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个股公告正文

古井贡B:2012年年度报告(英文版)

日期:2013-04-23附件下载

                 2012 Annual Report of Anhui Gujing Distillery Company Limited




ANHUI GUJING DISTILLERY COMPANY LIMITED


            2012 Annual Report




                April 2013




                                                                            1
                                                                2012 Annual Report of Anhui Gujing Distillery Company Limited




                                   SectionI.ImportantReminders,Catalogue&Explanation



The Board of Directors, the Supervisory Committee, directors, supervisors and senior management staff of Anhui Gujing Distillery
Company Limited (hereinafter referred to as “the Company”) warrant that this report does not contain any false record or misleading
statement or omit any material fact and shall hereby accept, individually and collectively, responsibility for the factuality, accuracy
and completeness of the contents carried in this report.

Yu Lin, company principal, Ye Changqing, chief of the accounting work, and Xia Xueyun, chief of the accounting organ (chief of
accounting), hereby confirm that the Financial Report enclosed in this report is factual, accurate and complete.

All directors have attended the board session for reviewing this report.

The Company’s profit allocation preplan upon review and approval of this board session: Based on the total shares of the Company
as at 31 Dec. 2012, a cash dividend of RMB 5.00 (tax included) will be distributed for every 10 shares held by shareholders. No
bonus shares will be granted and no capital reserve will be turned into share capital.

The report relates to the future plans of forward-looking statements, does not constitute a company on the substantial commitment of
investors, please investors pay attention to investment risk.




                                                                                                                                     2
                                            2012 Annual Report of Anhui Gujing Distillery Company Limited


                                            Catalogue




Section I. Important Reminders, Catalogue & Explanation ........... 2
Section II. Company Profile ........................................................... 6
Section III. Accounting & Financial Highlights............................. 8
Section IV. Report of the Board of Directors ............................... 12
V. Significant Events .................................................................... 31
     Section VI. Changes in Share Capital and Particulars about
Shareholders ................................................................................. 35




                                                                                                       3
                                             2012 Annual Report of Anhui Gujing Distillery Company Limited




                                           Explanation




                                Refers
                   Term                                                 Contents
                                  to

                                Refers
Company, the Company, Gu Jing            Anhui Gujing Distillery Company Limited
                                  to

                                Refers
Group, the Group                         Anhui Gujing Distillery Company Limited (consolidated)
                                  to

                                Refers
Gujing Group                             Anhui Gujing Group Co., Ltd.
                                  to




                                                                                                        4
                                                              2012 Annual Report of Anhui Gujing Distillery Company Limited




                                                     Reminder of Major Risks



1. China Securities Journal, Securities Times, Ta Kung Pao (HK) and www.cninfo.com.cn are designated by the Company as the
media for information disclosure. All information of the Company shall be subject to what is disclosed by the Company on the said
media. And Investors are kindly reminded to pay attention to possible investment risks.

2. This report is prepared in both Chinese and English. Should there be any understanding discrepancy between the two versions, the
Chinese version shall prevail.




                                                                                                                                 5
                                                               2012 Annual Report of Anhui Gujing Distillery Company Limited




                                                    SectionII.CompanyProfile 



I. Basic information of the Company


Stock abbreviation                 GJGJ, GJGB                            Stock code               000596, 200596

Stock exchange listed with         Shenzhen Stock Exchange

Chinese name of the Company 安徽古井贡酒股份有限公司

Abbr. of the Chinese name of
                                   古井
the Company

English name of the Company
                                   ANHUI     GUJING      DISTILLERY COMPANY LIMITED
(if any)

Abbr. of the English name of
                                   GU JING
the Company (if any)

Legal representative of the
                                   Yu Lin
Company

Registered address                 Gujing Town, Bozhou City, Anhui Province

Postal code for the registered
                                   236820
address

Office address                     Gujing Town, Bozhou City, Anhui Province

Postal code for the office
                                   236820
address

Internet   website     of    the
                                   http://www.gujing.com
Company

Email address                      gjzqb@gujing.com.cn


II. For Contact


                                                           Company Secretary              Securities Affairs Representative

Name                                          Ye Changqing                            Ma Junwei

                                              Gujing Town, Bozhou City, Anhui         Gujing Town, Bozhou City, Anhui
Contact address
                                              Province                                Province

Tel.                                          (0558)5712231                         (0558)5710057

Fax                                           (0558)5317706                         (0558)5317706

E-mail                                        ycq@gujing.com.cn                       gjzqb@gujing.com.cn




                                                                                                                              6
                                                                   2012 Annual Report of Anhui Gujing Distillery Company Limited


III. About information disclosure and where this report is placed


Newspapers designated by the Company for
                                                        China Securities Journal, Securities Times, Ta Kung Pao (HK)
information disclosure

Internet website designated by CSRC for
                                                        http://www.cninfo.com.cn
disclosing this report

Where this report is placed                             Company Secretary Office


IV. Change of the registered information


                                                                                              Registration code of
                           Registration date      Registration place   Business license No.                          Organizational code
                                                                                                    taxation

                                                 Industrial &
                                                 Commercial
Initial registration     30 May 1996             Administration        14897271-1             341600151940008        15194000-8
                                                 Bureau of Anhui
                                                 Province

                                                 Industrial &
                                                 Commercial
At the end of the
                         9 Jul. 2012             Administration        340000400001632        341600151940008        15194000-8
reporting period
                                                 Bureau of Anhui
                                                 Province


V. Other information


The CPAs firm hired by the Company:

Name                                   RSM China Certified Public Accountants

                                       3-9 F, West Tower, China Overseas Property Plaza, Building No. 7, Courtyard No. 8, Xi Binhe
Office address
                                       Road, Yong Ding Men, Dong Cheng District, Beijing, China

Signing accountants                    Lin Wanqiang, Zhang Liping

Sponsor engaged by the Company to conduct consistent supervision during the reporting period
√ Applicable □ Inapplicable

              Name                             Office address                  Representative            Consistent supervision period

                                   43/F, Metropolitan Plaza,
                                   183-187 Tianhe North Rd.,                                            In August 15, 2011 -2012 year
GF Securities Co., Ltd.                                                He Xiaoshe, Yan Peng
                                   Tianhe District, Guangzhou,                                          in December 31st
                                   Guangdong Province, China

Financial consultant engaged by the Company to conduct consistent supervision during the reporting period
□ Applicable √ Inapplicable




                                                                                                                                           7
                                                                 2012 Annual Report of Anhui Gujing Distillery Company Limited




                                             SectionIII.Accounting&FinancialHighlights



I. Major accounting data and financial indicators


Does the Company adjust retrospectively or restate accounting data of previous years due to change of the accounting policy or
correction of any accounting error?
□ Yes √ No

                                                                                       Increase or decrease of
                                                 2012                  2011            this year over last year         2010
                                                                                                (%)

Operating revenues (RMB Yuan)               4,197,057,315.26      3,307,979,236.00                     26.88%      1,879,155,480.31

Net     profit        attributable    to
shareholders     of     the   Company         725,589,286.31        566,390,286.36                     28.11%        313,757,556.93
(RMB Yuan)
 Net    profit    attributable to
shareholders of the Company after
                                              711,934,788.75        553,567,092.68                     28.61%        286,885,074.85
extraordinary gains and losses
(RMB Yuan)
Net cash flows from operating
                                            1,086,867,364.46        625,901,467.35                     73.65%        517,700,354.38
activities (RMB Yuan)

Basic EPS (RMB Yuan/share)                                1.44                  1.17                   23.08%                    0.66

Diluted EPS (RMB Yuan/share)                              1.44                  1.17                   23.08%                    0.66

ROE (%)                                                  23.8%                31.65%                   -7.85%                  34.17%

                                                                                       Increase or decrease of
                                           As at 31 Dec. 2012    As at 31 Dec. 2011    this year-end than last    As at 31 Dec. 2010
                                                                                            year-end (%)

Total assets (RMB Yuan)                       5,308,127,471.04      4,241,819,550.30                   25.14%        1,857,931,814.00

Net assets/owners’ equity
attributable to shareholders of the           3,375,488,108.64      2,761,115,284.45                   22.25%        1,049,475,547.82
Company (RMB Yuan)


II. 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


There is no difference.




                                                                                                                                        8
                                                            2012 Annual Report of Anhui Gujing Distillery Company Limited


 2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and Chinese accounting
standards


There is no difference.


3. Explain reasons for the differences between accounting data under domestic and overseas accounting standards


III. Items and amounts of extraordinary gains and losses


                                                                                                          Unit: RMB Yuan

                     Items                          2012              2011              2010               Notes

Gain/loss on the disposal of non-current
assets (including the offset part of the asset      465,158.50         186,246.05       4,370,129.60
impairment provisions)

Tax rebates, reductions or exemptions due to
approval beyond authority or the lack of                   0.00              0.00              0.00
official approval documents

Government grants recognized in the current
period, except for those acquired in the
ordinary course of business or granted at           5,871,645.90      4,111,902.86      2,161,537.17
certain quotas or amounts according to the
government’s unified standards

Capital occupation charges on non-financial
enterprises that are recorded into current                 0.00              0.00
gains and losses

Gains due to that the investment costs for
the   Company       to    obtain    subsidiaries,
associates and joint ventures are lower than
                                                           0.00              0.00
the enjoyable fair value of the identifiable
net assets of the investees when making the
investments

Gain/loss on non-monetary asset swap                       0.00              0.00

Gain/loss     on    entrusting     others   with
                                                           0.00              0.00
investments or asset management

Asset impairment provisions due to acts of
                                                           0.00              0.00
God such as natural disasters

Gain/loss on debt restructuring                            0.00              0.00

Expenses on business reorganization, such
as    expenses      on    staff    arrangements,           0.00              0.00
integration, etc.

Gain/loss on the part over the fair value due              0.00              0.00


                                                                                                                        9
                                                              2012 Annual Report of Anhui Gujing Distillery Company Limited


to transactions with distinctly unfair prices

Current gains and losses of subsidies
acquired from business combination under
                                                              0.00                 0.00           24,890.84
the same control as from period-begin to
combination date

Gain/loss on contingent events irrelevant to
                                                              0.00                 0.00
the Company’s normal business

Gains and losses on change in fair value
from tradable financial assets and tradable
financial liabilities, as well as investment
income from disposal of tradable financial
                                                              0.00                 0.00          982,590.50
assets and tradable financial liabilities and
financial assets available for sales except for
effective hedging related with normal
businesses of the Company

Impairment provision reversal of accounts
receivable on which the impairment test is                    0.00        4,106,508.26        17,885,989.72
carried out separately

Gain/loss on entrustment loans                                0.00                 0.00

Gain/loss on change of the fair value of
investing real estate of which the subsequent
                                                              0.00                 0.00
measurement is carried out adopting the fair
value method

Effect on current gains/losses when a
one-off adjustment is made to current
gains/losses according to requirements of                     0.00                 0.00
taxation, accounting and other relevant laws
and regulations

Custody fee income when entrusted with
                                                              0.00                 0.00
operation

Non-operating income and expense other
                                                    12,188,577.39         9,993,800.13         3,973,823.73
than the above

Other gain and loss items that meet the
                                                              0.00                 0.00
definition of an extraordinary gain/loss

Income tax effects                                   4,870,884.23         5,575,263.62         2,526,479.48

Minority interests effects (after tax)                        0.00                 0.00

Total                                               13,654,497.56        12,823,193.68        26,872,482.08            --

Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Extraordinary Gains and
Losses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item


                                                                                                                                      10
                                2012 Annual Report of Anhui Gujing Distillery Company Limited


□ Applicable √ Inapplicable




                                                                                          11
                                                              2012 Annual Report of Anhui Gujing Distillery Company Limited




                                          SectionIV.ReportoftheBoardofDirectors 



I. Overview


In 2012, is the company's leap-forward development a key in the reporting period the company closely around business objectives, In
the reporting period, doggedly pursuing the operating objectives and in strict compliance with the powers bestowed by the Company
Law, the Securities Law and its Articles of Association, the Company strictly executed all resolutions of the Shareholders’ General
Meeting, firmly carried out the leap-frog development strategy and put in constant efforts on key tasks. Through carrying out lean
management in depth, adjusting the organizational structure, sturdily improving the internal control mechanism, constantly updating
the management mode and rationally allocating various resources, the Company overcame various unfavorable external factors,
steadily improved operation & management and comprehensive competitiveness and achieved all the operating budget targets set at
the beginning of the year.


II. Main business analysis


1. Overview


For 2012, the Company achieved operating revenues of RMB 4,197,057,300 yuan, up 26.88% over last year, total profit of RMB
972,427,100, up 14.39% over last year; net profit of RMB 725,589,300, up 28.11% over last year; EPS of RMB 1.44/share, up
23.08%; operating net cash flows of RMB 1,086,867,400, up 73.65% over last year. The production and operation of the Company
continued to improve.
General operation of the Company in the reporting period
1. Continuously improved branding and optimized marketing structure to promote sales growth of the Company.
In the reporting period, the Company improved its brand influence by participating in several large-scale activities, such as Touching
the Heart of China, Korea Yeosu World Expo, and ancestor worship with the crew of Hero of Caocao. Through foundation work in
market, optimization of distributor and product structure, and in-depth promotion of Three Direct Links, it could allocate all kinds of
resources rationally, overcome outside adverse factors and promote sales growth for the Company.
2. Product quality rose steadily through lean management and scientific and technological achievements.
In 2012, lean production and technical quality had achieved a great of breakthroughs. The second stage of lean management for the
Company was completed successfully. Three QC tasks and three teams were honored as provincial excellent ones. One lean
management project won the first prize of provincial management innovation product. Moreover, by combining practice, the
Company reinforced the project construction. In the reporting period, four scientific research projects won the provincial scientific
and technological achievements. The project of “influence study of bran water to taste of wine” helped to improve raw wine quality
and guaranteed the steady quality enhancement.
3. Took the opportunity of application for “Anhui Government Quality Reward” to promote the excellent performance management
model and the overall management level of the company.
The Company has introduced excellent performance management model and taken the opportunity of application for “Anhui
Government Quality Reward”. According to standard requirements of Excellent Performance Evaluation Criteria, it has summarized
the development history and management experience to make a full examination for the Company. By deep analysis in advantages
and disadvantages, specialties and highlights, problems have been solved and rectified, helpful to improve the core competitiveness
for the Company and enhance awareness and understanding of excellent performance management to all staff. It would be
meaningful for the Company to establish a sound and long-term excellent management mechanism and advance the total


                                                                                                                                    12
                                                              2012 Annual Report of Anhui Gujing Distillery Company Limited


management levels.
4. Reinforced internal controls and optimized management system to continuously improve governance in the Company.
In the reporting period, the Company had formulated and implemented the Work Program of Internal Control Practices. By the
principle of careful planning and implement by step, the Company had developed the promotion of internal controls. Through
summarizing current regulations and rules and formulating pointed rectification and reform programs, it had clarified the settings and
responsibilities for each organization. The operation system could be optimized. At present, the Company has formulated Internal
Control Management Manual to make full risk management for internal environment, organizational structure, development
strategies, human resources, social responsibility, product quality and corporate culture to enhance risk prevention for the Company.
5. Corporate cultural construction and position evaluation provided protection for the great-leap-forward development.
Corporate culture is the soul and foundation for a company. In the reporting period, the Company held large music and dance epic
evening party of “Exceeding 5 billion”, commemorative activity of the first tribute wine by Cao Cao since 1816 and inauguration for
the industrial park and other large-scale activities to represent new look of the Company and enhance confidence for all staff. The
position evaluation, perfect reward and punishment mechanism, position-valued salary administration would all improve the sense of
belonging for all staff and provide power guarantee for its development.


State the reasons why the Company’s actual business performance is 20% lower or higher than the earning forecast for the reporting
period which has been publicly disclosed earlier:
□ Applicable √ Inapplicable


2. Revenues


Explanation:
N/A
Is the Company’s goods selling revenue higher than the service revenue?
√ Yes □ No

         Industry                     Items                  2012 (ton)                 2011 (ton)               YoY +/-(%)

                           Sales volume                             54,529.63                  37,120.33                     46.90%

Liquor making              Output                                   52,770.09                  43,250.63                     22.01%

                           Stock                                     2,033.16                   3,792.70                    -46.39%

Reasons for any over-30% YoY movement of the data above:
√ Applicable □ Inapplicable
The sales volume up to 31 Dec. 2012 increased 46.90% over last year and the stock increased46.39%, which was mainly because
production and sales were both strong and the Company stocked up for the Spring Festival.
Major orders held:
□ Applicable √ Inapplicable
Significant change or adjustment of the Company’s products or services during the reporting period:
□ Applicable √ Inapplicable
Major customers:

Total sales to the top 5 customers (RMB Yuan)                                                                        852,756,890.47

Ratio of the total sales to the top 5 customers to the                                                                       20.32%



                                                                                                                                   13
                                                                   2012 Annual Report of Anhui Gujing Distillery Company Limited


annual total sales (%)

Information about the top 5 customers:
√ Applicable □ Inapplicable

Serial No.                   Name of customer                       Sales (RMB Yuan)              Proportion in annual total sales (%)

      1      Distributor A                                                       273,725,490.08                                    6.32%

      2      Distributor B                                                       228,037,813.66                                    5.26%

      3      Distributor C                                                       161,291,594.65                                    3.72%

      4      Distributor D                                                        99,191,699.56                                    2.29%

      5      Distributor E                                                        90,510,292.52                                    2.09%

   Total                             ——                                        852,756,890.47                                  20.32%


3. Costs


Classified by industry:
                                                                                                                          Unit: RMB Yuan

                                                          2012                                    2011

                                                                 Proportion in                           Proportion in
      Industry                Item                                                                                        YoY +/- (%)
                                                Amount          operating costs         Amount         operating costs
                                                                    (%)                                   (%)

Food making         Raw materials           1,138,829,249.65              95.4%       765,457,373.60            91.89%           48.78%

Classified by product:
                                                                                                                          Unit: RMB Yuan

                                                         2012                                     2011

                                                                 Proportion in                           Proportion in
      Product             Item                                                                                            YoY +/- (%)
                                             Amount             operating costs         Amount         operating costs
                                                                    (%)                                   (%)

Distilled spirit    raw material             846,150,132.49               74.3%       582,283,424.10            76.07%           45.32%

Distilled spirit    Their wages              846,150,132.49             10.52%         68,355,343.46              8.93%          75.27%


Distilled spirit    energy                   846,150,132.49               7.68%        60,322,861.04              7.88%          44.92%

                    manufacturin
Distilled spirit                             846,150,132.49                 7.5%       54,495,745.00              7.12%          56.81%
                    g expense

Explanation:
N/A
Major suppliers:

Total purchases from the top 5 suppliers (RMB Yuan)                                                                     331,604,957.26

Ratio of the total purchases from the top 5 suppliers to the                                                                     36.06%



                                                                                                                                         14
                                                               2012 Annual Report of Anhui Gujing Distillery Company Limited


annual total purchases(%)

Information about the top 5 suppliers:
√ Applicable □ Inapplicable

                                                            Procurement amount (RMB          Proportion in annual total procurement
 Serial No.                Name of supplier
                                                                       Yuan)                              amount (%)

      1       Supplier A                                                  136,688,547.01                                     14.87%

      2       Supplier B                                                   66,204,786.32                                       7.2%

      3       Supplier C                                                   46,453,504.27                                      5.05%

      4       Supplier D                                                   42,416,239.32                                      4.61%

      5       Supplier E                                                   39,841,880.34                                      4.33%

    Total                        ——                                     331,604,957.26                                     36.06%


4. Expense


1. Sales expenses stood at RMB1,075,977,234.87, up 34.28% over last year, which was mainly because the Company enhanced sales
promotion and the expense on services, sales promotion and advertising increased.
2. Financial expenses stood at RMB -88,430,981.17, down 70.48%, which was mainly because the bill handling fees received, as
well as the interest income from term deposits and structural deposits, increased.


5. R&D expenses


The R&D expenses in the reporting period stood at RMB 174,362,000, accounting for 5.17% of the net assets and 4.15% of the
operating revenues.


6. Cash flows


                                                                                                                     Unit: RMB Yuan

                Item                            2012                             2011                        YoY +/-(%)

Subtotal of cash inflows from
                                                 5,409,722,258.53                    3,682,028,848.98                        46.92%
operating activities

Subtotal of cash outflows from
                                                 4,322,854,894.07                    3,056,127,381.63                        41.45%
operating activities

Net cash flows from operating
                                                 1,086,867,364.46                     625,901,467.35                         73.65%
activities

Subtotal of cash inflows from
                                                       308,940.95                        9,087,318.61                        -96.6%
investing activities

Subtotal of cash outflows from
                                                   646,248,607.55                     344,656,892.95                          87.5%
investing activities

Net cash flows from investing
                                                  -645,939,666.60                    -335,569,574.34                         92.49%
activities


                                                                                                                                      15
                                                                2012 Annual Report of Anhui Gujing Distillery Company Limited


Subtotal of cash inflows from
                                                                                     1,231,500,000.00                                  -100%
financing activities

Subtotal of cash outflows from
                                                    113,310,000.00                      83,030,122.54                               36.47%
financing activities

Net cash flows from financing
                                                   -113,310,000.00                   1,148,469,877.46                             -109.87%
activities

Net increase in cash and cash
                                                    327,617,860.76                   1,438,801,086.91                               -77.23%
equivalents

Reasons for any over-30% YoY movement of the data above:
√ Applicable □ Inapplicable
1. Net cash flows from operating activities stood at RMB 1,086,867,364.76, up 73.65% over last year, which was mainly because the
sales income increased.
2. Net cash flows from investing activities stood at RMB -645,939,666.90, up 92.49% over last year, which was mainly because the
Company paid more for fixed assets, equipment and engineering and it subscribed for the non-public shares issued by Shandong
Lipeng Co., Ltd..
3. Net cash flows from financing activities stood at RMB-113,310,000.00, down 109.87% over last year, which was mainly because
last year, the Company made a non-public offering to raise funds, setting a high comparative.
Reasons for a big difference between the operating cash flows and the net profit:
□ Applicable √ Inapplicable


III. Breakdown of main business


                                                                                                                            Unit: RMB Yuan

                                                                                Increase/decrease                         Increase/decrease
                                                                                                     Increase/decrease
                          Operating                         Gross profit rate     of operating                             of gross profit
                                          Operating costs                                            of operating costs
                          revenues                                (%)           revenues over last                        rate over last year
                                                                                                     over last year (%)
                                                                                    year (%)                                     (%)

Classified by industry:

Manufacture            4,148,697,033.94 1,193,727,937.33             71.23%               26.58%                43.3%                -3.35%

Classified by product:

Distilled spirit       4,045,542,438.97 1,138,829,249.65             71.85%               27.27%               48.78%                -4.07%

Hotel                     71,252,072.61     39,515,901.20            44.54%               -0.53%              -13.97%                  8.67%

Other                     31,902,522.36     15,382,786.48            51.78%               17.21%              -28.96%                31.34%

Classified by region:

Domestic               4,143,500,606.57 1,192,256,588.06             71.23%               26.54%               43.25%                -3.36%

Overseas                   5,196,427.37      1,471,349.27            71.69%               70.98%              101.02%                -4.23%

Where the Company’s accounting standard of the main business data above changed during the reporting period, give the main
business data of the latest year adjusted according to the accounting standard at the end of the reporting period:
□ Applicable √ Inapplicable


                                                                                                                                             16
                                                                  2012 Annual Report of Anhui Gujing Distillery Company Limited


IV. Asset and liability analysis


1. Major changes of asset items


                                                                                                                          Unit: RMB Yuan

                         As at 31 Dec. 2012                As at 31 Dec. 2011
                                                                                        Proportio
                                       Proportion in                    Proportion in
                                                                                        n change         Explain any major change
                       Amount           total assets     Amount          total assets
                                                                                         (%)
                                           (%)                              (%)

                    2,609,650,352.                     2,082,032,491.
Monetary funds                               49.16%                           49.08%       0.08%
                                09                                 33

Accounts
                      7,887,007.25            0.15% 37,685,831.22              0.89%      -0.74%
receivable

                    782,399,498.8
Inventories                                  14.74% 578,157,069.43            13.63%       1.11%
                                   5

Investing real
                    31,451,269.49             0.59% 32,558,410.26              0.77%      -0.18%
estate

                    783,740,205.1
Fixed assets                                 14.76% 362,778,190.84             8.55%       6.21%
                                   5

Construction in     423,672,281.5
                                              7.98% 133,017,100.51             3.14%       4.84%
process                            4




2. Significant changes in liabilities


Naught


3. Assets and liabilities measured at fair value


                                                                                                                          Unit: RMB Yuan

                                   Gain/loss from Accumulative                              Amount
                                                                         Impairment                      Amount sold in      Closing
                     Opening       change in fair change in fair
      Item                                                              provision for     purchased in
                     balance        value in this value recorded                                           this period       balance
                                                                          this period
                                        year        into equity                            this period

Financial assets


                                                                                                                                       17
                                                                2012 Annual Report of Anhui Gujing Distillery Company Limited


3.      Financial
assets available             0.00             0.00     2,791,383.84              0.00                                     27,991,376.84
for sale

Subtotal       of
                             0.00             0.00     2,791,383.84              0.00                                     27,991,376.84
financial assets

Total of the
above                        0.00             0.00     2,791,383.84              0.00                                     27,991,376.84
mentioned

Financial
                             0.00             0.00              0.00             0.00                                                0.00
liabilities

Whether the measurement attributes of the main assets of the Company had significant changes during the reporting period or not?
□ Yes √ No


V. Analysis to the core competitiveness


After one thousand years pass on, adhering to the traditional brewing wine, after several generations of hard working, flavoring
liquor has formed the unique core competitiveness, mainly displays in:
A brand value, the liquor industry
Flavoring liquor is one of the "old" eight famous liquor in China, national gold medal four go-round, Paris is the only won gold
MEDALS in the 13th international food exposition of famous Chinese liquors, awarded China's well-known trademarks, of original
protection products of China, national geographical indication products such as honor, high market recognition.
Second, the unique brewing technology and good quality
Flavoring liquor traditional brewing craft after one thousand, has a wealth of historical, scientific and cultural value, is an important
branch of Chinese traditional distilling brewing techniques. Unique brewing process, given the flavoring wine quiet and tastefully
laid out and the connotation of the quality of excellence; Using traditional brewing technology production base, from raw material
selection, design, technology research and development, to the password taste quality and physical and chemical analysis,
professional evaluation and so on, each process shall be strictly controlled, the product has good quality and reputation for quality,
accept consumer favour for a long time.
Three, outstanding management innovation ability and the decision-making ability of rapid response to market changes
Company takes the lead in liquor-making industry and stick to the lean management mode, the lean concept into the various
functional departments, to customer demand as the center, breaking boundaries, full participation, pursuit of excellence, promote
standardization of winemaking, created a model of liquor-making industry, to form the excellence of management innovation ability;
Companies adhere to the "research, production, sales and service" four one of the overall train of thought, by importing the
performance excellence management model and 6 s management method optimize enterprise organization structure, shorten the
market research, product design, development, product manufacturing, product sales, and service cycle; Raw stock company in the
year of strategic leading products, reform the marketing agency, to set up the strategic market operation center, operation center and
provincial market will reach decisions, makes the decision-making ability of rapid response to market changes.
VI. Analysis to the investment situation




                                                                                                                                         18
                                                                     2012 Annual Report of Anhui Gujing Distillery Company Limited


1. Particulars about external equity investment


(1)Particulars about external investment


Naught


(2)Particulars about holding equity of financial enterprises


Naught


(3)Particulars about securities investment


                                                 Number Sharehold                    Sharehold               Gain/loss
                                      Initial                            Number                  Closing
                                                 of shares      ing                     ing                     for
                        Abbreviat investmen                              of shares                 book
Variety of Code of                                held at    percentag               percentag               reporting Accounti Source of
                         ion of       t cost                              held at                 value
securities securities                            period-be     e at                    e at                   period        ng title     stock
                        securities    (RMB                               period-en                (RMB
                                                   gin       period-be               period-en                (RMB
                                      Yuan)                              d (share)                Yuan)
                                                  (share)     gin (%)                 d (%)                   Yuan)

                                                                                                                           Available
                                     25,199,99                                                   27,991,37                 -for-sale   Subscript
Stock      002374       LPGF                     1,938,461      1.82% 1,938,461         1.82%                          0
                                          3.00                                                        6.84                 financial ion
                                                                                                                           assets

                                     25,199,99                                                   27,991,37
Total                                            1,938,461      --       1,938,461      --                             0       --          --
                                          3.00                                                        6.84

Explanation on holding equity of other listed companies


2. Entrusted financial management, derivatives investment and entrustment loans


(1)Entrusted financial management


Naught


(2)Derivatives investment


Particulars about the derivatives investment held at the end of the reporting period
□ Applicable √ Inapplicable
Note


(3)Entrustment loans


Naught




                                                                                                                                                 19
                                                                    2012 Annual Report of Anhui Gujing Distillery Company Limited


3. Particulars about the use of raised funds


(1)Overview of the use of raised funds


                                                                                                                  Unit: RMB Ten Thousand

Total amount of raised funds                                                                                                            122,749.95

Total amount of raised funds input in the reporting
                                                                                                                                         45,800.12
period

Total amount of raised funds accumulatively input                                                                                        60,404.42

                                         Explanation on overview of the use of raised funds

The Company’s raised funds were used stably as scheduled, without any changes.


(2)Projects promised to be invested with raised funds


                                                                                                                    Unit: RMB Ten Thousand

                                                                                                    Date
                          Project                                                     Investme
                                                                          Accumul                 when the                               Material
 Projects invested with changed                                                          nt                    Profit
                                      Raised    Investme Input in           ative                  project                  Reach the change in
    raised capital as     or not                                                      progress                generated
                                      capital    nt after          the    input up                 reaches                  expected          the
        promised and     (includin                                                    up to the                in the
                                     input as adjustme reporting           to the                    the                    profit or     project
   investments with            g                                                      period-en               reporting
                                     promised    nt (1)           year    period-en               expected                     not       feasibility
  over-raised capital    partially                                                    d (%)(3)                 period
                                                                            d (2)                  usable                                  or not
                         changed)                                                     =(2)/(1)
                                                                                                  condition

Projects invested with raised capital as promised
Technological
Transform on the                                                                                  31 Dec.
Brewage of              No             13,500 12,194.42 6,842.82            7,302.5    59.88%                                            No
High-quality Base                                                                                 2013
Wine
Construction of Base
Wine Blending &                                                                                   31 Dec.
                        No             68,600 65,921.06 20,158.83 22,367.75            33.93%                                            No
Filling Centre and                                                                                2013
Ancillary Facilities

Construction of                                                                                   31 Dec.
                        No             27,500       27,500 7,171.68 13,806.28            50.2%                                           No
Marketing Network                                                                                 2013

Construction of Brand                                                                             31 Dec.
                      No               17,000       17,000 11,626.79 16,927.89         99.58%                                            No
Promotion                                                                                         2012

Subtotal of promised                            122,615.4
                               --     126,600                   45,800.12 60,404.42      --          --                        --             --
investment projects                                         8

Investments of over-raised capital

                                                122,615.4
Total                          --     126,600                   45,800.12 60,404.42      --          --                 0      --             --
                                                            8

Reason for failing to In 2012, the high quality base liquor brewing technical renovation project schedule completed as planned,


                                                                                                                                                    20
                                                                      2012 Annual Report of Anhui Gujing Distillery Company Limited


reach         scheduled the main reason is that companies was scheduled in May 2012 to September during the wine-making
progress or projected workshop production during boiler facilities renovation project, due to the wine-making workshop during
income (explain one the production of pilot project in 2012, to the construction schedule of boiler renovation projects failed to;
project by one project) Company was originally scheduled for lab equipment renewal projects in 2012, due to lab site redesign
                               transformation, lead to project failure to carried out on schedule.
                               Hook 2012, base liquor storage and filling center failed to progress as planned and supporting facilities
                               construction projects completed, the main reason is that in order to guarantee the engineering quality, under
                               the premise of meet the needs of the production and business operation, give priority to the construction
                               base liquor storage and filling plant and ancillary facilities.

Explanation               on
significant changes in Naught
feasibility of projects

Amount,     usage     and Inapplicable
usage     progress        of
                               Naught
over-raised capital

Change of the                  Inapplicable
implementation
location of any raised
                               Naught
funds investment
project

                               Inapplicable
Adjustment of the
implementation
method of any raised           Naught
funds investment
project

                               Applicable

                               In accordance with the explanation of the Particulars on the Private Issuance of A-share of Anhui Gujing
                               Distillery Co., Ltd. and the Listing Announcement, “Before the raised proceeds being in place, the
                               Company can use the self-raised proceeds to input preliminarily in accordance with the actual progress of
                               raised proceeds investment projects; after the raised proceeds being in place, the Company can use the
                               raised proceeds to replace the self-raised proceeds preliminarily input”. And the Proposal on Using the
                               Raised Proceeds to Replace the Self-raised Proceeds Preliminarily Input to the Raised Proceeds Investment
                               Projects was reviewed and approved at the 7th Session of the 6th Board of Directors, which agreed to use
                               the raised proceeds to replace the self-raised proceeds of RMB27,058,143.42 preliminarily input to the
                               raised proceeds investment projects. The above funds replacement was completed on 6 Jan. 2012.

Advance input and              Inapplicable
exchange of any raised
funds investment               Naught
project

Outstanding raised             Inapplicable



                                                                                                                                           21
                                                                     2012 Annual Report of Anhui Gujing Distillery Company Limited


funds in project
implementation and           Naught
reasons

Usage and whereabouts
                             Deposited in the special account for raised proceeds
of unused raise capital

Problems found in the
usage and disclosure
                             Naught
affairs of raised capital
and other situations


(3)Change of projects invested with raised funds


Naught


4. Analysis to main subsidiaries and stock-participating companies


Main subsidiaries and stock-participating companies

                                                               Registered
                                                   Main                                                Operating Operating
 Company         Company                                        capital     Total assets Net assets                                 Net profit
                                    Industry   products/ser                                               revenues     profit
      name         variety                                       (RMB           (Yuan)       (Yuan)                                  (Yuan)
                                                   vices                                                  (Yuan)      (Yuan)
                                                                0’000)

                                               Wholesales 8,486.00          1,091,916,6 206,408,49 4,036,240,0 732,581,7 554,171,976.
                                               of distilled                 27.19        3.29         71.78          75.69      79
Bozhou                                         spirit,
Gujing                          Business       constructio
               Subsidiary
Sales Co.,                      trading        n materials,
Ltd                                            feeds and
                                               assistant
                                               materials

Bozhou                                         Transportati 695.00          3,587,200.6 2,475,117.0 0.00             0.00       0.00
Gujing                          Transportati on, sales                      0            2
               Subsidiary
Transportati                    on             and repair
on Co., Ltd                                    service

Bozhou                                         Manufactur 8,666.03          165,078,03 120,039,70 174,470,52 20,070,30 15,756,937.6
Gujing                          Manufactur e and sale                       7.28         9.91         3.83           4.54       3
               Subsidiary
Glass Co.,                      e              of glass
Ltd                                            products

Bozhou                                         Collect and 100.00           1,653,929.3 1,315,524.2 5,772,888.6 91,756.32 71,519.31
Gujing                                         sale of                      0            6            4
                                Waste
Waste          Subsidiary                      recycled
                                recycle
Reclamatio                                     glass bottle,
n Co., Ltd                                     glass,


                                                                                                                                                 22
                                                           2012 Annual Report of Anhui Gujing Distillery Company Limited


                                      wastebasket

                                      Production, 200.00       139,275,47 3,687,985.8 324,986,53 6,735,116 5,159,808.51
                                      publish,                 8.77       5           8.30        .13
                                      design and
                                      proxy of
Anhui                                 ads in
Jinyunlai                             China;
                         Ads
Culture &   Subsidiary                ceremony
                         marketing
Media                                 service for
Co.,Ltd.                              conferences
                                      as well as
                                      sales of
                                      gifts in arts
                                      and crafts

                                      Administrat 3,000.00     45,894,557. 34,564,087. 24,370,829. 6,119,107 4,564,087.80
                                      ive license              16         80          39          .18
                                      items:
                                      Naught;
                                      General
                                      operating
                                      items:
                                      providing
Bozhou                   Production
                                      packing for
Gujing                   and
            Subsidiary                Gujing
Packing                  manufactur
                                      Brand,
Co., Ltd.                e
                                      serials
                                      wine,      fruit
                                      and
                                      vegetable
                                      wine, health
                                      wine of
                                      Gujing
                                      Brand

                                      Production, 500.00       37,890,707. 5,423,313.7 46,346,472. 1,109,731 837,512.46
                                      publish,                 49         1           18          .28
Shanghai                              design and
Hongbang                              proxy of
Culture                  Ads          ads in
            Subsidiary
Communica                marketing    China;
tion Co.,                             ceremony
Ltd.                                  service for
                                      conferences
                                      ; public



                                                                                                                          23
                                                             2012 Annual Report of Anhui Gujing Distillery Company Limited


                                       relations
                                       activities
                                       planning;
                                       design &
                                       planning of
                                       company
                                       image; sales
                                       of gifts in
                                       arts and
                                       crafts
                                       (except
                                       special
                                       items) (If
                                       the
                                       enterprise
                                       operation
                                       involves the
                                       administrati
                                       ve
                                       licensing, it
                                       shall
                                       operate
                                       based on
                                       the license).

                                       Hotel           5,400.00   250,805,15 83,389,984. 69,674,624. 5,232,501 4,392,153.33
                                       managemen                  6.53       01          96          .57
                                       t (Except
                                       for catering
                                       managemen
                                       t、Except
                                       for hotel
Shanghai                               operation);
Gujing                                 Self-owned
                           Hotel
Jinhao                                 housing
              Subsidiary   managemen
Hotel                                  rental;
                           t
Managemen                              establish
t Co., Ltd.                            branch. (If
                                       the
                                       enterprise
                                       operation
                                       involves the
                                       administrati
                                       ve
                                       licensing, it


                                                                                                                          24
                                                                     2012 Annual Report of Anhui Gujing Distillery Company Limited


                                                shall
                                                operate
                                                based on
                                                the license).

                                                Accommod 62.80            1,045,443.4 12,937.60         3,890,467.0 -192,763. -198,406.85
                                                ation and                 1                             0          68
                                                parking
                                                services;
Bozhou                                          lunch
                                 Hotel
Gujing                                          processing,
              Subsidiary         managemen
Hotel Co.,                                      sales of
                                 t
Ltd.                                            alcohol and
                                                tobacco and
                                                sales of
                                                daily
                                                commodity

Explanation on main subsidiaries and stock-participating companies
Particulars about subsidiaries gained and disposed during the reporting period
□ Applicable √ Inapplicable
5. Particulars about significant projects invested by non-raised funds
                                                                                                                    Unit: RMB Ten Thousand

                                                                              Accumulative
                              Total amount of                             amount        actually
                                                   Amount input in the
   Name of project           investment (RMB                              input    as   of   the Progress of project     Gains from project
                                                        year (RMB Yuan)
                                     Yuan)                                period-end     (RMB
                                                                          Yuan)

Relocation           and 55,000.00                 26,807.95              35,253.54                64.1%
Technological
Transform     on     the
Brewage      of     Base
Wine        and      the
supporting facilities
projects

Technological               994.00                 924.21                 926.70                   100.00%
transform         project
workshop I

Deep-processing             2,020.00               1,940.66               1,941.66                 100.00%
complex building

Total                       58,014.00              29,672.82              38,121.90                --                   --

                                         Explanation on significant projects invested by non-raised funds

VII. Particulars about special purpose entities controlled by the Company


                                                                                                                                              25
                                                             2012 Annual Report of Anhui Gujing Distillery Company Limited


Naught


VIII. Outlook of the Company’s future development


Outlook of the Company’s future development and operation plan for 2013

(Ⅰ).   Industry development prospects of the Company

1. From macroscopic view: since 2012, global economy is changeable. High unemployment rate and slow growth of emerging

economies in America still exist. Reduced domestic demands, high costs, gliding corporate profits and excess production capacity are

prominent. Looking forward the year of 2013, there are still many uncertain factors. Domestic demand, especially consumption,

would be main engine for China economic growth. Macro-policy is stable, fiscal policy more positive, monetary policy more stable

and standard-reduction probability higher. China economy would enter new normalcy with intermediate speed. New reform for

economy development is demanded for a new dividend system.

2. From development tendency of the industry: three public consumption types have been limited with suffocation of group purchase

and top grade wine. The wine industry is facing crisis of food safety. Confidence from consumers needs to be re-established. Excess

production capacity, oversupply, and policy changes result in rational return of consumption parting from high growth for wine

industry. High-end market has been slowed down and middle end market develops fast with differentiation of structure. The

advantages of brand enterprises are more prominent. Merging and re-organization could not be avoided.

3. From future development of the Company: costs of raw materials are increasing. Pressure of inflationary would be larger. Internal

operation costs have been increased. Moreover, wine industry has entered extruding growth from market expansion. Market

competition would turn white-hot, which challenges the leading advantages for the Company.




(Ⅱ).   Operating measures of the Company in 2013

1. Keep focus on, duplicate quickly, and promote marketing from resource-oriented to brand-oriented.

The Company would continue enhancing market foundation, insisting keeping focus on, cultivate intensively, deepen Three Direct

Links, and optimize structures of products, prices, customers and internal system. It is to promote work in all areas on key points,

duplicate the strategies quickly and put forward promotion of the brand of Gujing nationwide. Moreover, it will continue resources

optimization, allocation of organizations and talents to improve quality and profits for wine sales and marketing from

resource-oriented to brand-oriented.

2. In-depth promote fine management and transfer to fine corporation to improve quality control.

The Company would in-depth promote fine management centered on customers, drove by continuous improvement and

standardization. The strategies of 6S, talent education and TPM would be adopted for establishment of fine management evaluation


                                                                                                                                 26
                                                               2012 Annual Report of Anhui Gujing Distillery Company Limited



system, and perfect quality management system. Standardized document management and strict obedience to procedures would both

be helpful enhancement of monitoring production procedures, product quality and control capabilities. It would continuously

strengthen technical software allocation, improve development levels and accelerate scientific and research execution and transfer to

fine corporation.

3. Accelerate application projects construction and scientific management to ensure completion.

The Company would strictly control the construction period and budget to accelerate application projects construction.

Organizational discipline for construction staff with work style of innovation, dedication and painstaking would be promoted.

Planning and coordination relationships of proprietors, construction units, supervision units, and other governing departments would

be adopted to guarantee the project construction. Complete flow scheme would ensure standardization, automation and ecological

cycle in implementation of the philosophy of “wine industry, wind culture, wine tourism, wine ecology” for a real resource-saving

and environment-friendly project, which would promote the brand influence and market competition for the Company.

4. Carry out activity of Cost-control Year to improve internal operation efficiency

The Company would develop cost control activities and resolve external market pressure to promote improvement of the internal

operation efficiency by all involved, overall procedures control through budget management, fine management, benchmark

management and internal control. In order to guarantee the effects of cost control activities, cost control department would motivate

all organizations to participate in production, operation and sales control for positioning and predicting of prices, costs and profits,

controlling sales costs, evaluating market expenses, optimizing capital management model and improving capital usage efficiency.

5. Carry out campaigns for better performance, team construction, participation in public welfare activities and delivery social

positive energy.

The Company would carefully summarize effects and experience in the campaigns with promotion of competent and moral talents.

By fully expressing the demonstration effect of advanced employees, it would consolidate and enlarge working effects to be

institutional, normal and long-term. The Company also would make breakthroughs by promoting the culture of contribution by

Gujing, participating in social public activities, enlarging communication, leading wine consumption, delivering social positive

energy and improving reputation for the Company.

The year of 2013 is a new start. The Company would continue insisting core values of “five solid principles” with all staff standing

together regardless of situation. The Company would develop a new sky for Gujing by solid steps and confidence.




                                                                                                                                     27
                                                                  2012 Annual Report of Anhui Gujing Distillery Company Limited


IX. Explanation of the Board of Directors on “Non-standard Auditor’s Report” issued by the CPA firm for the reporting
period


Naught


X. Explanation on change of accounting policy, accounting estimates and accounting methods as compared with the
financial report in last year


(1)Change of accounting policy
There was no change of accounting policy for the Company during the reporting period.
(2)Change of accounting estimates
    Content, reason and applicable time of change in                                   Name of affected items
                                                              Approval procedure                                    Affected amount
    accounting estimate                                                                of financial statements
    In order to unite and refine the management and
    accounting rules for fixed assets, as well as strictly Approved at the 8th Fixed                      assets,
                                                                                  th
    control the occurrence of non-operating business, the Session of the 6 management                  expenses,
                                                                                                                    3,691,833.96
    Company planed to change the depreciation life of Board of Directors sales expenses
    fixed assets from 1 Jan. 2012. (please refer to note ① of the Company
    for details)
Note ①:The category, expected useful life, annual depreciation rate and residual value rate of fixed assets before the change of
accounting estimate

Category of fixed assets        Expected useful life (year) Annual depreciation rate (%) Residual value rate (%)

Houses and buildings            8-35 years                    3-5                              2.7-12.1

Machinery Equipments            8-10 years                    3-5                              9.5-12.1

Transportation Equipments       8 years                       3                                12.1

Office equipments and others 8 years                          3                                12.1



The category, expected useful life, annual depreciation rate and residual value rate of fixed assets after the change of accounting
estimate

                                                                  Annual depreciation rate
   Category of fixed assets     Expected useful life (year)                                       Residual value rate (%)
                                                                            (%)

Houses and buildings            8-35                          3-5                              2.7-12.1

Machinery Equipments            8-10                          3-5                              9.5-12.1

Transportation Equipments       4                             3                                24.25

Office equipments and others 3                                3                                32.33



XI. Explanation on the retrospective restatement for correcting the significant accounting errors during the reporting period


Naught




                                                                                                                                      28
                                                               2012 Annual Report of Anhui Gujing Distillery Company Limited


XII. Explanation on changes in the consolidated scope compared with the financial report in last year


Entities that newly and no longer combined into consolidation scope in the reporting period
(1)Entities that newly and no longer combined into consolidation scope in the reporting period
① The subsidiaries, special purpose entities and operating entities with control right formed by entrusted operation or lease that
newly included in the consolidated scope

                     Name                           Closing net assets      Net profit in current period

Shanghai            Hongbang          Culture 5,423,313.71                 837,512.46
Communication Co., Ltd.
Shanghai Hongbang Culture Communication Co., Ltd. was the subsidiary gained by establishment in the year.
② The subsidiaries, special purpose entities and operating entities with control right formed by entrusted operation or lease that no
longer included in the consolidated scope

                                                                           Net profit from year-begin to
               Name                       Net asset on the disposal date
                                                                                   disposal date

Hefei Gujing Trading Co., Ltd.       0.00                                  -789,080.51
Hefei Gujing Trading Co., Ltd. was cancelled in the year, which was no longer included in the consolidated scope.


XIII. Particulars about the profit distribution and dividend policy of the Company


Formulation, execution or adjustment of the Company’s profit distribution policy, especially the cash dividend policy, during the
reporting period:
The Company’s equity distribution plan in 2011 was reviewed and approved at the 2011 Annual Shareholders’ General Meeting,
with details as follows: Based on the total 251,800,000 shares of the Company as at the end of 2011, a cash dividend of RMB 4.50
(tax included) was distributed for every 10 shares of all the shareholders; meanwhile, 10 additional bonus shares were distributed for
every 10 shares by capital reserves for all the shareholders. The plan was fully carried out in Apr. 2012 without any adjustment.
The Company’s preplan on profit distribution and turning capital reserve into share capital were in line with relevant stipulations of
the Articles of Association.
The Company’s preplans on profit distribution and turning capital reserve into share capital for the recent three years (including the
reporting year):
1. During the reporting period, according to the requirements of Regulations on Reinforcing the Protection for the Interests of Public
Share Holders (Zheng-Jian-Fa [2004] No. 118), Decision on Revising the Provisions of Cash Dividends Distribution of Listed
Company (CSRC Order No. 57) and Notice on Further Implementing Matters Related to Cash Dividend Distribution of Listed
Companies issued by CSRC, the Company convened the 10th Session of the 6th Board of Directors to revise the Articles of
Association, newly adding the detailed conditions and proportion for cash dividends distribution and other profits distribution policy,
which was submitted to the First Special Shareholders’ General Meeting for 2012 and approved.
2. The Company’s preplans on profit distribution and turning capital reserve into share capital were in line with relevant stipulations
of the Articles of Association.
3. The Company’s preplans or plans on profit distribution and turning capital reserve into share capital for the recent three years
(including the reporting year) as follows:
The Company’s plan on cash distribution in 2010 was as follows: a cash of RMB 3.5 (tax included) was distributed for each 10
shares, with no public reserves turned into share capitals.
The Company’s plan on cash distribution in 2011 was as follows: a cash of RMB 4.5 (tax included) was distributed for each 10
shares, and 10 additional bonus shares were distributed for every 10 shares by capital reserves.


                                                                                                                                     29
                                                                   2012 Annual Report of Anhui Gujing Distillery Company Limited


The Company’s preplan on cash distribution in 2012 was as follows: a cash of RMB 5 (tax included) was distributed for each 10
shares, and no capital reserves were turned into share capitals.


Cash dividend distribution of the Company over the recent three years:
                                                                                                                          Unit: RMB Yuan

                                                                          Net profit attributable to
                                                                                                        Ratio in net profit attributable to
                                                                           shareholders of listed
                                      Amount of cash dividend                                                shareholders of listed
              Year                                                          companies under the
                                            (tax included)                                                    companies under the
                                                                        consolidated statement in the
                                                                                                          consolidated statement (%)
                                                                                    year

2012                                                251,800,000.00                     725,589,286.31                               34.7%

2011                                                113,310,000.00                     566,390,286.36                             20.01%

2010                                                 82,250,000.00                     313,757,556.93                             26.21%

The Company (including its subsidiaries) made profit in the reporting period and the retained profit of the Company (without
subsidiaries) was positive, but it did not put forward a preplan for cash dividend distribution:
□ Applicable √ Inapplicable


XIV. Social responsibilities


For particulars about the social responsibilities performed by the Company during the reporting period, please refer to the Report on
Social Responsibilities disclosed on http://www.cninfo.com.cn dated 23 Apr. 2013.


XV. Particulars about researches, visits and interviews received in this reporting period


The reporting period the company did not happen in the field investigation, communication and interview etc.




                                                                                                                                         30
                                                               2012 Annual Report of Anhui Gujing Distillery Company Limited




                                                        V.SignificantEvents



I. Significant lawsuit or arbitration


□ Applicable √ Inapplicable
There was no significant lawsuit or arbitration during the reporting period.
Media’s queries
√ Applicable □ Inapplicable

      Explanation on media’s queries                       Disclosure date                        Disclosure index

A press article titled “Gu Jing: Alcohol                                            For details, please refer to the clarification
Procurement Reaches RMB 46 Million.                                                  announcement No. 2012-024 disclosed by
                                             27 Aug. 2012
For Blending?” was published against the                                            the Company on
Company.                                                                             http://www.cninfo.com.cn.


II. Occupation of the Company’s capital by the controlling shareholder and its related parties for non-operating purposes


Naught


III. Bankruptcy and reorganization


Naught


IV. Asset transactions


1. Asset acquisition


Naught


2. Sale of assets


Naught


3. Business combination


Naught


V. Implementation and influence of equity incentive plan of the Company


Naught




                                                                                                                                  31
                                                                           2012 Annual Report of Anhui Gujing Distillery Company Limited


VI. Significant related-party transactions


1. Related-party transactions concerning routine operation


                                                       Pricing                                          Settlemen
                                Type of   Contents
                                                      principle                Transacti Proportio t method
                                  the       of the
 Related                                                of the                    on       n in same      of the
               Relations related-pa related-pa                     Transacti                                         Market    Date of    Index of
transactio                                            related-pa                amount      kind of     related-pa
                    hip           rty        rty                   on price                                          price    disclosure disclosure
  n party                                                rty                    (RMB       transactio      rty
                            transactio transactio
                                                      transactio                0,000)      ns (%)      transactio
                                  n           n
                                                          n                                                 n

                                                                                                                                         The
                                                                                                                                         announce
                                                                                                                                         ment on
               Affiliated
                                                                                                                                         routine
               enterprise
                                                                                                                                         related-pa
               of           Routine
Anhui                                                                                                                                    rty
               controllin related-pa
Ruifuxian                                             Market                                                                  29 Feb.    transactio
               g            rty           Materials                             4,686.91     49.31%
g Food                                                price                                                                   2012       ns for
               sharehold transactio
Co., Ltd.                                                                                                                                2012 (No.
               er and       n
                                                                                                                                         2012-005
               actual
                                                                                                                                         ) on
               controller
                                                                                                                                         http://ww
                                                                                                                                         w.cninfo.
                                                                                                                                         com.cn

Total                                                     --          --       4,686.91      --             --         --         --            --


2. Related-party transactions arising from asset acquisition or sale


Naught


3. Significant related-party transactions concerning joint investment in external parties


Naught


4. Credits and liabilities with related parties


Was there any non-operating credit or liability with related parties?
□ Yes √ No


5. Other significant related-party transactions


Naught



                                                                                                                                                     32
                                                              2012 Annual Report of Anhui Gujing Distillery Company Limited


VII. Particulars about significant contracts and their fulfillment


1. Particulars about trusteeship, contract and lease
(1) Trusteeship
Explanation on the trusteeship
Naught
The trusteeship whose profits reaching more than 10% of the total profits of the Company in the reporting period
□ Applicable √ Inapplicable
(2) Contract
Explanation on the contract
Naught
The contract whose profits reaching more than 10% of the total profits of the Company in the reporting period
□ Applicable √ Inapplicable
(3) Lease
Explanation on the lease
Naught
The lease whose profits reaching more than 10% of the total profits of the Company in the reporting period
□ Applicable √ Inapplicable


2. Guaranty


Naught


VIII. Performance of commitments


1. Commitments made by the Company or shareholders holding over 5% of the Company’s shares in the reporting period, or
such commitments carried down into the reporting period


Naught


IX. Particulars about engagement and disengagement of CPAs firm
CPAs firm engaged at present

Name of domestic CPAs firm                             RSM China Certified Public Accountants LLP

Remuneration for domestic CPAs firm (RMB 0’000) 105

Consecutive years of the audit services provided by
                                                       1
domestic CPAs firm

Names of the certified public accountants from the
                                                       Lin Wanqiang, Zhang Liping
CPAs firm

Reengage the CPAs firm at current period or not?
√ Yes □ No
Change the CPAs firm during the audit period or not?

                                                                                                                        33
                                                              2012 Annual Report of Anhui Gujing Distillery Company Limited


□ Yes √ No
Execute the approval procedure to change the CPAs firm or not?
√ Yes □ No
Explain in detail the change of the CPAs firm:
The former financial and internal control auditor Reanda Certified Public Accountants Co., Ltd. was merged by RSM China Certified
Public Accountants LLP. In order to ensure the consistency of the financial and internal control audit and upon review and approval
of the 1st Special Shareholders’ General Meeting for 2013, the Company hired RSM China Certified Public Accountants LLP as its
new financial and internal control auditor. For details, see the announcement No. 2012-028 on the 14th Session of the 6th Board of
Directors disclosed on http://www.cninfo.com.cn dated 10 Nov. 2012.
CPAs firm for the internal control audit:
√ Applicable □ Inapplicable
The former financial and internal control auditor Reanda Certified Public Accountants Co., Ltd. was merged by RSM China Certified
Public Accountants LLP. In order to ensure the consistency of the financial and internal control audit and upon review and approval
of the 1st Special Shareholders’ General Meeting for 2013, the Company hired RSM China Certified Public Accountants LLP as its
new financial and internal control auditor. For details, see the announcement No. 2012-028 on the 14th Session of the 6th Board of
Directors disclosed on http://www.cninfo.com.cn dated 10 Nov. 2012.


X. Explanation by the Supervisory Committee and independent directors (if applicable) about the “non-standard audit
report” issued by the CPAs firm for the reporting period


Naught


XI. Punishment and rectification


Naught


XII. Share trading suspension and delisting after the disclosure of this annual report


Naught


XIII. Other significant events


Naught


XIV. Significant events of subsidiaries of the Company


Naught


XV. Corporate bonds issued by the Company


Naught




                                                                                                                                     34
                                                                     2012 Annual Report of Anhui Gujing Distillery Company Limited




                           SectionVI.ChangesinShareCapitalandParticularsaboutShareholders



I. Changes in share capital


                                 Before the change                        Increase/decrease (+, -)                            After the change

                                                                                 Capitalizat
                                                          Issuance                 ion of
                                             Proportion                 Bonus                                                            Proportio
                                Amount                    of new                   public        Others       Subtotal       Amount
                                                (%)                     shares                                                            n (%)
                                                           shares                 reserve
                                                                                    fund

I. Shares subject to trading 16,800,00                                           16,800,00 -33,599,10 -16,799,10
                                                 6.67%                                                                            900          0%
moratorium                               0                                                   0            0              0

                                16,800,00                                        16,800,00 -33,600,00 -16,800,00
3. Other domestic shares                         6.67%
                                         0                                                   0            0              0

Including: Shares held by 16,800,00                                              16,800,00 -33,600,00 -16,800,00
                                                 6.67%
domestic legal persons                   0                                                   0            0              0

5. Shares held by senior
                                                                                                     900           900            900          0%
management staff

II. Shares not subject to 235,000,0                                              235,000,0 33,599,10 268,599,1 503,599,1
                                               93.33%                                                                                       100%
trading moratorium                      00                                                  00            0         00             00

1.     Ordinary       shares 175,000,0                                           175,000,0 33,599,10 268,599,1 383,599,1
                                                 69.5%                                                                                     76.17%
denominated in RMB                      00                                                  00            0         00             00

2.   Domestically      listed 60,000,00                                          60,000,00                                   120,000,0
                                               23.83%                                                                                      23.83%
foreign shares                           0                                                   0                                     00

                                251,800,0                                        251,800,0                    251,800,0 503,600,0
III. Total shares                                100%                                                                                       100%
                                        00                                                  00                      00             00

Reason for the changes in share capital:
1. In Apr. 2012, the Company carried out the equity distribution plan of 10 bonus shares for 10 shares on all shareholders with the
capital reserve and the total shares of the Company thus increased to 503,600,000 shares.
2. In Aug. 2012, the Company disclosed on http://www.cninfo.com.cn the “Suggestive Announcement on Lifting Share Trading
Moratorium by the Board of Directors of Anhui Gujing Distillery Co., Ltd.” (No. 2012-021). The unlocked shares of 33,600,000
were from the non-public offering in 2011, accounting for 6.67% of the Company’s total shares.


Approval for changes in share capital
□ Applicable √ Inapplicable
Transfer for changes in share capital
The 2011 annual equity distribution plan and the listing of share trading moratorium completed in the reporting period, with all the
involved shares having been transferred.


                                                                                                                                                  35
                                                                    2012 Annual Report of Anhui Gujing Distillery Company Limited


Effects of changes in share capital on the basic EPS, diluted EPS, net assets per share attributable to common shareholders of the
Company and other financial indexes over the last year and last period
□ Applicable √ Inapplicable
Other contents that the Company considers necessary or required by the securities regulatory authorities to disclose


II. Issuance and listing of securities


1. Securities issued in the previous three years


Name of security
                                              Issuing price       Number of                          Number approved        Ending date of
and its derivative      Issuing date                                                 Listing date
                                              (RMB Yuan)        issuance (share)                      for listing (share)       trade
     security

Stock

RMB ordinary
                     15 Jul. 2011        75                           16,800,000 3 Aug. 2011                 16,800,000
shares

Convertible company bonds, bonds with attached warrant, company bonds, etc.

Warrant

Explanation on securities issuance over the past three years:
The non-public stock offering plan for 2011 was reviewed and approved at the 26th Session of the 5th Board of Directors held on 26
Nov. 2010 and later at the 1st Special Shareholders’ General Meeting for 2011 held on 14 Jan. 2011. The offering application
documents were accepted by CSRC on 29 Jan. 2011, reviewed and approved by the Public Offering Review Committee of CSRC on
20 May 2011 and then approved by CSRC (ZJXK [2011] No. 943) on 15 Jun. 2011. The Company accomplished the issuance-related
work of the private offering project on 15 Jul. 2011. The Company issued a total of 16.80 million shares of RMB ordinary shares
(A-shares) to 6 specific investors, raising RMB 1.26 billion in total. Reanda Certified Public Accountants verified the raised capital
upon its arrival and issued the Capital Verification Report Reanda-Yan-Zi [2011] No. 1065.


2. Change of the total shares, the shareholder structure, the asset structure and the liability structure


Naught


3. Existing shares held by employees


Naught


III. Shareholders and actual controller


1. Total number of shareholders and their shareholding
                                                                                                                                  Unit: share

Total number of shareholders at the                            Total number of shareholders on the fifth trading day
                                                      32,085                                                                         34,406
reporting period                                               before the disclosure date of the annual report

                         Particulars about shares held by shareholders with a shareholding percentage over 5%




                                                                                                                                             36
                                                       2012 Annual Report of Anhui Gujing Distillery Company Limited


                                                    Total       Increase Number                    Pledged or frozen shares
                                                                                  Number
                                                   shares /decreas          of
                                                                                    of
    Name of         Nature of     Shareholding     held at e during non-trad
                                                                                  tradable
  shareholder      shareholder    percentage (%)     the           the     able                Status of shares Number of shares
                                                                                  shares
                                                   period-e reportin shares
                                                                                   held
                                                     nd         g period   held

ANHUI GUJING
GROUP           State-owned                        271,404 135,702                271,404
                                          53.89%                                              The pledge             114,000,000
COMPANY         Corporation                           ,022 ,011                       ,022
LIMITED

PUNING
XINHONG         Domestic
                                                   15,000, 7,500,0                15,000,
INDUSTRIAL      non-state-owned            2.98%                                              The pledge              15,000,000
                                                       000 00                         000
INVESTMENT      Corporation
CO., LTD.

KGI ASIA        Foreign                            10,290, 5,100,2                10,290,
                                           2.04%
LIMITED         corporation                            679 56                         679

TRIVEST
                Foreign                            7,644,1 4,369,0                7,644,1
CHINA FOCUS                                1.52%
                corporation                                48 05                         48
MASTER FUND

UBS
                Foreign                            7,357,5 3,670,6                7,357,5
(LUXEMBOUR                                 1.46%
                corporation                                95 78                         95
G) S.A.

CHINA
CONSTRUCTIO
N BANK-
BANK OF
COMMUNICATI
                State-owned                        6,330,3                        6,330,3
ONS                                        1.26%
                Corporation                                88                            88
SCHRODERS
SUSTAINING
ALLOCATION
MIXED TYPE
FUND

CHINA
MERCHANTS       Foreign                            5,706,0                        5,706,0
                                           1.13%
SECURITIES      corporation                                02                            02
(HK) CO., LTD

CHINA
CONSTRUCTIO State-owned                            4,965,9                        4,965,9
                                           0.99%
N BANK-        Corporation                                47                            47
FIRST STATE


                                                                                                                               37
                                                                  2012 Annual Report of Anhui Gujing Distillery Company Limited


CINDA
LEADING
GROWTH
STOCK FUND

GOLDEN
                    Foreign                                   4,778,2                     4,778,2
CHINA                                                 0.95%
                    corporation                                    34                          34
MASTER FUND

INDUSTRIAL
AND
COMMERCIAL
BANK OF
                    State-owned                               4,658,6                     4,658,6
CHINA-GALAX                                           0.93%
                    Corporation                                    29                          29
Y YINTAI
FINANCING
DIVIDEND
FUND

Strategic     investor   or     general
corporation becoming a top ten
                                           Inapplicable
shareholder due to placing of new
shares (if any)

                                           Among the shareholders above, no affiliated relationship exists between the Company’s
                                           controlling shareholder—Anhui Gujing Group Company Limited—and other shareholders,
Explanation        on         associated
                                           nor they are parties acting in concert as defined in the Administrative Measures on
relationship or persons acting in
                                           Information Disclosure of Changes in Shareholding of Listed Companies. As for other
concert among the above-mentioned
                                           shareholders, the Company does not know whether they are related parties or whether they
shareholders:
                                           belong to parties acting in concert as defined in the Administrative Measures on Information
                                           Disclosure of Changes in Shareholding of Listed Companies.

              Particulars about shares held by the top ten shareholders holding shares not subject to trading moratorium

                                                                                                                 Type of shares
        Name of shareholder                Number of tradable shares held at the year-end (Note 4)
                                                                                                              Type           Number

ANHUI GUJING GROUP                                                                                   Renminbi
                                                                                     271,404,022                             271,404,022
COMPANY LIMITED                                                                                      ordinary shares

PUNING XINHONG
                                                                                                     Renminbi
INDUSTRIAL INVESTMENT CO.,                                                             15,000,000                                 15,000,000
                                                                                                     ordinary shares
LTD.

                                                                                                     Domestically
KGI ASIA LIMITED                                                                       10,290,679 listed foreign                  10,290,679
                                                                                                     shares

                                                                                                     Domestically
TRIVEST CHINA FOCUS
                                                                                        7,644,148 listed foreign                   7,644,148
MASTER FUND
                                                                                                     shares


                                                                                                                                          38
                                                                2012 Annual Report of Anhui Gujing Distillery Company Limited


                                                                                                  Domestically
UBS (LUXEMBOURG) S.A.                                                                 7,357,595 listed foreign              7,357,595
                                                                                                  shares

CHINA CONSTRUCTION BANK
-BANK OF COMMUNICATIONS
                                                                                                  Renminbi
SCHRODERS SUSTAINING                                                                  6,330,388                             6,330,388
                                                                                                  ordinary shares
ALLOCATION MIXED TYPE
FUND

                                                                                                  Domestically
CHINA                    MERCHANTS
                                                                                      5,706,002 listed foreign              5,706,002
SECURITIES (HK) CO., LTD
                                                                                                  shares

CHINA CONSTRUCTION BANK
-FIRST STATE CINDA                                                                               Renminbi
                                                                                      4,965,947                             4,965,947
LEADING GROWTH STOCK                                                                              ordinary shares
FUND

                                                                                                  Domestically
GOLDEN CHINA MASTER FUND                                                              4,778,234 listed foreign              4,778,234
                                                                                                  shares

INDUSTRIAL AND
COMMERCIAL BANK OF                                                                                Renminbi
                                                                                      4,658,629                             4,658,629
CHINA-GALAXY YINTAI                                                                               ordinary shares
FINANCING DIVIDEND FUND

                                         Among the shareholders above, no affiliated relationship exists between the Company’s
Explanation         on      associated
                                         controlling shareholder—Anhui Gujing Group Company Limited—and other shareholders,
relationship or/and persons acting in
                                         nor they are parties acting in concert as defined in the Administrative Measures on
concert among the top ten tradable
                                         Information Disclosure of Changes in Shareholding of Listed Companies. As for other
shareholders and between the top ten
                                         shareholders, the Company does not know whether they are related parties or whether they
tradable shareholders and the top ten
                                         belong to parties acting in concert as defined in the Administrative Measures on Information
shareholders
                                         Disclosure of Changes in Shareholding of Listed Companies.

Explanation         on    shareholders
participating in the margin trading Naught
business (if any)


2. Particulars about the controlling shareholder


Corporation

                                   Legal
                                                  Date of
    Name of controlling        representative
                                                establishm     Organization code       Registered capital           Business scope
         shareholder             / company
                                                    ent
                                  principal

ANHUI GUJING GROUP             Yu Lin           16 Jan.      151947437              353,380,000.00            Making beverage,



                                                                                                                                     39
                                                                 2012 Annual Report of Anhui Gujing Distillery Company Limited


COMPANY LIMITED                                  1995                                                     construction materials
                                                                                                          and plastic products

Operating results, financial
situation, cash flow and
                                Inapplicable
future development strategy,
etc.

Shares held by the
controlling shareholder in
other listed companies by       Inapplicable
holding or shareholding
during the reporting period

Change of the controlling shareholder during the reporting period
□ Applicable √ Inapplicable


3. Particulars about the actual controller


Corporation

                                    Legal
                                                  Date of
                                representative
Name of the actual controller                    establishm   Organizational code    Registered capital    Main business scope
                                 / person in
                                                    ent
                                   charge

The People’s Government of
Bozhou

Operating results, financial
situation, cash flow and
                                Inapplicable
future development strategy,
etc.

Shares held by the
controlling shareholder in
other listed companies by       Inapplicable
holding or shareholding
during the reporting period

Change of the actual controller during the reporting period
□ Applicable √ Inapplicable
The ownership and controlling relationship between the actual controller of the Company and the Company is detailed as follows:




                              The People’s Government of Bozhou


                                                          60%
                                                                                                                                   40
                                Anhui Gujing Group Company Limited

                                                          53.89%
                                                            2012 Annual Report of Anhui Gujing Distillery Company Limited




The actual controller controls the Company via trust or other ways of asset management

□ Applicable √ Inapplicable


4. Other corporate shareholders with a shareholding ratio over 10%


Naught


IV. Particulars on shareholding increase scheme during the reporting period proposed or implemented by the shareholders
and act-in-concert persons


Naught




                                                                                                                      41
                                                                   2012 Annual Report of Anhui Gujing Distillery Company Limited


          Section VII. Particulars about Directors, Supervisors, Senior Executives and Employees of the Company
I. Changes in shareholding of directors, supervisors and senior executives

                                                                                     Shares at Increase of Decrease
                                                                                                                        Shares at
                                                            Beginning     Ending        the       shares    of shares
                         Incumbent                                                                                      the end of
  Name         Title                 Gender      Age          date of     date of   beginning during this during this
                           or not                                                                                       this year
                                                            office term office term of the year   period     period
                                                                                                                         (share)
                                                                                      (share)     (share)    (share)

           Chairman
           of the                                           15 April    16 April
YU LIN                   Incumbent Male                59
           Board of                                         2011        2014
           Directors

           General
LIANG                                                       15 April    16 April
           Manager,      Incumbent Male                49
JINHUI                                                      2011        2014
           Director

           Director,
ZHOU       Executive                                        15 April    16 April
                         Incumbent Male                39
QINGWU General                                              2011        2014
           Manager

           Vice
           General
           Manager,
           Secretary
YE
           of the                                           15 April    16 April
CHANGQ                   Incumbent Male                39
           Board of                                         2011        2014
ING
           Directors,
           Chief
           Accountan
           t

WANG                                                        15 April    16 April
           Director      Incumbent Male                48
FENG                                                        2011        2014

YANG                                                        15 April    16 April
           Director      Incumbent Male                45
XIAOFAN                                                     2011        2014

WANG       Independe                                        15 April    16 April
                         Incumbent Male                51
RUIHUA nt Director                                          2011        2014

WU         Independe                                        15 April    16 April
                         Incumbent Male                51
CISHENG nt Director                                         2011        2014

LIU        Independe                                        15 April    16 April
                         Incumbent Male                69
LIBIN      nt Director                                      2011        2014

           General
ZONG                                                        12 June     16 April
           Manage        Incumbent Male                40
ZHAOJI                                                      2012        2014
           Assistant


                                                                                                                                    42
                                                                        2012 Annual Report of Anhui Gujing Distillery Company Limited


ZHAI        General
                                                               12 June      16 April
LIANGD Manager          Incumbent Male                    42                                 1,200                            1,200
                                                               2012         2014
ONG         Assistant

            General
                                                               12 June      16 April
FANG JI     Manager     Incumbent Male                    46
                                                               2012         2014
            Assistant

            General
ZHANG                                                          12 June      16 April
            Manager     Incumbent Male                    44
LIHONG                                                         2012         2014
            Assistant

            Chairman
            of the
                                                               15 April     16 April
XU PENG Supervisor Incumbent Male                         43
                                                               2011         2014
            y
            Committee

NIU                                                            15 April     16 April
            Supervisor Incumbent Male                     42
HAITING                                                        2011         2014

FU
                                                               15 April     16 April
QIANGXI Supervisor Incumbent Male                         43
                                                               2011         2014
N

HU
                                                               15 April     16 April
WENCHA Supervisor Incumbent Male                          47
                                                               2011         2014
O

LU
                                                               15 April     16 April
DUICAN Supervisor Incumbent Male                          33
                                                               2011         2014
G

Total            --          --          --          --            --            --          1,200          0          0      1,200

II. Particulars about the employment
The main work experience of current directors, supervisors and senior executives over the past five years
(I) Mr. Yu Lin, 59 year-old, is Economic Engineer who is postgraduate degree holder, incumbent Director, Chairman of the Board of
the Company, Chairman of the Board of Anhui Gujing Group Co., Ltd. and Vice Chairman of CPPCC of Bozhou ; had ever acted as
worker, management of Chemical Fertilizer Plant of Bozhou County, Chief of Corporate Management of Ministry of Agriculture and
Economy of Bozhou City, Chief of Corporate Bureau of County of Bozhou City, Deputy Secretary of Bozhou Municipal Government,
Chief of Minority Development Bureau of Bozhou City, Director of Ministry of Economy of Bozhou City, Secretary of Party
Leadership Group, Vice Chairman of Political Consultative Conference of Bozhou City.
(II) Mr. Liang Jinhui, 49 year-old, is Political Engineer who has educational experience of graduate student, incumbent Director and
General Manager of the Company. He ever took posts of Secretary of Information Research Office of the Company, Editor in Chief
of Gujing Newspaper Office, Chief of Propaganda and Education Section, Vice Manager of Market Development Department of the
company, Supervisor of the Second Supervisory Committee, Manager of Market Development Department, Chief of Market
Research and Supervision Center, Supervisor of Third Supervisory Committee and Director of the Fourth Board of Directors,
Chairman of the Board of Bozhou Gujing Sales Company.
(III) Mr. Zhou Qingwu, 39 year-old, is Economist who has educational experience of undergraduate college. At present, he is


                                                                                                                                  43
                                                                   2012 Annual Report of Anhui Gujing Distillery Company Limited


Director and Executive Deputy General Manager of the Company, Vice Secretary of CPC of Gujing Group. He had ever acted as
Clerk and Deputy Sector Chief of Quality Control Section of Business Administration Department of the Company, Director of
Quality Control Center of Assets Management Department, Vice Manager and Manager of Quality Control Department, and
Chairman and General Manager of Bozhou Gujing Packing Material Co., Ltd.; Director of the 5th Board of Directors and Vice
General Manager.
(IV) Mr. Ye Changqing, 39 year-old, holder of master degree and International Certified Internal Auditor. Incumbent Director, Chief
Accountant and acting Secretary of Board of Directors of the company; started to work in July 1997, had ever acted Chief Auditor of
Audit Department, Vice Manager of Audit Department and Vice Supervisor and Supervisor of Auditing& Supervision Department;
and Supervisor of the Fourth Supervisory Committee; Director and Secretary of the 5th Board of Directors, Chief Accountant.
(V) Mr. Wang Feng, 48 year-old, is Senior Economic Engineer who is postgraduate degree holder, incumbent Director, Deputy
Secretary of CPC of Gujing Group. He had ever acted as Secretary of the League Committee of Bozhou Gujing Distillery; Deputy
Director of Economy Development Department; Deputy Director of Enterprises Management Department; Manager of Assets
Management Department of Gujing Group; Director, Secretary of the board, Vice General Manager, and General Manager of the
Second Board of Directors; Director and Chairman of the Third Board of Directors, and Director as well as Chairman of the Fourth
Board of Directors; Director of the 5th Board of Directors.
(VI) Mr. Yang Xiaofan, 45 year-old, holder of master degree. At present, he is Vice President of Gujing Group. He began to work in
1987, ever took posts of middle school teacher, journalist of newspaper office, propagandist of district office, teacher of normal
school, director of editors’ board of magazine; in Jul. 1993, he began to work in Gujing, he successively acted as Director of the
Editors’ Board of Gujing News, Chief of Propaganda, Manager of Propaganda and Information Department, Vice President and
General Manager of Anhui Gujing Real Estates Group Co., Ltd., Director and Assistant Chairman, Vice President of Gujing Group;
Director of the 5th Board of Directors.
(VII) Mr. Wang Ruihua, male, 51 years old, and accounting. Is now the company independent director, the central university of
finance and economics, director of the MBA education center, dean of school of business, accounting professor, doctoral supervisor,
Beijing zhongke three-ring high technology co., LTD., the independent directors, independent director of Beijing aerospace long feng
co., LTD., sinolink securities co., LTD., the independent directors. A former, deputy director of the central university of finance and
economics graduate students.
(VIII) Mr. Wu Cisheng, 51 year-old, who has Ph.D of Management Study, and is Professor of Management School, Dean of Business
Administration Department of Hefei University of Technology, Superintendent of Business Administration Research Institute, has
gained Master’s Degree of Industry Engineering in 1990, Ph. D of Business Administration in 2004; and had presided three national
social science fund projects, project topics of National Ministry of Science & Technology and National Bureau of Statistics
successively; had issued more than 60 theses on magazines in domestic and abroad successively, and published 6 works; and had
gained provincial and ministerial advance prize of science and technology. He is incumbent independent director of the company.
(IX) Mr. Liu Libin, 69 year-old, is incumbent Vice Chairman and Chief Secretary of China Advertising Association and President and
Chief Editor of International Advertising. He is the Doctor’s Tutor of Communication University of China, Visiting Professor of
many universities, Advisor of many brands, Superintendent of IAI International Advertising Institute, Chief Editor of Chinese
Advertisement Works Almanac and Chief Editor of Chinese Marketing Creative Works Almanac. And he has acted as member of a
review committee of various arts and advertisement exhibitions all around the country. And now he is incumbent the Independent
Director of the Company.
(X) Mr. Zong Zhaoji, Male, 40-year-old, engineer, achieved the diploma of junior college. He is now acting as General Manager
Assistant of the Company, General Manager of Bozhou Gujing Sales Co., Ltd. He once acted as clerk of Production Engineering
Department, Workshop Director of Jiufang Pharmaceuticals Company of Gujing Group, Salesman of Bozhou Gujing Sales Co., Ltd.,
Executive, Manager of Marketing Department, Regional Manager and Marketing Director.
(XI)Mr. Zhai Liangdong, Male, 42-year-old, achieved the Master degree. He is now acting as General Manager Assistant of the
Company, Chief Inspector of Administrative Center. He once acted as clerk of Labor Union Office of Gujing Group; clerk, Secretary,



                                                                                                                                    44
                                                                  2012 Annual Report of Anhui Gujing Distillery Company Limited


Deputy Director, Director of Gujing Group Office; Director of corporate office.
(XII) Mr. Fang Ji, Male, 46-year-old, is an account, economic engineer and engineer. He is now acting as General Manager Assistant
of the Company, Chief Inspector of Brewing Management Center. He once acted as programmer of corporate computer room,
headman of processing equipment team of Gujing Group, Factory Manager of Packaging Materials Factory, Manager of Production
Material Control Department, Manager of Power Department, Chief Inspector of Production Management Center.
(XIII) Mr. Zhang Lihong, Male, 44-year-old, economic engineering, achieved the Bachelor degree. He is now acting as General
Manager Assistant of the Company, Chief of HR Center. He once acted as clerk of Bozhou Gujing Sales Co., Ltd., Secretary of
Corporate Operation Department, Secretary of Market Development Department, Vice General Manager of Bozhou Gujing Sales Co.,
Ltd., Director of Comprehensive Office, Chief Inspector of Comprehensive Service Center.
(XIV) Mr. Xu Peng, 43 year-old, has educational experience of undergraduate college. He is incumbent Chief Supervisor of the
Company, Chief Inspector of Internal Audit Centre. And he had ever acted as Deputy Director and Director of Finance Second Office
of Finance Department of the Company, Manager of Finance Department of Anhui Laobada Co., Ltd., and Vice Manager and
Manager of Finance Department of the Company, Deputy General Manager and Chief Supervisor of Market Supervision Department
of Bozhou Gujing Sales Company.
(XV) Mr. Niu Haiting, 42 year-old, has educational experience of undergraduate college. He is incumbent Supervisor of the
Company, Member of Party Committee, and member of Commission for Disciplinary Inspection. He had ever acted as Personnel
Administrator, Vice Chief Supervisor of Human Resource Department of Anhui Gujing Group and Chief Inspector of Safety
Management Center.
(XVI) Mr. Fu Qiangxin, 43 year-old, bachelor degree, accountant, incumbent Supervisor and Vice Secretary of Discipline Inspection
Commission of Audit. He ever took posts of accountant of Bozhou Gujing Hotel, Manager of Finance of Bozhou Gujing Integrated
Services Company and Bozhou Gujing Import and Export Trade Company, clerk of Planning and Finance Department of Gujing
Group, Chief Inspector of Internal Audit Center.
(XVII) Mr. Hu Wenchao, is 47 year-old, Registered Senior Human Resource Specialist who has educational experience of
undergraduate college, National Trainer Grade 2 and one of Administrators recommended by China Human Resource Development
Association. Now he is incumbent Supervisor of the Company, Chief of HR Center of Anhui Gujing Group Co., Ltd. He had ever
acted as Labor Allocation Clerk and Deputy GM of Personnel Department, Vice Manager of HR Department of Anhui Gujing Group
Co., Ltd., Vice Manager of HR Department of Anhui Gujing Distillery Company Limited.
(XVIII) Mr. Lu Duicang, 33 year-old, has educational experience of undergraduate college. Now, he is incumbent Supervisor of the
Company and General Supervisor of Finance Department of Anhui Gujing Group Co., Ltd. He had ever acted as Accountant, Vice
Director and Director of Finance Department First Center of the Company, Factory Manager of Liquor Filling Branch Factory and
Manager of Finished Products Department.


Employment in shareholders’ entities
√ Applicable □ Non-Applicable

                                                                                                                 Whether receiving
                                                             Post held in Beginning date
                                                                                              Ending date of          subsidies and
     Name               Name of shareholders’ entity        shareholders’   of the office
                                                                                              the office term    remuneration from
                                                                entity            term
                                                                                                                shareholders’ entities

                                                            Chairman of
YU LIN           Anhui Gujing Group Co., Ltd.               the Board of                                        Yes
                                                            Directors

                                                            Deputy
WANG FENG Anhui Gujing Group Co., Ltd.                                                                          Yes
                                                            Chairman of


                                                                                                                                      45
                                                                     2012 Annual Report of Anhui Gujing Distillery Company Limited


                                                             Party
                                                             Committee,
                                                             Chairman of
                                                             Discipline
                                                             Inspection
                                                             Committee

YANG                                                         Vice
                 Anhui Gujing Group Co., Ltd.                                                                 Yes
XIAOFAN                                                      President

                                                             Deputy
ZHOU                                                         Chairman of
                 Anhui Gujing Group Co., Ltd.                                                                 No
QINGWU                                                       Party
                                                             Committee

                                                             Vice
                                                             Chairman of
                                                             Discipline
                                                             Inspection
FU                                                           Committee,
                 Anhui Gujing Group Co., Ltd.                                                                 Yes
QIANGXIN                                                     Chief
                                                             Inspector of
                                                             Audit
                                                             Inspection
                                                             Center

HU                                                           Chief of HR
                 Anhui Gujing Group Co., Ltd.                                                                 Yes
WENCHAO                                                      Center

                                                             Chief
                                                             Inspector of
LU DUICANG Anhui Gujing Group Co., Ltd.                      Financial                                        Yes
                                                             Management
                                                             Center

Explanation
about            The above-mentioned personnel, though they take posts in shareholders’ entities, comply with the relevant
employment in employment requirements of Company Law, Securities Law and never were disciplined by CSRC, other relevant
shareholders’   departments and the Stock Exchange.
entities

Employment in other entities
□ Applicable √ Non-Applicable


III. Remuneration of directors, supervisors and senior executives
Decision-making procedure, basis for determination and actual payment of remuneration of directors, supervisors and senior
executives
(I) Decision-making procedure for the remuneration of directors, supervisors and senior management
The Remuneration & Appraisal Committee under the Board of Directors is in charge of drafting appraisal index of senior


                                                                                                                               46
                                                                    2012 Annual Report of Anhui Gujing Distillery Company Limited


management and checking accomplishment of annual index.
(II) Basis for determining the remuneration of directors, supervisors and senior management
Remuneration of directors, supervisors and senior management is calculated by appraisal index drafted in year-begin and weight.
Financial index is on base of Auditor’s Report issued by certified public accountant, and comprehensive appraisal index is appraised
and discussed by the Remuneration & Appraisal Committee under the Board of Directors.
(III) Actual payment of the remuneration of directors, supervisors and senior management
Payment of the remuneration of directors, supervisors and senior management is with certain amount in advance monthly and
distributed annually according to check.
Particulars about remuneration of directors, supervisors and senior executives in the reporting period
                                                                                                                          Unit: RMB 0’000

                                                                                                         Total amount         Actual
                                                                                     Total amount
                                                                                                         of payment got payment got at
                                                                    Incumbent or of payment got
     Name                Title        Gender            Age                                                 from the         the end of
                                                                          not           from the
                                                                                                         shareholders’      reporting
                                                                                       Company
                                                                                                            entities          period

                 Chairman of
YU LIN           the Board of     Male                          59 Incumbent                                      97.45             97.45
                 Directors

                 General
LIANG
                 Manager,         Male                          49 Incumbent                  113.66                               113.66
JINHUI
                 Director

                 Director,
ZHOU             Executive Vice
                                  Male                          39 Incumbent                   88.01                                88.01
QINGWU           General
                 Manager

                 Vice General
                 Manager,
                 Secretary of
YE
                 the Board of     Male                          39 Incumbent                   76.76                                76.76
CHANGQING
                 Directors,
                 Chief
                 Accountant

WANG FENG Director                Male                          48 Incumbent                                       90.6                90.6

YANG
                 Director         Male                          45 Incumbent                                       90.6                90.6
XIAOFAN

WANG             Independent
                                  Male                          51 Incumbent                       7.5                                   7.5
RUIHUA           Director

                 Independent
WU CISHENG                        Male                          51 Incumbent                       7.5                                   7.5
                 Director

                 Independent
LIU LIBIN                         Male                          69 Incumbent                       7.5                                   7.5
                 Director


                                                                                                                                          47
                                                                       2012 Annual Report of Anhui Gujing Distillery Company Limited


                   General
ZONG
                   Manager         Male                           40 Incumbent                 94.39                            94.39
ZHAOJI
                   Assistant

                   General
ZHAI
                   Manager         Male                           42 Incumbent                 69.45                            69.45
LIANGDONG
                   Assistant

                   General
FANG JI            Manager         Male                           46 Incumbent                  74.4                                74.4
                   Assistant

                   General
ZHANG
                   Manager         Male                           44 Incumbent                 75.44                            75.44
LIHONG
                   Assistant

                   Chairman of
XU PENG            the Supervisory Male                           43 Incumbent                 70.84                            70.84
                   Committee

NIU HAITING Supervisor             Male                           42 Incumbent                 54.42                            54.42

FU
                   Supervisor      Male                           43 Incumbent                 56.86            7.67            64.53
QIANGXIN

HU
                   Supervisor      Male                           47 Incumbent                 39.96            4.53            44.49
WENCHAO

LU DUICANG Supervisor              Male                           33 Incumbent                                 54.95            54.95

       Total             --               --             --                  --              836.69            345.8        1,182.49

Particulars about stock incentive granted to directors, supervisors and senior executives of the Company in the reporting period.
□ Applicable √ Non-Applicable
IV. Particulars about resignation and dismissal of directors, supervisors and senior executives
None
V. Particulars about changes in personnel of core technical team and crucial technical team (excluding directors, supervisors
and senior executives) in the reporting period
None


VI. Employees


Up to 31 Dec. 2012, the total number of current employees in the Company is 5,440
1. Particulars about professional categories
  Professional category           Number of personnel         Proportion
     Production staff             4,086                       75.11%
     Sales staff                  570                         10.48%
     Technical staff              278                         5.11%
     Financial staff              77                          1.42%
     Administrative staff         429                         7.89%


                                                                                                                                      48
                                                           2012 Annual Report of Anhui Gujing Distillery Company Limited


    Total                    5,440                100.00%



                               Professional categories




                                                                             Production staff
                                                                             Sales staff
                                                                             Technical staff
                                                                             Financial staff
                                                                             Administrative staff




2. Level of education
Level of education       Number (person)      proportion
High    school     and      4,305.00          79.14%
below

Junior college                574.00          10.55%

Bachelor degree               544.00          10.00%

Master degree or               17.00          0.31%
above

Total                       5,440.00          100.00%




                                 Level of education




                                                                           High school and below
                                                                           Junior college
                                                                           Bachelor degree
                                                                           Master degree or above




                                                                                                                     49
                                                                   2012 Annual Report of Anhui Gujing Distillery Company Limited




                                               Section VIII. Corporate Governance


I. Basic information about corporate governance
Since foundation, the Company constantly perfects corporate governance structure and standardize its management strictly in
accordance with the Company Law, Securities Law, Standard for Governance of Listed Companies, Guide Opinion on Setting up
Independent Directors Systems for Listed Companies as well as principles and requirements of other relevant laws, regulations and
normative documents.
In the reporting period, as per requirements of Basic Standard for Enterprise Internal Control and Shenzhen Stock Exchange
Guideline on Internal Control of Listed Companies, the Company developed internal control activity, implemented Rules on
Management of Assets Provision for Impairment, The Policy on the Liability of Disclosing Materially Inaccurate Information in
Annual Report, Rules for Management of External Information User and Rules for Management of Insider of Inner Information,
perfected internal control system step by step, promoted normative operation and healthy development. The Board of Directors, the
Supervisory Committee and the management of the Company make decisions, perform rights and assume obligation strictly
according to the standard operation rules and inner control system so as to make sure the standard operation of the Company in the
frame of rules and systems.
In the reporting period, according to requirements of China Securities Regulatory Commission and Rules for Listing of Shares in
Shenzhen Stock Exchange and with the “open, fair and just” principle, the Company seriously and timely performed information
disclosure obligation and guaranteed that the information disclosed is true, accurate and complete, free from fictitious presentation,
misleading statements or important omissions, so that all the shareholders will equally acquaint themselves with all the notices of the
Company.
After the reporting period, the Company will continuously optimize and perfect the corporate governance of listed companies, further
improve the standard operation of the Company.


Whether there existed differences between the corporate governance and relevant regulations of Company Law and CSRC or not
□ Yes √ No
There existed no difference between the corporate governance and relevant regulations of Company Law and CSRC.
Information about the progress of special activities of corporate governance and the formulation and implementation of registration
and management system for insiders
In order to further perfect the Company’s corporate governance, strengthen the management on the information disclosure for the
Company, the Company promulgated the Management Rules for Information Insider and Management Rules for Information
Reporting, Submission to and Use by External Parties, which were reviewed and approved at the 20th Session of the 5th Board of
Directors. In the reporting period, the company secretary was responsible for the disclosure of sensitive information. Before the
disclosure of any significant information in periodical reports or interim announcements, the personnel who had access to the insider
information all filled in the Registration Form for Information Insiders in a timely manner as required by Anhui Securities Regulatory
Bureau and Shenzhen Stock Exchange. During the reporting period, no insider traded the Company’s shares making use of the
insider information before the disclosure of significant sensitive information that might influence the Company’s stock price. During
the reporting period, the Company strictly carried out the Management Rules for Information Reporting, Submission to and Use by
External Parties, effectively controlling the reporting and submission of the Company’s business data, financial statements and other
internal information to external parties. No information of the Company was leaked against applicable laws and regulations.


II. Particulars about annual shareholders’ general meetings and temporary shareholders’ general meetings
1. Particulars about annual shareholders’ general meetings


                                                                                                                                      50
                                                                        2012 Annual Report of Anhui Gujing Distillery Company Limited


       Session            Opening date        Name of proposal               Resolution       Disclosure date   Index for disclosure

                                            2011 Annual Report
                                            of    the    Board    of
                                            Directors,          2011
                                            Annual Report of the
                                            Supervisory
                                            Committee,          2011
                                            Annual Report on
                                            Financial Statement,
                                                                                                                On the Cninfo
                                            2011 Annual Report
                                                                                                                website
                                            and            Abstract,
                                                                                                                Announcement on
                                            Proposal      on    2011
                                                                                                                Resolutions Passed
2011 Annual                                 Annual             Profit
                                                                        All the proposals                       on the 2011 Annual
Shareholders’        19 April 2012         Distribution         and                        20 April 2012
                                                                        were passed.                            Shareholders’
General Meeting                             Transfer of Capital
                                                                                                                General Meeting
                                            Reserve to Common
                                                                                                                (No. 2012-011)
                                            Shares, Proposal on
                                                                                                                http://www.cninfo.co
                                            Project of Investing
                                                                                                                m.cn
                                            White              Spirit
                                            Industrial          Park,
                                            Proposal              on
                                            Amending        Articles
                                            of          Association,
                                            Proposal              on
                                            Employing          Audit
                                            Institution for 2012

2. Particulars about temporary shareholders’ general meeting

       Session            Opening date        Name of proposal               Resolution       Disclosure date   Index for disclosure

                                                                                                                On the Cninfo
                                                                                                                website
                                            Proposal on                                                         Announcement on
                                            Amending Articles                                                   Resolutions Passed
The 1st Temporary
                                            of Association, Plan                                                on the 1st Temporary
Shareholders’                                                          The all proposals
                      15 Aug. 2012          on Rewarding the                                16 Aug. 2012        Shareholders’
General Meeting in                                                      were passed
                                            Shareholders of                                                     General Meeting in
2012
                                            Anhui Gujing Co.,                                                   2012(No.
                                            Ltd. (2012)                                                         2012-022)
                                                                                                                http://www.cninfo.co
                                                                                                                m.cn

III. Duty performance of independent directors in the reporting period
1. Particulars about attendance of independent directors in the board meetings and shareholders’ general meetings

                            Particulars about attendance of independent directors in the board meetings



                                                                                                                                     51
                                                                      2012 Annual Report of Anhui Gujing Distillery Company Limited




                           Number of
                                                                 Number of                                                  Whether being
                            meetings            Number of                             Number of           Number of
                                                                  meetings                                                   absent from
Name of independent       independent            meetings                              meetings         meetings skipped
                                                                attended in the                                              meetings in
       director           directors are       attended on the                         attended by            from
                                                                  means of                                                 person two times
                          supposed to              spot                               mandatary
                                                                communication                                               in succession
                        attend during the
                        reporting period

WANG RUIHUA                               8                 1                     7                 0                 0 No

WU CISHENG                                8                 1                     7                 0                 0 No

LIU LIBIN                                 8                 1                     7                 0                 0 No

Number of shareholders’ general
meetings attended by independent                                                                                                            2
directors

Notes to being absent from meetings in person two times in succession
2. Particulars about objections raised by independent directors about the relevant items of the Company
Whether independent directors raised objections about the relevant items of the Company?
□ Yes √ No
In the reporting period, independent directors raised no objection about the relevant items of the Company.
3. Other notes to duty performance of independent directors
Whether the advices of independent directors were taken by the Company?
√ Yes □ No
Explanation about whether the advices of independent directors were taken by the Company
In 2012, the 6th Board of Directors fulfilled their duties faithfully and responsibly, issued independent opinions on Self-appraisal
Report of Internal Control and Routine Related Transactions with the Related Parties on the basis of a detailed understanding of
corporate operation. They raised many constructive opinions and advices, which played an active part in the scientific and objective
decisions of the Board of directors and the benign development of the Company.
IV. Duty performance of special committees affiliated to the Board of Directors in the reporting period
1. Duty performance of the Strategy Committee
The Strategy Committee is under the leadership of the Board of Directors. In the reporting period, in strict compliance with the
Specific Implementation Rules for the Strategy Committee, the Strategy Committee conscientiously performed its duties, making a
lot of constructive suggestions for the efficient execution of the Company’s “12th Five-Year” strategy.
2. Duty performance of the Audit Committee
In the reporting period, five members of the Audit Committee diligently and responsibly performed their duties as stipulated in the
relevant rules of the Company:
(1) It reviewed the periodical reports of the Company in 2012.
(2) Upon discussion with RSM China Certified Public Accountants for the 2012 annual audit, it determined the schedule for the
financial report and internal control audit for 2012.
(3) It communicated in advance with the CPAs firm and independent directors before the CPAs firm came to the Company and
started the 2012 annual audit.
(3) It reviewed the short form of the preliminary financial statements prepared by the financial department of the Company for the


                                                                                                                                            52
                                                                   2012 Annual Report of Anhui Gujing Distillery Company Limited


first time before the annual auditor came to the Company and made some helpful suggestions.
(5) After the annual auditor came to the Company and started the audit, it communicated with the registered accountants on the
problems found in the audit and the submission time of the audit report.
(6) After the annual auditor issued the preliminary audit opinion, it reviewed the 2012 annual financial statements again and made the
final resolution.
3. Duty performance of the Nomination Committee
In the reporting period, in strict compliance with the Specific Implementation Rules of the Nomination Committee, the Nomination
Committee vigorously worked on various tasks, which ensured that the senior management staff of the Company were hired in
compliance with laws and regulations.
(1) In the reporting period, the senior management staff hired by the Company satisfied the requirements of the Company Law and
other relevant laws and regulations. They were qualified as senior management staff. They were not in such a case where the
Company Law should forbid them from being senior management staff. Nor they were forbidden by CSRC from entering the
securities market.
(2) In the reporting period, the senior management staff of the Company were nominated and hired in line with the Company Law
and the Company’s Articles of Association. The hired personnel have never been punished by CSRC, other relevant authorities or
stock exchanges.
4. Duty performance of Remuneration and Appraisal Committee
(1) The Remuneration and Appraisal Committee affiliated to the Board of Directors, according to relevant regulations of
Implementation Rules of Remuneration and Appraisal Committee successfully completed the annual performance appraisal to
directors, supervisors and senior executives in line with standards and procedures of performance appraisal during the reporting
period.
(2) Through the deliberation and assessment of the committee, the consistent opinion was that the general remuneration level
complied with development of the Company; the remuneration level of directors, supervisors and senior executives accurately
reflected the overall performance situation of the Company and individual work performance, which complied with the remuneration
management system; the remuneration plan and procedure of issuing remuneration were in accordance with the laws and did not
violate relevant national laws and regulations.
V. Information about work of the Supervisory Committee
Whether there existed any risk in the Company according to the supervision of the Supervisory Committee in the reporting period
□ Yes √ No
The Supervisory Committee raised no objection about matters of the Company under its supervision in the reporting period.
VI. Particulars about independence and completeness in business, personnel, assets, organizations and financial affairs
between this company and controlling shareholders
The company and the controlling shareholder, Anhui Gujing Group Co., Ltd., realized five independences in terms of business,
personnel, assets, organizations and financial affairs, with separate independent calculation, independent and complete business,
independent operation ability, and independent responsibilities and risks. Majority shareholders can not surpass the shareholders’
general meeting to directly or indirectly interfere with the company’s decisions and legal production and operation activities, and
there is no same trade competition state of the same products between the company and majority shareholders.
VII. Particulars about horizontal competition
None
VIII. Particulars about assessment and incentive mechanism to senior executives during the report period
The Company has set up a Performance Appraisal and Incentive Mechanism for Senior Executives, which links remuneration of
senior executives with the Company’ performance, the decision-making management adopts the assessment and incentive measures
by linking the annual remuneration with the Company’ economic indexes & management achievement. To promote the standard,


                                                                                                                                   53
                                                                   2012 Annual Report of Anhui Gujing Distillery Company Limited


healthy and orderly development of the company and keep the stability of the senior executives, the company annually sets up the
assessment index for them and signs a written responsibility of business target at the year-begin, then decides their remuneration and
the rewards & punishment at the year-end according to their personal work performance and completion of the Company’s operating
target.




                                                                                                                                   54
                                                                     2012 Annual Report of Anhui Gujing Distillery Company Limited




                                                       Section IX Internal Control


I. Construction of internal control


In the reporting period, the Company, according to the requirements of normative documents including Basic Standards of Corporate
Internal Control, Appraisal Guideline for Corporate Internal Control (hereinafter referred to as Appraisal Guideline) and Guideline
for Internal Control of Listed Companies issued by Shenzhen Stock Exchange, founded leading team and work team of construction
and implementation of internal control and employed Huafu Kunming Consultants (Beijing) Co., Ltd. as the consultancy of internal
control system construction which guided the Company on and assisted the Company in the establishment and perfectness of internal
control system, formulated Management Manual of Internal Control, effectively managed and controlled in the aspects of strategic
risks, financial risks, operating risks and market risks, legal risks, enhanced the level of corporate operation and management and the
level of risk prevention. Note: for details see Self-assessment Report on 2012 Annual Internal Control published on the Cninfo
website on 23 April 2013.
II. Statement on the Responsibility for Internal Control from the Board of Directors

The Board of Directors and all its directors hereby ensure that this announcement contains no false information, misleading statement
or material omission, and shall be jointly and severally liable for the factuality, accuracy and completeness of the information carried
in this announcement. Establishing, perfecting and effectively conducting internal control is the liability of the Board of Directors;
establishment and implementation of internal control conducted by the Board is under the supervision of the supervisory committee;
the management is responsible for organizing and guiding daily operation of internal control. The objective of internal control:
reasonably guarantee the legality and compliance of the Company’s operating management, safety of assets, authenticity and
completeness of financial report and relevant information; enhance operation efficiency and improve operation results; promote the
realization of sustainable development.


III. Basis of establishing internal control of financial statements
Basis of establishing internal control of financial statements: the Company established comparatively sound internal control system
of financial management, according to requirements of relevant normative documents like Accounting Law, Accounting Standards
for Business Enterprises, Basic Standards of Corporate Internal Control, Evaluation Guideline for Corporate Internal Control.


IV. Self-assessment report of internal control

 Specific details about significant defects of internal control during the reporting period found in self-assessment report of internal
                                                                control

None

Disclosure date of whole article of
self-assessment report of internal     23 April 2013
control

Index for disclosure of whole
                                       Cninfo website (www.cninfo.com.cn) “2012 Annual Self-assessment Report of Internal
article of self-assessment report of
                                       Control”
internal control

V. Audit report of internal control
√ Applicable □ Non-Applicable

                                            Audit opinion in audit report of internal control


                                                                                                                                          55
                                                                      2012 Annual Report of Anhui Gujing Distillery Company Limited


We believe, Anhui Gujing Distillery Co., Ltd. maintained effective internal control of financial statements in all significant aspects
on 31 Dec. 2012 in accordance with Basic Standards for Internal Control and relevant regulations.

Disclosure date of whole article of
                                      23 April 2013
audit report of internal control

Index for disclosure of whole
article of audit report of internal Cninfo website (www.cninfo.com.cn) “Audit Report of Internal Control”
control

Whether the accounting firm issued non-standard audit report of internal control
□ Yes √ No
Whether audit report of internal control issued by accounting firm was consistent with self-assessment report of the board of directors
√ Yes □ No
VI. Establishment and implementation of institution of clarifying responsibility for major mistakes in annual report
In order to improve the standard operation of the Company, strengthen the factuality, accuracy, completeness and promptness of
information disclosure and enhance the quality and transparency of information disclosed in annual reports, the Company formulated
System of Clarifying Responsibility for Major Mistakes in Information Disclosure of Annual Report and clarified the responsibilities
for major mistakes in information disclosure of annual reports, according to the relevant laws and regulations. In the reporting period,
the Company strictly implemented the above system and did not conduct correction of major mistakes, supplementation for
significant omitted information and revise of performance bulletin.




                                                                                                                                         56
                                                                     2012 Annual Report of Anhui Gujing Distillery Company Limited




                                                      Section X. Financial report


I. Audit Report

Type of audit opinion                                               Standard unqualified audit opinion

Date of signing audit report                                        21 April 2013

                                                                    RSM China Certified Public Accountants (Special General
Name of audit institution
                                                                    Partnership)

Reference number of audit report                                    RSM China SZ [2013] No. 5933

                                                       Main body of audit report
To the Shareholders of Anhui Gujing Distillery Co., Ltd.:
We have audited the attached financial statements of Anhui Gujing Distillery Co., Ltd. (“the Company”), which comprise the
consolidated and the Company’s balance sheet as at December 31, 2011, the consolidated and the Company’s income statement, the
consolidated and the Company’s cash flow statement, the consolidated and the Company’s statement of changes in owners’ equity for
the year then ended, and the notes to financial statements.
I. Responsibilities of the management concerning the financial statements
The management of the Company is responsible for the preparation of these financial statements and fair presentation. These
responsibilities include: (1) preparing financial statements according to the Accounting Standards for Business Enterprises and make
them a fair presentation; and (2) designing, implementing and maintaining internal control relevant to the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
II. Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in
accordance with the Chinese Certified Public Accountants' Auditing Standards. These standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amount and disclosures in the financial statements. The
procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
entity’s preparation of the consolidation financial statements and fair presentation in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.
An audit also includes evaluating the appropriateness of accounting policies used and reasonableness of accounting estimates made
by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
III. Opinion
In our opinion, the financial statements have been prepared in accordance with the requirements of the Enterprises Accounting
Standards promulgated by the People’s Republic of China in all material respects, and present fairly the consolidated operating
results of Anhui Gujing Distillery Co., Ltd. and its subsidiaries as at December 31, 2012, and consolidated operating results and cash
flow in 2012 as well as the operating results at 31 Dec. 2012 and the operating results & cash flow in 2012 of Anhui Gujing Distillery
Co., Ltd..


II. Financial Statement
Unit of statements in the notes appended to financial report is RMB Yuan


                                                                                                                                       57
                                                                2012 Annual Report of Anhui Gujing Distillery Company Limited


1. Consolidated balance sheet
Prepared by Anhui Gujing Distillery Company Limited
                                                                                                             Unit: RMB Yuan

                  Item                                Closing balance                          Opening balance

Current Assets:

  Monetary funds                                                  2,609,650,352.09                         2,082,032,491.33

  Settlement reserves

  Intra-group lendings

  Transactional financial assets

  Notes receivable                                                156,449,495.65                           490,543,018.49

  Accounts receivable                                               7,887,007.25                            37,685,831.22

  Accounts paid in advance                                         85,305,973.47                           233,262,710.73

  Premiums receivable

  Reinsurance premiums receivable

  Receivable      reinsurance      contract
reserves

  Interest receivable                                               7,253,858.34                             4,451,540.35

   Dividend receivable

  Other accounts receivable                                        21,559,146.98                             7,882,417.86

  Financial assets purchased under
agreements to resell

  Inventories                                                     782,399,498.85                           578,157,069.43

  Non-current assets due within 1 year

  Other current assets

Total current assets                                           3,670,505,332.63                          3,434,015,079.41

Non-current assets:

  Loans by mandate and advances
granted

  Available-for-sale financial assets                              27,991,376.84

  Held-to-maturity investments

  Long-term accounts receivable

  Long-term equity investment

  Investing property                                               31,451,269.49                            32,558,410.26

  Fixed assets                                                    783,740,205.15                           362,778,190.84

  Construction in progress                                        423,672,281.54                           133,017,100.51



                                                                                                                          58
                                               2012 Annual Report of Anhui Gujing Distillery Company Limited


  Engineering materials

  Disposal of fixed assets

  Production biological assets

  Oil-gas assets

  Intangible assets                              320,716,225.67                           248,594,232.04

  R&D expense

  Goodwill

  Long-term deferred expenses                     30,959,542.67                             9,678,465.54

  Deferred income tax assets                      19,091,237.05                            21,178,071.70

  Other non-current assets

Total of non-current assets                    1,637,622,138.41                           807,804,470.89

Total assets                                   5,308,127,471.04                         4,241,819,550.30

Current liabilities:

  Short-term borrowings

  Borrowings from Central Bank

  Customer bank deposits and due to
banks and other financial institutions

  Intra-group borrowings

  Transactional financial liabilities

  Notes payable                                   224,460,000.00

  Accounts payable                                461,112,575.26                            219,823,856.45

  Accounts received in advance                    114,610,235.81                            135,597,187.88

  Financial assets sold for repurchase

  Handling charges and commissions
payable

  Employee’s compensation payable                178,726,582.68                            192,762,077.27

  Tax payable                                     645,410,021.57                            671,079,511.43

  Interest payable

  Dividend payable

  Other accounts payable                          297,098,777.98                            248,890,018.78

  Reinsurance premiums payable

  Insurance contract reserves

  Payables     for     acting   trading   of
securities

  Payables for acting underwriting of


                                                                                                         59
                                                               2012 Annual Report of Anhui Gujing Distillery Company Limited


securities

  Non-current liabilities due within 1
year

  Other current liabilities                                          2,120,250.11                                 2,075,708.75

Total current liabilities                                        1,923,538,443.41                             1,470,228,360.56

Non-current liabilities:

  Long-term borrowings

  Bonds payable

  Long-term payables

  Specific payables

  Estimated liabilities

  Deferred income tax liabilities                                      697,845.96

  Other non-current liabilities                                      8,403,073.03                               10,475,905.29

Total non-current liabilities                                        9,100,918.99                               10,475,905.29

Total liabilities                                                1,932,639,362.40                             1,480,704,265.85

Owners’      equity    (or   shareholders’
equity)

  Paid-up capital (or share capital)                               503,600,000.00                              251,800,000.00

  Capital reserves                                               1,297,032,031.07                             1,546,738,493.19

  Less: Treasury stock

  Specific reserves

  Surplus reserves                                                 218,736,964.73                              147,070,297.60

  Provisions for general risks

  Retained profits                                               1,356,119,112.84                              815,506,493.66

  Foreign exchange difference

Total equity attributable to owners of
                                                                 3,375,488,108.64                             2,761,115,284.45
the Company

Minority interests

Total owners’ (or shareholders’) equity                        3,375,488,108.64                             2,761,115,284.45

Total     liabilities   and   owners’   (or                     5,308,127,471.04                             4,241,819,550.30
shareholders’) equity


Legal representative: Yu Lin                          Person-in-charge of the accounting work: Ye Changqing


Chief of the accounting division: Xia Xueyun
2. Balance sheet of the Company
Prepared by Anhui Gujing Distillery Company Limited


                                                                                                                            60
                                                   2012 Annual Report of Anhui Gujing Distillery Company Limited


                                                                                                       Unit: Yuan

                   Item                  Closing balance                          Opening balance

Current Assets:

  Monetary funds                                     2,390,346,607.43                         1,885,937,555.53

  Transactional financial assets

  Notes receivable                                    139,414,615.95                            481,125,332.25

  Accounts receivable                                      1,293,202.89                             1,857,487.49

  Accounts paid in advance                                 1,151,359.52                         148,873,681.27

  Interest receivable                                      6,129,902.78                             4,395,740.35

   Dividend receivable

  Other accounts receivable                           161,967,822.69                            263,635,938.96

  Inventories                                         748,777,364.57                            545,878,714.66

  Non-current assets due within 1 year

  Other current assets

Total current assets                                 3,449,080,875.83                         3,331,704,450.51

Non-current assets:

  Available-for-sale financial assets                 27,991,376.84

  Held-to-maturity investments

  Long-term accounts receivable                        4,172,166.85

  Long-term equity investment                        258,089,408.32                           247,991,408.32

  Investing property                                  29,814,360.87                            32,558,410.26

  Fixed assets                                       562,993,821.32                           152,140,192.21

  Construction in progress                           423,672,281.54                           132,982,180.51

  Engineering materials

  Disposal of fixed assets

  Production biological assets

  Oil-gas assets

  Intangible assets                                  200,084,457.08                           124,709,474.17

  R&D expense

  Goodwill

  Long-term deferred expenses                         27,338,996.93                             4,536,265.22

  Deferred income tax assets                          18,496,292.51                            20,167,034.56

  Other non-current assets

Total of non-current assets                       1,552,653,162.26                            715,084,965.25



                                                                                                              61
                                               2012 Annual Report of Anhui Gujing Distillery Company Limited


Total assets                                   5,001,734,038.09                         4,046,789,415.76

Current liabilities:

  Short-term borrowings

  Transactional financial liabilities

  Notes payable                                   80,000,000.00

  Accounts payable                               446,890,857.97                           225,568,150.93

  Accounts received in advance                   714,794,965.38                           590,174,171.08

  Employee’s compensation payable                79,627,703.42                           102,876,125.19

  Tax payable                                    314,625,057.22                           446,265,127.40

  Interest payable

  Dividend payable

  Other accounts payable                         168,504,557.80                            89,012,417.91

  Non-current liabilities due within 1
year

  Other current liabilities                        1,998,845.04                             1,798,000.00

Total current liabilities                      1,806,441,986.83                         1,455,693,992.51

Non-current liabilities:

  Long-term borrowings

  Bonds payable

  Long-term payables

  Specific payables

  Estimated liabilities

  Deferred income tax liabilities                    697,845.96

  Other non-current liabilities                    8,403,073.03                            10,354,500.20

Total non-current liabilities                      9,100,918.99                            10,354,500.20

Total liabilities                              1,815,542,905.82                         1,466,048,492.71

Owners’     equity    (or    shareholders’
equity)

  Paid-up capital (or share capital)             503,600,000.00                           251,800,000.00

  Capital reserves                             1,249,255,645.23                         1,498,962,107.35

  Less: Treasury stock

  Specific reserves

  Surplus reserves                               213,634,704.46                           141,968,037.33

  Provision for general risks

  Retained profits                             1,219,700,782.58                           688,010,778.37


                                                                                                         62
                                                               2012 Annual Report of Anhui Gujing Distillery Company Limited


  Foreign exchange difference

Total owners’ (or shareholders’) equity                     3,186,191,132.27                            2,580,740,923.05

Total   liabilities    and     owners’   (or
                                                              5,001,734,038.09                            4,046,789,415.76
shareholders’) equity


Legal representative: Yu Lin                          Person-in-charge of the accounting work: Ye Changqing


Chief of the accounting division: Xia Xueyun
3. Consolidated income statement
Prepared by Anhui Gujing Distillery Company Limited
                                                                                                                     Unit: Yuan

                      Item                      Amount of this period                        Amount of last period

I. Total operating revenues                                   4,197,057,315.26                            3,307,979,236.00

Including: Sales income                                       4,197,057,315.26                            3,307,979,236.00

        Interest income

        Premium income

        Handling             charge       and
commission income

II. Total operating cost                                      3,243,155,636.29                            2,473,852,861.75

Including: Cost of sales                                      1,220,831,141.50                                861,012,764.70

        Interest expenses

        Handling             charge       and
commission expenses

        Surrenders

        Net claims paid

        Net amount withdrawn for the
insurance contract reserve

        Expenditure on policy dividends

        Reinsurance premium

        Taxes and associate charges                              638,945,267.01                               522,390,054.93

        Selling and distribution expenses                     1,075,977,234.87                                798,067,079.39

        Administrative expenses                                  393,028,645.85                               345,615,957.58

        Financial expenses                                       -88,430,981.17                               -51,871,404.15

        Asset impairment loss                                      2,804,328.23                               -1,361,590.70

Add: Gain/(loss) from change in fair
value (“-” means loss)

     Gain/(loss) from investment (“-”                                                                          1,656,581.66


                                                                                                                            63
                                                                  2012 Annual Report of Anhui Gujing Distillery Company Limited


means loss)

Including: share of profits in associates
and joint ventures

Foreign exchange gains (“-” means
loss)

III. Business profit (“-” means loss)                            953,901,678.97                              835,782,955.91

        Add: non-operating income                                   21,972,077.88                               16,911,302.91

        Less: non-operating expense                                  3,446,696.09                                 2,619,353.87

Including: loss from non-current asset
                                                                        511,271.68                                  396,678.97
disposal

IV. Total profit (“-” means loss)                                972,427,060.76                              850,074,904.95

        Less: Income tax expense                                   246,837,774.45                              283,684,618.59

V. Net profit (“-” means loss)                                   725,589,286.31                              566,390,286.36

        Including: Net profit achieved by
combined         parties        before    the
combinations

        Attributable to owners of the
                                                                     725,589,286.31                              566,390,286.36
Company

        Minority shareholders’ income

VI. Earnings per share                                       --                                          --

        (I) Basic earnings per share                                           1.44                                         1.17

        (II) Diluted earnings per share                                        1.44                                         1.17

Ⅶ. Other comprehensive incomes                                        2,093,537.88

Ⅷ. Total comprehensive incomes                                      727,682,824.19                              566,390,286.36

        Attributable to owners of the
                                                                     727,682,824.19                              566,390,286.36
Company

        Attributable       to        minority
shareholders


Where business mergers under the same control occurred in this report period, the net profit achieved by the merged parties before
the business mergers was RMB 0.


Legal representative: Yu Lin                           Person-in-charge of the accounting work: Ye Changqing


Chief of the accounting division: Xia Xueyun
4. Income statement of the Company
Prepared by Anhui Gujing Distillery Company Limited
                                                                                                                       Unit: Yuan



                                                                                                                               64
                                                               2012 Annual Report of Anhui Gujing Distillery Company Limited


                    Item                        Amount of this period                      Amount of last period

I. Total sales                                                 2,535,315,597.69                           1,957,164,481.24

Less: cost of sales                                            1,207,277,936.81                            827,862,350.62

Business taxes and surcharges                                    604,155,623.28                            495,328,024.61

Distribution expenses                                            364,959,419.40                            190,724,471.78

Administrative expenses                                          240,774,307.44                            222,853,051.65

Financial costs                                                  -71,949,250.84                            -33,627,927.71

Impairment loss                                                    3,629,434.58                             -1,535,341.86

Add: gain/(loss) from change in fair
value (“-” means loss)

Gain/(loss) from investment (“-” means
                                                                 570,794,532.17                            371,010,624.52
loss)

Including: income form investment on
associates and joint ventures

II. Business profit (“-” means loss)                           757,262,659.19                            626,570,476.67

Add: non-business income                                          15,984,988.19                               7,458,576.15

Less: non-business expense                                         1,770,071.21                               1,848,819.85

Including: loss from non-current asset
                                                                                                                    8,044.53
disposal

III. Total profit (“-” means loss)                             771,477,576.17                            632,180,232.97

Less: income tax expense                                          54,810,904.83                            134,309,163.96

IV. Net profit    (“-” means loss)                             716,666,671.34                            497,871,069.01

V. Earnings per share                                     --                                         --

(I) Basic earnings per share                                                1.42                                         0.99

(II) Diluted earnings per share                                             1.42                                         0.99

VI. Other comprehensive income                                     2,093,537.88

VII. Total comprehensive income                                  718,760,209.22                            497,871,069.01


Legal representative: Yu Lin                          Person-in-charge of the accounting work: Ye Changqing        Chief of the
accounting division: Xia Xueyun


5. Consolidated cash flow statement


Prepared by Anhui Gujing Distillery Company Limited
                                                                                                                    Unit: Yuan

                    Item                        Amount of this period                      Amount of last period

I. Cash flows from operating activities:



                                                                                                                            65
                                                   2012 Annual Report of Anhui Gujing Distillery Company Limited


  Cash       received        from    sale     of
                                                   5,256,820,153.39                         3,467,179,264.61
commodities and rendering of service

  Net      increase     of    deposits      from
customers and dues from banks

  Net increase of loans from the central
bank

  Net increase of funds borrowed from
other financial institutions

  Cash received from premium of
original insurance contracts

  Net cash received from reinsurance
business

  Net increase of deposits of policy
holders and investment fund

  Net increase of disposal of tradable
financial assets

  Cash received from interest, handling
charges and commissions

  Net        increase        of     intra-group
borrowings

  Net increase of funds in repurchase
business

  Tax refunds received                                   642,100.00                                976,614.88

  Other cash received relating to
                                                     152,260,005.14                           213,872,969.49
operating activities

Subtotal of cash inflows from operating
                                                   5,409,722,258.53                         3,682,028,848.98
activities

  Cash paid for goods and services                 1,117,167,748.88                         1,108,607,023.23

  Net increase of customer lendings
and advances

  Net increase of funds deposited in the
central bank and amount due from
banks

  Cash for paying claims of the original
insurance contracts

  Cash for paying interest, handling
charges and commissions

  Cash for paying policy dividends



                                                                                                             66
                                                     2012 Annual Report of Anhui Gujing Distillery Company Limited


   Cash paid to and for employees                      722,698,221.19                           516,181,360.59

   Various taxes paid                                1,556,750,391.03                           981,128,678.39

   Other cash payment relating to
                                                       726,238,532.97                           450,210,319.42
operating activities

Subtotal        of     cash    outflows       from
                                                     4,122,854,894.07                         3,056,127,381.63
operating activities

Net cash flows from operating activities             1,286,867,364.46                           625,901,467.35

II. Cash flows from investing activities:

   Cash received from withdrawal of
investments

   Cash       received        from   return    on
investments

   Net cash received from disposal of
fixed assets, intangible assets and other                    68,940.95                                987,318.61
long-term assets

   Net cash received from disposal of
subsidiaries or other business units

        Other cash received relating to
                                                            240,000.00                              8,100,000.00
investing activities

          Subtotal of cash inflows from
                                                            308,940.95                              9,087,318.61
investing activities

   Cash paid to acquire fixed assets,
intangible assets and other long-term                   621,048,614.85                            344,656,892.95
assets

   Cash paid for investment                              25,199,993.00

   Net increase of pledged loans

   Net cash paid to acquire subsidiaries
and other business units

   Other cash payments relating to
investing activities

Subtotal        of     cash    outflows       from
                                                        646,248,607.85                            344,656,892.95
investing activities

Net cash flows from investing activities               -645,939,666.90                           -335,569,574.34

III.     Cash        Flows    from     Financing
Activities:

       Cash      received       from       capital
                                                                                                1,231,500,000.00
contributions

       Including:      Cash     received      from


                                                                                                               67
                                                               2012 Annual Report of Anhui Gujing Distillery Company Limited


minority shareholder investments by
subsidiaries

    Cash received from borrowings

    Cash received from issuance of
bonds

    Other cash received relating to
financing activities

Subtotal of cash inflows from financing
                                                                                                              1,231,500,000.00
activities

    Repayment of borrowings

    Cash paid for interest expenses and
                                                                   113,310,000.00                               79,818,322.54
distribution of dividends or profit

     Including: dividends or profit paid
by subsidiaries to minority shareholders

     Other cash payments relating to
                                                                 200,000,000.00                                 3,211,800.00
financing activities

Sub-total      of   cash     outflows     from
                                                                 313,310,000.00                                83,030,122.54
financing activities

Net cash flows from financing activities                        -313,310,000.00                           1,148,469,877.46

IV. Effect of foreign exchange rate
                                                                          162.90                                      -683.56
changes on cash and cash equivalents

V. Net increase in cash and cash
                                                                 327,617,860.76                           1,438,801,086.91
equivalents

     Add: Opening balance of cash and
                                                              2,082,032,491.33                                643,231,404.42
cash equivalents

VI. Closing balance of cash and cash
                                                              2,409,650,352.09                            2,082,032,491.33
equivalents


Legal representative: Yu Lin                          Person-in-charge of the accounting work: Ye Changqing


Chief of the accounting division: Xia Xueyun
6. Cash flow statement of the Company
Prepared by Anhui Gujing Distillery Company Limited
                                                                                                                     Unit: Yuan

                     Item                        Amount of this period                       Amount of last period

I. Cash flows from operating activities:

  Cash       received       from   sale     of
                                                              3,423,191,472.27                            2,185,615,817.88
commodities and rendering of service




                                                                                                                            68
                                                 2012 Annual Report of Anhui Gujing Distillery Company Limited


  Tax refunds received

  Other cash received relating to
                                                   237,910,854.26                            67,797,805.76
operating activities

Subtotal of cash inflows from operating
                                                 3,661,102,326.53                         2,253,413,623.64
activities

  Cash paid for goods and services               1,374,069,572.75                         1,022,068,472.17

  Cash paid to and for employees                   336,171,582.81                           235,666,465.31

  Various taxes paid                             1,111,980,958.34                           692,592,618.07

  Other cash payment relating to
                                                   173,079,396.45                            78,996,659.00
operating activities

Subtotal     of    cash    outflows       from
                                                 2,995,301,510.35                         2,029,324,214.55
operating activities

Net cash flows from operating activities           665,800,816.18                           224,089,409.09

II. Cash flows from investing activities:

  Cash received from retraction of
                                                     9,900,000.00                            10,000,000.00
investments

  Cash       received     from   return    on
                                                   570,794,532.17                           363,057,695.16
investments

  Net cash received from disposal of
fixed assets, intangible assets and other               68,940.95                                276,019.86
long-term assets

  Net cash received from disposal of
subsidiaries or other business units

     Other cash received relating to
                                                     1,240,000.00                             8,100,000.00
investing activities

         Subtotal of cash inflows from
                                                   582,003,473.12                           381,433,715.02
investing activities

  Cash paid to acquire fixed assets,
intangible assets and other long-term              584,887,244.40                           318,792,844.60
assets

  Cash paid for investment                          45,197,993.00                            30,000,000.00

  Net cash paid to acquire subsidiaries
and other business units

  Other cash payments relating to
investing activities

Subtotal     of    cash    outflows       from
                                                   630,085,237.40                           348,792,844.60
investing activities

Net cash flows from investing activities           -48,081,764.28                            32,640,870.42


                                                                                                           69
                                                                      2012 Annual Report of Anhui Gujing Distillery Company Limited


III.     Cash    Flows      from    Financing
Activities:

       Cash     received     from       capital
                                                                                                                 1,231,500,000.00
contributions

       Cash received from borrowings

       Cash received from issuance of
bonds

       Other cash received relating to
financing activities

Subtotal of cash inflows from financing
                                                                                                                 1,231,500,000.00
activities

       Repayment of borrowings

       Cash paid for interest expenses and
                                                                        113,310,000.00                             79,818,322.54
distribution of dividends or profit

        Other cash payments relating to
                                                                        100,000,000.00                                3,211,800.00
financing activities

Sub-total       of   cash    outflows    from
                                                                        213,310,000.00                             83,030,122.54
financing activities

Net cash flows from financing activities                               -213,310,000.00                         1,148,469,877.46

IV. Effect of foreign exchange rate
changes on cash and cash equivalents

V. Net increase in cash and cash
                                                                        404,409,051.90                         1,405,200,156.97
equivalents

        Add: Opening balance of cash and
                                                                     1,885,937,555.53                            480,737,398.56
cash equivalents

VI. Closing balance of cash and cash
                                                                     2,290,346,607.43                          1,885,937,555.53
equivalents


Legal representative: Yu Lin                                  Person-in-charge of the accounting work: Ye Changqing      Chief of the
accounting division: Xia Xueyun


7. Consolidated statement of changes in owners’ equity


Prepared by Anhui Gujing Distillery Company Limited
Amount of this period
                                                                                                                          Unit: Yuan

                                                                          Amount of this period

                 Item                               Equity attributable to owners of the Company             Minority      Total
                                        Paid-up Capital   Less:   Specific Surplus General Retaine Others    interests    owners’


                                                                                                                                     70
                                                                           2012 Annual Report of Anhui Gujing Distillery Company Limited


                                           capital    reserve treasury reserve reserve    risk     d profit                   equity
                                             (or                 stock                   reserve
                                            share
                                           capital)

I. Balance at the end of the 251,800 1,546,73                                  147,070             815,506,                  2,761,115,
previous year                              ,000.00 8,493.19                    ,297.60              493.66                      284.45

   Add: change of accounting
policy

   Correction         of     errors   in
previous periods

   Other

II. Balance at the beginning of 251,800 1,546,73                               147,070             815,506,                  2,761,115,
the year                                   ,000.00 8,493.19                    ,297.60              493.66                      284.45

III.      Increase/        decrease   of
                                           251,800 -249,70                     71,666,             540,612,                 614,372,82
amount in the year (“-” means
                                           ,000.00 6,462.12                     667.13              619.18                        4.19
decrease)

                                                                                                   725,589,                 725,589,28
   (I) Net profit
                                                                                                    286.31                        6.31

   (II)     Other     comprehensive                   2,093,53                                                              2,093,537.
incomes                                                   7.88                                                                         88

                                                      2,093,53                                     725,589,                 727,682,82
   Subtotal of (I) and (II)
                                                          7.88                                      286.31                        4.19

   (III) Capital paid in and
reduced by owners

       1. Capital paid in by
owners

       2. Amounts of share-based
payments            recognized        in
owners’ equity

       3. Others

                                                                               71,666,             -184,97                  -113,310,0
   (IV) Profit distribution
                                                                                667.13             6,667.13                      00.00

       1.     Appropriations          to                                       71,666,             -71,666,
surplus reserves                                                                667.13              667.13

       2.     Appropriations          to
general risk provisions

       3.     Appropriations          to                                                            -113,31                 -113,310,0
owners (or shareholders)                                                                           0,000.00                      00.00

       4. Other


                                                                                                                                        71
                                                                            2012 Annual Report of Anhui Gujing Distillery Company Limited


  (V) Internal carry-forward of 251,800 -251,80
owners’ equity                         ,000.00 0,000.00

     1. New increase of capital
                                        251,800 -251,80
(or share capital) from capital
                                        ,000.00 0,000.00
public reserves

     2. New increase of capital
(or share capital) from surplus
reserves

     3. Surplus reserves for
making up losses

     4. Other

(Ⅵ) Specific reserve

     1.    Withdrawn       for    the
period

     2. Used in the period

(Ⅶ) Other

                                        503,600 1,297,03                         218,736             1,356,11                        3,375,488,
IV. Closing balance
                                        ,000.00 2,031.07                         ,964.73             9,112.84                           108.64

Amount of last period
                                                                                                                                      Unit: Yuan

                                                                                Amount of last period

                                                       Equity attributable to owners of the Company

                                        Paid-up
                                                                                                                                       Total
                Item                    capital                                                                          Minority
                                                              Less:                        General
                                                   Capital              Specific Surplus             Retaine                         owners’
                                          (or                treasury                       risk                Others   interests
                                                   reserve              reserve reserve              d profit                         equity
                                         share                stock                        reserve
                                        capital)

I. Balance at the end of the 235,000 336,039,                                    97,283,             381,153,                        1,049,475,
previous year                           ,000.00     042.92                        190.70              314.20                            547.82

  Add:                 retrospective
adjustments due to business
combinations under the same
control

  Add: change of accounting
policy

  Correction      of     errors    in
previous periods

  Other



                                                                                                                                                72
                                                          2012 Annual Report of Anhui Gujing Distillery Company Limited


II. Balance at the beginning of 235,000 336,039,              97,283,          381,153,                    1,049,475,
the year                               ,000.00   042.92        190.70           314.20                         547.82

III.      Increase/    decrease   of
                                       16,800, 1,210,69       49,787,          434,353,                     1,711,639,
amount in the year (“-” means
                                       000.00 9,450.27         106.90           179.46                         736.63
decrease)

                                                                               566,390,                    566,390,28
   (I) Net profit
                                                                                286.36                           6.36

   (II)     Other     comprehensive
incomes

                                                                               566,390,                    566,390,28
   Subtotal of (I) and (II)
                                                                                286.36                           6.36

   (III) Capital paid in and 16,800, 1,210,69                                                              1,227,499,
reduced by owners                      000.00 9,450.27                                                         450.27

       1. Capital paid in by 16,800, 1,210,69                                                              1,227,499,
owners                                 000.00 9,450.27                                                         450.27

       2. Amounts of share-based
payments            recognized    in
owners’ equity

       3. Others

                                                              49,787,           -132,03                    -82,250,00
   (IV) Profit distribution
                                                               106.90          7,106.90                          0.00

       1.     Appropriations      to                          49,787,          -49,787,
surplus reserves                                               106.90           106.90

       2.     Appropriations      to
general risk provisions

       3.     Appropriations      to                                           -82,250,                    -82,250,00
owners (or shareholders)                                                        000.00                           0.00

       4. Other

   (V) Internal carry-forward of
owners’ equity

       1. New increase of capital
(or share capital) from capital
public reserves

       2. New increase of capital
(or share capital) from surplus
reserves

       3. Surplus reserves for
making up losses

       4. Other


                                                                                                                    73
                                                                          2012 Annual Report of Anhui Gujing Distillery Company Limited


(Ⅵ) Specific reserve

     1.    Withdrawn     for     the
period

     2. Used in the period

(Ⅶ) Other

                                       251,800 1,546,73                        147,070          815,506,                        2,761,115,
IV. Closing balance
                                        ,000.00 8,493.19                       ,297.60            493.66                           284.45


Legal representative: Yu Lin                                     Person-in-charge of the accounting work: Ye Changqing


Chief of the accounting division: Xia Xueyun
8. Statement of changes in owners’ equity of the Company
Prepared by Anhui Gujing Distillery Company Limited
Amount of this period
                                                                                                                                 Unit: Yuan

                                                                               Amount of this period

                                          Paid-up
                                                                     Less:                              General                   Total
                Item                    capital (or    Capital                  Specific    Surplus               Retained
                                                                    treasury                               risk                 owners’
                                           share       reserve                  reserve     reserve                 profit
                                                                     stock                              reserve                  equity
                                          capital)

I. Balance at the end of the 251,800,00 1,498,962,                                         141,968,03             688,010,77 2,580,740,
previous year                                  0.00        107.35                                7.33                    8.37      923.05

  Add: change of accounting
policy

  Correction       of   errors     in
previous periods

  Other

II. Balance at the beginning of 251,800,00 1,498,962,                                      141,968,03             688,010,77 2,580,740,
the year                                       0.00        107.35                                7.33                    8.37      923.05

III. Increase/ decrease of amount 251,800,00 -249,706,4                                    71,666,667             531,690,00 605,450,20
in the year (“-” means decrease)             0.00         62.12                                 .13                    4.21        9.22

                                                                                                                  716,666,67 716,666,67
  (I) Net profit
                                                                                                                         1.34        1.34

  (II)     Other    comprehensive                     2,093,537.                                                                2,093,537.
incomes                                                       88                                                                          88

                                                      2,093,537.                                                  716,666,67 718,760,20
  Subtotal of (I) and (II)
                                                              88                                                         1.34        9.22

  (III) Capital paid in and
reduced by owners


                                                                                                                                           74
                                                                       2012 Annual Report of Anhui Gujing Distillery Company Limited


     1. Capital paid in by owners

     2. Amounts of share-based
payments recognized in owners’
equity

     3. Others

                                                                                        71,666,667             -184,976,6 -113,310,0
  (IV) Profit distribution
                                                                                               .13                 67.13        00.00

     1. Appropriations to surplus                                                       71,666,667             -71,666,66
reserves                                                                                       .13                   7.13

     2. Appropriations to general
risk provisions

     3. Appropriations to owners                                                                               -113,310,0 -113,310,0
(or shareholders)                                                                                                  00.00        00.00

     4. Other

  (V) Internal carry-forward of 251,800,00 -251,800,0
owners’ equity                                0.00       00.00

     1. New increase of capital
                                         251,800,00 -251,800,0
(or share capital) from capital
                                               0.00       00.00
public reserves

     2. New increase of capital
(or share capital) from surplus
reserves

     3.    Surplus      reserves   for
making up losses

     4. Other

(Ⅵ) Specific reserve

     1. Withdrawn for the period

     2. Used in the period

(Ⅶ) Other

                                         503,600,00 1,249,255,                          213,634,70             1,219,700, 3,186,191,
IV. Closing balance
                                               0.00      645.23                               4.46                782.58      132.27

Amount of last period
                                                                                                                            Unit: Yuan

                                                                             Amount of last period

                                          Paid-up
                                                                   Less:                             General                 Total
                 Item                    capital (or   Capital               Specific    Surplus               Retained
                                                                  treasury                            risk                  owners’
                                           share       reserve                reserve    reserve                 profit
                                                                   stock                             reserve                equity
                                          capital)


                                                                                                                                       75
                                                                    2012 Annual Report of Anhui Gujing Distillery Company Limited


I. Balance at the end of the 235,000,00 288,262,65                                 92,180,930             322,176,81 937,620,40
previous year                                     0.00       7.08                          .43                  6.26        3.77

  Add: change of accounting
policy

  Correction         of      errors    in
previous periods

  Other

II. Balance at the beginning of 235,000,00 288,262,65                              92,180,930             322,176,81 937,620,40
the year                                          0.00       7.08                          .43                  6.26        3.77

III. Increase/ decrease of amount 16,800,000 1,210,699,                            49,787,106             365,833,96 1,643,120,
in the year (“-” means decrease)                 .00    450.27                           .90                  2.11      519.28

                                                                                                          497,871,06 497,871,06
  (I) Net profit
                                                                                                                9.01        9.01

  (II)     Other      comprehensive
incomes

                                                                                                          497,871,06 497,871,06
  Subtotal of (I) and (II)
                                                                                                                9.01        9.01

  (III)    Capital        paid   in   and 16,800,000 1,210,699,                                                        1,227,499,
reduced by owners                                  .00    450.27                                                          450.27

                                            16,800,000 1,210,699,                                                      1,227,499,
     1. Capital paid in by owners
                                                   .00    450.27                                                          450.27

     2. Amounts of share-based
payments recognized in owners’
equity

     3. Others

                                                                                   49,787,106             -132,037,1 -82,250,00
  (IV) Profit distribution
                                                                                           .90                 06.90        0.00

     1. Appropriations to surplus                                                  49,787,106             -49,787,10
reserves                                                                                   .90                  6.90

     2. Appropriations to general
risk provisions

     3. Appropriations to owners                                                                          -82,250,00 -82,250,00
(or shareholders)                                                                                               0.00        0.00

     4. Other

  (V) Internal carry-forward of
owners’ equity

     1. New increase of capital
(or share capital) from capital



                                                                                                                               76
                                                                          2012 Annual Report of Anhui Gujing Distillery Company Limited


  public reserves

       2. New increase of capital
  (or share capital) from surplus
  reserves

       3.     Surplus   reserves   for
  making up losses

       4. Other

  (Ⅵ) Specific reserve

       1. Withdrawn for the period

       2. Used in the period

  (Ⅶ) Other

                                         251,800,00 1,498,962,                              141,968,03                 688,010,77 2,580,740,
  IV. Closing balance
                                               0.00       107.35                                    7.33                      8.37      923.05


 Legal representative: Yu Lin                                  Person-in-charge of the accounting work: Ye Changqing


   Chief of the accounting division: Xia Xueyun
                                                        Anhui Gujing Distillery Co., Ltd.
                                                       Notes to the Financial Statements
                                                      For the Year Ended 31 December 2012
                                     (All amounts are expressed, unless otherwise stated, in Renminbi (CNY).)



Note 1: Company Profile

1.1 History

Anhui Gujing Distillery Co., Ltd. (hereafter “the Company” or "Company") was the company limited by shares approved by Administration Bureau of

State-owned Property of Anhui province following the approval WanGuoZiGongZi (1996) NO. 053 (皖国资工字(1996)第053号文), Anhui Gujing

Group Co., Ltd. as the sole sponsors, established net assets in the assessment of main production operating assets of its core company Anhui

Bozhou Gujing distillery 377.1677 million transferred into the 155,000,000 state-owned shares, and the registered location was the Bozhou City of

People's Republic of China. The company was registered in the The People's Republic of China on 5 March 1996 and was approved by People’s

Government of Anhui province following the approval WanZhengMin (1996) NO.42 (皖政秘(1996)42 号文). The company convoked the founding

meeting on 28 May 1996, and registrated on 30 May 1996 by Administration for Industry and Commerce of Anhui province. The registration number

of Business License for Enterprise as a Legal Person is: 14897271-1.

The Company has been issued 60,000,000 domestic listed foreign shares (hereafter “B” shares) in June 1996 and 20,000,000 domestic listed

CNY ordinary shares (hereafter “A” shares) in September 1996, the par value of ordinary shares is CNY1.00 per share. Both A share and B share

are listed in Shenzhen Stock exchange.

                                                                                                                                               77
                                                                               2012 Annual Report of Anhui Gujing Distillery Company Limited



The headquarters of the company is located in Gujing town, Bozhou city, Anhui province. The company and the subsidiaries (collectively called

“Group”) is mainly engaged in liquor production and sales, it belongs to the food manufacturing industry.

The original registered capital was CNY 215 million, the total amount of shares were 215 million, including state-owned shares 155 million and

domestic listed foreign shares 60 million, the par value is CNY 1 per share.

On 29 May 2006, the shareholder meeting for the Company’s shareholdings reform of A-share market have been discussed and approved the

proposal of the shareholdings reform, and that has been implemented in June 2006. After the Company’s shareholdings reform implemented, all

shares of the Company became floating shares, which including 147,000,000 shares with restrict condition on disposal, represent 62.55% of total

share capital, and 88,000,000 shares without restrict condition on disposal, represent 37.45% of total share capital.

On 27 June 2007, the Company issued the , the 11,750,000

restricted outstanding shares with restrict condition on disposal became non-restricted in stock market, and the conversion date is on 29 June

2007. Hence, outstanding shares with restrict condition on disposal are 135,250,000 shares, representing 57.55% of total share capital, the share

without restrict condition on disposal are 99,750,000 shares, representing 42.45% of total share capital.

On 17 July 2008, the Company issued the , the 11,750,000

restricted outstanding shares with restrict condition on disposal became non-restricted in stock market, and the conversion date is on 18 July

2008. Hence, outstanding shares with restrict condition on disposal are 123,500,000 shares, representing 52.55% of total share capital, the

share without restrict condition on disposal are 111,500,000 shares, representing 47.45% of total share capital.

On 24 July 2009, the Company issued the ,   the

123,500,000      restricted outstanding    shares    with    restrict   condition   on disposal became non-restricted in stock market, and the

conversion date is on 29 July 2009. Hence, all shares of the Company were became outstanding shares without restrict condition on disposal.

According to the approval by China Securities Regulatory Commission (the authorization file No. zhengjianxuke[2011]943), on 15th July 2011, the

Company private issued 16,800,000 shares of ordinary share (A shares) to specific investors, the par value in CNY 1 per share, and the offering

price is CNY 75 per share, the funds raised amounting to CNY 1,260 million, deduct those sundry issuing charges amounting to CNY 32,500,549.73,

the actual funds raised net amounting to CNY 1,227,499,450.27. The above funds have been reviewed by Reanda Certified Public Accountants Co.,

Ltd., and issued the Capital Verification Report (REANDA YAN ZI[2011]No.1065). After private issued, the share capital was increased to CNY

251.8 million.

According to the resolution of 2011 annual general meeting of stockholders, every 10 shares transferred to increase 10 shares by capital reserves

used the base of the 251.8 million shares on 31 December, 2011, the total amount of increase by transferring were 251.8 million shares and has

been implemented in 2012. After increase by transferring the registered capital was increased to CNY 503.6 million.

Up to 31 December, 2012, the accumulated total amount of issued capital was 503.6 million shares, see the note 7.24.



                                                                                                                                                     78
                                                                              2012 Annual Report of Anhui Gujing Distillery Company Limited



The approved business scope: grain procurement (operation by license), manufacture of distilled spirits, beer, red wine, facilities for wine making,

packaging materials, and glass bottles, alcohol, feeds, grease (limited to the by-products from alcohol manufacture), development of high-tech,

biotechnology development agricultural and sideline products deep processing, sales of goods from own production.

The parent company of the group and ultimate parent company is the Anhui Gujing Group Co., Ltd.

The financial statement is approved by the resolution of board of directors on 21 April, 2013. According to the articles of association, the financial

statements will be submitted to the shareholders meeting for consideration.



Note 2: Basis for preparation of the financial statements

The financial statements of company have been prepared on basis of going concern in conformity with Chinese Accounting Standards for Business

Enterprises and the Accounting Systems for Business Enterprises issued by the Ministry of Finance of People’s Republic of China in February 2006,

and Accounting Standards (order No.38 of the Ministry of Finance) and Compilation Rules for Information Disclosure by Companies Offering

Securities to the Public No.15 – General Provisions on Financial Reports (2010 Revision) issued by the China Securities Regulatory Commission

(CSRC).

According to the relevant accounting regulations in Chinese Accounting Standards for Business Enterprises, the company has adopted the accrual

basis of accounting. Except for certain financial instruments which are measured by at fair value, the Company adopts the historical cost as the

principle of measurement in the financial statements. Where assets are impaired, provisions for asset impairment are made in accordance with

relevant requirements.




Note 3: Statement of Compliance with Enterprise Accounting Standards

The financial statements of the company are recognized and measured in accordance with the regulations in the Chinese Accounting Standards for

Business Enterprises and they give a true and fair view of the financial position, business result and cash flow of the Company as of 31 December

2012 .In addition, the financial statements of the company comply, in all material respects, with the revised disclosing requirements for financial

statements and the Compilation Rules for Information Disclosure by Companies Offering Securities to the Public No.15—General Provisions on

Financial Reports (2010 Revision) issued by China Securities Regulatory Commission (CSRC) in 2010.




Note 4: Important Accounting Principles and Accounting Estimates

4.1 Accounting period

The accounting period of the Company is classified as interim period and annual period. Interim period refers to the reporting period shorter than a

complete annual period. The accounting period of the Company is the calendar year from January 1 to December 31.


                                                                                                                                                    79
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4.2 Monetary Unit

Yuan (CNY) is the currency of the primary economic environment in which the Company and its domestic subsidiaries operate. Therefore, the

Company and its domestic subsidiaries choose CNY as their functional currency. The Company adopts CNY to prepare its functional statements.

4.3 Business combination

A business combination is a transaction or event that brings together two or more separate entities into one reporting entity. Business combinations

are classified into business combinations involving enterprises under common control and business combinations not involving enterprises under

common control.

(1) Business combination involving entities under common control

A business combination involving enterprises under common control is a business combination in which all of the combining enterprises are

ultimately controlled by the same party or parties both before and after the combination, and that control is not transitory.

For a business combination involving enterprises under common control, the party that, on the combination date, obtains control of another

enterprise participating in the combination is the absorbing party, while that other enterprise participating in the combination is a party being

absorbed. Combination date is the date on which the absorbing party effectively obtains control of the party being absorbed.

The assets and liabilities obtained are measured at the carrying amounts as recorded by the enterprise being combined at the combination date.

The difference between the carrying amount of the net assets obtained and the carrying amount of consideration paid for the combination (or the

total face value of shares issued) is adjusted to the capital premium (or share premium) in the capital reserve. If the balance of the capital premium

(or share premium) is insufficient, any excess is adjusted to retained earnings.

The cost of a combination incurred by the absorbing party includes any costs directly attributable to the combination shall be recognized as an

expense through profit or loss for the current period when incurred.

(2) Business combination involving entities not under common control

A business combination involving enterprises not under common control is a business combination in which all of the combining enterprises are not

ultimately controlled by the same party or parties both before and after the business combination.

For a business combination not involving enterprises under common control, the party that, on the acquisition date, obtains control of another

enterprise participating in the combination is the acquirer, while that other enterprise participating in the combination is the acquiree. Acquisition

date is the date on which the acquirer effectively obtains control of the acquiree.

For a business combination not involving enterprise under common control, the combination cost including the sum of fair value, at the acquisition

date, of the assets given, liabilities incurred or assumed, and equity securities issued by the acquirer. The intermediary expenses incurred by the

acquirer in respect of auditing, legal services, valuation and consultancy services etc and other associated administrative expenses attributable to

the business combination are recognized in profit or loss when they are incurred.

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The transaction cost arose from issuing of equity securities or liability securities shall be initially recognized as equity securities or liability securities.

The contingent consideration related to the combination shall be booked as combination cost at the fair value at the acquisition date. If, within the 12

months after acquisition, additional information can prove the existence of related information at acquisition date and the contingent consideration

need to be adjusted, goodwill can be offset.

For a business combination achieved in stages that involves multiple exchange transactions, the equity interest in the acquiree previously held

before the acquisition date re-assessed at the fair value at the acquisition date, with any difference between its fair value and its carrying amount is

recorded as investment income. The other comprehensive income of the acquiree before the acquisition date relating to the previously held interest

in the acquiree is transferred to investment income.

Combination cost is the aggregate of the carrying amount of the equity interest held in the acquiree prior to the acquisition date and the fair value of

the cost of the additional investment at the acquisition date.

Combination cost of the acquirer’s interest and identifiable net assets of the acquirer acquired through the business combination shall be measured

by the fair value at the acquisition date. Where the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable

net assets, the difference shall be recognized as goodwill. Where the cost of combination is less than the acquirer’s interest in the fair value of the

acquiree’s identifiable net assets, the difference shall be accounted for according to the following requirements: (i) the acquirer shall reassess the

measurement of the fair values of the acquiree’s identifiable assets, liabilities and contingent liabilities and measurement of the cost of combination;

(ii) if after that reassessment, the cost of combination is still less than the acquirer’s interest in the fair values of the acquiree’s      identifiable net

assets, the acquirer shall recognize the remaining difference immediately in profit or loss for the current period.

Where the temporary difference obtained by the acquirer was not recognized due to inconformity with the conditions applied for recognition of

deferred income tax, if, within the 12 months after acquisition, additional information can prove the existence of related information at acquisition

date and the expected economic benefits on the acquisition date arose from deductible temporary difference by the acquiree can be achieved,

relevant income tax assets can be recognized, and goodwill offset. If the goodwill is not sufficient, the difference shall be recognized as profit of the

current period.

Apart from above, the differences shall be taken into profit or loss of the current period if the recognition of deferred income tax assets is related to

the combination.

4.4 Preparation of the consolidated financial statements

(1) The scope of consolidation

The scope of consolidation for the consolidated financial statements is determined on the basis of control. Control is the power to govern the

financial and operating policies of an enterprise so as to obtain benefits from its operating activities. The scope of consolidation includes the

Company and all of the subsidiaries. Subsidiary is an enterprise or entity under the control of the Company.


                                                                                                                                                               81
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(2) Preparation of the consolidated financial statements

The subsidiary of the Company is included in the consolidated financial statements from the date when the control over the net assets and business

decisions of the subsidiary is effectively obtained, and excluded from the date when the control ceases.

For a subsidiary disposed of by the Company, the operating results and cash flows before the date of disposal (the date when control is lost) are

included in the consolidated income statement and consolidated statement of cash flows, as appropriate. For a subsidiary disposed during the

period, no adjustment is made to the opening balance of the consolidated financial statements.

For a subsidiary acquired through a business combination not under common control, the operating results and cash flows from the acquisition (the

date when the control is obtained) are included in the consolidated income statement and consolidated statement of cash flows, as appropriated; no

adjustment is made to the opening balance and comparative figures in the consolidated financial statements.

Where a subsidiary was acquired during the reporting period, through a business combination involving enterprises under common control, the

financial statements of the subsidiary are included in the consolidated financial statements. The results of operations and cash flow are included in

the consolidated balance sheet and the consolidated income statement, respectively, based on their carrying amounts, from the date that common

control was established, and the opening balances and the comparative figures of the consolidated financial statements are restated.

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

adjustments to the financial statements of the subsidiary based on the Company’s own accounting period or accounting policies. Where a subsidiary

was acquired during the reporting period through a business combination not under common control, the financial statements was reconciliated on

the basis of the fair value of identifiable net assets at the date of acquisition. Intra-Group balances and transactions, and any unrealized profit or loss

arising from intra-Group transactions, are eliminated in preparing the consolidated financial statements.

Minority interest and the portion in the net profit or loss not attributable to the Company are presented separately in the consolidated balance sheet

within shareholders’/ owners’ equity and net profit. Net profit or loss attributable to minority shareholders in the subsidiaries is presented separately

as minority interest in the consolidated income statement below the net profit line item.

When the amount of loss for the current period attributable to the minority shareholders of a subsidiary exceeds the minority shareholders’ portion of

the opening balance of [shareholders’] [owners’] equity of the subsidiary, the excess is allocated against the minority interests.

When the Company loses control of a subsidiary due to the disposal of a portion of an equity investment or other reasons, the remaining equity

investment is re-measured at its fair value at the date when control is lost. The difference between 1) the total amount of consideration received

from the transaction that resulted in the loss of control and the fair value of the remaining equity investment and 2) the carrying amounts of the

interest in the former subsidiary’s net assets immediately before the loss of the control is recognized as investment income for the current period

when control is lost. The amount recognized in other comprehensive income in relation to the former subsidiary’s equity investment is reclassified as

investment income for the current period when control is lost. The retained interest is subsequently measured according to the rules stipulated in the


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- “Chinese Accounting Standards for Business Enterprises No.2 - Long-term equity investment” or “Chinese Accounting Standards for Business

Enterprises No.22 - Determination and measurement of financial instruments”. See Note 4.10 Long-term equity investments and Note 4.7 Financial

instruments for details.

4.5 Cash equivalent

Cash and cash equivalents of the Company include cash on hand, ready usable deposits and investments having short holding term (normally will

be due within three months from the day of purchase), with strong liquidity and easy to be exchanged into certain amount of cash that can be

measured reliably and have low risks of change.

4.6 Foreign exchange

(1) Translation in foreign exchange transactions

The foreign currency transactions are recorded, on initial recognition in the functional currency, by applying [the spot exchange rate on the date of

the transaction / an exchange rate that approximates the actual spot exchange rate on the date of transaction]. The exchange of foreign currency

and transactions related to the foreign exchange are translated at the spot exchange rate.

(2) Translation of monetary foreign currency and non-monetary foreign currency

At the balance sheet date, foreign currency monetary items are translated using the spot exchange rate at the balance sheet date. All the exchange

differences thus resulted are taken to profit or loss, except for ① those relating to foreign currency borrowings specifically for construction and

acquisition of qualifying assets, which are capitalized in accordance with the principle of capitalization of borrowing costs; ② hedging accounting,

the exchange difference related to hedging instruments for the purpose of net oversea operating investment is recorded in the comprehensive

income till the date of disposal and recognized in profit or loss of the period; exchange difference from changes of other account balance of foreign

currency monetary items,     ③ available-for-trade is recorded into profit or loss except for amortized cost.

Non-monetary foreign currency items measured at historical cost shall still be translated at the spot exchange rate prevailing on the transaction date,

and the amount denominated in the functional currency is not changed. Non-monetary foreign currency items measured at fair value are translated

at the spot exchange rate prevailing at the date when the fair values are determined. The exchange difference thus resulted are recognized in profit

or loss for the current period or as capital reserve.

(3) The translation of financial statement in foreign currency

When the consolidated financial statements include foreign operation(s), if there is a foreign currency monetary item constituting a net investment in

a foreign operation, exchange difference arising from changes in exchange rates are recognized as “exchange differences arising on translation of

financial statements denominated in foreign currencies” in owner’s equity, and in profit or loss for the period upon disposal of the foreign operation.

The Group translates the financial statements of its foreign operations into CNY by following rules. Assets and liabilities in the balance sheet are

translated at the spot exchange rate prevailing at the balance sheet date; all equity items except for retained earnings are translated at the spot

                                                                                                                                                            83
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exchange rates at the dates on which such items occur; income and expenses in income statement are translated at the spot exchange rates at the

date of transaction; the opening retained earnings is the closing retained earnings of the last period after translation; the closing balance of retained

earnings is calculates and presented in the basis of each translated income statements and profit distribution item; the difference arising between

the assets and liabilities and shareholders’ equity shall be booked as translation difference of foreign currency statements, and shall be presented

as a separate component of equity in the balance sheet. On a loss of control over Group’s oversea operation due to disposal, the Company

transfers the accumulated or proportionate share of the accumulated exchange difference arising on translation of financial statements of this

oversea operation attributable to the owners’ equity of the Company and presented under shareholders’ equity, to profit or loss in the period in which

the disposal occurs.

Foreign currency cash flows and cash flow of oversea subsidiaries are translated at the spot exchange rates on the date of cash flows.The effect of

exchange rate changes on cash is separately presented as an adjustment item in the cash flow statement.

The opening and actual amount of last year are presented in the financial statement after translation.

4.7 Financial instruments

(1) Determination of financial assets and liabilities’ fair value

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length

transaction. For a financial instrument which has an active market, the Company uses quoted price in the active market to establish its fair value.

The quoted price in the active market refers to the price that can be regularly obtained from exchange market, agencies, industry associations,

pricing authorities; it represents the fair market trading price in the actual transaction.

For a financial instrument which does not have an active market, the Company establishes fair value by using a valuation technique. Valuation

techniques include using recent arm’s length market transactions between knowledgeable, willing parties, reference to the current fair value of

another instrument that is substantially the same, discounted cash flow analysis and option pricing models.

The Company measures initially and subsequently the fair value of an interest rate swap at the value of a competitor’s interest rate swap quoted by

a recognised financial institution as at the Company’s balance sheet date in accordance with the principle of consistency.

(2) Classification, recognition and measurement of financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. On initial recognition, the Company’s

financial assets are classified into one of the four categories, including financial assets at fair value though profit or loss, held-to maturity

investments, loans and receivables and available-for-trade financial assets. A financial asset is recognized initially at fair value. In the case of

financial assets at fair value through profit or loss, relevant transaction costs are immediately charged to the profit and loss of the current period;

transaction costs relating to financial assets of other categories are included in the amount initially recognized.

1) Financial assets at fair value through profit or loss:


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Including financial assets held-for-trade and financial assets designated at fair value through profit or loss.

Financial asset held-for-trade is the financial asset that meets one of the following conditions:

A. the financial asset is acquired for the purpose of selling it in a short term;

B. the financial asset is a part of a portfolio of identifiable financial instruments that are collectively managed, and there is objective evidence

indicating that the enterprise recently manages this portfolio for the purpose of short-term profits;

C. the financial asset is a derivative, except for a derivative that is designated and effective hedging instrument, or a financial guarantee contract, or

a derivative that is linked to and must be settled by delivery of an unquoted equity instrument (without a quoted price from an active market) whose

fair value cannot be reliably measured. For such kind of financial assets, fair values are adopted for subsequent measurement.

Financial asset is designated on initial recognition as at fair value through profit or loss only when it meets one of the following conditions:

A. the designation eliminates or significantly reduces the inconsistency in the measurement or recognition of relevant gains or losses that would

otherwise arise from measuring the financial instruments on different bases.

B. a Group of financial instruments is managed and its performance is evaluated on a fair value basis, and is reported to the enterprise’s key

management personnels. Formal documentation regarding risk management or investment strategy has prepared.

Financial assets at fair value through profit or loss are subsequently measured at the fair value. Any gains or losses arising from changes in the fair

value and any dividends or interest income earned on the financial assets are recognized in the profit or loss.

2) Investment held-to maturity

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that an entity has the

positive intention and ability to hold to maturity. Such kind of financial assets are subsequently measured at amortized cost using the effective

interest method. Gains or losses arising from derecognition, impairment or amortization are recognized in profit or loss for the current period.

Effective interest rate is the rate that exactly discounted estimated future cash flows through the expected life of the financial asset or financial

liability or, where appropriate, a shorter period to the net carrying amount of the financial asset or financial liability.

When calculating the effective interest rate, the Company shall estimate future cash flow considering all contractual terms of the financial asset or

financial liability without considering future credit losses, and also consider all fees paid or received between the parties to the contract giving rise to

the financial asset and financial liability that are an integral part of the effective interest rate, transaction costs, and premiums or discounts, etc.

3) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed determinable payment that are not quoted in an active market. Financial assets

classified as loans and receivables by the Company include note receivables, account receivables, interest receivable dividends receivable and

other receivables.



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Loans and receivables are subsequently measured at amortized cost using the effective interest method. Gain or loss arising from derecognition,

impairment or amortization is recognized in profit or loss.

4) Financial assets available-for-trade

Financial assets available-for-trade include non-derivative financial assets that are designated on initial recognition as available for trade, and

financial assets that are not classified as financial assets at fair value through profit or loss, loans and receivables or investment held-to-maturity.

Financial assets available-for-trade are subsequently measured at fair value, and gains or losses arising from changes in the fair value are

recognized as other comprehensive income and included in the capital reserve, except that impairment losses and exchange differences related to

amortized cost of monetary financial assets denominated in foreign currencies are recognized in profit or loss, until the financial assets are

derecognized, at which time the gains or losses are released and recognized in profit or loss.

Interests obtained and dividends declared by the investee during the period in which the financial assets available-for-trade are held, are recognized

in investment gains.

(3) Impairment of financial assets

The Group assesses at the balance sheet date the carrying amount of every financial asset except for the financial assets that measured by the fair

value. If there is objective evidence indicating a financial asset may be impaired, a provision is provided for the impairment.

1) Impairment on held-to maturity investment, loans and receivables

The financial assets measured by cost or amortized cost write down their carrying value by the estimated present value of future cash flow. The

difference is recorded as impairment loss. If there is objective evidence to indicate the recovery of value of financial assets after impairment, and it is

related with subsequent event after recognition of loss, the impairment loss recorded originally can be reversed. The carrying value of financial

assets after impairment loss reversed shall not exceed the amortized cost of the financial assets without provisions of impairment loss on the

reserving date.

2) Impairment loss on available-for-trade financial assets

Where the fair value of the equity instrument investment drops significantly or not contemporarily according to the integrated relevant factors, an

available-for-trade financial asset is impaired.

When an available-for-trade financial asset is impaired, the cumulative loss arising from declining in fair value that had been recognized in capital

reserve shall be removed and recognized in profit or loss. The amount of the cumulative loss that is removed shall be difference between the

acquisition cost with deduction of recoverable amount less amortized cost, current fair value and any impairment loss on that financial asset

previously recognized in profit or loss.

If, after an impairment loss has been recognized, there is objective evidence that the value of the financial asset is recovered, and it is objectively

related to an event occurring after the impairment loss was recognized, the initial impairment loss can be reversed and the reserved impairment loss

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on available-for-trade equity instrument is recorded in the profit or loss, the reserved impairment loss on available-for-trade debt instrument is

recorded in the current profit or loss.

The equity instrument where there is no quoted price in an active market, and whose fair value cannot be reliably measured, or impairment loss on a

derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument shall not be reversed.

(4) Recognition and measurement of financial assets transfer

The Group derecognizes a financial asset when one of the following conditions is met:

1) the rights to receive cash flows from the asset have expired;

2) the enterprise has transferred its rights to receive cash flows from the asset to a third party under a pass-through arrangement; or

3) the enterprise has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards

of the asset, or (b) has neither transferred nor

retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

If the enterprise has neither retained all the risks and rewards from the financial asset nor control over the asset, the asset is recognized according

to the extent it exists as financial asset, and correspondent liability is recognized. The extent of existence refers the level of risk by the financial

asset changes the enterprise is facing.

For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, (a). the carrying amount of the financial asset transferred; and

(b) the sum of the consideration received from the transfer and any cumulative gain or loss that had been recognized in other comprehensive

income, is recognized in profit or loss.

If a part of the transferred financial asset qualifies for derecognition, the carrying amount of the transferred financial asset is allocated between the

part that continues to be recognized and the part that is derecognized, based on the relative fair value of those parts. The difference between (a) the

carrying amount allocated to the part derecognized; and (b) the sum of the consideration received for the part derecognized and any cumulative

gain or loss allocated to the part derecognized which has been previously recognized in other comprehensive income, is recognized in profit or loss.

(5) Classification and measurement of financial liabilities

The Group’s financial liabilities are, on initial recognition, classified into financial liabilities at fair value through profit or loss and other financial

liabilities. For financial liabilities at fair value through profit or loss, relevant transaction costs are immediately recognized in profit or loss for the

current period, and transaction costs relating to other financial liabilities are included in the initial recognition amounts.

1) Financial liabilities measured by the fair value and the changes recorded in profit or loss

The classification by which financial liabilities held-for-trade and financial liabilities designed at the initial recognition to be measured by the fair value

follows the same criteria as the classification by which financial assets held-for-trade and financial assets designed at the initial recognition to be



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measured by the fair value and their changes are recorded in the current profit or loss.

For the financial liabilities measured by the fair value and changes recorded in the profit or loss, fair values are adopted for subsequent

measurement. All the gains or losses on the change of fair value and the expenses on dividends or interests related to these financial liabilities are

recognized in profit or loss for the current period.

2) Other financial liabilities

Derivative financial liabilities that linked with equity instruments, which do not have a quoted price in an active market and their fair value cannot be

measured reliably, is subsequently measured by cost Other financial liabilities are subsequently measured at amortized cost using the effective

interest method. Gains or losses arising from derecognition or amortization are recognized in profit or loss for the current period.

(6) Derecognition

The Group derecognizes a financial liability (or part of it) when the underlying present obligation (or part of it) is discharged or cancelled or has

expired. An agreement between the Company (an existing borrower) and existing lender to replace original financial liability with a new financial

liability with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new liability.

When the Company derecognizes a financial liability or a part of it, it recognizes the difference between the carrying amount of the financial liability

(or part of the financial liability) derecognized the consideration paid (including any non-cash assets transferred or new financial liabilities assumed)

in profit or loss.

(7) Derivatives and embedded derivatives

Derivative financial instruments include derivatives are initially measured at fair value at the date when the derivative contracts are entered into and

are substantially re-measured at fair value. The resulting gain and loss is recognized in profit or loss.

An embedded derivative is separated from the hybrid instrument, where the hybrid instrument is not designated as a financial asset or financial

liability at fair value though profit or loss, and the treated as a standalone derivative if (a) the economic characteristics and risks of the embedded

derivative are not closely related to the economic characteristics and risks of the host contract; and (b) a separate instrument with the same terms

as the embedded derivative would meet the definition of a derivative. If the Company is unable to measure the embedded derivative separately

either at acquisition or at a subsequent balance sheet date, it designates the entire hybrid instrument as a financial asset or financial liability at fair

value through profit or loss.

(8) Offsetting financial assets and financial liabilities

When the Company has a legal right that is currently enforceable to set off the recognized financial assets and financial liabilities, and intends either

to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously, a financial asset and a financial liability shall

be offset and the net amount is presented in the balance sheet. Except for the above circumstances, financial assets and financial liabilities shall be

presented separately in the balance sheet and shall not be offset.

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(9) Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. The

consideration received from issuing equity instruments, net of transaction costs, are added to shareholders’ equity. All types of distribution

(excluding stock dividends) made by the Company to holders of equity instruments are deducted from shareholders’ equity. The Group does not

recognize any changes in the fair value of equity instruments.

4.8 Accounts receivable

The receivables by the Company includes account receivables, and other receivables.

(1) Criteria for recognition of bad debts:

The Company carries out an inspection on the balance sheet date. Where there is any objective evidence proving that the receivables have been

impaired, an impairment provision shall be made:

1) A serious financial difficulty occurs to the issuer or debtor;

2) The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the payment of interests or the principal, etc.;

3) The debtor will probably become bankrupt or carry out other financial reorganizations;

4) Other objective evidences showing the impairment of the receivables.

(2) Method for bad debts provision

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

Individual receivables equal to or higher than 5% of total receivables are classified as receivables of individual significance.

For an account receivable that is individually significant, the asset is individually assessed for impairment, the impairment loss is recognized at the

difference between the present value of future cash flow less the carrying amount, and provision is made accordingly.

2) Provisions of bad debts in account receivables that individually insignificant items with similar credit risk characteristics that have significant risk:

A. Evidence of credit risk characteristics

Whether the financial asset is individually significant or not individually significant, it is included in a group of financial assets with similar credit risk

characteristics and collectively assessed for impairment. Such credit risk reflects the repayment of all due amount under the contract, and is related

to the estimation of future cash flow expected to be derived from the assets.

Evidence of portfolios:


   Item                                                      Basis

   Age portfolios                                                                                            Age

   Related party portfolios                                 The companies which are in the scope of the consolidation.


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B. Provision by credit risk characteristics

During the Company impairment test, the amount of bad debts provisions is determined by the assessed result from the experience of historical loss

and current economic status and the existing loss in the estimated account receivables according to the set of account receivables and credit risk

characteristic.

Provision for different portfolios:


                                              Item                                                                        Provision

     Age portfolios                                                                                                 Age analysis method

     Related party portfolios                                                                                    No allowance for bad debt

a.     Portfolio by age analysis


                                                             Percentage of carrying amount for recognition      Percentage of carrying amount for

     Category                                                of allowance for bad debt applicable to            recognition of allowance for bad debt

                                                             accounts receivable                                applicable to other   receivable

     Less than 1 year (inclusive, same applies to the

     following)

     Including: 1 to 6 months                                                                            1.00                                             1.00


              7 to 12 months                                                                             5.00                                             5.00


     1 to 2 years                                                                                       10.00                                            10.00


     2 to 3 years                                                                                       50.00                                            50.00


     Over 2 years                                                                                      100.00                                           100.00

3) Provisions of bad debts that is individually insignificant.

For the account receivables not individually significant, the Company assesses the account receivables individually for impairment when are of

following characteristics: if there is objective evidence indicating the impairment, the impairment loss is recognized at the difference between the

present value of future cash flow less the carrying amount, and provision is made accordingly. For examples: receivables of individual insignificance

bears differing credit risk characteristics to other receivables of individual insignificance account receivables with related parties; account

receivables under litigations or arbitrations, or account receivables with obvious indication that debtor cannot fulfill the obligation of repayment.

(3) The reversal of bad debts provision

If there is objective evidence of recovery in value of account receivables, and the recovery can be related to an event occurring after the impairment

was recognized, the previously recognized impairment loss is reversed and recognized in profit or loss. However, the reversal shall not result in a

carrying amount that exceeds what the amortized cost would have been had the impairment loss not been recognized at the date the impairment is


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reversed.

4.9 Inventories

(1) Classification of inventory

The Company’s inventory mainly include air materials and low-value consumables.

(2) Valuation method of inventories

Inventories are initially carried at the actual cost. Cost of inventories include purchase cost, conversion cost and other cost. Cost of issue is

measured using the weighted average method.

(3) Basis for determining net realizable value of inventories and provision methods for decline in value of inventories

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion, the estimated costs

necessary to make the sale and relevant taxes. Net realizable value is determined on the basis of clear evidence obtained, and takes into

consideration the purpose of holding inventories and effect of post balance sheet events.

At the balance sheet date, inventories are measured at the lower of the cost and net realizable value. If the net realizable value is below the cost of

inventories, a provision for decline in value of inventories is made. The provision for inventories decline in value is determined normally by the

difference of the cost of individual item less its realizable value. For large quantity and low value items of inventories,

provision for decline in value is made based on categories of inventories. For items of inventories relating to a product line that are produced and

marketed in the same geographical area, have the same or similar end users or purposes, and cannot be practicably evaluated separately from

other items in that product line provision for decline in value is determined on an aggregate basis.

After the provision for decline in value of inventories is made, if the circumstances that previously caused inventories to be written down below cost

no longer exist so that the net realizable value of inventories is higher than their cost, the original provision for decline in value is reversed and the

reversal is included in profit or loss for the period.

(4) The perpetual inventory system is maintained for stock system.

(5) Amortization method for low cost and short-lived consumable items and packaging materials.

Low cost and short-lived consumable items are amortized using immediate write-off method; packaging materials are amortized using immediate

write-off method.

4.10 Long-term equity investments

(1) Determination of Investment cost

For a business combination involving enterprises under common control, the initial investment cost of the long-term           equity investment shall be

carrying value of the absorbing party’s share of the shareholder’s equity of the party being absorbed at the date of combination.



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For a business combination not involving enterprise under common control, the combination cost including the sum of fair value, at the acquisition

date, of the assets given, liabilities incurred or assumed, and equity securities issued by the acquirer. The intermediary expenses incurred by the

acquirer in respect of auditing, legal services, valuation and consultancy services etc and other associated administrative expenses attributable to

the business combination are recognized in profit or loss when they are incurred.

The transaction cost for the equity securities or liability securities issued by the acquirer in the business combination shall be recognized as initial

amount of equity security or liability.

The equity investments other than the long-term equity through combination shall be initially measured by cost. The cost shall be recognized to the

difference in the way of acquisition of long-term equity investment. Theses ways include the cash purchase price the Companythe Company actually

paid, the fair value of equity security issued by the Companythe Company, value specified in the investment contract or agreement, the fair value or

carrying value of the asset out in the transaction of non-monetary asset exchanges, and the fair value of the long-term equity investment.

Expenses, taxes and other necessary expenditures directly attributable to the acquisition of long-term equity investment are taken into investment

cost.

(2) Subsequent Measurement

Cost method shall be adopted in a long-term equity investment where the investing enterprise does not have common control or significant influence

over the investee, the investment is not quoted in an active market and its fair value cannot be measured reliably.

Where an investing enterprise can exercise common control or significant influence over the investee,

a long-term investment shall be accounted for using the equity method.

When an investing enterprise can no longer exercise joint control or common control nor significant influence over the investee, and its fair value

cannot be measured reliably, a long-term investment shall be counted as financial asset ready-for trade.

A long-term equity investment where cost method is adopted in the Company’s financial statements

can exercise controls over the investee.

1) Cost method of accounting for long-term equity investments

Under the cost method, a long-term equity investment is measured at initial investment cost. Except for cash dividends or profits declared but not

yet paid that are included in the price or consideration actually paid upon acquisition of the long-term equity investment, investment income is

recognized in the period in accordance with the attributable share of cash dividends or profit distributions declared by the investee.

2) Equity method of accounting for long-term equity investments

Where the initial investment cost of a long-term equity investment exceeds the investing enterprise’s interest in the fair values of the investee’s

identifiable net assets at the time of acquisition, no adjustment shall be made to the initial investment cost.



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Where the initial investment cost of a long-term equity investment is less than the investing enterprise’s interest in the fair values of investee’s

identifiable net assets at the time of acquisition, the difference shall be charged to profit or loss for the current period, and the cost of the long-term

equity investment shall adjusted accordingly.

Under the equity method, the Company recognizes its share of the net profit or loss of the investee for the period as investment income or loss for

the period. The Group recognizes it share of the investee’s net profit or loss based on the fair value of the investee’s individual separately indentible

assets, etc at the acquisition date after making appropriate adjustments to confirm with the Company’s accounting policies and accounting period.

Unrealized profits or losses resulting from the Company’s transactions with its associates and joint ventures are recognized as investment income or

loss to the extent that those attributable to the Company’s equity interest are eliminated. However, unrealized losses resulting from the Company’s

transactions with its investees on the transferred assets, in accordance with "Accounting Standards for Enterprises No. 8 - Impairment of Assets",

are not eliminated. Changes in owners’ equity of the investee other than net profit or loss are correspondingly adjusted to the carrying amount of the

long-term equity investment, and recognized as other compressive income which is included in the capital reserve.

When the investee is recognized net losses, reduce the carrying value of long-term equity investments and long-term equity of net investment (in

substance) in investee to zero. In addition, the Company has the obligations on additional losses, then the expected obligation as estimated

liabilities and included in the current investment losses. Where the net profit from investee units, restoration confirm the amount of revenue sharing

after offset the amount of unrecognized loss sharing.

For long-term equity investments in associates and joint ventures which had been held by the Company before its first time adoption of Accounting

Standards for Business Enterprises, where the initial investment cost of a long-term equity investment exceeds the Company’s                interest in the

investee’s net assets at the time of acquisition, the excess is amortized and is recognized in profit or loss on a straight line basis over the original

remaining life.

3) Acquisition of minority interest

The difference between newly increased equity investment due to acquisition of minority interests and portion of net asset cumulatively calculated

from the acquisition date is adjusted as capital reserve. If the capital reserve is not sufficient to absorb the difference, the excess are adjusted

against returned earnings.

4) Disposal of long-term equity investment

Where the parent company disposes long-term investment in a subsidiary without a change in control, the difference in the net asset between the

amount of disposed long-term investment and the amount of the consideration paid or received is adjusted to the owner’s equity. If the disposal of

long-term investment in a subsidiary involves loss of control over the subsidiary, the related accounting policies in Note 4.2(2) applies.

On disposal of a long-term equity investment, the difference between the proceeds actually received and receivable and the carrying amount is

recognized in profit or loss for the period. For along-term equity investment accounted for using the equity method, the amount included in the


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owners’ equity attributable to the percentage interest disposed is transferred to profit or loss for the period.

For any retained interest, it shall be subsequently measured according to the related accounting policies in regard of long-term equity investments or

financial assets as described above if its carrying amount is recognized as long-term equity investments or other related financial assets.

Retroactive adjustment is made on the basis of relevant policies if the retained interests are settled from cost method to equity method.

(3) Recognition of investee under common control or significant influence

Control is the power to govern the financial and operating policies of an enterprise so as to obtain benefits from its operating activities.

Common control is the contractually agreed sharing of control over an economic activity, and exists only when the strategic financial and operating

decisions relating to the activity require the unanimous consent of the parties sharing control.

Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over

those policies.

When determining whether an investing enterprise is able to exercise control or significant influence over an investee, the effect of potential voting

rights of the investee held be the investing enterprise or other parties that are currently exercisable or convertible shall be considered.

(4) Impairment testing methods and recognition of impairment provision

The company assesses the long-term equity investment at the balance sheet date whether there is any indication of impairment. If any indication

exists that an asset may be impaired, the enterprise shall

estimate its recoverable value of the asset. If the recoverable value of the asset is less than its carrying amount, a provision for impairment loss of

the asset is recognized accordingly.

Once an impairment loss is recognized, it shall not be reversed in a subsequent period.

4.11 Investment property

Investment property is held to earn rentals or for capital appreciation or for both. Investment property includes leased or ready to transfer after

capital appreciation land use rights and leased buildings. Investment property is initially measured at cost. Subsequent expenditures related to an

investment real estate are likely to flow about the economic benefits of the asset and its cost can be measured reliably , is included in the cost of

investment real estate. Other subsequent expenditure in the profit or loss when incurred .

The Group uses the cost model for subsequent measurement of investment property, and in accordance with the depreciation or amortization of

buildings or land use rights policy.

Investment property impairment test method and impairment accrual method described in Note 17 “Non-current and non-financial assets impairment

".

Occupied real estate for investment property or investment property is transferred to owner-occupied real estate or stock conversion as the recorded



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value after the conversion, according to the book value before the conversion.

Investment property change into the Owner-occupied real estate , since the change of date for the investment property is transferred to fixed assets

or intangible assets. Change the owner-occupied property held to earn rentals or for capital appreciation, since the change of date, the fixed assets

or intangible assets to investment property. Conversion occurs when converted to investment property using the cost model, as the book value

before the conversion of the recorded value after the conversion; converted to investment property measured at fair value model, the fair value of

the conversion date as the recorded value after conversion.

Derecognised when the investment property is disposed of or permanently withdrawn from use and the expected economic benefits can not be

obtained from the disposal of investment property. Proceeds on disposal of investment property is sold, transferred, retired or damaged through

profit or loss after deducting the book value and related taxes.

4.12 Fixed assets

(1) The conditions of recognition

Fixed assets refers to the tangible assets that are held for the sake of producing commodities, rendering labor service, renting or business

management and their useful life is in excess of one fiscal year.

(2) The method for depreciation

Fixed assets are stated at cost and consider the impact of expected costs of abandoning the initial measurement. From the following month of state

of intended use, depreciation method of the straight-line method is used for different categories of fixed assets to take depreciation. The

recognition of the classification, useful life and estimated residual rate are as follows:


                      Category                                  Expected useful life             Estimated residual value(%)       Depreciation(%)

  Houses and building                                                                  8-35                               3-5                  2.7-12.1

  Machineries                                                                          8-10                               3-5                  9.5-12.1

  Vehicles                                                                                   4                                 3                 24.25

  Administrative equipments and others                                                       3                                 3                 32.33

Expected net residual value of fixed assets is the balance of the Company currently obtained from the disposal of the asset less the estimated costs

of disposal amount, assuming the asset is out of useful life and state the expected service life in the end.

(3) Measurement and recognition of fixed assets impairment

Impairment and provisions of fixed assets are disclosed on Note 4.17 Impairment of non-current and non-financial assets.

(4) Fixed Assets under finance leases

A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership of an asset. Title may or may not eventually be



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transferred.

Fixed assets that are held under finance leases shall be depreciated by applying the same policy as that for the fixed assets owned by the Company.

If it can be reasonably determined that the ownership of the leased assets can be obtained at the end of the lease period, the leased assets are

depreciated over their useful lives; otherwise, the leased assets are depreciated over the shorter of the lease terms and the useful lives of the

leased assets.

(5) Others

A fixed asset is recognized only when the economic benefits associated with the asset will probably flow to the Company and the cost of the asset

can be measured reliably. Subsequent expenditure incurred for a fixed asset that meet the recognition criteria shall be included in the cost of the

fixed asset, and the carrying amount of the component of the fixed asset that is replaced shall be derecognized. Otherwise, such expenditure shall

be recognized in profit or loss in the period in which they are incurred.

The revenue from selling or transferring, or disposing a fixed asset is booked into profit and loss after deduction of carrying value and related tax.

The Company conducts a review of useful life, expected net realizable value and depreciation methods of the fixed asset at least on an annual base.

Any change is regarded as change in accounting estimates.

4.13 Construction in progress

Construction in progress is measured at its actual cost. The actual costs include various construction expenditures during the construction period,

borrowing costs capitalized before it is ready for intended use and other relevant costs. Construction in progress is transferred to a fixed asset when

it is ready for intended use.

Testing method for provision impairment of construction in progress and accrued method for provision impairment please refer to Note 4.17.

4.14 Borrowing costs

Borrowing costs include interest, amortization of discounts or premiums related to borrowings, ancillary costs incurred in connection with the

arrangement of borrowings, and exchange differences arising from foreign currency borrowings.

The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized. The amounts of

other borrowing costs incurred are recognized as an expense in the period in which they are incurred. Qualifying assets are asset (fixed assets,

investment property and inventories, etc.) that necessarily take a substantial period of time for acquisition, construction or production to get ready for

their intended use or sale.

Where funds are borrowed for a specific-purpose, the amount of interest to be capitalized is the actual interest     expense incurred on that borrowing

for the period less any bank interest earned from depositing the borrowed funds before being used on the asset or any investment income on the

temporary investment of those funds.




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Where funds are borrowed for a general-purpose, the amount of interest to be capitalized on such borrowings is determined by applying a weighted

average interest rate to the weighted average of the excess amounts of accumulated expenditure on the asset over and above the amounts of

specific-purpose borrowings.

During the capitalization period, exchange differences related to a specific-purpose borrowing

denominating in foreign currency are all capitalized. Exchange differences in connection with general-purpose borrowings are recognized in profit or

loss in the period in which they are incurred.

Assets qualified for capitalization are the fixed assets, investment properties or inventories which need a long time of construction or production

activities before ready for intended used or sale.

Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or production of a qualifying asset is interrupted

by activities other than those necessary to prepare the asset for its intended use or sale, when the interruption is for a continuous period of more

than 3 months. Borrowing costs incurred during these periods recognized as an expense for the current period until the acquisition, construction or

production is resumed.

4.15 Intangible assets

(1) Intangible asset

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

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

are likely to flow into the enterprise and the cost of intangible assets can be measured reliably, shall be recorded as cost of intangible assets. The

expenses other than this shall be booked in the profit or loss when they occur.

Land use rights that are purchased by the Company are accounted for as intangible assets. Buildings, such as plants that are developed and

constructed by the Company, and relevant land use rights and buildings, are accounted for as intangible assets and fixed assets, respectively.

Payments for the land and buildings purchased are allocated between the land use rights and the buildings; if they cannot be reasonably allocated,

all of the land use rights and buildings are accounted for as fixed assets.

When an intangible asset with a definite useful life is available for use, its original cost less net residual value and any accumulate impairment

losses is amortized over its estimated useful life using the straight-line method. An intangible asset with an indefinite useful life is not amortized.

For an intangible asset with a definite useful life, the Company reviews the useful life and amortization method at the end of the period, and makes

adjustment when necessary.. An additional review is also carried out for useful life of the intangible assets with indefinite useful life. If there is

evidence showing the foreseeable limit period of economic benefits generated to the enterprise by the intangible assets, then estimate its useful life

and amortize according to the policy of intangible assets with definite useful life.

(2) Research and development cost

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Cost of research and development is distinguished into the research phase and the development phases.

Cost of the research phase is recognised in the profit or loss in the period in which it is incurred.

Unless the following conditions are satisfied, cost of the development phase is recognised in the profit or loss in the period in which it is incurred:

1) it is technically feasible to complete the intangible asset so as to use it or sell it;

2) it is clearly invented to complete the intangible asset in order to use it or sell it;

3) it is probable that the intangible asset is capable of generating future economic benefit, such as the market for the product produced by the

intangible asset or the intangible asset itself, it is objectively evidential that the intangible asset is economically usable if it is going to be used

internally;

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

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

If the cost cannot be distinguished into the search phase and the development phase, it is recognised in the profit or loss for the period in which it is

incurred.

(3) Impairment of intangible assets

Impairment and provisions of intangible assets are disclosed on Note 4.17.

4.16 Long-term deferred expenditure

An item long-term deferred expenses is an expense which has been incurred and which has a beneficial period (a period during which an expense

is expected to bring economic benefits to an entity) which is longer than one year and which includes at least part of the reporting period during

which the expense was incurred and subsequent reporting periods. An item of long-term deferred expenses is recognised at the actual amount of

the expense incurred and allocated in each month of the beneficial period using the straight line method.

4.17 Impairment of non-current and non-financial assets

Non-financial assets with non-current nature include fixed assets, construction in progress, intangible assets with definite useful lives, investment

properties measured by cost methods and long-term equity investment on subsidiaries, jointly operations. The Company assesses whether there

are any indicators of impairment for all non-financial assets at the balance sheet date, and impairment test is carried out and recoverable value is

estimated if such an indicator exits. Goodwill and intangible assets with indefinite useful lives, as well as intangible assets not ready for use, are

tested for impairment annually regardless of indicators of impairment.

Impairment of loss is calculated and provisions taken by the difference if the recoverable value of the assets is lower than the book value. The

recoverable value is the higher of estimated present value of the future expected cash flows from the asset and net fair value of the asset less

disposed cost. The fair value of asset is determined by the sales agreement price within an arm’s length transaction. In case there is no sales



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agreement, but there is active market of assets, the fair value can be determined by the selling price. If there is neither sales agreement nor active

market, the fair value of the asset can be estimated based on the best information obtained.

Disposal expenses include expenses related to the legislation, taxes, transportations and the direct expense for the asset to be ready for sale. When

calculating the present value of expected future cash flows from an asset or asset Group, the management shall estimate the expected future cash

flows from the asset or asset Group and choose a suitable discount rate in order to calculate the present value of those cash flows.

Provision for asset impairment is calculated and determined on the individual basis. If the recoverable of individual asset is hard to estimate, the

recoverable amount can be determined by the asset Group where subject asset belongs. Asset Group is the smallest set of assets that can have

cash flow in independently.

The Company determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the present value of the future

expected cash flows from the asset Groups or sets of asset Groups to which the goodwill is allocated. Estimating the present value requires the

Company to make an estimate of the expected future cash flows from the asset Groups or sets of asset Groups and also choose a suitable discount

rate in order to calculate the present value of those cash flows. Once the loss from above asset impairment is recognized, the recoverable part

cannot be reserved in the subsequent periods.

4.18 Accrued liabilities

Recognition of accrued liabilities:

Obligation with contingency factor such as external hypothecate, lawsuit or arbitrage in dispute, guarantee on quality of product, cut-down plan, loss

of contract, recombine obligation, obligation on abandon fixed asset, and meet the follow condition simultaneously would determined as liabilities:

①This obligation is current obligation of the Company; and,

②The performance of this obligation will probably cause economic benefits outflow of the               Company; and,

③The amount of this obligation can be reliably measured.

Loss contracts and restructuring obligations of the Company meet the above conditions shall be recognized as accrued liabilities.

Measurement of accrued liabilities

Accrued liabilities would be measured initial according to the optimum evaluation of outflow of economic benefit, and the Company perform relate

obligation that consider risk, incertitude, time value of currency of contingency factor. Discount future cash flow to present value to determine the

optimum evaluation if the time value of currency has great impact. On balance sheet date, check the carry amount of accrued liabilities, and make

adjustment to carry amount to reflect the optimum evaluation. The increase amount in carry amount of accrued liabilities cause by time process

would be determined as interest fee.

Optimum evaluation of accrued liabilities




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If the necessary payments have scopes, the optimum evaluation shall be determined based on the average amount between the upper and lower

limit amount of scope ; if the necessary payments do not have such scopes, then the optimum evaluation shall be determined in the following

method:

① If the contingent event is involved in an individual project, the optimum evaluation amount will be determined base on the most possible amount;

② If the contingent event is involved more than one project, the optimum evaluation amount shall be determined base on possible amount and

occurrence probability. In case of all or part of payments about the confirmed liquidation liabilities are expected to be compensated by the third

parties or other parties, and the compensation amounts are surely received, then such amounts shall be separately recognized as assets. The

confirmed compensation amounts shall not exceed book values of confirmed liabilities.

4.19 Revenue

(1)   Revenue from sales of goods

Revenue from sales of goods is recognised when significant risks and rewards attached to the ownership of the goods sold are passed to the buyer,

when neither continual involvement in the rights normally associated with the ownership of the goods sold nor effective control over the goods

controls are retained, when revenue arising from the goods sold is reliably measurable, when inflow of future economic benefits is probable, and

when cost incurred or to be incurred associated with the goods sold is reliably measurable.

Revenue arising from domestic sales of goods is recognised when goods are dispatched and delivered to the buyer, when significant risks and

rewards attached to the ownership of the goods sold are passed to the buyer, when neither continual involvement in the rights normally associated

with the ownership of the goods sold nor effective control over the goods controls are retained, when revenue arising from the goods sold is reliably

measurable, when inflow of future economic benefits is probable, and when cost incurred or to be incurred associated with the goods sold is reliably

measurable. Revenue arising from non-domestic sales of goods is recognised when goods are loaded on board and when the export clearance with

the custom is completed.

(2) Revenue from rendering of service

Revenue arising from rendering of services is recognised on the balance date using the percentage of completion method when the outcome of the

services rendered can be reliably estimated. The percentage of completion of the services rendered is calculated by dividing the cost to date by the

budgeted total cost.

The outcome of the services rendered can be reliably estimated when revenue from the services render can be reliably measured, when the inflow

of associated future economic benefits is probable, when the percentage of completion can be reliably measure, and when the cost incurred or to be

incurred associated with the services can be reliably measured.

When the outcome of the services rendered cannot be reliably estimate, revenue is recognised as cost reimbursement received or to be received, if

any, and cost incurred is recognised in profit or loss for the period in which the cost is incurred. No revenue is recognised if cost reimbursement is


                                                                                                                                                   100
                                                                              2012 Annual Report of Anhui Gujing Distillery Company Limited



not probable.

When a contract between the group and another entity involves both sales of goods and rendering for services, the sales of goods and rendering of

services are accounted for separately if they are distinguishable and separately measurable; the contract is accounted for as if it is a contract

involves only sales of goods if the sales of goods and rendering of services are either indistinguishable or distinguishable but not separately

measurable.

(3) Royalty Revenue

According to the contract or agreement, the revenue is recognized on an accrual basis.

(4) Interest Income

The amount of interest revenue should be measured and confirmed in accordance with the length of time for which the enterprise's cash is used by

others and the actual interest rate.

4.20 Government Grants

Government grants are transfer of monetary assets and non-monetary assets from the government to the Company at no consideration, excluding

the capital invested by the government as equity owner. Government grant can be classified as grant related to the assets and grants related to the

income.

If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or receivable. If a government grant is in

the form of a non-monetary asset, it is measured at fair value. If the fair value cannot be reliably determined, it is measured at a nominal amount. A

government grant measured at a nominal amount is recognized immediately in profit or loss for the period.

A government grant related to an asset is recognized as deferred income, and evenly amortized to profit or loss over the useful life of the related

asset. For a government grant related to income, if the grant is a compensation for related expenses or losses to be incurred in subsequent period,

the grant is recognized as deferred income, and recognized in profit or loss over the periods in which the related costs are recognized. If the grant is

a compensation for related expenses or losses already incurred, the grant is recognized immediately in profit or loss for the period.

For repayment of a government grant already recognized, if there is a related deferred income, the repayment is offset against the carrying amount

of the deferred income, and any excess is recognized in profit or loss for the period. If there is no related deferred income, the repayment is

recognized immediately in profit or loss for the period.

4.21 Deferred tax assets and deferred tax liabilities

(1) Income tax for the curr