adjusted according to the Company’s accounting policies and accounting period based on which investment income or loss and other comprehensive income etc. shall be adjusted. The unrealized profits or losses resulting from inter-company transactions between the company and its associate or joint venture are eliminated in proportion to the company’s equity interest in the investee based on which investment income or losses shall be recognised. Any losses resulting from inter-company transactions between the investor and the investee which belong to asset impairment shall be recognised in full.Where the Company obtains the power of joint control or significant influence but not control over the investee due to additional investment or other reason the relevant long-term equity investment shall be accounted for by ~ 61 ~using the equity method initial cost of which shall be the fair value of the original investment plus the additional investment. Where the original investment is classified as investments in other equity instrument difference between its fair value and the carrying value in addition to the cumulative gains or losses previously recorded in other comprehensive income shall be transferred from other comprehensive income and recorded in retained earnings during the current period using equity method.If the Company loses the joint control or significant influence of the investee for some reasons such as disposal of equity investment the retained interest shall be measured at fair value and the difference between the carrying amount and the fair value at the date of loss the joint control or significant influence shall be recognised in profit or loss. When the Company discontinues the use of the equity method the Company shall account for all amounts previously recognised in other comprehensive income under equity method in relation to that investment on the same basis as would have been required if the investee had directly disposed of the related assets or liabilities.(d) Equity investment classified as held for sale Any retained interest in the equity investment not classified as held for sale shall be accounted for using equity method.When an equity investment in an associate or a joint venture previously classified as held for sale no longer meets the criteria to be so classified it shall be accounted for using the equity method retrospectively as from the date of its classification as held for sale. Financial statements for the periods since classification as held for sale shall be amended accordingly.(f) Impairment testing and provision for impairment loss For investment in subsidiaries associates or a joint venture provision for impairment loss please refer to Note 3.22. 3.16 Investment Properties (a) Classification of investment properties Investment properties are properties to earn rentals or for capital appreciation or both including: (i)Land use right leased out (ii)Land held for transfer upon appreciation (iii)Buildings leased out (b) The measurement model of investment property The Company adopts the cost model for subsequent measurement of investment properties. For provision for impairment please refer to Note 3.22.The Company calculates the depreciation or amortization based on the net amount of investment property cost less the accumulated impairment and the net residual value using straight-line method. 3.17 Fixed Assets Fixed assets refer to the tangible assets with higher unit price held for the purpose of producing commodities ~ 62 ~rendering services renting or business management with useful lives exceeding one year.(a) Recognition criteria of fixed assets Fixed assets will only be recognised at the actual cost paid when obtaining as all the following criteria are satisfied: (i) It is probable that the economic benefits relating to the fixed assets will flow into the Company; (ii) The costs of the fixed assets can be measured reliably.Subsequent expenditure for fixed assets shall be recorded in cost of fixed assets if recognition criteria of fixed assets are satisfied otherwise the expenditure shall be recorded in current profit or loss when incurred.(b) Depreciation methods of fixed assets The Company begins to depreciate the fixed asset from the next month after it is available for intended use using the straight-line-method. The estimated useful life and annual depreciation rates which are determined according to the categories estimated economic useful lives and estimated net residual rates of fixed assets are listed as followings: Estimated useful life Residual Annual depreciation Category Depreciation method (year) rates (%) rates (%) Buildings and straight-line-method 8.00-35.00 3.00-5.00 2.70-12.10 constructions Machinery equipment straight-line-method 8.00-10.00 3.00-5.00 9.50-12.10 Vehicles straight-line-method 4.00 3.00 24.25 Office equipment and straight-line-method 3.00 3.00 32.33 others For the fixed assets with impairment provided the impairment provision should be excluded from the cost when calculating depreciation.At the end of reporting period the Company shall review the useful life estimated net residual value and depreciation method of the fixed assets. Estimated useful life of the fixed assets shall be adjusted if it is changed compared to the original estimation.(c) Recognition criteria valuation and depreciation methods of fixed assets obtained through a finance lease If the entire risk and rewards related to the leased assets have been substantially transferred the Company shall recognise the lease as a finance lease. The cost of the fixed assets obtained through a finance lease is determined at the lower of the fair value of the leased assets and the present value of the minimum lease payment on the date of the lease. The fixed assets obtained by a finance lease are depreciated in the method which is consistent with the self-owned fixed assets of the Company. For fixed assets obtained through a finance lease if it is reasonably ~ 63 ~certain that the ownership of the leased assets will be transferred to the lessee by the end of the lease term they shall be depreciated over their remaining useful lives; otherwise the leased assets shall be depreciated over the shorter of the lease terms or their remaining useful lives. 3.18 Construction in Progress (a) Classification of construction in progress Construction in progress is measured on an individual project basis.(b) Recognition criteria and timing of transfer from construction in progress to fixed assets The initial book values of the fixed assets are stated at total expenditures incurred before they are ready for their intended use including construction costs original price of machinery equipment other necessary expenses incurred to bring the construction in progress to get ready for its intended use and borrowing costs of the specific loan for the construction or the proportion of the general loan used for the constructions incurred before they are ready for their intended use. The construction in progress shall be transferred to fixed asset when the installation or construction is ready for the intended use. For construction in progress that has been ready for their intended use but relevant budgets for the completion of projects have not been completed the estimated values of project budgets prices or actual costs should be included in the costs of relevant fixed assets and depreciation should be provided according to relevant policies of the Company when the fixed assets are ready for intended use. After the completion of budgets needed for the completion of projects the estimated values should be substituted by actual costs but depreciation already provided is not adjusted. 3.19 Right-of-use assets The Company initially measures right-of-use assets at cost which includes: (1) The initial measurement amount of the lease obligation. (2) If a lease incentive exists for lease payments made on or before the commencement date of the lease term the amount related to the lease incentive already taken is deducted. (3) Initial direct costs incurred by the Company. (4) Costs expected to be incurred by the Company to disassemble and remove the leasehold property restore the site where the leasehold property is located or restore the leasehold property to the condition agreed upon under the terms of the lease (excluding costs incurred to produce inventory). Subsequent to the commencement date of the lease term the Company uses the cost model for subsequent measurement of right-of-use assets.If it is reasonably certain that ownership of the leasehold property will be obtained at the end of the lease term the Company depreciates the leasehold property over its remaining service life.If it may not be reasonably ascertained that ownership of the leasehold property can be obtained at the end of the lease term the Company will depreciate the leasehold property over the shorter of ~ 64 ~the lease term or the remaining service life of the leasehold property. Right-of-use assets for which depreciation reserves have been made are depreciated in future periods at their carrying amounts net of depreciation reserves with reference to the above principles. 3.20 Borrowing Costs (a) Recognition criteria and period for capitalization of borrowing costs The Company shall capitalize the borrowing costs that are directly attributable to the acquisition construction or production of qualifying assets when meet the following conditions: (i) Expenditures for the asset are being incurred; (ii) Borrowing costs are being incurred and; (iii) Acquisition construction or production activities that are necessary to prepare the assets for their intended use or sale are in progress.Other borrowing cost discounts or premiums on borrowings and exchange differences on foreign currency borrowings shall be recognized into current profit or loss when incurred.Capitalization of borrowing costs is suspended during periods in which the acquisition construction or production of a qualifying asset is interrupted abnormally and the interruption is for a continuous period of more than 3 months.Capitalization of such borrowing costs ceases when the qualifying assets being acquired constructed or produced become ready for their intended use or sale. The expenditure incurred subsequently shall be recognised as expenses when incurred.(b) Capitalization rate and measurement of capitalized amounts of borrowing costs When funds are borrowed specifically for purchase construction or manufacturing of assets eligible for capitalization the Company shall determine the amount of borrowing costs eligible for capitalisation as the actual borrowing costs incurred on that borrowing during the period less any interest income on bank deposit or investment income on the temporary investment of those borrowings.Where funds allocated for purchase construction or manufacturing of assets eligible for capitalization are part of a general borrowing the eligible amounts are determined by the weighted-average of the cumulative capital expenditures in excess of the specific borrowing multiplied by the general borrowing capitalization rate. The capitalization rate will be the weighted average of the borrowing costs applicable to the general borrowing. 3.21 Intangible Assets (a) Measurement method of intangible assets Intangible assets are recognised at actual cost at acquisition.(b) The useful life and amortisation of intangible assets (i) The estimated useful lives of the intangible assets with finite useful lives are as follows: Category Estimated useful life Basis ~ 65 ~Category Estimated useful life Basis Land use right 40-50 years Legal life The service life is determined by reference to the period that Patent right 10 years can bring economic benefits to the Company The service life is determined by reference to the period that Software 3-5 years can bring economic benefits to the Company The service life is determined by reference to the period that Trademark 10 years can bring economic benefits to the Company For intangible assets with finite useful life the estimated useful life and amortisation method are reviewed annually at the end of each reporting period and adjusted when necessary. No change incurred in current year in the estimated useful life and amortisation method upon review.(ii) Assets of which the period to bring economic benefits to the Company are unforeseeable are regarded as intangible assets with indefinite useful lives. The Company reassesses the useful lives of those assets at every year end. If the useful lives of those assets are still indefinite impairment test should be performed on those assets at the balance sheet date.(iii) Amortisation of the intangible assets For intangible assets with finite useful lives their useful lives should be determined upon their acquisition and systematically amortised on a straight-line basis over the useful life. The amortisation amount shall be recognized into current profit or loss according to the beneficial items. The amount to be amortised is cost deducting residual value. For intangible assets which has impaired the cumulative impairment provision shall be deducted as well.The residual value of an intangible asset with a finite useful life shall be assumed to be zero unless: there is a commitment by a third party to purchase the asset at the end of its useful life; or there is an active market for the asset and residual value can be determined by reference to that market; and it is probable that such a market will exist at the end of the asset’s useful life.Intangible assets with indefinite useful lives shall not be amortised. The Company reassesses the useful lives of those assets at every year end. If there is evidence to indicate that the useful lives of those assets become finite the useful lives shall be estimated and the intangible assets shall be amortised systematically and reasonably within the estimated useful lives.(c) Criteria of classifying expenditures on internal research and development projects into research phase and development phase Preparation activities related to materials and other relevant aspects undertaken by the Company for the purpose of further development shall be treated as research phase. Expenditures incurred during the research phase of internal research and development projects shall be recognised in profit or loss when incurred.Development activities after the research phase of the Company shall be treated as development phase.~ 66 ~(d) Criteria for capitalization of qualifying expenditures during the development phase Expenditures arising from development phase on internal research and development projects shall be recognised as intangible assets only if all of the following conditions have been met: (i) Technical feasibility of completing the intangible assets so that they will be available for use or sale; (ii) Its intention to complete the intangible asset and use or sell it; (iii) The method that the intangible assets generate economic benefits including the Company can demonstrate the existence of a market for the output of the intangible assets or the intangible assets themselves or if it is to be used internally the usefulness of the intangible assets; (iv) The availability of adequate technical financial and other resources to complete the development and to use or sell the intangible asset; and (v) Its ability to measure reliably the expenditure attributable to the intangible asset. 3.22 Impairment of Long-Term Assets Impairment loss of long-term equity investment in subsidiaries associates and joint ventures investment properties fixed assets and constructions in progress subsequently measured at cost intangible assets shall be determined according to following method: The Company shall assess at the end of each reporting period whether there is any indication that an asset may be impaired. If any such indication exists the Company shall estimate the recoverable amount of the asset and test for impairment. Irrespective of whether there is any indication of impairment the Company shall test for impairment of goodwill acquired in a business combination intangible assets with an indefinite useful life or intangible assets not yet available for use annually.The recoverable amounts of the long-term assets are the higher of their fair values less costs to dispose and the present values of the estimated future cash flows of the long-term assets. The Company estimate the recoverable amounts on an individual basis. If it is difficult to estimate the recoverable amount of the individual asset the Company estimates the recoverable amount of the groups of assets that the individual asset belongs to.Identification of an group of asset is based on whether the cash inflows from it are largely independent of the cash inflows from other assets or groups of assets.If and only if the recoverable amount of an asset or a group of assets is less than its carrying amount the carrying amount of the asset shall be reduced to its recoverable amount and the provision for impairment loss shall be recognised accordingly.For the purpose of impairment testing goodwill acquired in a business combination shall from the acquisition date be allocated to relevant group of assets based on reasonable method; if it is difficult to allocate to relevant group of assets good will shall be allocated to relevant combination of asset groups. The relevant group of assets or combination of asset groups is a group of assets or combination of asset groups that is benefit from the synergies of the business combination and is not larger than the reporting segment determined by the Company.~ 67 ~When test for impairment if there is an indication that relevant group of assets or combination of asset groups may be impaired impairment testing for group of assets or combination of asset groups excluding goodwill shall be conducted first and calculate the recoverable amount and recognize the impairment loss. Then the group of assets or combination of asset groups including goodwill shall be tested for impairment by comparing the carrying amount with its recoverable amount. If the recoverable amount is less than the carrying amount the Company shall recognise the impairment loss.The mentioned impairment loss will not be reversed in subsequent accounting period once it had been recognised. 3.23 Long-term Deferred Expenses Long-term deferred expenses are various expenses already incurred which shall be amortised over current and subsequent periods with the amortisation period exceeding one year. Long-term deferred expenses are evenly amortised over the beneficial period 3.24 Employee Benefits Employee benefits refer to all forms of consideration or compensation given by the Company in exchange for service rendered by employees or for the termination of employment relationship. Employee benefits include short-term employee benefits post-employment benefits termination benefits and other long-term employee benefits. Benefits provided to an employee's spouse children dependents family members of decreased employees or other beneficiaries are also employee benefits.According to liquidity employee benefits are presented in the statement of financial position as “Employeebenefits payable” and “Long-term employee benefits payable”.(a) Short-term employee benefits (i) Employee basic salary (salary bonus allowance subsidy) The Company recognises in the accounting period in which an employee provides service actually occurred short-term employee benefits as a liability with a corresponding charge to current profit except for those recognised as capital expenditure based on the requirement of accounting standards.(ii) Employee welfare The Company shall recognise the employee welfare based on actual amount when incurred into current profit or loss or related capital expenditure. Employee welfare shall be measured at fair value as it is a non-monetary benefit.(iii) Social insurance such as medical insurance and work injury insurance housing funds labor union fund and employee education fund Payments made by the Company of social insurance for employees such as medical insurance and work injury insurance payments of housing funds and labor union fund and employee education fund accrued in accordance with relevant requirements in the accounting period in which employees provide services is calculated according to required accrual bases and accrual ratio in determining the amount of employee benefits and the related ~ 68 ~liabilities which shall be recognised in current profit or loss or the cost of relevant asset.(iv) Short-term paid absences The company shall recognise the related employee benefits arising from accumulating paid absences when the employees render service that increases their entitlement to future paid absences. The additional payable amounts shall be measured at the expected additional payments as a result of the unused entitlement that has accumulated.The Company shall recognise relevant employee benefit of non-accumulating paid absences when the absences actually occurred.(v) Short-term profit-sharing plan The Company shall recognise the related employee benefits payable under a profit-sharing plan when all of the following conditions are satisfied: (i) The Company has a present legal or constructive obligation to make such payments as a result of past events; and (ii) A reliable estimate of the amounts of employee benefits obligation arising from the profit- sharing plan can be made.(b) Post-employment benefits (i) Defined contribution plans The Company shall recognise in the accounting period in which an employee provides service the contribution payable to a defined contribution plan as a liability with a corresponding charge to the current profit or loss or the cost of a relevant asset.When contributions to a defined contribution plan are not expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related service they shall be discounted using relevant discount rate (market yields at the end of the reporting period on high quality corporate bonds in active market or government bonds with the currency and term which shall be consistent with the currency and estimated term of the defined contribution obligations) to measure employee benefits payable.(ii) Defined benefit plan The present value of defined benefit obligation and current service costs Based on the expected accumulative welfare unit method the Company shall make estimates about demographic variables and financial variables in adopting the unbiased and consistent actuarial assumptions and measure defined benefit obligation and determine the obligation period. The Company shall discount the obligation arising from defined benefit plan using relevant discount rate (market yields at the end of the reporting period on high quality corporate bonds in active market or government bonds with the currency and term which shall be consistent with the currency and estimated term of the defined benefit obligations) in order to determine the present value of the defined benefit obligation and the current service cost.The net defined benefit liability or asset ~ 69 ~The net defined benefit liability (asset) is the deficit or surplus recognised as the present value of the defined benefit obligation less the fair value of plan assets (if any).When the Company has a surplus in a defined benefit plan it shall measure the net defined benefit asset at the lower of the surplus in the defined benefit plan and the asset ceiling.The amount recognised in the cost of asset or current profit or loss Service cost comprises current service cost past service cost and any gain or loss on settlement. Other service cost shall be recognised in profit or loss unless accounting standards require or allow the inclusion of current service cost within the cost of assets.Net interest on the net defined benefit liability (asset) comprising interest income on plan assets interest cost on the defined benefit obligation and interest on the effect of the asset ceiling shall be included in profit or loss.The amount recognised in other comprehensive income Changes in the net liability or asset of the defined benefit plan resulting from the remeasurements including: * Actuarial gains and losses the changes in the present value of the defined benefit obligation resulting from experience adjustments or the effects of changes in actuarial assumptions; * Return on plan assets excluding amounts included in net interest on the net defined benefit liability or asset; * Any change in the effect of the asset ceiling excluding amounts included in net interest on the net defined benefit liability (asset).Remeasurements of the net defined benefit liability (asset) recognised in other comprehensive income shall not be reclassified to profit or loss in a subsequent period. However the Company may transfer those amounts recognised in other comprehensive income within equity.(c) Termination benefits The Company providing termination benefits to employees shall recognise an employee benefits liability for termination benefits with a corresponding charge to the profit or loss of the reporting period at the earlier of the following dates: (i) When the Company cannot unilaterally withdraw the offer of termination benefits because of an employment termination plan or a curtailment proposal.(ii) When the Company recognises costs or expenses related to a restructuring that involves the payment of termination benefits.If the termination benefits are not expected to be settled wholly before twelve months after the end of the annual reporting period the Company shall discount the termination benefits using relevant discount rate (market yields at the end of the reporting period on high quality corporate bonds in active market or government bonds with the currency and term which shall be consistent with the currency and estimated term of the defined benefit obligations) to measure the employee benefits.(d) Other long-term employee benefits ~ 70 ~(i) Meet the conditions of the defined contribution plan When other long-term employee benefits provided by the Company to the employees satisfies the conditions for classifying as a defined contribution plan all those benefits payable shall be accounted for as employee benefits payable at their discounted value.(ii) Meet the conditions of the defined benefit plan At the end of the reporting period the Company recognised the cost of employee benefit from other long-term employee benefits as the following components: * Service costs; * Net interest cost for net liability or asset of other long-term employee benefits * Changes resulting from the remeasurements of the net liability or asset of other long-term employee benefits In order to simplify the accounting treatment the net amount of above items shall be recognised in profit or loss or relevant cost of assets. 3.25 Lease Liabilities The Company initially measures the lease obligation at the present value of the lease payments outstanding at the commencement date of the lease term. When calculating the present value of lease paymentsthe Company uses the interest rate implicit in lease as the rate of discount. If the interest rate implicit in lease cannot be determined the Company's incremental lending rate is used as the rate of discount. Lease payments include: (1) The amount of fixed payments net of amounts related to lease incentives and the amount of substantive fixed payments. (2) Variable lease payments that depend on indexation or ratio. (3) The lease payment amount includes the exercise price of the purchase option if the Company is reasonably certain that the option will be exercised. (4) Where the lease term reflects that the Company will exercise the option to terminate the lease the lease payment amount includes the amount required to be paid to exercise the option to terminate the lease. (5) Estimated amount payable based on the residual value of the guarantee provided by the Company. The Company calculates the interest expense on the lease obligation for each period of the lease term at a fixed rate of discount and includes it in the current profit or loss or cost of the related assets. Variable lease payments that are not included in the measurement of the lease obligation should be charged to current profit or loss or the cost of the related assets when they are actually incurred. 3.26 Estimated Liabilities (a) Recognition criteria of estimated liabilities The Company recognises the estimated liabilities when obligations related to contingencies satisfy all the following conditions: (i) That obligation is a current obligation of the Company; ~ 71 ~(ii) It is likely to cause any economic benefit to flow out of the Company as a result of performance of the obligation; and (iii) The amount of the obligation can be measured reliably.(b) Measurement method of estimated liabilities The estimated liabilities of the Company are initially measured at the best estimate of expenses required for the performance of relevant present obligations. The Company when determining the best estimate has had a comprehensive consideration of risks with respect to contingencies uncertainties and the time value of money.The carrying amount of the estimated liabilities shall be reviewed at the end of every reporting period. If conclusive evidences indicate that the carrying amount fails to be the best estimate of the estimated liabilities the carrying amount shall be adjusted based on the updated best estimate. 3.27 Revenue Recognition Principle and Measurement 3.27.1 General principle Revenue is the total inflow of economic benefits formed in the company's daily activities that will increase shareholders' equity and does not relate to the capital invested by shareholders.The Company has fulfilled the performance obligation in the contract that is the revenue is recognised when the customer obtains the control right of relevant goods. To obtain the control right of the relevant commodity means to be able to dominate the use of the commodity and obtain almost all the economic benefits from it.If there are two or more performance obligations in the contract the Company will allocate the transaction price to each performance obligation based on the relative proportion of the separate selling price of the goods or services promised by each performance obligation on the start date of the contract and measure the income based on the transaction price allocated to each single performance obligation.The transaction price refers to the amount of consideration that the Company is expected to be entitled to receive due to the transfer of goods or services to customers excluding payments collected on behalf of third parties.When determining the transaction price of the contract the Company determines the transaction price according to the terms of the contract and in combination with its historical practices. When determining the transaction price the Company takes into account the influence of variable considerations significant financing elements in the contract the non-cash considerations the considerations payable to customers and other factors. The Company determines the transaction price including variable consideration at an amount that does not exceed the amount at which the accumulated recognized income is unlikely to have a significant reversal when the relevant uncertainty is eliminated. If there is a significant financing component in the contract the Company will determine the transaction price based on the amount payable in cash when the customer obtains the control right ~ 72 ~of the commodity. The difference between the transaction price and the contract consideration will be amortised by the effective interest method during the contract period. If the interval between the control right transfer and the customer's payment is less than one year the company will not consider the financing component.If one of the following conditions is met the performance obligation shall be fulfilled within a certain period of time; otherwise the performance obligation shall be fulfilled at a certain point of time: (a) The customer obtains and consumes the economic benefits brought by the Company's fulfillment of contract when the Company performs the obligations; (b) The customer can control the commodities under construction during the Company's execution of the contract; (c) The commodities produced by the Company during the performance of the contract have irreplaceable uses and the Company has the right to collect payment for the cumulative performance part that has been completed so far during the entire contract period.For performance obligations fulfilled within a certain period of time the Company recognises revenue in accordance with the performance progress during that period except where the performance progress cannot be reasonably determined. The Company determines the progress of the performance of services in accordance with the input method (or output method). When the progress of the contract performance cannot be reasonably determined if the cost incurred by the Company is expected to be compensated the revenue shall be recognised according to the amount of the cost incurred until the progress of the contract performance can be reasonably determined.For performance obligations fulfilled at a certain point in time the Company recognises revenue at the point when the customer obtains control of the relevant commodities. The Company considers the following signs when judging whether a customer has obtained control of goods or services: (a)The Company has the current right to receive payment for the goods or services that is the customer has the current obligation to pay for the goods; (b) The Company has transferred the legal ownership of the goods to the customer that is the customer has the legal ownership of the goods; (c) The Company has transferred the goods in kind to the customer that is the customer has possessed the goods in kind; (d) The company has transferred the main risks and rewards of the ownership of the goods to the customers that is the customers have obtained the main risks and rewards of the ownership of the goods; (e) The customer has accepted the goods or services.~ 73 ~(f) Other indications that the customer has obtained control of the product 3.27.2 Specific methods The specific methods of the Company's revenue recognition are as follows: (a) Revenue from sale of goods The sale contract between the Company and its customers is an obligation fulfilled within a certain period in time.The following requirements shall be met to recognize the revenue of products: The Company has delivered the goods to the customer in accordance with the contract and the customer has accepted the goods. The payment has been recovered or the receipt voucher has been obtained and the relevant economic benefits are likely to flow in.The main risks and rewards of product ownership have been transferred. The legal ownership of the goods has been transferred.(b) Revenue from rendering of services The customer simultaneously receives and consumes the economic benefits provided by the Company’s performance as the Company fulfills obligation. For the performance obligations fulfilled within a certain period of time the Company recognizes the revenue according to the performance progress when providing technical services.If the customer is unable to immediately obtain and consume the economic benefits provided by the Company’s performance as the Company fulfills obligation and the Company has no right to receive the revenue from the accumulated performance that has been completed so far throughout the entire contract period the Company will consider it as a performance obligation to be fulfilled at a certain point in time. When the Company completes technical services according to the contract agreement the company recognizes revenue.(c) Revenue from alienating the right to use assets When the economic benefits relevant to the transaction are likely to flow into the Company and the amount of revenue can be reliably measured the transfer of asset use rights shall be recognized as the amount of revenue.The revenue from the transfer of asset use rights by the Company mainly comes from the rental of premises and tenements which is calculated and recognized according to the charging time and method stipulated in relevant contracts or agreements. 3.28 Government Grants (a) Recognition of government grants A government grant shall not be recgonised until there is reasonable assurance that: (i) The Company will comply with the conditions attaching to them; and ~ 74 ~(ii) The grants will be received.(b) Measurement of government grants Monetary grants from the government shall be measured at amount received or receivable and non-monetary grants from the government shall be measured at their fair value or at a nominal value of RMB 1.00 when reliable fair value is not available.(c) Accounting for government grants (i) Government grants related to assets Government grants pertinent to assets mean the government grants that are obtained by the Company used for purchase or construction or forming the long-term assets by other ways. Government grants pertinent to assets shall be recognised as deferred income and should be recognised in profit or loss on a systematic basis over the useful lives of the relevant assets. Grants measured at their nominal value shall be directly recognised in profit or loss of the period when the grants are received. When the relevant assets are sold transferred written off or damaged before the assets are terminated the remaining deferred income shall be transferred into profit or loss of the period of disposing relevant assets.(ii) Government grants related to income Government grants other than related to assets are classified as government grants related to income. Government grants related to income are accounted for in accordance with the following principles: If the government grants related to income are used to compensate the enterprise’s relevant expenses or losses in future periods such government grants shall be recognised as deferred income and included into profit or loss in the same period as the relevant expenses or losses are recognised; If the government grants related to income are used to compensate the enterprise’s relevant expenses or losses incurred such government grants are directly recognised into current profit or loss For government grants comprised of part related to assets as well as part related to income each part is accounted for separately; if it is difficult to identify different part the government grants are accounted for as government grants related to income as a whole.Government grants related to daily operation activities are recognised in other income in accordance with the nature of the activities and government grants irrelevant to daily operation activities are recognised in non-operating income.(iii) Loan interest subsidy When loan interest subsidy is allocated to the bank and the bank provides a loan at lower-market rate of interest to the Company the loan is recognised at the actual received amount and the interest expense is calculated based on the principal of the loan and the lower-market rate of interest.When loan interest subsidy is directly allocated to the Company the subsidy shall be recognised as offsetting the relevant borrowing cost.~ 75 ~(iv) Repayment of the government grants Repayment of the government grants shall be recorded by increasing the carrying amount of the asset if the book value of the asset has been written down or reducing the balance of relevant deferred income if deferred income balance exists any excess will be recognised into current profit or loss; or directly recognised into current profit or loss for other circumstances. 3.29 Deferred Tax Assets and Deferred Tax Liabilities Temporary differences are differences between the carrying amount of an asset or liability in the statement of financial position and its tax base at the balance sheet date. The Company recognise and measure the effect of taxable temporary differences and deductible temporary differences on income tax as deferred tax liabilities or deferred tax assets using liability method. Deferred tax assets and deferred tax liabilities shall not be discounted.(a) Recognition of deferred tax assets Deferred tax assets should be recognised for deductible temporary differences the carryforward of unused tax losses and the carryforward of unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences the carryforward of unused tax losses and the carryforward of unused tax credits can be utilised at the tax rates that are expected to apply to the period when the asset is realised unless the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that: (i) Is not a business combination; and (ii) At the time of the transaction affects neither accounting profit nor taxable profit (tax loss) The Company shall recognise a deferred tax asset for all deductible temporary differences arising from investments in subsidiaries associates and joint ventures only to the extent that it is probable that: (i) The temporary difference will reverse in the foreseeable future; and (ii) Taxable profit will be available against which the deductible temporary difference can be utilised.At the end of each reporting period if there is sufficient evidence that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized the Company recognises a previously unrecognised deferred tax asset.The carrying amount of a deferred tax asset shall be reviewed at the end of each reporting period. The Company shall reduce the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised. Any such reduction shall be reversed to the extent that it becomes probable that sufficient taxable profit will be available.(b) Recognition of deferred tax liabilities A deferred tax liability shall be recognised for all taxable temporary differences at the tax rate that are expected to apply to the period when the liability is settled.~ 76 ~(i) No deferred tax liability shall be recognised for taxable temporary differences arising from: * The initial recognition of goodwill; or * The initial recognition of an asset or liability in a transaction which: is not a business combination; and at the time of the transaction affects neither accounting profit nor taxable profit (tax loss) (ii) An entity shall recognise a deferred tax liability for all taxable temporary differences associated with investments in subsidiaries associates and joint ventures except to the extent that both of the following conditions are satisfied: * The Company is able to control the timing of the reversal of the temporary difference; and * It is probable that the temporary difference will not reverse in the foreseeable future.(c) Recognition of deferred tax liabilities or assets involved in special transactions or events (i) Deferred tax liabilities or assets related to business combination For the taxable temporary difference or deductible temporary difference arising from a business combination not under common control a deferred tax liability or a deferred tax asset shall be recognised and simultaneously goodwill recognised in the business combination shall be adjusted based on relevant deferred tax expense (income).(ii) Items directly recognised in equity Current tax and deferred tax related to items that are recognised directly in equity shall be recognised in equity.Such items include: other comprehensive income generated from fair value fluctuation of investments in other debt obligations; an adjustment to the opening balance of retained earnings resulting from either a change in accounting policy that is applied retrospectively or the correction of a prior period (significant) error; amounts arising on initial recognition of the equity component of a compound financial instrument that contains both liability and equity component.(iii) Unused tax losses and unused tax credits Unsused tax losses and unused tax credits generated from daily operation of the Company itself Deductible loss refers to the loss calculated and permitted according to the requirement of tax law that can be offset against taxable income in future periods. The criteria for recognising deferred tax assets arising from the carryforward of unused tax losses and tax credits are the same as the criteria for recognising deferred tax assets arising from deductible temporary differences. The Company recognises a deferred tax asset arising from unused tax losses or tax credits only to the extent that there is convincing other evidence that sufficient taxable profit will be available against which the unused tax losses or unused tax credits can be utilised by the Company. Income taxes in current profit or loss shall be deducted as well.Unsused tax losses and unused tax credits arising from a business combination Under a business combination the acquiree’s deductible temporary differences which do not satisfy the criteria at the acquisition date for recognition of deferred tax asset shall not be recognised. Within 12 months after the ~ 77 ~acquisition date if new information regarding the facts and circumstances exists at the acquisition date and the economic benefit of the acquiree’s deductible temporary differences at the acquisition is expected to be realised the Company shall recognise acquired deferred tax benefits and reduce the carrying amount of any goodwill related to this acquisition. If goodwill is reduced to zero any remaining deferred tax benefits shall be recognised in profit or loss. All other acquired deferred tax benefits realised shall be recognised in profit or loss.(iv) Temporary difference generated in consolidation elimination When preparing consolidated financial statements if temporary difference between carrying value of the assets and liabilities in the consolidated financial statements and their taxable bases is generated from elimination of inter-company unrealized profit or loss deferred tax assets or deferred tax liabilities shall be recognised in the consolidated financial statements and income taxes expense in current profit or loss shall be adjusted as well except for deferred tax related to transactions or events recognised directly in equity and business combination.(v) Share-based payment settled by equity If tax authority permits tax deduction that relates to share-based payment during the period in which the expenses are recognised according to the accounting standards the Company estimates the tax base in accordance with available information at the end of the accounting period and the temporary difference arising from it. Deferred tax shall be recognised when criteria of recognition are satisfied. If the amount of estimated future tax deduction exceeds the amount of the cumulative expenses related to share-based payment recognised according to the accounting standards the tax effect of the excess amount shall be recognised directly in equity. 3.30 Leases (1) Identification of a lease At inception of a contract the Company assesses whether the contract is or contains a lease. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of time the Company assesses whether throughout the period of use the customer has the right to obtain substantially all of the economic benefits from use of the identified asset and the right to direct the use of the identified asset. (2) Identification of separate leases If a contract contains multiple separate leases the Company divides the contract and perform separate accounting treatment for each separate lease. The right to use an identified asset is a separate lease component if simultaneously: a) the lessee can benefit from use of the asset either on its own or together with other resources that are readily ~ 78 ~available to the lessee; and b) the asset is neither highly dependent on nor highly interrelated with other assets in the contract. (3) Accounting treatment of a lease in which the Company is the lessee On its commencement date the Company recognizes a lease that has a lease term of 12 months or less and does not contain a purchase option as a short-term lease and recognizes a lease for which the underlying asset is of low value when it is brand new as a lease of a low-value asset. If the Company subleases an asset leased or expects to sublease an asset leased the head lease does not qualify as a lease of a low-value asset.For all short-term leases and leases of low-value assets the Company shall record the lease payments in the underlying asset costs or current profits and losses with a straight-line method during each period of the lease term.Except for short-term leases and leases of low-value assets which are treated using a simplified approach for each lease the Company recognizes the right-of-use assets and lease liabilities on the commencement date of the lease term.* Right-of-use assets Right-of-use assets refer to the right of the lessees to use the leasehold property in the lease term.After the commencement date of the lease term the Group uses the cost for initial measurement of right-of-use assets. The cost includes: The initial measurement amount of lease liabilities; Lease payments made on or before the start date of the lease term (if a lease incentive exists the amount related to the lease incentive already taken shall be deducted); Initial direct costs incurred by the lessee; Costs expected to be incurred by the Company for dismantling and removing the leased assets restoring the premises where the leased assets are located or restoring the leased assets to the status agreed in the leasing clauses. The costs shall be recognized and measured by the Company according to the recognition criteria and measurement method of provisions. Please refer to “12. Provisions” in Note 3 for details. If the aforementioned costs are incurred for inventory production the costs shall be included in inventory costs.The Company depreciates the right-of-use assets with the straight-line method. If it is reasonably certain that the ownership of the leasehold property will be obtained at the end of the lease term the Company will determine the depreciation rate in accordance with the types of right-of-use assets and estimated net residual value rates over its ~ 79 ~estimated remaining service life. If it is not reasonably certain that the ownership of the leasehold property will be obtained at the end of the lease term the Company will determine the depreciation rate in accordance with the types of right-of-use assets over the lease term or the remaining service life whichever is shorter.* Lease liabilities Lease liabilities are initially measured at the present value of the lease payments outstanding at the commencement date of the lease term. The lease payments include the following five items: Fixed lease payments and substantial fixed lease payments (if a lease incentive exists the amount related to the lease incentive shall be deducted); Variable lease payments that depend on indexation or ratio; Exercise price of the purchase option provided that the lessee is reasonably certain that the option will be exercised; Payments required to be made for exercising the option to terminate the lease if the lease term reflects that the lessee will exercise such an option; The estimated amount payable based on the secured residual value provided by the lessee.The Company uses the interest rate implicit in lease as the rate of discount when calculating the present value of the lease payments. The incremental interest rate on borrowing of the lessee will be used as the rate of discount if the interest rate implicit in lease cannot be determined. The difference between the lease payment and its present value is regarded as an unrecognized financing expense. Interest expense is recognized at the discount rate of the present value of the recognized lease payment during each period of the lease term and is recorded in the profit and loss for the current period. Variable lease payments that are not covered in the measurement of the lease liabilities are included in current profit or loss when actually incurred.The Company will re-calculate the lease liabilities using the present value of the changed lease payments and adjust the book value of right-of-use assets accordingly if the substantial fixed payment the estimated payments due to the guaranteed residual value the index or rate used to determine the lease payments or the assessment result of the call option the renewal option or the termination option or the actual exercise changes after the commencement date of the lease term. (4) Accounting treatment of lease change Where an operating lease changes the accounting treatment is conducted for it which is regarded as a new lease from the effective date of the change and receivables in advance or lease receivables related to lease before ~ 80 ~change are deemed as the receivables in the new lease. (5) Sale and leaseback The Company assesses whether the asset transfer in a sale and leaseback transaction is a sale in accordance with the Note 3.27.* The Company as seller (the lessee) If the asset transfer in a sale and leaseback transaction is not a sale the Company continues to recognize the transferred asset and at the same time recognizes a financial liability equivalent to the transfer revenue and conducts corresponding accounting treatment for the financial liability in accordance with “10. Provisions” in Note 3. If the asset transfer in a sale and leaseback transaction is a sale the Company measures the right-of-use assets formed by the sale and leaseback based on the portion of the original asset’s carrying value that is related to the use right acquired by the leaseback and recognizes related gains or losses only for the right transferred to the lessor.* The Company as the buyer (the lessor) If the asset transfer in a sale and leaseback transaction is not a sale the Company does not recognize the transferred asset but recognizes a financial asset equivalent to the transfer revenue and conducts corresponding accounting treatment for the financial asset in accordance with the Note 3.10. If the asset transfer in a sale and leaseback transaction is a sale the Company applies other accounting standards for business enterprises to the accounting treatment for asset purchase and conducts corresponding accounting treatment for asset lease. 3.31 Changes in Significant Accounting Policies and Accounting Estimates (1) Changes in accounting polices □ Applicable □ Not applicable Changes to the accounting policies and Remark Approval process why On 30 December 2021 the Ministry of Finance (MOF) issued Accounting Standard for Business Enterprises Interpretation No. 15 (C.K. [2021] No. 35) ("Interpretation No. 15") in which "Accounting for the sale of products or Deliberated and approved by the 2nd See the Announcement on Changes in by-products produced by an enterprise Meeting of the 10th Board of Directors Accounting Policies disclosed by the before the fixed assets reach their and the 2nd Meeting of the 10th Company on Cninfo dated 31 August intended useable state or in the course of Supervisory Committee of the Company 2023 for details.research and development" and "Judgment on loss-making contracts" came into force on 1 January 2022 and“Presentation of centralized capitalmanagement” came into force on the date ~ 81 ~of publication.On 30 November 2022 the Ministry of Finance ("MOF") issued Accounting Standard for Business Enterprises Interpretation No. 16 (C.K. [2022] No. 31) ("Interpretation No. 16") in which“Accounting treatment for deferredincome tax relating to assets and liabilities arising from a single Deliberated and approved by the 2nd See the Announcement on Changes in transaction that is not subject to the Meeting of the 10th Board of Directors Accounting Policies disclosed by theinitial recognition exemption” came into and the 2nd Meeting of the 10th Company on Cninfo dated 31 Augustforce on 1 January 2023 “AccountingSupervisory Committee of the Company 2023 for details.method of the income tax effects of dividends on financial instruments classified as equity instruments by the issuer" and "Accounting method of the revision of share-based payment settled in cash to share-based payment settled in equity by an enterprise" came into force on the date of publication. (2) Changes in Accounting Estimates □ Applicable □ Not applicable (3) Adjustments to Financial Statement Items at the Beginning of the Year of the First Implementation of the New Accounting Standards Implemented since 2023 □ Applicable □ Not applicable 4. TAXATION 4.1 Main Taxes and Tax Rate Category of taxes Basis of tax assessment Tax rate VAT are paid on added value of VAT 13% 9% 6% product sales Consumption taxes are paid Sales of baijiu RMB1 per 1000 ml or per kg to calculate the amount of Consumption tax onsales volume of taxable consumption tax a flat rate 20% of the annual turnover to calculate the consumer goods amount of consumption tax at valorem.Urban maintenance and Urban maintenance and construction taxes are paid on 7%、5% construction tax turnover taxes Education expenses Educational surcharges are paid 3% surcharge on turnover taxes Local education Local educational surcharges are 2% surcharge paid on turnover taxes Business taxes are calculated Enterprise income tax 25% and paid on taxable revenues The basic rate of enterprise income tax of the Company is 25% and the actual income tax rates of some of its ~ 82 ~subsidiaries with different tax rates are as follows: Name of the entities Actual income tax rate Anhui Longrui Glass Co. Ltd 15.00% Anhui Ruisiweier Technology Co. Ltd 15.00% Anhui RunAnXinKe Testing Technology Co. Ltd. 15.00% Wuhan Yashibo Technology Co. Ltd 5.00% Bozhou Gujing Hotel Co. Ltd 5.00% Hubei Junlou Cultural Tourism Co. Ltd. 5.00% Hubei Yellow Crane Tower Beverage Co. Ltd. 5.00% Hubei Xinjia Testing Technology Co. Ltd. 5.00% Wuhan Gulou Junhe Trading Co. Ltd. 5.00% Wuhan Gulou Juntai Trading Co. Ltd. 5.00% Anhui Guqi Distillery Co. Ltd. 5.00% Anhui Jiuan Mechanical Electrical Equipment Co. 5.00% Ltd.Anhui Jiuhao China Railway Construction 5.00% Engineering Co. Ltd.Anhui Anjie Technology Co. Ltd. 5.00% Anhui Gujinggong Liquor Original Vintage Theme 5.00% Hotel Management Co. Ltd.Anhui Gujing Health Technology Co. Ltd. 15.00% 4.2 Tax Preference (1) According to the Notice on Announcing the List of First Batch of High-tech Enterprises in Anhui Province for 2022 (wankeqimi [2022] No.482) issued by Department of Science and Technology of Anhui province the subsidiary Ruisiweier was identified as a high-tech enterprise in 2022 therefore was given High-tech Enterprise Certificate (Certificate Number: GR202234000476) which is valid for 3 years. According to Enterprise Income Tax Law and other relevant regulations the company is subject to a national high-tech enterprise income tax rate at 15% for three years from 1 January 2022 to 31 December 2024. (2) According to the Notice on Filing and Publicity for the First Batch of High-tech Enterprises Recognized by the Certifing Body in Anhui Province for 2022 jointly issued by Department of Science and Technology of Anhui province Department of Finance of Anhui province and Anhui Provincial Taxation Bureau of State Administration of Taxation the subsidiary Longrui Glass was identified as a high-tech enterprise in 2022 therefore was given High-tech Enterprise Certificate (Certificate Number: GR202234004359) which is valid for 3 years. According to Enterprise Income Tax Law and other relevant regulations the company is subject to a ~ 83 ~national high-tech enterprise income tax rate at 15% for three years from 1 January 2022 to 31 December 2024. (3) According to Notice on Announcing the List of Two Batches of Supplementary Filing High-tech Enterprises in Anhui Province for 2021 (wankegaomi [2022] No.49) issued by Department of Science and Technology of Anhui province Department of Finance of Anhui province and Anhui Provincial Taxation Bureau of State Administration of Taxation the subsidiary Anhui RunAnXinKe Testing Technology Co. Ltd. was identified as a high-tech enterprise in 2021 therefore was given High-tech Enterprise Certificate (Certificate Number: GR202134004920) which is valid for 3 years. According to Enterprise Income Tax Law and other relevant regulations the company is subject to a national high-tech enterprise income tax rate at 15% for three years from 1 January 2021 to 31 December 2023. (4) According to the Announcement on the Filing of the Second Batch of High-tech Enterprises Identified by the Anhui Province in 2021 issued by the Office of the National Leading Group for the Identification andManagement of High-tech Enterprises the subsidiary Anhui Gujing Health Technology Co. Ltd. (“HealthTechnology”) has been recognized as the second batch of high-tech enterprises in Anhui Province in 2021 and obtained the High-tech Enterprise Certificate (Certificate No.: GR202134004641) with a valid period from 2021 to 2023. According to relevant regulations such as the Enterprise Income Tax Law the Health Technology shall enjoy an income tax rate of 15% for national high-tech enterprises from 1 January 2021 to 31 December 2023. (5) As per the Announcement on Further Implementing the Preferential Income Tax Policy for Small and Micro Enterprises (Announcement No. 13 of 2022 of the Ministry of Finance and the State Taxation Administration) from 1 January 2022 to 31 December 2024 the portion of the annual taxable income of small- and micro-sized enterprises exceeding RMB 1 million but not exceeding RMB 3 million the taxable income shall be reduced by 25% and subject to enterprise income tax at a rate of 20%. According to the Announcement of the State Taxation Administration and the Ministry of Finance on the Implementation of Preferential Income Tax Policies for Small- and Micro-sized Enterprises and Individual Industrial and Commercial Entities (Announcement No. 6 of 2023 of the Ministry of Finance and the State Taxation Administration) from 1 January 2023 to 31 December 2024 for the portion of the annual taxable income of small- and micro-sized enterprises not exceeding RMB 1 million the taxable income shall be reduced by 25% and subject to enterprise income tax at a rate of 20%. Subsidiaries Anjie Technology Gujing Hotel Theme Hotel Junlou Cultural Yellow Crane Tower Beverage Yashibo Xinjia Testing Jiuan Mechanical Electrical Gulou Junhe Gulou Juntai Guqi Distillery and Jiuhao China Railway shall observe the relevant provisions of the preferential income tax policy for small micro-profit enterprises. 5. NOTES TO MAJOR ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY 5.1 Monetary Assets Item Ending balance Beginning balance Cash on hand 100681.01 111642.11 Cash in bank 16852074031.88 13698187278.75 ~ 84 ~Item Ending balance Beginning balance 135504.47 Other monetary assets 74262220.44 16852310217.36 Total 13772561141.30 At 30 June 2023 in monetary assets the certificates of deposit pledged for opening bank acceptance bills amounted to RMB10 million and the security deposit that cannot be withdrawn in advance amounted to RMB6995.00. Except for that no other monetary funds are restricted to use or in some potential risks of recovery due to the mortgage pledge or freezing.Liquor manufacturing enterprises shall disclose whether there exists special interest arrangements such as establishing a joint fund account with related parties □ Applicable □ Not applicable 5.2 Trading Financial Assets Item Ending balance Beginning balance Financial assets at fair value through profit or 1790678478.171782687769.66 loss Including: bank financial products 1790678478.17 1580352899.17 Fund investment 0.00 202334870.49 1790678478.17 Total 1782687769.66 5.3 Accounts Receivable (1) Disclosure by aging Aging Ending balance Beginning balance Within one year 100905875.04 60886443.44 Of which: 1-6 months 98696120.05 57829416.75 7-12 months 2209754.99 3057026.69 1-2 years 9238124.00 10382550.23 2-3 years 158653.64 405162.30 Over 3 years 107451.79 137464.27 Subtotal 110410104.47 71811620.24 Less: Bad debt provision 9221545.29 9122951.30 Total 101188559.18 62688668.94 (2) Disclosure by withdrawal method of bad debt provision ~ 85 ~* Ending balance Ending balance Carrying amount Bad debt provision Category Withdrawal Carrying value Amount Proportion (%) Amount proportion (%) Bad debt provision withdrawn 7792783.727.067792783.72100.000.00 separately Bad debt provision withdrawn by 102617320.7592.941428761.571.39101188559.18 group Of which: Group 1 Group 2 102617320.75 92.94 1428761.57 1.39 101188559.18 Total 110410104.47 100.00 9221545.29 8.35 101188559.18 * Beginning balance Beginning balance Carrying amount Bad debt provision Category Withdrawal Carrying value Amount Proportion (%) Amount proportion (%) Bad debt provision withdrawn 7792783.7210.857792783.72100.000.00 separately Bad debt provision withdrawn by 64018836.5289.151330167.582.0862688668.94 group Of which: Group 1 Group 2 64018836.52 89.15 1330167.58 2.08 62688668.94 Total 71811620.24 100.00 9122951.30 12.70 62688668.94 On 30 June 2023 Accounts receivable with bad debt provision withdrawn by group 2 Ending balance Aging Withdrawal proportion Carrying amount Bad debt provision (%) Within one year 100905875.04 1097448.94 1.09 Of which: 1-6 months 98696120.05 986961.20 1.00 7-12 months 2209754.99 110487.74 5.00 1-2 years 1445340.28 144534.02 10.00 2-3 years 158653.64 79326.82 50.00 ~ 86 ~Ending balance Aging Withdrawal proportion Carrying amount Bad debt provision (%) Over 3 years 107451.79 107451.79 100.00 Total 102617320.75 1428761.57 1.39 On 1 January 2023 Accounts receivable with bad debt provision withdrawn by group 2 Beginning balance Aging Withdrawal proportion Carrying amount Bad debt provision (%) Within one year 60886443.44 731145.50 1.20 Of which: 1-6 months 57829416.75 578294.17 1.00 7-12 months 3057026.69 152851.33 5.00 1-2 years 2589766.51 258976.65 10.00 2-3 years 405162.30 202581.16 50.00 Over 3 years 137464.27 137464.27 100.00 Total 64018836.52 1330167.58 2.08 (3) Changes of bad debt provision during the Reporting Period Changes in the Reporting Period Increase from Beginning business Category Recovery or Ending balance amount Withdrawal combination not Write-off reversal under the same control Accounts receivable with 7792783.72 significant amount but bad 7792783.72 debt provision withdrawn separately Accounts receivable with insignificant amount but bad debt provision withdrawn separately Group 2: Bad debt provision 1330167.5898593.991428761.57 withdrawn by aging group Total 9122951.30 98593.99 9221545.29 (4) Top five ending balances by entity ~ 87 ~Proportion to total ending balance Ending balance of Entity name Ending balance of accounts receivable (%) bad debt provision No. 1 13568287.20 12.29 135682.87 No. 2 10547127.95 9.55 105471.28 No. 3 7792783.72 7.06 7792783.72 No. 4 7673301.89 6.95 76733.02 No. 5 7600000.00 6.88 76000.00 Total 47181500.76 42.73 8186670.89 5.4 Accounts Receivable Financing Ending balance Beginning balance Category Bad debt Bad debt Carrying amount Carrying value Carrying amount Carrying value provision provision Bank acceptance 835279520.98835279520.98217419441.32217419441.32 bills Commercial acceptance bills Total 835279520.98 835279520.98 217419441.32 217419441.32 (1) The Company’s notes receivable discounted or endorsed to third parties but not yet matured as of 30 June 2022 Items Amount of derecognition Amount of unrecognition Bank acceptance bills 4226921148.01 0.00 Total 4226921148.01 0.00 The issuing bank of the bank acceptance bill of the Company presented as accounts receivable financing are commercial banks with higher credit. Therefore when the bank acceptance bills are mature they are likely to get paid. The interest rate risk related to the bill has been transferred to the bank so it can be judged that the main risks and rewards of the bill ownership have been transferred so need to be derecogised. (2) The Company has no notes receivable transferred to accounts receivable due to drawers’ inability of fulfillment at 30 June 2023 (3) Notes receivable by bad debt provision method Ending balance Category Carrying amount Bad debt provision Carrying value ~ 88 ~Withdrawal Amount Proportion (%) Amount proportion (%) Bad debt provision withdrawn separately Bad debt provision 835279520.98100.00835279520.98 withdrawn by group Of which: Group 1 Group 2 835279520.98 100.00 835279520.98 Total 835279520.98 100.00 835279520.98 (Continued) Beginning balance Carrying amount Bad debt provision Category Withdrawal Carrying value Amount Proportion (%) Amount proportion (%) Bad debt provision withdrawn separately Bad debt provision 217419441.32100.00217419441.32 withdrawn by group Of which: Group 1 - Group 2 217419441.32 100.00 217419441.32 Total 217419441.32 100.00 217419441.32 * Notes receivable with provision for bad debt recognised by group 1 None.* Notes receivable with provision for bad debt recognised by group 2 On 30 June 2023 the Company measured provision for bad debt of bank acceptance bill according to the lifetime expected credit loss. The Company believes that no significant credit risk exists in the bank acceptance bills and no significant losses arise from default risk of banks or other issuer’ failure of fulfillment. (4) Changes of bad debt provision during the Reporting Period None. 5.5 Prepayment (1) Disclosure by aging Ending balance Beginning balance Aging Amount Proportion (%) Amount Proportion (%) ~ 89 ~Ending balance Beginning balance Aging Amount Proportion (%) Amount Proportion (%) Within one year 94633298.42 96.56 233344417.80 99.72 1 to 2 years 3243149.88 3.31 631243.89 0.27 2 to 3 years 126942.16 0.13 20000.00 0.01 Over 3 years Total 98003390.46 100.00 233995661.69 100.00 (2) Top five ending balances by entity Proportion of the balance to the Entity name Ending balance total prepayment (%) No. 1 11020206.90 11.24 No. 2 10132079.38 10.34 No. 3 3820133.01 3.90 No. 4 3309248.95 3.38 No. 5 1940000.00 1.98 Total 30221668.24 30.84 5.6 Other Receivables (1) Listed by category Item Ending balance Beginning balance Interest receivable Dividend receivable Other receivables 65401034.51 73337415.74 Total 65401034.51 73337415.74 (2) Other Receivables * Disclosure by aging Aging Ending balance Beginning balance Within one year 60805550.23 68032959.87 Of which: 1-6 months 56954905.73 66026552.80 7-12 months 3850644.50 2006407.07 1-2 years 5361866.84 5801770.49 2-3 years 1063770.81 1686854.49 ~ 90 ~Aging Ending balance Beginning balance Over 3 years 44816198.92 44645231.37 Subtotal 112047386.80 120166816.22 Less: Bad debt provision 46646352.29 46829400.48 Total 65401034.51 73337415.74 * Disclosure by nature Nature Ending balance Beginning balance Investment in securities 38336008.08 38434247.10 Deposit and guarantee 10046065.16 9840126.80 Borrowing for business trip expenses 1364558.50 1172804.12 Rent utilities and gasoline charges 8846028.79 5206927.45 Other 53454726.27 65512710.75 Subtotal 112047386.80 120166816.22 Less: Bad debt provision 46646352.29 46829400.48 Total 65401034.51 73337415.74 * Disclosure by withdrawal method of bad debt provision A. As of 30 June 2023 bad debt provision withdrawn based on three stages model: Stage Carrying amount Bad debt provision Carrying value Stage 1 73711378.72 8310344.21 65401034.51 Stage 2 Stage 3 38336008.08 38336008.08 0.00 Total 112047386.80 46646352.29 65401034.51 A1. As of 30 June 2023 bad debt provision at stage 1: 12-month expected Category Carrying amount credit losses rate Bad debt provision Carrying value (%) Bad debt provision withdrawn separately Bad debt provision withdrawn by group 73711378.72 11.27 8310344.21 65401034.51 Of which: Group 1 Group 2 73711378.72 11.27 8310344.21 65401034.51 ~ 91 ~12-month expected Category Carrying amount credit losses rate Bad debt provision Carrying value (%) Total 73711378.72 11.27 8310344.21 65401034.51 On 30 June 2023 other receivables with bad debt provision withdrawn by group 2 Ending balance Aging Withdrawal proportion Carrying amount Bad debt provision (%) Within one year 60805550.23 762081.28 1.25 Of which: 1-6 months 56954905.73 569549.05 1.00 7-12 months 3850644.50 192532.23 5.00 1-2 years 5361866.84 536186.68 10.00 2-3 years 1063770.81 531885.41 50.00 Over 3 years 6480190.84 6480190.84 100.00 Total 73711378.72 8310344.21 11.27 A2. As of 30 June 2023 bad debt provision at stage 3: Expected credit Category Carrying amount loss rate for the Bad debt provision Carrying value entire duration (%) Bad debt provision withdrawn separately 38336008.08 100.00 38336008.08 Bad debt provision withdrawn by group - Of which: Group 1 Group 2 - Total 38336008.08 100.00 38336008.08 On 30 June 2023 other receivables with bad debt provision withdrawn separately: Ending balance Name Withdrawal Carrying amount Bad debt provision Withdrawal reason proportion (%) The enterprise is bankrupt and Hengxin Securities Co. Ltd. 28635660.22 28635660.22 100.00 liquidated The enterprise is bankrupt and Jianqiao Securities Co. Ltd. 9700347.86 9700347.86 100.00 liquidated Total 38336008.08 38336008.08 100.00 -- ~ 92 ~B. As of 1 January 2023 bad debt provision withdrawn based on three stages model: Stage Carrying amount Bad debt provision Carrying value Stage 1 81732569.12 8395153.38 73337415.74 Stage 2 Stage 3 38434247.10 38434247.10 0.00 Total 120166816.22 46829400.48 73337415.74 B1. On 1 January 2023 bad debt provision at stage 1: 12-month expected Category Carrying amount credit losses rate Bad debt provision Carrying value (%) Bad debt provision withdrawn separately Bad debt provision withdrawn by group 81732569.12 10.27 8395153.38 73337415.74 Of which: Group 1 Group 2 81732569.12 10.27 8395153.38 73337415.74 Total 81732569.12 10.27 8395153.38 73337415.74 On 1 January 2023 other receivables with bad debt provision withdrawn by group 2 Beginning balance Aging Withdrawal proportion Carrying amount Bad debt provision (%) Within one year 68032959.87 760564.80 1.12 Of which: 1-6 months 66026552.80 660244.43 1.00 7-12 months 2006407.07 100320.37 5.00 1-2 years 5801770.49 580177.04 10.00 2-3 years 1686854.49 843427.27 50.00 Over 3 years 6210984.27 6210984.27 100.00 Total 81732569.12 8395153.38 10.27 B2. As of 1 January 2023 bad debt provision at stage 3: Expected credit Category Carrying amount loss rate for the Bad debt provision Carrying value entire duration (%) Bad debt provision withdrawn separately 38434247.10 100.00 38434247.10 ~ 93 ~Expected credit Category Carrying amount loss rate for the Bad debt provision Carrying value entire duration (%) Bad debt provision withdrawn by group Of which: Group 1 Group 2 Total 38434247.10 100.00 38434247.10 On 1 January 2023 other receivables with bad debt provision withdrawn separately: Beginning balance Name Withdrawal Carrying amount Bad debt provision Withdrawal reason proportion (%) Hengxin Securities Co. Ltd. The enterprise is bankrupt and 28733899.2428733899.24100.00 liquidated Jianqiao Securities Co. Ltd. The enterprise is bankrupt and 9700347.869700347.86100.00 liquidated Total 38434247.10 38434247.10 100.00 -- * Changes of bad debt provision during the Reporting Period Changes in the Reporting Period Increase from Beginning business Category Recovery or Ending balance balance Withdrawal combination not Write-off reversal under the same control Bad debt provision 38434247.100.0098239.0238336008.08 withdrawn separately Bad debt provision 8395153.38-84809.170.008310344.21 withdrawn by group Total 46829400.48 -84809.17 98239.02 46646352.29 * Top five ending balances by entity Proportion of the balance to the total Entity name Nature Ending balance Aging Bad debt provision other receivables (%) ~ 94 ~No. 1 Securities 28635660.22 Over 3 years 25.56 28635660.22 investment No. 2 Within 6 Other 12484975.39 11.14 124849.75 months No. 3 Securities 9700347.86 Over 3 years 8.66 9700347.86 investment No. 4 Within 6 Other 5822913.66 5.20 58229.14 months Within 6 No. 5 Other 5585130.77 4.98 55851.31 months Total 62229027.90 55.54 38574938.28 5.7 Inventories (1) Category of inventories Ending balance Item Carrying amount Falling price reserves Carrying value Raw materials and package 213152150.8618503008.69194649142.17 materials Semi-finished goods and work 5033783996.410.005033783996.41 in process Finished goods 967084041.00 20469460.46 946614580.54 Total 6214020188.27 38972469.15 6175047719.12 (Continued) Beginning balance Item Carrying amount Falling price reserves Carrying value Raw materials and package 384626636.2516449308.79368177327.46 materials Semi-finished goods and work 4263603307.090.004263603307.09 in process Finished goods 1431913213.36 5587757.03 1426325456.33 Total 6080143156.70 22037065.82 6058106090.88 (2) Falling price reserves of inventories ~ 95 ~Increase Decrease Beginning Items Increase from Ending balance balance Reversal or Withdrawal business Other recovery combination Raw materials and 16449308.792432862.49379162.5918503008.69 package materials Finished goods 5587757.03 15123811.38 242107.9520469460.46 Total 22037065.82 17556673.87 621270.5438972469.15 5.8 Contract Assets Item Ending balance Beginning balance Completed and unliquidated assets 546215.81 1855188.15 Total 546215.81 1855188.15 5.9 Other Current Assets Item Ending balance Beginning balance Pledge-style repo of treasury bonds 20000000.00 60000000.00 Accrued Interests on deposits 12313701.79 3579838.89 Deductible tax 74037701.57 61988886.62 Total 106351403.36 125568725.51 5.10 Long-term Equity Investment Changes in the Reporting Period Profit and loss on Adjustment of Investees Beginning balance Additional Reduced investments other Changes in investments investments confirmed according comprehensive other equity to equity law income I. Associated enterprises Beijing Guge Trading 5484525.733044.66 Co. Ltd.Anhui Xunfei Jiuzhi 4669710.2543101.60 Technology Co. Ltd.Total 10154235.98 46146.26 (Continued) Investees Changes in the Reporting Period Ending balance Balance of ~ 96 ~impairment Declaration of cash Withdrawal of provision dividends or impairment Other distribution of profit provision I. Associated enterprises Beijing Guge Trading 5487570.39 Co. Ltd.Anhui Xunfei Jiuzhi 4712811.85 Technology Co. Ltd.Total 10200382.24 5.11 Other Equity Instrument Investment Item Ending balance Beginning balance Anhui Mingguang Rural Commercial Bank Co. 60753939.2856447789.94 Ltd.Total 60753939.28 56447789.94 Disclosure of non-trading equity instrument investment by items Reason for assigning to Amount of other Reason for other measure in fair comprehensive comprehensive Dividend income Accumulative Accumulative value and the Item income income recognized gains losses changes included transferred to transferred to in other retained earnings retained earnings comprehensive income Assigned to measure in fair value and the Anhui Mingguang changes included Rural in other 747200.506905241.48 Commercial Bank comprehensive Co. Ltd. income according to the holding purpose of the management 5.12 Investment Property (1) Investment property adopting cost measurement mode Items Building and plants Land use rights Total ~ 97 ~Items Building and plants Land use rights Total I. Original carrying value 1. Beginning balance 20473989.11 2644592.00 23118581.11 2. Increase during the Reporting Period 63563661.47 0.00 63563661.47 (1) Transfer from fixed assets 63563661.47 0.00 63563661.47 3. Decrease during the Reporting Period 4. Ending balance 84037650.58 2644592.00 86682242.58 II. Accumulated depreciation and amortization: 1. Beginning balance 8853919.61 867779.54 9721699.15 2. Increase during the Reporting Period 28396712.94 28013.28 28424726.22 (1) Withdrawal or amortization 674786.99 28013.28 702800.27 (2) Transfer from fixed assets 27721925.95 0.00 27721925.95 3. Decrease during the Reporting Period 4. Ending balance 37250632.55 895792.82 38146425.37 III. Impairment provision 1. Beginning balance 2. Increase during the Reporting Period 3. Decrease during the Reporting Period 4. Ending balance IV. Carrying value 1. Ending carrying value 46787018.03 1748799.18 48535817.21 2. Beginning carrying value 11620069.50 1776812.46 13396881.96 5.13 Fixed Assets (1) Listed by category Item Ending balance Beginning balance Fixed assets 2917327570.54 2741844586.30 Disposal of fixed assets 0.00 0.00 2917327570.54 Total 2741844586.30 (2) Fixed assets * General information of fixed assets Buildings and Machinery Office equipment Items Vehicles Total constructions equipments and other I. Original carrying value ~ 98 ~Buildings and Machinery Office equipment Items Vehicles Total constructions equipments and other 1. Beginning balance 2726822355.63 1665445833.44 79609320.00 408442822.46 4880320331.53 2. Increase during the 189332235.24153214225.893146790.968530952.51354224204.60 Reporting Period (1) Acquisition 7640841.97 10515314.72 3146790.96 7446607.79 28749555.44 (2) Transfer from 181691393.27142698911.170.001084344.72325474649.16 construction in progress 3. Decrease during the 65837210.314420667.451927237.021894694.6674079809.44 Reporting Period (1) Disposal or scrap 2273548.84 4420667.45 1927237.02 1894694.66 10516147.97 (2) Transfer to investment 63563661.470.000.000.0063563661.47 property 4. Ending balance 2850317380.56 1814239391.88 80828873.94 415079080.31 5160464726.69 II. Accumulated depreciation 1. Beginning balance 993719532.71 832439496.35 67958168.40 239273719.06 2133390916.52 2. Increase during the 55103687.0460554019.102616111.6122788081.62141061899.37 Reporting Period (1) Withdrawal 55103687.04 60554019.10 2616111.61 22788081.62 141061899.37 3. Decrease during the 29247651.693752545.411508111.521803368.3336311676.95 Reporting Period (1) Disposal or scrap 1525725.74 3752545.41 1508111.52 1803368.33 8589751.00 (2) Transfer to investment 27721925.950.000.000.0027721925.95 property 4. Ending balance 1019575568.06 889240970.04 69066168.49 260258432.35 2238141138.94 III. Impairment provision 1. Beginning balance 2596209.90 1907219.92 0.00 581398.89 5084828.71 2. Increase during the Reporting Period (1) Withdrawal 3. Decrease during the 0.00 88811.50 0.00 0.00 88811.50 Reporting Period (1) Disposal or scrap 0.00 88811.50 0.00 0.00 88811.50 4. Ending balance 2596209.90 1818408.42 0.00 581398.89 4996017.21 IV. Carrying value 1. Ending carrying value 1828145602.60 923180013.42 11762705.45 154239249.07 2917327570.54 ~ 99 ~Buildings and Machinery Office equipment Items Vehicles Total constructions equipments and other 2. Beginning carrying 1730506613.02831099117.1711651151.60168587704.512741844586.30 value * Idle fixed assets Original carrying Accumulated Item Impairment provision Carrying value Note value depreciation Buildings and 7453258.024767039.342596209.9090008.78 constructions Machinery equipments 9642767.65 7684779.01 1818408.42 139580.22 Office equipment and 867531.26260172.43581398.8925959.94 others Total 17963556.93 12711990.78 4996017.21 255548.94 * Fixed assets without certificate of title Items Carrying value Reason Buildings and constructions 1124786340.32 In process Total 1124786340.32 5.14 Construction in Progress (1) Listed by category Item Ending balance Beginning balance Construction in progress 3007948340.56 2454703251.44 Project materials 0.00 0.00 Total 3007948340.56 2454703251.44 (2) Construction in progress * General information of construction in progress Ending balance Beginning balance Deprecia Deprecia Item Carrying Carrying Carrying Carrying tion tion amount value amount value reserve reserve 24902879249028792043434920434349 Smart park project 37.3437.3453.1753.17 32602872326028722521696025216960 Theme hotel project 9.009.003.403.40 Gujing plant 79054102. 79054102. 48337480. 48337480.~ 100 ~area 12# 51 51 17 17 liquor warehouse Flexible and automated technology transformation project for 23558436. 23558436. 0.000.00 glass bottle production line 29 29 73415307.73415307.57312769.57312769. Suizhou new plant project 93930808 39162263.39162263.29890009.29890009. Other individual project 78783333 30079483300794832454703224547032 Total 40.5640.5651.4451.44 * Changes in significant projects of construction in progress Decrease Increase during Amount Budget during the Project Beginning balance the Reporting transferred to Ending balance (RMB’0000) Reporting Period fixed asset Period Smart park project 828965.74 2043434953.17 664193932.50 217340948.33 2490287937.34 Theme hotel project 49900.00 252169603.40 74666205.25 807079.65 326028729.00 Gujing plant area 12# 16250.00 48337480.17 30716622.34 0.00 79054102.51 liquor warehouse Flexible and automated technology transformation project 5940.00 23558436.29 14352263.60 37910699.89 0.00 for glass bottle production line Suizhou new plant 60000.0057312769.0888559657.5664500140.637956978.0873415307.93 project Other individual 11753.4729890009.3316994599.674915780.662806564.5639162263.78 project Total 972809.21 2454703251.44 889483280.92 325474649.16 10763542.64 3007948340.56 (Continued) Interest Cumulative Of which: Interest Proportion of capitalization amount of capitalized during Project project input to Schedule (%) during the Source of funds interest the reporting budgets (%) Reporting capitalization period Period (%) ~ 101 ~Interest Cumulative Of which: Interest Proportion of capitalization amount of capitalized during Project project input to Schedule (%) during the Source of funds interest the reporting budgets (%) Reporting capitalization period Period (%) Self-owned Smart park project 37.93 42.29 fund and raised fund Self-owned Theme hotel project 65.49 65.49 fund Gujing plant Self-owned area 12# 75.09 75.09 fund liquor warehouse Flexible and automated technology transformation Self-owned 63.82100.00 project for glass bottle fund production line Self-owned Suizhou new plant project 80.50 90.00 5954414.42 1302024.04 3.35 fund and borrowings Self-owned Other individual project 39.89 39.89 fund Total —— —— 5954414.42 1302024.04 5.15 Right-of-use Assets Items Buildings and constructions Machinery equipments Total I. Original carrying value 1. Beginning balance 58410080.67 1330929.57 59741010.24 2. Increase during the Reporting Period 3. Decrease during the Reporting Period 4. Ending balance 58410080.67 1330929.57 59741010.24 II. Accumulated depreciation 1. Beginning balance 26291552.70 887286.44 27178839.14 2. Increase during the Reporting 7049426.28 221821.60 7271247.88 Period ~ 102 ~3. Decrease during the Reporting Period 4. Ending balance 33340978.98 1109108.04 34450087.02 III. Impairment provision 1. Beginning balance 2. Increase during the Reporting Period 3. Decrease during the Reporting Period 4. Ending balance IV. Carrying value 1. Ending carrying value 25069101.69 221821.53 25290923.22 2. Beginning carrying value 32118527.97 443643.13 32562171.10 5.16 Intangible Assets (1) General information of intangible assets Patents and Item Land use rights Software Total trademark I. Original carrying value 1. Beginning balance 1088480720.77 122263823.72 254995277.12 1465739821.61 2. Increase during the Reporting 29354733.962187948.9237735.8431580418.72 Period (1) Acquisition 29354733.96 574479.89 37735.84 29966949.69 (2) Transfer from construction in 0.001613469.030.001613469.03 progress 3. Decrease during the Reporting Period (1) Disposal 4. Ending balance 1117835454.73 124451772.64 255033012.96 1497320240.33 II. Accumulated amortization: 1. Beginning balance 204751419.36 80821700.01 71874672.80 357447792.17 2. Increase during the Reporting 11732524.929848670.89112821.0321694016.84 Period (1) Withdrawal 11732524.92 9848670.89 112821.03 21694016.84 3. Decrease during the Reporting Period ~ 103 ~Patents and Item Land use rights Software Total trademark (1) Disposal 4. Ending balance 216483944.28 90670370.90 71987493.83 379141809.01 III. Impairment provision 1. Beginning balance 0.00 166872.39 0.00 166872.39 2. Increase during the Reporting Period (1) Withdrawal 3. Decrease during the Reporting Period 4. Ending balance 0.00 166872.39 0.00 166872.39 IV. Carrying value 1. Ending carrying value 901351510.45 33614529.35 183045519.13 1118011558.93 2. Beginning carrying value 883729301.41 41275251.32 183120604.32 1108125157.05 (2) Intangible assets used for mortgage or pledge at 30 June 2023 Original carrying Accumulated Item Impairment provision Carrying value Note value amortization Trademark right 176630692.63 7514092.63 169116600.00 Total 176630692.63 7514092.63 169116600.00 (3) Intangible assets without certificate of title Item Carrying value Reason Land use rights 29212240.17 In progress Total 29212240.17 -- 5.17 Goodwill (1) Original carrying value of goodwill Increase Decrease Investees or matters that Formed by goodwill arising from Beginning balance Ending balance business Other Disposal Other combination Yellow Crane Tower Distillery 478283495.29478283495.29 Co. Ltd.Anhui Mingguang Distillery Co. 60686182.0760686182.07 Ltd.~ 104 ~Increase Decrease Investees or matters that Formed by goodwill arising from Beginning balance Ending balance business Other Disposal Other combination Renhuai Maotai Town Zhencang 22394707.6522394707.65 Winery Industry Co. Ltd.Total 561364385.01 561364385.01 5.18 Long-term Deferred Expenses Beginning Decrease Item Increase Ending balance balance Amortization Other decrease Experience center 18055386.32 156139.05 6946176.16 11265349.21 Sewage treatment project 999508.20 0.00 461311.48 538196.72 Yellow Crane Tower chateau and 770053.590.00739326.2330727.36 museum Gujing party building cultural 1181818.180.00590909.09590909.09 center Outdoor auxiliary projects 16586539.00 4604396.05 1115312.37 20075622.68 Other individual project with 13419672.024229749.264475009.5613174411.72 insignificant amounts Total 51012977.31 8990284.36 14328044.89 45675216.78 5.19 Deferred Tax Assets and Deferred Tax Liabilities (1) Deferred tax assets before offsetting Ending balance Beginning balance Item Deductible Deductible temporary temporary Deferred tax assets Deferred tax assets differences differences Asset impairment provision 44135358.75 11017152.45 27288766.92 6642674.57 Credit impairment provision 55867897.58 13966974.39 55952351.78 13967271.03 Unrealized intergroup profit 52435871.27 13108967.82 100142928.48 25035732.12 Deferred income 100910143.95 25227535.99 103714978.95 25483351.68 Deductible losses 383255423.61 88916471.40 337681202.44 77041463.86 Carry-over of payroll payables deductible during the next 0.00 0.00 6380952.10 957142.82 period ~ 105 ~Accrued expenses and 1601881132.90400470283.231104571137.01275740361.64 discount Lease liabilities 23349279.64 5837319.91 0.00 0.00 Change in fair value of 3343717.82824156.261024977.31252229.65 accounts receivable financing Total 2265178825.52 559368861.45 1736757294.99 425120227.37 (2) Deferred tax liabilities before offsetting Ending balance Beginning balance Item Taxable Deferred tax temporary Taxable temporary differences Deferred tax liabilities liabilities differences Difference in accelerated depreciation of fixed 144758293.39 36189573.35 157708682.09 39427170.52 assets Assets appreciation arising from business 685401126.74165822949.79697149707.15168589543.40 combination not under the same control Changes in fair value of 40678478.1710169619.5432687769.668171942.42 trading financial assets Right-of-use assets 25290923.22 6322730.81 0.00 0.00 Unrealized intergroup 291469749.0072867437.25257338901.3264334725.33 profit Changes in fair value of investments in other 6905241.48 1726310.37 2599092.14 649773.03 equity instruments Total 1194503812.00 293098621.11 1147484152.36 281173154.70 3.20 Other Non-current Assets Item Ending balance Beginning balance Prepayments for equipment 5834000.00 6870532.00 Total 5834000.00 6870532.00 3.21 Short-term Borrowings Category Ending balance Beginning balance Mortgage borrowings 0.00 34267952.97 Guarantee borrowings 0.00 48964223.34 Total 0.00 83232176.31 ~ 106 ~3.22 Notes Payable (1) Listed by nature Category Ending balance Beginning balance Bank acceptance bills 212480000.00 695740000.00 Commercial acceptance bills 0.00 0.00 Total 212480000.00 695740000.00 (2) At the end of the reporting period there is no notes payable matured but not yet paid. 5.23 Accounts Payable (1) Listed by nature Item Ending balance Beginning balance Payments for goods 949500340.00 1123707643.38 Payments for constructions and equipment 511432073.23 539292035.62 Other 396036791.23 391063880.15 Total 1856969204.46 2054063559.15 (2) Significant accounts payable aging over one year Item Ending balance Reason No. 1 981100.63 Payments for goods No. 2 862858.85 Final payment No. 3 598255.90 Final payment No. 4 517243.00 Final payment No. 5 490485.32 Final payment Total 3449943.70 -- 5.24 Contract Liabilities Item Ending balance Beginning balance Payment for goods 3025229971.79 826636478.35 Total 3025229971.79 826636478.35 5.25 Employee Benefits Payable (1) List of employee benefits payable Item Beginning balance Increase Decrease Ending balance ~ 107 ~Item Beginning balance Increase Decrease Ending balance I. Short-term employee benefits 793591539.55 1891342619.23 1810041140.28 874893018.50 II. Post-employment 1546766.0882066395.2881861755.551751405.81 benefits-defined contribution plans III. Termination benefits 0.00 121127.34 121127.34 0.00 IV. Other benefits due within one year Total 795138305.63 1973530141.85 1892024023.17 876644424.31 (2) List of short-term employee benefits Item Beginning balance Increase Decrease Ending balance I. Salaries bonuses allowances and 711371745.691672419568.801586243702.43797547612.06 subsidies II. Employee benefits 0.00 54951784.82 54951784.82 0.00 III. Social insurance 420184.43 44471544.83 44661581.87 230147.39 Of which: Health insurance 419281.03 41825990.32 42015999.21 229272.14 Injury insurance 903.40 2645554.51 2645582.66 875.25 IV. Housing accumulation fund 6773970.41 55878131.43 57342446.51 5309655.33 V. Labor union funds and employee 71814254.1418689814.1021936590.3468567477.90 education funds VI. Enterprise annuity 3211384.88 44931775.25 44905034.31 3238125.82 Total 793591539.55 1891342619.23 1810041140.28 874893018.50 (3) Defined contribution plans Item Beginning balance Increase Decrease Ending balance 1. Basic endowment insurance 1545352.88 78912453.57 78708034.44 1749772.01 2. Unemployment insurance 1413.20 3153941.71 3153721.11 1633.80 Total 1546766.08 82066395.28 81861755.55 1751405.81 5.26 Taxes Payable Item Ending balance Beginning balance VAT 254255476.34 256705264.84 ~ 108 ~Item Ending balance Beginning balance Consumption tax 291097865.81 502091276.19 Enterprise income tax 408778673.72 335723169.21 Individual income tax 3398625.33 12550946.18 Urban maintenance and construction tax 28272630.16 40572819.42 Stamp duty 4296747.25 4553890.84 Educational surcharge 27096659.93 37594377.10 Other 14871540.56 15236386.24 Total 1032068219.10 1205028130.02 5.27 Other Payables (1) Listed by category Item Ending balance Beginning balance Interest payable Dividends payable 1585800000.00 0.00 Other payables 2941736360.10 3261763838.80 Total 4527536360.10 3261763838.80 (2) Other payables * Listed by nature Item Ending balance Beginning balance Security deposit and guarantee 2451019568.08 2752404989.26 Warranty 64044176.35 58897431.31 Personal housing fund paid by company 5468646.73 5465938.41 Other 421203968.94 444995479.82 Total 2941736360.10 3261763838.80 * Significant other payables aging over one year Other payables balance aging over one year are mainly security deposit and warranty not yet matured. 5.28 Non-current Liabilities due within one year Item Ending balance Beginning balance Lease liabilities due within one year 9907322.54 12204345.11 Long-term borrowings 0.00 30033000.00 ~ 109 ~Item Ending balance Beginning balance Total 9907322.54 42237345.11 5.29 Other Current Liabilities Item Ending balance Beginning balance Accrued expenses 1273818015.34 942387734.28 The VAT tax liability has not yet occurred and needs to be recognized as the value-added tax of 393861615.92 102276707.30 the output tax in the subsequent periods Total 1667679631.26 1044664441.58 5.30 Long-term Borrowings Item Ending balance Beginning balance Credit Loan 20000000.00 20000000.00 Guarantee loan 158900000.00 24900000.00 Accrued interest 153388.89 44737.91 Total 179053388.89 44944737.91 5.31 Lease Liabilities Item Ending balance Beginning balance Lease payments 24581361.42 33494997.76 Less: unrecognized financial charges 1232081.78 2659256.72 Subtotal 23349279.64 30835741.04 Less: lease liabilities due within one year 9907322.54 12204345.11 Total 13441957.10 18631395.93 5.32 Deferred Income (1) General information of deferred income Item Beginning balance Increase Decrease Ending balance Reason Government Receiving asset-related 103714978.952804835.00100910143.95 grants grants from government Total 103714978.95 2804835.00 100910143.95 -- (2) Items involved with government grants: Recognized in Increase during Related to Beginning other income Item the Reporting Other changes Ending balance assets/related to balance during the income Period Reporting ~ 110 ~Period Subsidy for Suizhou new 34590105.88 373947.06 34216158.82 Related to assets factory infrastructure Refund of Land payment 41721392.05 489459.12 41231932.93 Related to assets Funds for strategic emerging industry 1129920.10 311359.98 818560.12 Related to assets agglomeration development base Comprehensive subsidy fund for air pollution 1790739.87 147182.40 1643557.47 Related to assets prevention and control Instrument subsidy 959437.91 160133.94 799303.97 Related to assets Subsidy funds for strong manufacturing province and private economy 941529.13 154327.14 787201.99 Related to assets development projects in 2019 Subsidy for technical transformation of No.2 537037.00 111111.12 425925.88 Related to assets boiler Equipment subsidy 460698.12 104104.98 356593.14 Related to assets Gujing Zhangji wine cellar optimization and 692708.55 23749.98 668958.57 Related to assets reconstruction project Subsidy for food safety 275862.25 68965.50 206896.75 Related to assets improvement project Specific funds for side management of power 84000.00 72000.00 12000.00 Related to assets demand Wine production system 1889148.47 119744.64 1769403.83 Related to assets technical transformation Intelligent solid brewing technology innovation 26041.41 15625.02 10416.39 Related to assets project Specific funds for transformation of gas-fired 167500.00 15000.00 152500.00 Related to assets boilers Recognition awards for 482978.61 34821.85 448156.76 Related to assets ~ 111 ~Industrial enterprise technical transformation investments Government grants from Technology and Quality 101804.98 10274.27 91530.71 Related to assets Department Baijiu industry Internet 7000000.00 7000000.00 Related to assets Platform VOCs emission treatment 6128067.23 311596.62 5816470.61 Related to assets for brewing workshops Provincial special Fund for high-quality 2707500.00 142500.00 2565000.00 Related to assets development of manufacturing industry Upgrading of intelligent and automatic baijiu 900000.04 49999.98 850000.06 Related to assets production Deep treatment project of 716391.45 66200.94 650190.51 Related to assets VOCs Project of Robot 412115.90 22730.46 389385.44 Related to assets Development Total 103714978.95 2804835.00 100910143.95 -- 5.33 Share Capital Changes during the Reporting Period (+-) Item Beginning balance Bonus Capitalization Ending balance New issues Others Subtotal issues of reserves The sum of 528600000.00528600000.00 shares 5.34 Capital Reserves Item Beginning balance Increase Decrease Ending balance Capital premium (share 6191894530.90 6191894530.90 premium) ~ 112 ~Item Beginning balance Increase Decrease Ending balance Other capital reserves 32853136.20 32853136.20 Total 6224747667.10 6224747667.10 5.35 Other Comprehensive Income Reporting Period Less: Less: Recorded in Recorded in other other comprehensi comprehensiv Attributable to ve income in Attributable to Beginning Income before e income in owners of the Ending Item prior period Less: Income non-controllin balance taxation in the prior period Company as balance and tax expense g interests Current Period and transferred the parent transferred after tax to profit or after tax to retained loss in the earnings in Current the Current Period Period I. Other comprehensive income that may not subsequently be 1169591.46 4306149.34 0.00 1076537.34 1937767.20 1291844.80 3107358.66 reclassified to profit or loss Of which: Changes caused by remeasurements on defined benefit schemes Other comprehensive income that will not be reclassified to profit or loss under the equity method Changes in fair value of other equity instrument 1169591.46 4306149.34 0.00 1076537.34 1937767.20 1291844.80 3107358.66 investment Changes in the fair value arising from changes in own credit risk II. Other comprehensive income that may subsequently be -760851.85 -3343717.82 -1030330.20 -578346.91 -1687623.02 -47417.69 -2448474.87 reclassified to profit or loss Of which: Other comprehensive income that will be reclassified to profit or loss under the equity ~ 113 ~method Changes in the fair value of investments in other debt obligations Other comprehensive income arising from the -760851.85 -3343717.82 -1030330.20 - -578346.91 -1687623.02 -47417.69 -2448474.87 reclassification of financial assets Credit impairment allowance for investments in other debt obligations Reserve for cash flow hedges Differences arising from translation of foreign currency-denominated financial statements Total of other comprehensive 408739.61962431.52-1030330.20-498190.43250144.181244427.11658883.79 income 5.36 Surplus Reserves Item Beginning balance Increase Decrease Ending balance Statutory surplus reserve 269402260.27 269402260.27 Total 269402260.27 269402260.27 Note: In accordance with provisions of Company Law and Articles of Association the statutory surplus reserve shall be withdrawn at 10% of net profits by the Company. The accumulated amount of statutory surplus reserve can no longer be withdrawn when it is more than 50% of the Company’s registered capital. 5.37 Retained Earnings Item Reporting Period Same period of last year Beginning balance of retained earnings before adjustments 11497599306.54 9517374574.46 Total beginning balance of retained earnings before adjustment (increase+ decrease-) Beginning balance of retained earnings after adjustments 11497599306.54 9517374574.46 Add: Net profit attributable to owners of the Company as 2779474367.513143144732.08 the parent Less: withdrawal of statutory surplus reserve Dividend of ordinary shares payable 1585800000.00 1162920000.00 ~ 114 ~Item Reporting Period Same period of last year Ending retained earnings 12691273674.05 11497599306.54 5.38 Operating Revenue and Cost of Sales Reporting Period Same period of last year Item Operating revenue Costs of sales Operating revenue Costs of sales Main operations 11255806929.70 2371427439.55 8962507998.25 2007802802.77 Other operations 54209565.40 17183398.73 39497925.17 15201058.59 Total 11310016495.10 2388610838.28 9002005923.42 2023003861.36 Information on operating revenue: Contract category Liquor sales Total Commodity type 10980685839.60 10980685839.60 Including: Original Vintage 8761231340.80 8761231340.80 Gujinggong Liquor 1111025383.77 1111025383.77 Yellow Crane Tower and others 1108429115.03 1108429115.03 By operating segment 10980685839.60 10980685839.60 Including: North China 821080901.86 821080901.86 Central China 9497289610.95 9497289610.95 Southern China 652489537.33 652489537.33 Overseas 9825789.46 9825789.46 Contract type 10980685839.60 10980685839.60 Including: Commodity sales contract 10980685839.60 10980685839.60 By sales channel 10980685839.60 10980685839.60 Including: Online 343534388.41 343534388.41 Offline 10637151451.19 10637151451.19 Total 10980685839.60 10980685839.60 Information on performance obligations: None 5.39 Taxes and Surcharges Item Reporting Period Same period of last year Consumption tax 1311088718.86 1047706042.57 ~ 115 ~Urban maintenance and construction tax and 249167147.23191118110.88 educational surcharge Urban land use tax 11797701.09 10644741.02 Property tax 12402844.79 8962556.19 Stamp duty 9986220.33 9277618.92 Other 10999508.76 9029828.22 Total 1605442141.06 1276738897.80 5.40 Selling Expense Item Reporting Period Same period of last year Employment benefits 623631139.58 499313896.40 Travel fees 96783184.70 77211414.12 Advertisement fees 564290043.38 557349666.49 Comprehensive promotion costs 1333513264.01 1057068152.23 Service fees 371761620.49 352084304.93 Other 58035891.45 52077986.29 Total 3048015143.61 2595105420.46 5.41 Administrative Expenses Item Reporting Period Same period of last year 404447209.51332926047.23 Employee benefits 18750767.9021699298.12 Office fees 24933916.6888287928.43 Maintenance expenses 34435401.7734878234.93 Depreciation 17399804.2217052302.25 Amortization of intangible assets 11632964.0912080582.54 Pollution discharge 7252762.784611573.45 Travel expenses 6563326.705701410.83 Water and electricity charges 58558405.7242083164.88 Other Total 583974559.37 559320542.66 5.42 Development Costs Item Reporting Period Same period of last year Labor cost 20823084.10 17578443.61 ~ 116 ~Item Reporting Period Same period of last year Direct input costs 5437858.15 4038177.88 Depreciation expense 1459282.37 1250539.87 Other 2243950.60 4970204.58 Total 29964175.22 27837365.94 5.43 Finance Costs Item Reporting Period Same period of last year 771499.922498008.94 Interest expenses 122996635.75131378962.32 Less: Interest income -122225135.83-128880953.38 Net interest expenses -75794.06-429484.32 Net foreign exchange losses -549709.86-313522.29 Bank charges and others -122850639.75-129623959.99 Total 5.44 Other Income Same period of last Item Reporting Period Related to assets /income year I. Government grants recorded to other income Of which: Government grant related to deferred 2804835.00 3128898.51 Related to assets income Government grant recorded to current 24299742.88 23080182.64 Related to income profit or loss Total 27104577.88 26209081.15 -- 5.45 Investment Income Item Reporting Period Same period of last year Investment income from long-term equity 46146.26144074.52 investments under equity method Investment income from disposal of financial -991715.70 assets at fair value through profit or loss Investment income from holding of debt obligations Investment income from holding of other 747200.50957949.08 equity instrument investments Investment income from disposal of financial -27223678.44-18654353.22 assets at fair value through other ~ 117 ~comprehensive income Investment income from holding of trading 0.000.00 financial assets Other 75934.01 103208.20 Total -27346113.37 -17449121.42 5.46 Gains on Changes in Fair Values Sources Reporting Period Same period of last year Financial assets at fair value through profit or loss 25168981.30 318569.02 Of which: gains on changes in fair value of derivatives 0.00 0.00 Total 25168981.30 318569.02 5.47 Credit Impairment Loss Item Reporting Period Same period of last year Bad debt of notes receivable 0.00 0.00 Bad debt of accounts receivable -98593.99 -167126.54 Bad debt of other receivables 183048.19 -1091654.82 Total 84454.20 -1258781.36 5.48 Asset Impairment Loss Item Reporting Period Same period of last year I. Inventory falling price loss -17556673.87 4343131.74 II. Impairment loss of fixed assets 0.00 0.00 III. Impairment loss of intangible assets 0.00 0.00 Total -17556673.87 4343131.74 5.49 Gains on Disposal of Assets Item Reporting Period Same period of last year Gains/losses from disposal of fixed assets construction in progress productive biological assets and intangible assets not 203366.67 191652.74 classified as held for sale Of which: Fixed assets 203366.67 191652.74 Total 203366.67 191652.74 5.50 Non-operating Income Recognized in current Item Reporting Period Same period of last year non-recurring profit or loss ~ 118 ~Recognized in current Item Reporting Period Same period of last year non-recurring profit or loss Gains from damage or scrapping of 792.36368223.18792.36 non-current asset Government grants irrelevant to daily 0.000.000.00 operation activities Income from penalties and compensation 27153467.53 18655281.74 27153467.53 Sales of wastes 2315235.07 2007451.66 2315235.07 Other 15206998.10 3957979.77 15206998.10 Total 44676493.06 24988936.35 44676493.06 5.51 Non-operating Expenses Recognized in current Item Reporting Period Same period of last year non-recurring profit or loss Loss from damage or scrapping of 1388046.95516064.411388046.95 non-current assets Donations 16260100.00 5480000.00 16260100.00 Other 2710295.84 2355398.76 2710295.84 Total 20358442.79 8351463.17 20358442.79 5.52 Income Tax Expenses (1) Details of income tax expenses Item Reporting Period Same period of last year Current tax expenses 1087484097.12 866229611.46 Deferred tax expenses -122827778.40 -160176427.85 Total 964656318.72 706053183.61 (2) Reconciliation of accounting profit and income tax expenses Item Reporting Period Profit before taxation 3808836920.39 Current income tax expense accounted at applicable tax rate of the 952209230.10 Company as the parent Influence of applying different tax rates by subsidiaries -7257941.68 Adjustment for prior period 24766045.43 Influence of non-taxable income ~ 119 ~Influence of non-deductable costs expenses and losses 1275896.31 Influence of deductable losses of unrecognized deferred income tax at the beginning of the Reporting Period Influence of deductable temporary difference or deductable losses of unrecognized deferred income tax in the Reporting Period Influence of development expense deduction -6336911.44 Tax rate adjustment to the beginning balance of deferred income tax assets/liabilities Income tax credits Total 964656318.72 5.53 Notes to the Statement of Cash Flows (1) Other cash received relating to operating activities Item Reporting Period Same period of last year Security deposit guarantee and warranty 191395775.56 210649471.58 Government grants 23086588.11 35430182.64 Interest income 114262772.85 100343028.34 Release of restricted monetary assets 667182706.08 0.00 Other 60720033.61 70451751.06 Total 1056647876.21 416874433.62 (2) Other cash payments relating to operating activities Item Reporting Period Same period of last year Cash paid in sales and distribution expenses and 1028393443.01614584443.16 general and administrative expense Security deposit guarantee and warranty 112028193.49 73317371.12 Time deposits or deposits pledged for the 10001995.000.00 issuance of notes payable Others 106759182.45 84256242.29 Total 1257182813.95 772158056.57 (3) Other cash payments relating to financing activities Item Reporting Period Same period of last year Rental fee 8506249.20 9257885.61 Total 8506249.20 9257885.61 5.54 Supplementary Information to the Statement of Cash Flows ~ 120 ~(1) Supplementary information to the statement of cash flows Supplementary information Reporting Period Same period of last year 1. Reconciliation of net profit to net cash flows generated from operating activities: Net profit 2844180601.67 1972562616.63 Add: Provisions for impairment of assets 17556673.87 -4343131.74 Losses on credit impairment -84454.20 1258781.36 Depreciation of fixed assets oil and gas 141764699.64114197513.54 assets and productive biological assets Depreciation of right-of-use assets 7271247.88 7290438.15 Amortization of intangible assets 21694016.84 21260439.42 Amortization of long-term deferred expenses 14328044.89 15659432.46 Losses from disposal of fixed assets intangible assets and other long-term assets -203366.67 -191652.74 (gains: negative) Losses on scrapping of fixed assets (gains: 1387254.59147841.23 negative) Losses on changes in fair value (gains: -25168981.30-318569.02 negative) Finance costs (gains: negative) 695705.86 -429484.32 Investment losses (gains: negative) 27346113.37 17449121.42 Decreases in deferred tax assets (increase: -134248634.08-153080744.31 negative) Increases in deferred tax liabilities (decrease: 11925466.41-6352743.86 negative) Decreases in inventories (increase: negative) -133877031.57 -344209016.09 Decreases in operating receivables (increase: -555140216.28-111211423.56 negative) Increases in operating payables (decrease: 1821226849.732661557381.22 negative) Other*1 667182706.08 0.00 Net cash flows from operating activities 4727836696.73 4191246799.79 2. Significant investing and financing ~ 121 ~activities without involvement of cash receipts and payments Conversion of debt into capital Current portion of convertible corporate bonds Fixed assets acquired under finance leases 3. Net increase/decrease of cash and cash equivalents: Ending balance of cash 16842303222.36 11409624162.43 Less: Beginning balance of cash 13105373435.22 6057550178.60 Add: Ending balance of cash equivalents Less: Beginning balance of cash equivalents Net increase in cash and cash equivalents 3736929787.14 5352073983.83 *1: Refer to impact of recovered restricted funds for operating activities paid at the same period of last year on net cash flow generated from operating activities of the reporting period. (2) Net Cash Paid For Acquisition of Subsidiaries Item Amount Cash or cash equivalents paid in the Reporting Period for business combination occurring in the Reporting Period Of which: Less: cash or cash equivalents held by subsidiaries on the purchase date Of which: Add: cash or cash equivalents paid in the Reporting Period for 13439262.05 business combination occurring in prior period Of which: Net payments for acquisition of subsidiaries 13439262.05 (3) The components of cash and cash equivalents Item Reporting Period Same period of last year I. Cash 16842303222.36 11409624162.43 Including: Cash on hand 100681.01 97411.12 Bank deposit on demand 16842069031.88 11409370669.26 Other monetary assets on demand 133509.47 156082.05 ~ 122 ~II. Cash equivalents Of which: Bond investments maturing within three months III. Ending balance of cash and cash equivalents 16842303222.36 11409624162.43 Of which: cash and cash equivalents with restriction to use in the subsidies of the Company as the parent or Group 5.55 Assets with Restricted Ownership or Right of Use Item Ending carrying value Reason Certificate of deposit pledged for opening Cash and cash equivalents 10006995.00 bank acceptance bills and security deposit Intangible assets 169116600.00 Pledged for guarantee loans Total 179123595.00 -- 5.56 Government Grants (1) Government grants related to assets Item Recognized in current profit or loss or as Presented item presented in deduct of related cost recorded to current Item Amount the statement profit or loss or as Reporting of financial Same period of last year deduct of related Period position cost Suizhou new plant infrastructure Deferred 34216158.82 373947.06 373947.06 Other income subsidy income Deferred Refund for land payment 41231932.93 489459.12 489459.12 Other income income Funds for strategic emerging Deferred industry agglomeration 818560.12 311359.98 311359.98 Other income income development base Comprehensive subsidy fund for Deferred air pollution prevention and 1643557.47 147182.40 147182.40 Other income income control Deferred Equipment subsidy 799303.97 160133.94 160133.94 Other income income Subsidy funds for strong manufacturing province and Deferred 787201.99 154327.14 154327.14 Other income private economy development income projects in 2019 Subsidy for the construction of Deferred independent innovation capacity 0.00 0.00 365272.50 Other income income of Anhui Province ~ 123 ~Subsidy for technical Deferred 425925.88 111111.12 111111.12 Other income transformation of No.2 boiler income Deferred Equipment subsidy 356593.14 104104.98 104104.56 Other income income Optimization and reconstruction Deferred project of Gujing Zhangji liquor 668958.57 23749.98 23749.98 Other income income store Subsidy for food safety Deferred 206896.75 68965.50 68965.50 Other income improvement project income Anhui province development of Deferred 0.00 0.00 146341.44 Other income direct funds of service industry income Specific funds for side Deferred 12000.00 72000.00 72000.00 Other income management of power demand income Whole process online Deferred monitoring of hook and store 0.00 0.00 46875.32 Other income income automation and product quality Wine production system Deferred 119744.64 1769403.83 145786.08 Other income technical transformation income Intelligent solid brewing Deferred 15625.02 10416.39 15625.02 Other income technology innovation project income Specific fund for transformation Deferred 15000.00 152500.00 15000.00 Other income of gas-fired boilers income Recognition awards for 34821.85 Deferred industrial enterprise technical 448156.76 34821.86 Other income income transformation investments Government grants from Deferred Technology and Quality 91530.71 10274.27 10274.26 Other income income Department Deferred Baijiu industry Internet Platform 7000000.00 0.00 0.00 Other income income VOCs emission treatment Deferred 5816470.61 311596.62 0.00 Other income project for brewing workshops income Provincial special Fund for Deferred high-quality development of 2565000.00 142500.00 0.00 Other income income manufacturing industry Upgrading of intelligent and Deferred 850000.06 49999.98 49999.98 Other income automatic baijiu production income Deferred 650190.51 66200.94 267407.61 Other income Deep treatment project of VOCs income ~ 124 ~Deferred 389385.44 22730.46 15153.64 Other income Project of Robot Development income Total 100910143.95 -- 2804835.00 3128898.51 -- (2) Government grants related to income Item Recognized in current profit or loss or as Presented presented deduct of related cost item recorded in the to current Item Amount statement Reporting profit or loss Same period of last year of financial Period or as deduct position of related cost Other Tax refund 3744824.92 3744824.92 4798088.43 Other income income Rewards for supporting high-quality Other 720000.00 Other income development of income intellectual property rights Subsidy for Other commending 13470300.00 13470300.00 7437183.00 Other income income industry Bozhou rewards and subsidies for Other supporting 800000.00 Other income income technological innovation Manufacturing Power Province Subsidies for Other 1140000.00 Other income Intelligent and income Automatic Baijiu Production The third special fund from Bureau for Promoting Economy and Other 558760.00 Other income Technology of income High-tech Zone of Xianning for carriers with characteristics ~ 125 ~of innovation and entrepreneurship VAT add-on Other 1216092.52 1216092.52 2650735.41 Other income deduction income Other Others 3113985.44 3113985.44 4975415.80 Other income income Other Plant rent subsidy 1800000.00 1800000.00 Other income income Special fund for special carriers of Other mass 954540.00 954540.00 0.00 Other income income entrepreneurship and innovation Finance Finance Discounted loans 1392125.00 1392125.00 9666.66 expense expense Total 25691867.88 -- 25691867.88 23089849.30 -- 6. CHANGES OF CONSOLIDATION SCOPE 6.1 Changes in Combination Scope for Other Reasons Compared with the previous period the Company added subsidiaries Anhui Guqi Distillery Co. Ltd. Wuhan Gulou Junhe Trading Co. Ltd. and Wuhan Gulou Juntai Trading Co. Ltd. 7. EQUITY IN OTHER ENTITIES 7.1 Equity in Subsidiaries (1) Composition of corporate group Main Holding percentage (%) Registration Nature of Name operating Way of gaining place business Directly Indirectly place Anhui Commercial Investment Bozhou Gujing Sales Co. Ltd. Anhui Bozhou 100.00 Bozhou trade establishment Anhui Investment Anhui Longrui Glass Co. Ltd Anhui Bozhou Manufacture 100.00 Bozhou establishment Anhui Jiuan Mechanical Electrical Anhui Equipment Investment Anhui Bozhou 100.00 Equipment Co. Ltd. Bozhou manufacturing establishment Anhui Jinyunlai Culture & Media Advertisement Investment Anhui Hefei Anhui Hefei 100.00 Co. Ltd. marketing establishment Anhui Ruisiweier Technology Co. Anhui Technical Investment Anhui Bozhou 100.00 Ltd. Bozhou research establishment Shanghai Gujing Jinhao Hotel Shanghai Shanghai Hotel 100.00 Business ~ 126 ~Management Co. Ltd. management combination under common control Bozhou Gujing Hotel Co. Ltd Business Anhui combination Anhui Bozhou Hotel operating 100.00 Bozhou under common control Anhui Yuanqing Environmental Anhui Sewage Investment Anhui Bozhou 100.00 Protection Co. Ltd. Bozhou treatment establishment Anhui Gujing Yunshang Electronic Investment Anhui Hefei Anhui Hefei 100.00 E-commerce Co. Ltd commerce establishment Anhui RunAnXinKe Testing Anhui Investment Anhui Bozhou Food testing 100.00 Technology Co. Ltd. Bozhou establishment Anhui Jiudao Culture Media Co. Advertisement Investment Anhui Hefei Anhui Hefei 100.00 Ltd. marketing establishment Anhui Gujinggong Liquor Original Anhui Investment Vintage Theme Hotel Management Anhui Bozhou Hotel operation 100.00 Bozhou establishment Co. Ltd.Anhui Investment Anhui Anjie Technology Co. Ltd. Anhui Bozhou Food testing 70.00 Bozhou establishment Anhui Investment Anhui Guqi Distillery Co. Ltd. Anhui Bozhou Manufacture 60.00 Bozhou establishment Business Yellow Crane Tower Distillery Co. combination not Hubei Wuhan Hubei Wuhan Manufacture 51.00 under common Ltd.control Business Yellow Crane Tower Distillery Hubei Hubei combination not Manufacture 51.00 (Xianning) Co. Ltd. Xianning Xianning under common control Business Yellow Crane Tower Distillery Hubei Hubei combination not Manufacture 51.00 (Suizhou) Co. Ltd. Suizhou Suizhou under common control Business Hubei Junlou Cultural Tourism Co. Hubei Hubei Advertising combination not 51.00 Ltd. Wuhan Wuhan marketing under common control Hubei Yellow Crane Tower Beverage Hubei Hubei Investment Manufacture 51.00 Co. Ltd Xianning Xianning establishment ~ 127 ~Wuhan Yashibo Technology Co. Technology Investment Hubei Wuhan Hubei Wuhan 51.00 Ltd. development establishment Hubei Xinjia Testing Technology Hubei Hubei Investment Food testing 51.00 Co. Ltd. Xianning Xianning establishment Business Wuhan Tianlong Jindi Technology Commercial combination not Hubei Wuhan Hubei Wuhan 51.00 Development Co. Ltd trade under common control Business Hubei Hubei Commercial combination not Xianning Junhe Sales Co. Ltd 51.00 Xianning Xianning trade under common control Commercial Investment Wuhan Junya Sales Co. Ltd Hubei Wuhan Hubei Wuhan 51.00 trade establishment Hubei Hubei Commercial Investment Suizhou Junhe Commercial Co. Ltd. 51.00 Suizhou Suizhou trade establishment Huanggang Huanggang Commercial Investment Huanggang Junya Trading Co. Ltd. 51.00 Hubei Hubei trade establishment Wuhan Gulou Junhe Trading Co. Commercial Investment Hubei Wuhan Hubei Wuhan 51.00 Ltd. trade establishment Wuhan Gulou Juntai Trading Co. Commercial Investment Hubei Wuhan Hubei Wuhan 51.00 Ltd. trade establishment Business Anhui Mingguang Distillery Co. Anhui Anhui combination not Manufacture 60.00 Ltd. Chuzhou Mingguang under common control Business Mingguang Tiancheng Ming Wine Anhui Anhui Commercial combination not 60.00 Sales Co. Ltd. Chuzhou Mingguang trade under common control Business Fengyang Xiaogang Village Ming Anhui Anhui combination not Manufacture 42.00 Wine Distillery Co. Ltd. Chuzhou Chuzhou under common control Anhui Jiuhao China Railway Anhui Investment Anhui Bozhou Construction 52.00 Construction Engineering Co. Ltd. Bozhou establishment Anhui Zhenrui Construction Anhui Investment Anhui Bozhou Construction 52.00 Engineering Co. Ltd Bozhou establishment Renhuai Maotai Town Zhencang Renhuai Renhuai Business Manufacture 60.00 Winery Industry Co. Ltd. Guizhou Guizhou combination not ~ 128 ~under common control Anhui Gujing Health Technology Business Co. Ltd. Anhui combination not Anhui Bozhou Manufacture 60.00 Bozhou under common control Anhui Maiqi Biotechnology Co. Business Ltd. Anhui Technology combination not Anhui Bozhou 60.00 Bozhou development under common control Anhui Yangshengtianxia Brand Business Operation Co. Ltd. Anhui Anhui Advertising combination not 60.00 Hefei Hefei marketing under common control Hainan Yangshengtianxia Business Biotechnology Development Co. Hainan Hainan Commercial combination not 60.00 Ltd. Lingshui Lingshui trade under common control (2) Significant non-wholly owned subsidiaries Shareholding The profit or loss Declaring dividends Balance of proportion of Name attributable to the distributed to non-controlling interests non-controlling non-controlling interests non-controlling interests at the period-end interests Yellow Crane Tower 49.0049480734.840.00599231262.60 Distillery Co. Ltd. (3) Main financial information of significant non-wholly owned subsidiaries Ending balance Name Non-current Current Non-current Current assets Total assets Total liabilities assets liabilities liability Yellow Crane Tower Distillery 1039423337.10 1162240464.05 2201663801.15 650778983.48 327963873.59 978742857.07 Co. Ltd. (Continued) Beginning balance Name Non-current Current Non-current Current assets Total assets Total liabilities assets liabilities liability Yellow Crane 1174784972.791095159397.172269944369.96952593793.76195313952.861147907746.62 Tower Distillery ~ 129 ~Beginning balance Name Non-current Current Non-current Current assets Total assets Total liabilities assets liabilities liability Co. Ltd. (Continued) Reporting Period Name Total comprehensive Cash flows from operating Operating revenue Net profit income activities Yellow Crane Tower Distillery 865646272.06100981091.52100884320.7419674621.86 Co. Ltd. (Continued) Same period of last year Name Total comprehensive Cash flows from operating Operating revenue Net profit income activities Yellow Crane Tower Distillery 886104927.21102164790.08101725592.48-32042974.64 Co. Ltd. 7.2 Equity in joint ventures or associated enterprises There was no significant joint venture or associated enterprise. 8. THE RISK RELATED TO FINANCIAL INSTRUMENTS Risks related to the financial instruments of the Company arise from the recognition of various financial assets and financial liabilities during its operation including credit risk liquidity risk and market risk.Management of the Company is responsible for determining risk management objectives and policies related to financial instruments. Operational management is responsible for the daily risk management through functional departments. Internal audit department is responsible for the daily supervision of implementation of the risk management policies and procedures and report their findings to the audit committee in a timely manner.Overall risk management objective of the Company is to establish risk management policies to minimize the risks without unduly affecting the competitiveness and resilience of the Company. 8.1 Credit Risk Credit risk is the risk of one party of the financial instrument face to a financial loss because the other party of the financial instrument fails to fulfill its obligation. The credit risk of the Company is related to cash and equivalent notes receivable accounts receivables other receivables and long-term receivables. Credit risk of these financial assets is derived from the counterparty’s breach of contract. The maximum risk exposure is equal to the carrying ~ 130 ~amount of these financial instruments.Cash and cash equivalent of the Company has lower credit risk as they are mainly deposited in such financial institutions as commercial bank of which the Company thinks with higher reputation and financial position.Notes receivable held by the Company are mainly bank acceptance bills which have strong liquidity. The Company has formulated corresponding bill management and control procedures and has been effectively implemented which greatly ensures the safety of bill storage and use to ensure the low credit risks. The Company only conducts business with customers with good credit rating and will continue to monitor the balance of accounts receivable to ensure that the Company avoids the risk of major bad debt losses. The company's largest credit risk exposure is the book value of each financial asset (including derivative financial instruments) in the balance sheet and the overall credit risk evaluation is low. 8.2 Liquidity Risk Liquidity risk is the risk of shortage of funds when fulfilling the obligation of settlement by delivering cash or other financial assets. The Company is responsible for the capital management of all of its subsidiaries including short-term investment of cash surplus and dealing with forecasted cash demand by raising loans. The Company’s policy is to monitor the demand for short-term and long-term floating capital and whether the requirement of loan contracts is satisfied so as to ensure to maintain adequate cash and cash equivalents. 8.3 Market Risk The market risk of financial instruments refers to the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market prices. Market risks mainly include foreign exchange risk and interest rate risk. (1) Foreign currency risk Foreign exchange risk refers to the risk of loss due to exchange rate fluctuations generally. The core business of the Company is on the mainland of China and trading with CNY. Foreign exchange risk is minimal. (2) Interest rate risk Interest rate risk refers to the risk that the fair value of financial instruments or future cash flows will fluctuate due to changes in market interest rates. The Company's interest rate risk mainly comes from long-term and short-term bank borrowings. As of 30 June 2023 the Company has no liabilities calculated with floating interest rates. (3) Other price risk The Held-for-trading financial assets of the Company are measured by fair value. As a result of that the Company ~ 131 ~bears the risk of the change of security market. To decrease the risk the management decided that the Company held a combination of several equities and securities. 9. THE DISCLOSURE OF FAIR VALUE The inputs used in the fair value measurement in its entirety are to be classified in the level of the hierarchy in which the lowest level input that is significant to the measurement is classified: Level 1: Inputs consist of unadjusted quoted prices in active markets for identical assets or liabilities Level 2: Inputs for the assets or liabilities (other than those included in Level 1) that are either directly or indirectly observable.Level 3: Inputs are unobservable inputs for the assets or liabilities 9.1 Assets and liabilities measured at fair value on 30 June 2023 Fair value on 30 June 2023 Item Level 1 Level 2 Level 3 Total Recurring fair value measurements (a) Held-for-trading financial assets 1790678478.171790678478.17 (i) Financial assets at fair value through 1790678478.171790678478.17 profit or loss Debt instruments Bank financial products 1790678478.17 1790678478.17 Fund investment (ii) Financial assets measured at fair value through other comprehensive - 60753939.28 835279520.98 896033460.26 income Accounts receivable financing 0.00835279520.98835279520.98 Investments in other equity instrument 60753939.28 0.00 60753939.28 Total assets measured at fair value on a -1851432417.45835279520.982686711938.43 recurring basis The fair value of financial instruments traded in an active market is based on quoted market prices at the reporting date. The fair value of financial instruments not traded in an active market is determined by using valuation techniques. Specific valuation techniques used to value the above financial instruments include discounted cash flow and market approach to comparable company model. Inputs in the valuation technique include risk-free interest rates benchmark interest rates exchange rates credit spreads liquidity premiums discount for lack of liquidity.~ 132 ~9.2 Valuation Technique(s) Qualitative and Quantitative Information about the Significant Inputs Used for Fair Value Measurement in Level 2 on a Recurring or Nonrecurring Basis The items of fair value measurement in Level 2 of the Company are mainly about wealth management products.For wealth management products the Company shall account actual revenues determine corresponding gains or losses arising from changes in fair value and the value of trading financial assets according to terms and conditions stipulated in the wealth management product contracts. 9.3 Valuation Technique(s) Qualitative and Quantitative Information about the Significant Inputs Used for Fair Value Measurement in Level 3 on a Recurring or Nonrecurring Basis The items of fair value measurement in Level 3 of the Company are mainly about received bank acceptance bills with high credit rating. We shall account the recoverable amount thereof according to the prevailing discounting rate on the balance sheet date and determine the fair value thereof. 10. RELATED PARTY AND RELATED-PARTY TRANSACTIONS Recognition of related parties: The Company has control or joint control of or exercise significant influence over another party; or the Company is controlled or jointly controlled or significant influenced by another party. 10.1 General Information of the Parent Company Proportion of Proportion of share voting rights held by the Registration owned by the Name Nature of business Registered capital Company as the place Company as the parent against the parent against the Company (%) Company (%) Beverages construction Anhui Gujing Group Anhui materials manufacturing 1000000000.00 51.34 51.34 Co. Ltd.Bozhou plastic production The ultimate controller of the Company: The ultimate controller is State-owned Assets Supervision and Administration Commission of the Government of Bozhou City Anhui Province. 10.2 General Information of Subsidiaries Refer to Note 7.1 Equity in joint ventures or associated enterprises for details. 10.3 Joint ventures and associated enterprises of the Company (1) General information of significant joint ventures and associates Refer to Note 7.2 Equity in joint ventures or associated enterprises for details. 10.4 Other Related Parties of the Company ~ 133 ~Name Relationship with the Company Enterprise controlled by Zhang Guiping who is an Nanjing Suning Real Estate Development Co. Ltd.independent director of the Company An affiliate of the actual controller and controlling Anhui Vista Business Travel (Group) Co. Ltd.shareholder An affiliate of the actual controller and controlling Hefei Gujing Holiday Hotel Co. Ltd.shareholder An affiliate of the actual controller and controlling Anhui Gujing Huishenglou Catering Co. Ltd.shareholder An affiliate of the actual controller and controlling Anhui Haochidian Catering Co. Ltd.shareholder An affiliate of the actual controller and controlling Anhui Vista Catering Management Co. Ltd.shareholder An affiliate of the actual controller and controlling Shanghai Beihai Restaurant Co. Ltd.shareholder An affiliate of the actual controller and controlling Anhui Gujing Hotel Development Co. Ltd.shareholder An affiliate of the actual controller and controlling Anhui Huixin Finance Investment Group Co. Ltd shareholder An affiliate of the actual controller and controlling Bozhou Anxin Micro Finance Co. Ltd.shareholder An affiliate of the actual controller and controlling Anhui Hengxin Pawn Co. Ltd.shareholder An affiliate of the actual controller and controlling Anhui Ruixin Pawn Co. Ltd.shareholder An affiliate of the actual controller and controlling Anhui Zhongxin Finance Leasing Co. Ltd.shareholder An affiliate of the actual controller and controlling Anhui Lixin E-commerce Co. Ltd.shareholder An affiliate of the actual controller and controlling Anhui Youxin Financing Guarantee Co. Ltd.shareholder An affiliate of the actual controller and controlling Hefei Longxin Business Management Consulting Co. Ltd.shareholder An affiliate of the actual controller and controlling Anhui Chuangxin Equity Investment Co. Ltd.shareholder An affiliate of the actual controller and controlling Anhui Lejiu Home Tourism Management Co. Ltd.shareholder An affiliate of the actual controller and controlling Anhui Shenglong Commercial Co. Ltd.shareholder An affiliate of the actual controller and controlling Anhui Gujing Health Industry Co. Ltd.shareholder An affiliate of the actual controller and controlling Bozhou Hotel Co. Ltd.shareholder ~ 134 ~An affiliate of the actual controller and controlling Dongfang Vista Business Investment Development Co. Ltd.shareholder An affiliate of the actual controller and controlling Anhui Gujing International Development Co. Ltd.shareholder An affiliate of the actual controller and controlling Anhui Jiuan Engineering Management Consulting Co. Ltd.shareholder 10.5 Related Party Transactions (1) Purchases or sales of goods rendering or receiving of services Purchases of goods receiving of services: Reporting Same period of last Related party Content Period year Bozhou Hotel Co. Ltd. Catering and accommodation service 4325048.30 298619.87 Bozhou Gujing Huishenglou Catering Co. Ltd. Catering and accommodation service 3553459.37 54578.00 Anhui Haochidian Catering Co. Ltd. Catering and accommodation service 0.00 1507790.81 Anhui Gujing Hotel Development Co. Ltd. Catering and accommodation service 728018.80 93310.05 Anhui Vista Business Travel (Group) Co. Ltd. Purchase of materials 45663.72 101061.95 Anhui Vista Business Travel (Group) Co. Ltd. Catering and accommodation service 10358.79 138089.91 Hefei Gujing Holiday Hotel Co. Ltd. Catering and accommodation service 22627.37 33214.85 Purchase of materials and receiving of 233711.85 Hefei Gujing Holiday Hotel Co. Ltd. 288237.40 services Anhui Jiuan Engineering Management Consulting Consultation and assurance 3098429.54 4012244.33 Co. Ltd.Total -- 12017317.74 6527147.17 Sales of goods and rendering of services: Related party Content Reporting Period Same period of last year Anhui Shenglong Commercial Co. Ltd. Sales of baijiu 1011223.02 1243492.90 Anhui Gujing Hotel Development Co. Ltd. Utilities 53250.00 67699.91 Catering and Anhui Gujing Group Co. Ltd. accommodation 75237.68 66730.00 service Sales of small Anhui Gujing Group Co. Ltd. 45141.22 17907.56 materials Anhui Gujing Hotel Development Co. Ltd. Sales of baijiu 18141.59 0.00 Catering and Anhui Vista Business Travel (Group) Co. Ltd. accommodation 3083.75 7061.78 service Sales of small Bozhou Hotel Co. Ltd. 44233.90 0.00 materials ~ 135 ~Anhui Huixin Finance Investment Group Co. Ltd Sales of baijiu 0.00 42022.13 Bozhou Gujing Huishenglou Catering Co. Ltd. Sales of baijiu 13238.94 0.00 Bozhou Anxin Micro Finance Co. Ltd. Sales of baijiu 0.00 40457.53 Anhui Zhongxin Finance Leasing Co. Ltd. Sales of baijiu 0.00 9650.45 Anhui Ruixin Pawn Co. Ltd. Sales of baijiu 0.00 15440.71 Anhui Jiuan Engineering Management Consulting Co. Ltd. Sales of baijiu 60318.59 60220.35 Anhui Lejiu Home Tourism Management Co. Ltd. Sales of baijiu 0.00 11155.76 Catering and Anhui Shenglong Commercial Co. Ltd. accommodation 6539.00 1940.00 service Anhui Lejiu Home Tourism Management Co. Ltd. Utilities 1346.46 3404.52 Anhui Ruixin Pawn Co. Ltd. Sales of baijiu 0.00 7720.35 Anhui Youxin Financing Guarantee Co. Ltd. Sales of baijiu 0.00 3010.63 Catering and Anhui Jiuan Engineering Management Consulting Co. Ltd. accommodation 3220.00 7190.00 service Sales of small Bozhou Anxin Micro Finance Co. Ltd. 9911.50 0.00 materials Anhui Shenglong Commercial Co. Ltd. Sales of small 1796.460.00 materials Hefei Longxin Business Management Consulting Co. Ltd Sales of baijiu 0.00 1930.09 Sales of small Anhui Jiuan Engineering Management Consulting Co. Ltd. 9376.56 0.00 materials Hefei Gujing Holiday Hotel Co. Ltd. Sales of small 14658.280.00 materials Hefei Gujing Holiday Hotel Co. Ltd. Catering and accommodation 1276.02 0.00 service Anhui Vista Business Travel (Group) Co. Ltd. Sales of small 4605.300.00 materials Dongfang Vista Business Investment Development Co. Ltd. Catering and accommodation 0.00 82528.93 service Anhui Gujing Hotel Development Co. Ltd. Catering and accommodation 0.00 14266.98 service Anhui Gujing Hotel Development Co. Ltd. Sales of small 17544.240.00 materials ~ 136 ~Total -- 1394142.51 1703830.58 (2) Related-party leases The Company as lessor: Category of leased The lease income confirmed in The lease income confirmed in Name of lessee assets the Reporting Period the same period of last year Anhui Gujing Hotel Development Co. Ltd. Houses and buildings 261183.34 420957.38 Total -- 261183.34 420957.38 The Company as lessee: Category of leased The lease fee confirmed in the The lease fee confirmed in Name of lessor assets Reporting Period the same period of last year Anhui Gujing Group Co. Ltd. Houses and buildings 534782.12 523451.01 Nanjing Suning Real Estate Development Co. Ltd. Houses and buildings 1050000.00 1050000.00 Total -- 1584782.12 1573451.01 10.6 Receivables and Payables with Related Parties Item Related party Ending balance Beginning balance Contract assets Bozhou Hotel Co. Ltd. 546215.81 1855188.15 Contract Anhui Vista Business Travel (Group) Co. Ltd. 221.12 221.12 liabilities Contract Anhui Gujing International Development Co. Ltd. 58849.56 58849.56 liabilities Contract Anhui Gujing Hotel Development Co. Ltd. 148.67 148.67 liabilities Anhui Jiuan Engineering Management Consulting Co.Accounts payable 1245656.92 2151065.65 Ltd.Other payables Anhui Vista Business Travel (Group) Co. Ltd. 25533.60 115533.60 Other payables Anhui Gujing Hotel Development Co. Ltd. 100108.48 50000.00 Other payables Anhui Gujing Group Co. Ltd. 86355.30 0.00 11. COMMITMENTS AND CONTINGENCY 11.1 Significant Commitments As of 30 June 2023 the Company has no significant commitments need to be disclosed. 11.2 Contingencies As of 30 June 2023 The Company has no contingencies need to be disclosed. 12. EVENTS AFTER BALANCE SHEET DATE As of 30 June 2023 except as aforesaid the Company has no other events after balance sheet date need to be ~ 137 ~disclosed. 13. OTHER SIGNIFICANT EVENTS Segment information The Company did not determine the operating segment in accordance with the internal organizational structure management requirements and internal reporting system so there was no need to disclose segment information report based on the operating segments. 14. NOTES OF MAIN ITEMS IN THE FINANCIAL STATEMENTS OF THE COMPANY AS THE PARENT 14.1 Accounts Receivable (1) On 30 June 2023 the Company as the parent has no balance of accounts receivable. (2) On 1 January 2023 the Company as the parent has no balance of accounts receivable. (3) There is no change in bad debt provision for the Company as the parent during the Reporting Period. 14.2 Other Receivables (1) Listed by category Item Ending balance Beginning balance Interest receivable Dividends receivable Other receivables 315299233.76 202279154.63 Total 315299233.76 202279154.63 (2) Other receivables * Disclosure by aging Aging Ending balance Beginning balance Within one year 313813660.69 200863691.53 Of which:1-6 months 313762218.08 200851698.40 7-12 months 51442.61 11993.13 1-2 years 1303136.00 1303136.00 2-3 years 690291.70 710291.70 Over 3 years 39699235.28 39757474.30 Subtotal 355506323.67 242634593.53 Less: Bad debt provision 40207089.91 40355438.90 ~ 138 ~Total 315299233.76 202279154.63 * Disclosure by nature Nature Ending balance Beginning balance Related parties within the scope of consolidation 310779913.48 189661149.05 Security investment 38336008.08 38434247.10 Security deposit and guarantee 3351294.09 3351294.09 Rent water electricity and gas 824458.36 741495.49 Other 2214649.66 10446407.80 Total 355506323.67 242634593.53 * Disclosure by withdrawal method of bad debt provision A. As of 30 June 2023 bad debt provision withdrawn based on three stages model: Stage Carrying amount Bad debt provision Carrying value Stage 1 317170315.59 1871081.83 315299233.76 Stage 2 Stage 3 38336008.08 38336008.08 0.00 Total 355506323.67 40207089.91 315299233.76 A1. As of 30 June 2023 bad debt provision at stage 1: 12-month expected credit Category Carrying amount Bad debt provision Carrying value losses rate (%) Bad debt provision withdrawn separately Bad debt provision withdrawn 317170315.590.591871081.83315299233.76 by group- Of which: Group 1 310779913.48 0.00 0.00 310779913.48 Group 2 6390402.11 29.28 1871081.83 4519320.28 Total 317170315.59 0.59 1871081.83 315299233.76 On 30 June 2023 other receivables with bad debt provision withdrawn by group 2 Ending balance Aging Withdrawal proportion Carrying amount Bad debt provision (%) Within one year 3033747.21 32395.18 1.07 Of which:1-6 months 2982304.60 29823.05 1.00 ~ 139 ~7-12 months 51442.61 2572.13 5.00 1-2 years 1303136.00 130313.60 10.00 2-3 years 690291.70 345145.85 50.00 Over 3 years 1363227.20 1363227.20 100.00 Total 6390402.11 1871081.83 29.28 A2. As of 30 June 2023 bad debt provision at stage 3: Expected credit loss rate for Category Carrying amount Bad debt provision Carrying value the entire duration (%) Bad debt provision withdrawn - 38336008.08100.0038336008.08 separately Bad debt provision withdrawn by group Of which: Group 1 Group 2 Total 38336008.08 100.00 38336008.08 - On 30 June 2023 other receivables with bad debt provision withdrawn separately: Ending balance Withdrawal Name Carrying amount Bad debt provision proportion Withdrawal reason (%) The enterprise has gone bankrupt Hengxin Securities Co. Ltd. 28635660.22 28635660.22 100.00 and liquidated The enterprise has gone bankrupt Jianqiao Securities Co. Ltd. 9700347.86 9700347.86 100.00 and liquidated Total 38336008.08 38336008.08 100.00 -- B. As of 1 January 2023 bad debt provision withdrawn based on three stages model: Stage Carrying amount Bad debt provision Carrying value Stage 1 204200346.43 1921191.80 202279154.63 Stage 2 Stage 3 38434247.10 38434247.10 0.00 Total 242634593.53 40355438.90 202279154.63 B1. On 1 January 2023 bad debt provision at stage 1: ~ 140 ~12-month expected credit Category Carrying amount Bad debt provision Carrying value losses rate (%) Bad debt provision withdrawn separately Bad debt provision withdrawn 204200346.430.941921191.80202279154.63 by group Of which: Group 1 189661149.05 0.00 0.00 189661149.05 Group 2 14539197.38 13.21 1921191.80 12618005.58 Total 204200346.43 0.94 1921191.80 202279154.63 On 1 January 2023 other receivables with bad debt provision withdrawn by group 2 Beginning balance Aging Withdrawal proportion Carrying amount Bad debt provision (%) Within one year 11202542.48 112505.14 1.00 Of which: 1-6 months 11190549.35 111905.48 1.00 7-12 months 11993.13 599.66 5.00 1-2 years 1303136.00 130313.60 10.00 2-3 years 710291.70 355145.86 50.00 Over 3 years 1323227.20 1323227.20 100.00 Total 14539197.38 1921191.80 13.21 B2. As of 1 January 2023 bad debt provision at stage 3: Expected credit loss rate for Category Carrying amount Bad debt provision Carrying value the entire duration (%) Bad debt provision withdrawn 38434247.10100.0038434247.10 separately Bad debt provision withdrawn by group Of which: Group 1 Group 2 Total 38434247.10 100.00 38434247.10 On 1 January 2023 other receivables with bad debt provision withdrawn separately: Name Beginning balance ~ 141 ~Withdrawal Carrying amount Bad debt provision proportion Withdrawal reason (%) Hengxin Securities Co. Ltd. The enterprise has gone bankrupt 28733899.2428733899.24100.00 and liquidated Jianqiao Securities Co. Ltd. The enterprise has gone bankrupt 9700347.869700347.86100.00 and liquidated Total 38434247.10 38434247.10 100.00 -- * Changes of bad debt provision during the Reporting Period Changes in the Reporting Period Category Beginning balance Reversal or Ending balance Withdrawal Write-off recovery Bad debt provision withdrawn 38434247.100.0098239.020.0038336008.08 separately Bad debt provision withdrawn by 1921191.80-50109.970.000.001871081.83 group Total 40355438.90 -50109.97 98239.02 0.00 40207089.91 * On 30 June 2023 top five ending balance by entity Proportion of the balance to Bad debt No. Nature Ending balance Aging the total other provision receivables (%) Current accounts within the No. 1 110000000.00 Within 6 months 30.94 0.00 scope of consolidation Current accounts within the No. 2 80207352.12 Within 1 year 22.56 0.00 scope of consolidation Current accounts within the No. 3 65000000.00 Within 6 months 18.28 0.00 scope of consolidation Current accounts within the No. 4 55572561.36 Within 6 months 15.63 0.00 scope of consolidation No. 5 Securities Investment 28635660.22 Over 3 years 8.05 28635660.22 Total -- 339415573.70 95.46 28635660.22 14.3 Long-term Equity Investments Item Ending balance Beginning balance ~ 142 ~Depre ciatio Depreciation Carrying amount n Carrying value Carrying amount Carrying value reserve reserv e Investment in 1598079903.431598079903.431582079903.431582079903.43 subsidiaries Investment in associated 4712811.85 4712811.85 4669710.25 4669710.25 enterprises Total 1602792715.28 1602792715.28 1586749613.68 1586749613.68 (1) Investments in subsidiaries Decrease Impairment Provision Increase during provision for during the Investees Beginning balance the Ending balance during the impairment Reporting Reporting Reporting at 30 June Period Period Period 2023 Bozhou Gujing Sales Co. 68949286.8968949286.89 Ltd.Anhui Longrui Glass Co. 85267453.0685267453.06 Ltd.Shanghai Gujing Jinhao Hotel Management Co. 49906854.63 49906854.63 Ltd.BozhouGujing Hotel Co. 648646.80648646.80 Ltd. 40000000.00 Anhui Ruisiweier 40000000.00 Technology Co. Ltd. 16000000.00 Anhui Yuanqing Environmental Protection 16000000.00 Co. Ltd. 5000000.00 Anhui Gujing Yunshang 5000000.00 E-commerce Co. Ltd.Yellow Crane Tower 816000000.00 816000000.00 ~ 143 ~Distillery Co. Ltd.Anhui Jinyunnlai Cultural 15000000.0015000000.00 Media Co. Ltd.Anhui RunanXinke Testing 10000000.0010000000.00 Technology Co. Ltd.Anhui Gujinggong Liquor Original Vintage Theme 0.0010000000.0010000000.00 Hotel Management Co.Ltd.Anhui Jiuan Mechanical Electrical Equipment Co. 10000000.00 10000000.00 Ltd.Anhui Guqi Distillery Co. 6000000.006000000.00 Ltd.Anhui Mingguang 200200000.00200200000.00 Distillery Co. Ltd.Renhuai Maotai Town Zhencang Winery Industry 224723400.00 224723400.00 Co. Ltd.Anhui Jiuhao China Railway Construction 5720000.00 5720000.00 Engineering Co. Ltd.Anhui Gujing Health 34664262.0534664262.05 Technology Co. Ltd.Total 1582079903.43 16000000.00 1598079903.43 (2) Investment in associated enterprises Increase/decrease Adjustment of Beginning Investment income Investee Additional Reduced other Changes of balance recognized under investment investment comprehensive other equity the equity method income I. Joint ventures Anhui Xunfei Jiuzhi 4669710.2543101.60-- Technology Co. Ltd.Total 4669710.25 43101.60 - - (Continued) Investee Increase/decrease Ending balance Ending balance of ~ 144 ~Withdrawal of depreciation Cash bonus or profits impairment Other reserve announced to issue provision I. Joint ventures Anhui Xunfei Jiuzhi Technology 4712811.85 Co. Ltd.Total 4712811.85 14.4 Operating Revenue and Cost of Sales Reporting Period Same period of last year Item Operating revenue Cost of sales Operating revenue Cost of sales Main operations 5622237508.48 1993854656.60 4421424122.12 1580664788.57 Other operations 66739498.50 39198474.43 51432771.67 32535174.94 Total 5688977006.98 2033053131.03 4472856893.79 1613199963.51 Information on performance obligations: None. 14.5 Investment Income Item Reporting Period Same period of last year Investment income from long-term equity investments under cost 9945959.41 0.00 method Investment income from long-term equity investments under equity 43101.60 0.00 method Investment income from disposal of long-term equity investments Gains on disposal of financial assets at fair value through profit or -1293063.110.00 loss Investment income from bond investments during the holding period Investment income from other debt obligation investments during the holding period Gains on disposal of financial assets at fair value through other -27107452.17-17533328.20 comprehensive income Investment income from trading financial assets during the holding period Other investment income 9669.81 103208.20 Total -18401784.46 -17430120.00 15. SUPPLEMENTARY MATERIALS ~ 145 ~15.1 Items and Amounts of Non-recurring Profit or Loss Unit: RMB Item Amount Note Gains/losses on the disposal of non-current -1183887.92 assets Tax rebates reductions or exemptions due to approval beyond authority or the lack of official approval documents Government grants recognized in the current period except for those acquired in the ordinary course of business or granted at 27104577.88 certain quotas or amounts according to the government’s unified standards Capital occupation charges on non-financial enterprises that are recorded into current profit or loss Gains due to that the investment costs for the Company to obtain subsidiaries associates and joint ventures are lower than the enjoyable fair value of the identifiable net assets of the investees when making the investments Gain/Loss on non-monetary asset swap Gain/Loss on entrusting others with investments or asset management Asset impairment provisions due to acts of God such as natural disasters Gain/Loss from debt restructuring Expenses on business reorganization such as expenses on staff arrangements integration etc.Gain/Loss on the part over the fair value due to transactions with distinctly unfair prices Current net profit or loss of subsidiaries acquired in business combination under the same control from period-beginning to combination date Gain/Loss incurred from contingency unrelated to the Company’s normal operating ~ 146 ~businesses.Gain/loss from change of fair value of trading financial assets and liabilities and investment gains from disposal of trading financial assets and liabilities as well as 25000400.11 available-for-sale financial assets other than valid hedging related to the Company’s common businesses Depreciation reserves returns of receivables 98239.02 with separate depreciation test Gain/loss on entrustment loans Gain/loss on change in fair value of investment property of which the subsequent measurement is carried out adopting fair value method Effect on current profit or loss when a one-off adjustment is made to current profit or loss according to requirements of taxation accounting and other relevant laws and regulations Custody fee income when entrusted with operation Other non-operating income and expense 25705304.86 other than the above Other gains and losses that meet definition of exceptional gains and losses Less: Income tax effects 18984822.91 Non-controlling interests effects 9386334.29 Total 48353476.75 -- Others that meets the definition of non-recurring gain/loss: □Applicable □ Not applicable No such cases in the Reporting Period.Explain the reasons if the Company classifies any extraordinary gain/loss item mentioned in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Non-recurring Gains and Losses as a recurrent gain/loss item □Applicable □ Not applicable 15.2 Return on Net Assets and Earnings Per Share ~ 147 ~Weighted average ROE EPS (Yuan/share) Profit as of Reporting Period (%) EPS-basic EPS-diluted Net profit attributable to ordinary shareholders of the 13.965.265.26 Company Net profit attributable to ordinary shareholders of the Company after deduction of non-recurring profit and 13.72 5.17 5.17 loss 15.3 Differences between Accounting Data under Domestic and Overseas Accounting Standards (1) Differences of Net Profit and Net Assets Disclosed in Financial Reports Prepared under International and Chinese Accounting Standards □ Applicable □ Not applicable (2) Differences of Net profit and Net assets Disclosed in Financial Reports Prepared under Overseas and Chinese Accounting Standards □ Applicable □ Not applicable (3) Explain Reasons for the Differences between Accounting Data under Domestic and Overseas Accounting Standards; for any Adjustment Made to the Difference Existing in the Data Audited by the Foreign Auditing Agent Such Foreign Auditing Agent’s Name Shall Be Clearly Stated None 15.4 Other None Chairman of the Board: (Liang Jinhui) Anhui Gujing Distillery Company Limited 30 August 2023 ~148~