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个股公告正文

古井贡B:2014年年度报告(英文版)

日期:2015-04-29附件下载

ANHUI GUJING DISTILLERY COMPANY LIMITED
            2014 Annual Report




                April 2015
                                                       2014 Annual Report of Anhui Gujing Distillery Company Limited




            Section I. Important Reminders & Explanation

                                       Important Reminders

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 is factual, accurate and complete without any false record, misleading
statement or material omission. And they shall be jointly and severally liable for that.
All directors attended the board session for reviewing this report.
The Company’s profit distribution preplan upon review and approval of this board session: Based
on the total shares of the Company as at 31 Dec. 2014, a cash dividend of RMB 2.00 (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.
Liang Jinhui, company principal, Ye Changqing, chief of the accounting work, and Zhu Jiafeng,
chief of the accounting organ (chief of accounting), hereby confirm that the Financial Report
enclosed in this report is factual, accurate and complete.
This report involves futures plans and some other forward-looking statements, which shall not be
considered as virtual promises to investors. Investors are kindly reminded to pay attention to
possible risks.




                                                   2
                                                                         2014 Annual Report of Anhui Gujing Distillery Company Limited




                                                          Catalogue

Section I. Important Reminders & Explanation ............................................................................. 2
Section II. Company Profile .............................................................................................................. 6
Section III. Accouonting & Financial Indicator Highlights ........................................................... 8
Section IV. Report of the Board of Directors ................................................................................ 11
Section V. Significant Events .......................................................................................................... 33
Section VI. Changes in Shares & Shareholders ............................................................................ 37
Section VII. Directors, Supervisors, Senior Management Staff & Employees .......................... 44
Section VIII. Corporate Governance ............................................................................................. 52
Section IX. Internal Control ........................................................................................................... 57
Section X. Financial Report ............................................................................................................ 59
Section XI. Documents Available for Reference ......................................................................... 160




                                                                     3
                                                   2014 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
                                                       2014 Annual Report of Anhui Gujing Distillery Company Limited




                                Reminder of Major Risks
1. We have disclosed in this report the major risk factors that may prevent us from fulfilling our
future development strategies and operating goals. Please refer to the possible risks in the outlook of
the future development of the Company in the Report of the Board of Directors in this report.
2. 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.
3. 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
                                                                         2014 Annual Report of Anhui Gujing Distillery Company Limited




                                            Section II. Company Profile

I. Company information

Stock abbreviation                 GJGJ, GJGB                                Stock code                  000596, 200596

Stock abbreviation after
change (if any)

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
                                   Liang Jinhui
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. Contact us

                                                            Company Secretary                    Securities Affairs Representative

Name                                             Ye Changqing                               Ma Junwei

                                                 Gujing Town, Bozhou City, Anhui            Gujing Town, Bozhou City, Anhui
Address
                                                 Province                                   Province

Tel.                                             (0558) 5712231                             (0558) 5710057

Fax                                              (0558) 5317706                             (0558) 5317706

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

                                                                     6
                                                                       2014 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 disclosing
                                                        http://www.cninfo.com.cn
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 May 2014            Administration        340000400001632        341600151940008        15194000-8
reporting period
                                             Bureau of Anhui
                                             Province

Changes of the main business since listing
                                             Unchanged
(if any)

Changes of the controlling shareholder (if
                                             Unchanged
any)


V. Other information

The CPAs firm hired by the Company:

Name                                 Ruihua Certified Public Accountants LLP

                                     5-11 F, West Tower, China Overseas Property Plaza, Building No. 7, Courtyard No. 8, Xi
Office address
                                     Binhe Road, Yong Ding Men, Dong Cheng District, Beijing, China

Signing accountants                  Yang Ganlin, Chen Lianwu

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




                                                                   7
                                                                       2014 Annual Report of Anhui Gujing Distillery Company Limited




                 Section III. Accounting & Financial Indicator Highlights

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
                                              2014                      2013             this year over last year         2012
                                                                                                   (%)

Operating revenues (RMB Yuan)               4,650,855,881.72       4,580,575,654.71                       1.53%        4,197,057,315.26

Net     profit     attributable    to
shareholders of the Company                  597,041,887.34            622,004,915.79                     -4.01%         725,589,286.31
(RMB Yuan)
Net    profit    attributable  to
shareholders of the Company after
                                             568,353,541.08            593,950,787.12                     -4.31%         711,934,788.75
extraordinary gains and losses
(RMB Yuan)
Net cash flows from operating
                                             387,494,289.89            638,255,355.31                    -39.29%       1,086,867,364.46
activities (RMB Yuan)

Basic EPS (RMB Yuan/share)                              1.19                      1.24                    -4.03%                   1.44

Diluted EPS (RMB Yuan/share)                            1.19                      1.24                    -4.03%                   1.44

Weighted average ROE (%)                             15.05%                    17.47%                     -2.42%                 23.80%

                                                                                         Increase or decrease of
                                        As at 31 Dec. 2014     As at 31 Dec. 2013        this year-end than last    As at 31 Dec. 2012
                                                                                              year-end (%)

Total assets (RMB Yuan)                     6,413,518,166.03       5,816,934,562.27                      10.26%        5,308,127,471.04

Net     assets     attributable    to
shareholders of the Company                 4,181,050,977.96       3,742,756,257.05                      11.71%        3,375,488,108.64
(RMB Yuan)

Number of the Company’s total shares in the trading day before disclosure of this report:

Number of the Company’s total shares in the trading day
                                                                                                                            503,600,000
before disclosure of this report




                                                                   8
                                                                  2014 Annual Report of Anhui Gujing Distillery Company Limited


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

     □ Applicable √ Inapplicable


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

     □ Applicable √ Inapplicable


III. Items and amounts of extraordinary gains and losses

√ Applicable □ Inapplicable
                                                                                                                 Unit: RMB Yuan

                      Item                         2014                 2013                2012                  Note

Gains/losses on the disposal of non-current
assets (including the offset part of the asset    -2,134,348.70        -1,394,990.98          465,158.50
impairment provisions)

Government grants recognized in the current
period, except for those acquired in the
ordinary course of business or granted at          6,045,394.97        6,438,091.17         5,871,645.90
certain quotas or amounts according to the
government’s unified standards

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
                                                  17,233,109.00       10,050,415.19
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           382,500.00
carried out separately

Non-operating income and expense other
                                                  16,729,758.11       22,311,989.53        12,188,577.39
than the above

Less: Income tax effects                           9,568,067.12        9,351,376.24         4,870,884.23

        Minority interests effects (after tax)

Total                                             28,688,346.26       28,054,128.67        13,654,497.56            --

Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in the Explanatory
                                                                9
                                                                   2014 Annual Report of Anhui Gujing Distillery Company Limited


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
□ Applicable √ Inapplicable




                                                                 10
                                                          2014 Annual Report of Anhui Gujing Distillery Company Limited




                     Section IV. Report of the Board of Directors

I. Overview

In the reporting period, in face of complicated economic situations and downward economies at home and abroad
as well as a severe season for the main business of distilled spirit, the Board of Directors of the Company, upon
common efforts of the new management team and all the staff, upheld the values of Gujing people of “be honest,
make good wine, make ourselves better and make the world better”, regained faith and confidence, solidified the
main business and kept innovating. As a result, all budgetary objectives for 2014 were successfully fulfilled.
For 2014, the Company achieved operating revenues of RMB 4,650,855,881.72,up 1.53% over last year; total
profit of RMB 796,204,507.14, down 6.54% over last year; net profit of RMB 597,041,887.34, down 4.01% over
last year; EPS of RMB 1.19/share, down 4.03% over last year; and net operating cash flows of RMB
387,494,289.89, down 39.29% over last year. The production and operating indicators set at the beginning of the
year were all fulfilled and the Company was in good production and operation.

II. Main business analysis

1. Overview

(I) The marketing model was reformed and the sales volume kept increasing.
1. Lean marketing was carried out. In face of pressure in marketing, we closely adhered to the strategic objectives,
upheld the guiding principles of “stability = growth, no decrease in prices = increase” and “downsizing & power
decentralization”, and carried out lean marketing according to “work on dynamic marketing, de-stock, keep prices
and stabilize channels”.
2. Brand promotion was continuously enhanced. According to the “top-end & internationally and domestically
famous” brand strategy, we gathered our brand power and continued to promote our brand by a series of activities
such as a global tour of Gujing Spirit, sponsoring Snooker games, the Most Touching Chinese Awards, the
Awards for the News Figures Who Touch the Heart of Anhui, and the 5th Anniversary for the Launch of Vintage
Original Gujing Spirit & 2014 Annual Distributor Strategic Communication.
3. The product system was optimized. In the reporting period, according to market needs, we upgraded the spirit
quality and package for the Vintage Original Gift edition, the Outside-Anhui Happiness edition and 5 vintage
originals.
4. We proactively explored new marketing models. In the reporting period, we enhanced and accelerated internet
marketing by setting up the Internet Business Center as well as official flagship stores on Tmall, Taobao and JD,
an official online shopping mall on our official website, and other direct sale and distribution channels.
5. Our market system was safeguarded in an all-round manner. We continued to optimize the organizational
structure of marketing and the three tiers of KPI appraisal and enhance our effort in expense audit and
anti-counterfeit so as to ensure the efficient operation of our market system.
(II) The production capacity structure was optimized, R&D was enhanced and the product quality kept improving.
1. The product quality guarantee system became more solid. We had a quality control team of nearly 100 staff.
Meanwhile, the internationally advanced large-scaled equipment for liquor quality testing and analysis previously
brought in were all put into use, leaving no effort spared in safeguarding the efficient operation of our quality
                                                        11
                                                                  2014 Annual Report of Anhui Gujing Distillery Company Limited


control system.
2. Preliminary results were achieved in promotion of standardized operation. The Company was selected as one of
the “(First) Example Enterprises in Standardization in the Industrial and Informatization Field in Anhui Province”.
The state-level lab set up by us officially passed the certification. And the academician workstation and the
postdoctoral research station were completed as scheduled.
  (III) Internal management was enhanced and the operational and managerial capability kept improving.
1. Activities for the “Year of Human Resource Improvement” were effectively carried out. 2014 had been set to
be a “Year of Human Resource Improvement” for the Company. We improved our human resource management
mechanism, further optimized our organizational structure and position system, and successfully kicked off
establishment of the career path.
2. We enhanced internal control, increased income and reduced expenditure, and increased the capital utilization
efficiency. In the reporting period, we further deepened cost control and formulated a systematic plan for cost
control. Beginning with internal control audit, we strictly audited expense on marketing, engineering projects, etc.
As such, quite a few costs were effectively controlled.
(IV) We enhanced corporate culture improvement and improved our brand image.
Since taking office, the new management team put forward, on the path of adhering to leapfrog development, a
series of new concepts such as “return to the top level of the distilled spirit industry”, a greater goal of building a
“manufacture empire” and core values of “be honest, make good wine, make ourselves better and make the world
better”. The atmosphere and ecology of the Company became healthier. The campaign of “new environment, new
atmosphere, new driving force and new achievements” started to yield results. A favorable internal environment
characteristic of “fair and righteous atmosphere, staff and operation” was created, urging every employee to
become an executor and spreader of Gujing’s contribution culture.
(V) Judging from the operation in the reporting period, we still need to work on the following:
1. Our existing organizational structure and human resources cannot keep up with our strategic development and
are facing adjustment.
2. As the Company grows bigger, market competition becomes fiercer and cost pressure in management,
production, procurement, human resources, etc. is building up. We need to exploit our potential in a deeper
manner and increase the economic benefits.
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
Changes in the main operational model
□ Applicable √ Inapplicable


2. Revenues

For 2014, we sold 66.6 thousand tons of distilled spirit, up 3.38% from the year earlier; and we achieved operating revenues of RMB
4.651 billion, up 1.53% year on year, and net profits attributable to shareholders of the Company of RMB 597 million, down 4.01%
year on year.
Are the Company’s goods selling revenue higher than the service revenue?
√ Yes □ No

       Industry                 Item                Unit                    2014               2013                YoY +/-

Distilled spirit       Sales volume         Ton                               66,608.13           64,427.29                  3.38%

                                                                12
                                                                       2014 Annual Report of Anhui Gujing Distillery Company Limited


brewage                 Output                  Ton                                 65,680.19               66,309.2                -0.95%

                        Stock                   Ton                                  2,987.13               3,915.07               -23.70%

Reasons for any over-30% YoY movement of the data above:
□ Applicable √ Inapplicable
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)                                                                             1,216,261,023.53

Ratio of the total sales to the top 5 customers to the
                                                                                                                                    26.15%
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                                                      470,825,726.23                                      10.12%

     2       Distributor B                                                      321,104,908.41                                       6.90%

     3       Distributor C                                                      282,787,375.85                                       6.08%

     4       Distributor D                                                       94,548,801.96                                       2.03%

     5       Distributor E                                                       46,994,211.08                                       1.01%

Total                                --                                    1,216,261,023.53                                         26.15%

Other information about major customers:
□ Applicable √ Inapplicable


3. Costs

Classified by industry:
                                                                                                                           Unit: RMB Yuan

                                                         2014                                    2013
     Industry                 Item                              Proportion in                           Proportion in         YoY +/-
                                                Amount                                 Amount
                                                             operating costs                           operating costs

Food
                     Direct materials     1,041,435,552.23             73.01%        978,021,881.81             72.53%               6.48%
manufacturing

Food
                     Direct labor cost     147,507,978.36              10.34%        133,456,697.33              9.90%              10.53%
manufacturing

Food                 Manufacturing
                                           101,989,180.53                 7.15%       93,924,997.50              6.97%               8.59%
manufacturing        expenses


                                                                     13
                                                                         2014 Annual Report of Anhui Gujing Distillery Company Limited


Food
                           Fuel-power          83,662,436.07                5.87%       80,318,500.09              5.96%            4.16%
manufacturing

Classified by product:
                                                                                                                            Unit: RMB Yuan

                                                           2014                                    2013
        Product                 Item                              Proportion in                           Proportion in       YoY +/-
                                                Amount                                   Amount
                                                                operating costs                         operating costs

Distilled         spirit
                                             1,374,595,147.19            96.37% 1,285,722,076.73                 95.35%             6.91%
products

Hotel revenue                                  41,303,525.82                2.90%       38,970,804.86              2.89%            5.99%

Others                                         10,460,416.70                0.73%       23,680,998.95              1.76%          -55.83%

Major suppliers:

Total purchases from the top 5 suppliers        (RMB Yuan)                                                                  408,499,592.87

Ratio of the total purchases from the top 5 suppliers to the
                                                                                                                                   39.47%
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                                                          190,276,478.21                                   18.38%

        2     Supplier B                                                           63,477,601.48                                    6.13%

        3     Supplier C                                                           56,504,876.15                                    5.46%

        4     Supplier D                                                           50,903,016.80                                    4.92%

        5     Supplier E                                                           47,337,620.23                                    4.57%

Total                                   --                                        408,499,592.87                                   39.47%

Other information about major suppliers:
□ Applicable √ Inapplicable


4. Expense

Naught




                                                                       14
                                                                   2014 Annual Report of Anhui Gujing Distillery Company Limited


5. R&D expenses

The R&D expenses in the reporting period stood at RMB 152,792,000, accounting for 3.65% of the net assets and 3.29% of the
operating revenues.


6. Cash flows

                                                                                                                 Unit: RMB Yuan

              Item                             2014                             2013                         YoY +/-

Subtotal of cash inflows from
                                                5,470,924,405.02                    5,681,044,259.07                     -3.70%
operating activities

Subtotal of cash outflows from
                                                5,083,430,115.13                    5,042,788,903.76                      0.81%
operating activities

Net cash flows from operating
                                                  387,494,289.89                      638,255,355.31                    -39.29%
activities

Subtotal of cash inflows from
                                                2,383,026,644.60                      948,305,978.93                    151.29%
investing activities

Subtotal of cash outflows from
                                                3,218,831,202.66                    2,437,480,975.37                     32.06%
investing activities

Net cash flows from investing
                                                 -835,804,558.06                    -1,489,174,996.44                    43.87%
activities

Subtotal of cash outflows from
                                                  176,260,000.00                      251,800,000.00                    -30.00%
financing activities

Net cash flows from financing
                                                 -176,260,000.00                     -251,800,000.00                     30.00%
activities

Net increase in cash and cash
                                                 -624,570,268.17                    -1,102,719,641.13                    43.36%
equivalents

Reasons for any over-30% YoY movement of the data above:
√ Applicable □ Inapplicable
1. Net cash flows from operating activities stood at RMB 387,494,289.89 for the reporting period, down 39.29% from last year,
which was mainly because the taxes paid by the Company and the proportion of note payments by customers increased.
2. Cash inflows from investing activities stood at RMB 2,383,026,644.60 for the reporting period, up 151.29% from last year, which
was mainly because the principals of due bank wealth management products were recovered.
3. Cash outflows from investing activities stood at RMB 3,218,831,202.66for the reporting period, up 32.06% from last year, which
was mainly because the investment expense on purchasing bank wealth management products and stocks increased.
4. Net cash flows from financing activities stood at RMB -176,260,000.00 for the reporting period, down 30% from last year, which
was mainly because the cash dividends distributed in the current period decreased.
Reasons for a big difference between the operating cash flows and the net profit:
□ Applicable √ Inapplicable



                                                                 15
                                                                           2014 Annual Report of Anhui Gujing Distillery Company Limited


III. Breakdown of main business

                                                                                                                                    Unit: RMB Yuan

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

Classified by industry

Manufacture            4,612,235,437.15 1,426,359,089.71                   69.07%                    1.57%              5.78%                -1.23%

Classified by product

Distilled     spirit
                       4,525,663,475.64 1,374,595,147.19                   69.63%                    1.96%              6.91%                -1.41%
products

Hotel revenue             76,460,229.81         41,303,525.82              45.98%                    5.09%              5.99%                -0.46%

Other                     10,111,731.70         10,460,416.70               -3.45%               -65.73%              -55.83%               -23.18%

Classified by region

North China              375,113,132.66        150,943,951.66              59.76%                 -3.43%               26.51%                -9.52%

Central China          3,593,793,057.50 1,064,736,548.39                   70.37%                    1.83%              2.60%                -0.22%

Southern China           641,172,562.92        210,129,418.65              67.23%                    3.24%             10.16%                -2.06%

Overseas                   2,156,684.07             549,171.01             74.54%                    3.52%              2.12%                 0.35%

Under the circumstances that the statistical standards for the Company's main business data adjusted in the Reporting Period, the
Company's main business data in the recent year is calculated based on adjusted statistical standards at the end of the Reporting
Period
□ Applicable √ Inapplicable


IV. Analysis of Assets and Liabilities

1. Material changes of asset items

                                                                                                                                    Unit: RMB Yuan

                           As at 31 Dec. 2014                  As at 31 Dec. 2013
                                                                                             Proportion
                                          Proportion in                    Proportion in                          Explain any major change
                         Amount                             Amount                             change
                                           total assets                     total assets

                       718,460,442.7                      1,381,930,710.
Monetary funds                                  11.20%                           23.76%         -12.56%
                                      9                               96

Accounts
                        4,337,953.26             0.07%     6,374,469.99           0.11%           -0.04%
receivable

                       1,227,182,774.                     1,075,033,137.
Inventories                                     19.13%                           18.48%           0.65%
                                  09                                  30

Investing       real 32,074,356.24               0.50% 35,188,079.66              0.60%           -0.10%

                                                                         16
                                                                             2014 Annual Report of Anhui Gujing Distillery Company Limited


estate

                             1,724,134,467.                 1,266,481,752.
Fixed assets                                       26.88%                        21.77%        5.11%
                                        11                             59

Construction            in
                             61,637,510.96          0.96% 377,338,939.54           6.49%      -5.53%
process


2. Significant changes in liabilities

Naught


3. Assets and liabilities measured at fair value

√ Applicable □ Inapplicable
                                                                                                                               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

1.       Financial
assets
measured          by
fair value with
the changes be
included in the
                                     0.00      121,035.00                                       182,884.60              0.00      303,919.60
current         gains
and         losses
(excluding the
derivative
financial
assets)

2.      Derivative
financial assets

3.       Financial
assets available 24,075,687.00                              22,226,138.76                    43,106,793.24 24,075,687.00 65,332,932.00
for sale

Total      of     the
                         24,075,687.00         121,035.00 22,226,138.76                      43,289,677.84 24,075,687.00 65,636,851.60
above

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




                                                                            17
                                                                              2014 Annual Report of Anhui Gujing Distillery Company Limited


4. List of main foreign assets

□ Applicable √ Inapplicable


V. Analysis to the core competitiveness

During the reporting period, there was no significant change of the core competitiveness of the Company.


VI. Analysis to the investment situation

1. Particulars about external equity investment

(1) Particulars about external investment

□ Applicable √ Inapplicable


(2) Particulars about holding equity of financial enterprises

□ Applicable √ Inapplicable


(3) Particulars about securities investment

√ Applicable □ Inapplicable

                                                   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)

                                                                                                                                    Financial
                         Ping An       17,080,74                                                          25,388,35                 assets      Self-own
Stock      000001                                             0      0.00% 1,602,800            0.014%
                         Bank               0.10                                                               2.00                 available- ed funds
                                                                                                                                    for-sale

                                                                                                                                    Financial
                                       26,026,05                                                          39,944,58                 assets      Self-own
Stock      601988        BOC                                  0      0.00% 9,625,200            0.003%
                                            3.14                                                               0.00                 available- ed funds
                                                                                                                                    for-sale

Other securities investment held
                                                                     --                          --                                     --         --
at the period-end

                                       43,106,79                              11,228,00                   65,332,93
Total                                                         0      --                          --                             0       --         --
                                            3.24                                          0                    2.00

Disclosure date of the board
announcement        on    securities

                                                                           18
                                                                                2014 Annual Report of Anhui Gujing Distillery Company Limited


investment approval

Disclosure date of the general
meeting     announcement            on
securities investment approval
(if any)


(4) Explanation on holding equity of other listed companies

□ Applicable √ Inapplicable


2. Entrusted financial management, derivatives investment and entrustment loans

(1) Entrusted financial management

□ Applicable √ Inapplicable


(2) Derivatives investment

√ Applicable □ Inapplicable
                                                                                                                     Unit: RMB Ten Thousand Yuan

                                                                                                                               Proportio
                                                                                                                                n of the
                                                                                                                                closing       Actual
                        Related-p Type of                                                              Impairme
                                                        Initial                            Opening                  Closing investmen gain/loss
                             arty        derivative                             Ending                    nt
Operator Relation                                     investmen Start date                 investmen               investmen t amount           in
                        transactio investmen                                        date               provision
                                                      t amount                             t amount                t amount      in the      reporting
                         n or not               t                                                      (if any)
                                                                                                                               Company        period
                                                                                                                               ’s closing
                                                                                                                               net assets

                                         Reverse
                                         repurchas
                                                                      2 Jan.
                        No               e of                     0                            8,000               18,071.22      4.32%        479.24
                                                                      2014
                                         national
                                         debt

Total                                                             0       --         --        8,000               18,071.22      4.32%        479.24

Capital source for derivative investment              Self-owned idle funds.

Cases involving lawsuit (if
                                                      Naught
applicable)
Disclosure date of the board announcement
approving     the      wealth       management 30 Aug. 2013
entrustment (if any)

Disclosure date of the general meeting


                                                                               19
                                                                             2014 Annual Report of Anhui Gujing Distillery Company Limited


announcement         approving       the   wealth
management entrustment (if any)

Analysis on risks and control measures of
derivative products held in the reporting
                                                       The Company had controlled the relevant risks strictly according to the Derivatives
period (including but not limited to market
                                                       Investment Management System.
risk, liquidity risk, credit risk, operation
risk, law risk, etc.)

Changes of market prices or fair values in
the reporting period of the invested
derivatives. And the analysis on the fair
                                                       Naught
value of the derivatives should include the
specific use methods and the relevant
assumptions and parameters.

Whether significant changes occurred to
the Company’s accounting policy and
specific      accounting         principles       of Naught
derivatives     in      the    reporting      period
compared to the previous reporting period

                                                       Based on the sustainable development of the main business and the sufficient free idle
                                                       money, the Company increased the profits through investing in the reasonable financial
                                                       derivative instruments, which was in favor of improving the service efficiency of the
                                                       idle funds; in order to reduce the investment risks of the financial derivative
                                                       instruments, the Company had set up corresponding supervision mechanism for the
Specific      opinion         from   independent
                                                       financial derivative instrument business and formulated reasonable accounting policy
directors on the Company’s derivatives
                                                       as well as specific principles of financial accounting; the derivative Investment
investment and risk control
                                                       business developed separately took national debts as mortgage object, which was met
                                                       with the cautious and steady risks management principle and the interest of the
                                                       Company and shareholders. Therefore, agreed the Company to develop the derivative
                                                       Investment business of reverse repurchase of national debt not more than the limit of
                                                       RMB 0.3 billion.


(3) Entrustment loans

□ Applicable √ Inapplicable


3. Particulars about the use of raised funds

√ Applicable □ Inapplicable


(1) Overview of the use of raised funds

√ Applicable □ Inapplicable
                                                                                                               Unit: RMB Ten Thousand Yuan

                                                                           20
                                                                     2014 Annual Report of Anhui Gujing Distillery Company Limited


Total amount of raised funds                                                                                                         122,749.95

Total amount of raised funds input in the reporting
                                                                                                                                       9,599.37
period

Total amount of raised funds accumulatively input                                                                                    104,156.09

Total amount of the raised funds which modified the
purposes during the reporting period

Total amount of the accumulative raised funds which
modified the purposes

Proportion of the total amount of the accumulative
raised funds which modified the purposes

                                          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

√ Applicable □ Inapplicable
                                                                                                             Unit: RMB Ten Thousand Yuan

                                                                                                  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

                                                                                                            Cannot b
Technological                                                                                               e calculat
Transform     on  the                                                                           30 Apr.
Brewage            of No                13,500 12,194.42 2,467.92 11,770.16           96.52%                ed separa                 No
High-quality     Base                                                                           2014
                                                                                                            tely
Wine


                                                                                                            Cannot b
Construction of Base                                                                                        e calculat
Wine Blending &                                                                                 30 Apr.
                     No                 68,600 65,921.06 6,122.17 57,403.52           87.08%                ed separa                 No
Filling Centre and                                                                              2014
Ancillary Facilities                                                                                        tely



                                                                                                            Cannot b

Construction      of                                                                            30 Apr.     e calculat
                     No                 27,500      27,500 1,009.28 17,957.35         65.30%                                          No
Marketing Network                                                                               2014        ed separa
                                                                                                            tely

                                                                    21
                                                                              2014 Annual Report of Anhui Gujing Distillery Company Limited




                                                                                                            Cannot b
                                                                                                            e calculat
Construction of Brand                                                                             31 Dec.
                      No                      17,000     17,000          0 17,025.06 100.15%                ed separa            No
Promotion                                                                                         2012
                                                                                                            tely



Subtotal of promised                                   122,615.4              104,156.0
                                  --         126,600               9,599.37                 --        --                    --        --
investment projects                                           8                       9

Investments of over-raised capital

Repayment of the bank
                                  --                                                                  --           --       --        --
loan (if any)

Supplement           of   the
circulating     fund       (if    --                                                                  --           --       --        --
any)

Subtotal        of        the
investments                of     --                                                        --        --                0   --        --
over-raised capital

                                                       122,615.4              104,156.0
Total                             --         126,600               9,599.37                 --        --                0   --        --
                                                              8                       9

Reason for failing to
reach           scheduled
progress or projected
income (explain one
project by one project)

Explanation                on
significant changes in Naught
feasibility of projects

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

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

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

Advanced input and Applicable

                                                                         22
                                                                          2014 Annual Report of Anhui Gujing Distillery Company Limited


exchange of any raised In accordance with the explanation of the Particulars on the Private Issuance of A-share of Anhui Gujing
funds          investment Distillery Co., Ltd. and the Listing Announcement, “Before the raised proceeds being in place, the
project                     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 RMB 27,058,143.42 preliminarily input to the
                            raised proceeds investment projects. The above funds replacement was completed on 6 Jan. 2012.

Idle raised capital for Inapplicable
temporarily
supplementing working
capital

                            Applicable

                            1. The Company strictly carried out the purchase system and the project bidding way, which better
                          controlled the project construction and purchase cost and under the premise of guaranteeing the project
Outstanding        raised quality with the principles of practicing strict economy, the Company further strengthened the project
funds     in      project expenses control, supervisor and management in the process of the execution which reduced the total cost
implementation         and of the investment project of the raised funds. 2. The surplus reason of the marketing network construction
reasons                     project was due to the rather big changes of the liquor market environment and the third party logistics
                            system gradually becoming more and more mature and at the same time, the Company would no more
                            execute the center project of Hefei Logistics for reducing the fixed operating cost of the Company, which
                            caused the capital surplus of the project.

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

Problems found in the
usage and disclosure
                            N/A
affairs of raised capital
and other situations


(3) Change of projects invested with raised funds

□ Applicable √ Inapplicable


4. Analysis to main subsidiaries and stock-participating companies

√ Applicable □ Inapplicable
Main subsidiaries and stock-participating companies
                                                                                                                           Unit: RMB Yuan

                                                 Main
 Company         Company                                    Registered                              Operating   Operating
                                  Industry   products/ser                 Total assets Net assets                             Net profit
   name           variety                                     capital                               revenues      profit
                                                 vices

                                                                         23
                                                                    2014 Annual Report of Anhui Gujing Distillery Company Limited


                                      Wholesales
                                      of distilled
Bozhou                                spirit,
Gujing                    Business    constructio 84,864,497. 1,414,256,3 161,657,67 4,525,137,3 593,174,31 461,431,97
             Subsidiary
Sales Co.,                trading     n materials, 89                     47.25        7.00       38.29        8.12        1.28
Ltd                                   feeds       and
                                      assistant
                                      materials

Bozhou                                Manufactur
Gujing                    Manufactur e and sale 86,660,268. 176,004,15 141,988,85 211,572,40 26,748,621. 20,076,148.
             Subsidiary
Glass Co.,                e           of        glass 98                   6.88        8.89        0.59          32          36
Ltd                                   products

                                      Collect and
Bozhou
                                      sale         of
Gujing
                          Waste       recycled          1,000,000.0 1,671,647.9 1,268,732.1 6,922,572.7
Waste        Subsidiary                                                                                   -44,063.50 -59,696.81
                          recycle     glass bottle, 0                         0           1           6
Reclamatio
                                      glass,
n Co., Ltd
                                      wastebasket

                                      Production,
                                      publish,
                                      design and
                                      proxy        of
Anhui                                 ads          in
Jinyunlai                             China;
                          Ads                           2,000,000.0 31,662,224. 2,995,033.3 423,212,13 6,499,394.3 4,887,003.2
Culture &    Subsidiary               ceremony
                          marketing                     0                   36            2        4.55           4           5
Media Co.,                            service for
Ltd.                                  conferences
                                      as well as
                                      sales        of
                                      gifts in arts
                                      and crafts

                                      Administrat
                                      ive license
                                      items:
                                      Naught;
Bozhou                    Production General
Gujing                    and         operating         30,000,000. 37,450,521. 31,074,921. 7,183,453.1 2,661,276.3 1,643,837.9
             Subsidiary
Packing                   manufactur items:             00                  64          13            0           4           6
Co., Ltd.                 e           providing
                                      packing for
                                      Gujing
                                      Brand,
                                      serials

                                                                  24
                                                                         2014 Annual Report of Anhui Gujing Distillery Company Limited


                                        wine,      fruit
                                        and
                                        vegetable
                                        wine, health
                                        wine         of
                                        Gujing
                                        Brand

Bozhou                                  Transportati
Gujing                      Transportati on,      sales 6,945,195.6 3,587,200.6 2,475,117.0
               Subsidiary                                                                                0.00         0.00        0.00
Transportati                on          and       repair 4                         0           2
on Co., Ltd                             service

                                        Hotel
                                        managemen
                                        t      (Except
                                        for catering
                                        managemen
                                        t 、 Except
                                        for       hotel
                                        operation);
                                        Self-owned
Shanghai                                housing
Gujing                                  rental;
                            Hotel
Jinhao                                  establish          54,000,000. 231,501,52 94,016,179. 71,671,628. 7,070,156.0 5,746,971.4
               Subsidiary   managemen
Hotel                                   branch. (If 00                          2.29         33            81            9          7
                            t
Managemen                               the
t Co., Ltd.                             enterprise
                                        operation
                                        involves the
                                        administrati
                                        ve
                                        licensing, it
                                        shall
                                        operate
                                        based        on
                                        the license).

                                        Accommod
                                        ation       and
Bozhou                                  parking
                            Hotel
Gujing                                  services;                        1,373,303.1               4,792,101.0
               Subsidiary   managemen                      628,000.00                  57,304.24                 235,725.80 234,534.80
Hotel Co.,                              lunch                                      7                        0
                            t
Ltd.                                    processing,
                                        sales        of
                                        alcohol and


                                                                        25
                                                              2014 Annual Report of Anhui Gujing Distillery Company Limited


                                       tobacco and
                                       sales        of
                                       daily
                                       commodity

                                       Research
                                       and
                                       promotion
                                       of         the
                                       engineering
                                       and
                                       technology;
                                       information
                                       System
                                       planning
                                       and design;
                                       computer
                                       software
                                       and
                                       hardware,
                                       network
                                       communica
                                       tion system
Anhui
                                       design,
Swisse Will
                           Technical   developmen 50,000,000. 51,552,515. 49,425,543. 3,365,280.6
Science &     Subsidiary                                                                            -574,456.82 -574,456.82
                           research    t and sales; 00                 18          18           6
Technology
                                       enterprise
Co., Ltd.
                                       managemen
                                       t consulting
                                       and
                                       services. (If
                                       the
                                       enterprise
                                       operation
                                       involves the
                                       administrati
                                       ve licensing
                                       or
                                       qualificatio
                                       n, it shall
                                       operate
                                       based       on
                                       the license
                                       or
                                       qualificatio

                                                            26
                                                                                      2014 Annual Report of Anhui Gujing Distillery Company Limited


                                                n)

Anhui                                           Production
Subway                           Manufactur and sales o
                                                                   30,000,000. 30,000,000. 30,000,000.
Cordial          Subsidiary      ing and        f other liq                                                              0.00           0.00          0.00
                                                                   00                            00           00
Wine Co.,                        sales          uor (compo
Ltd.                                            und wine)

                                                Production,
                                                publish,
                                                design and
Shanghai
                                                proxy         of
Hongbang
                                                ads           in
Culture                          Ads                               5,000,000.0
                 Subsidiary                     China;                                       0.00           0.00         0.00         234.82       -208.28
Communica                        marketing                         0
                                                ceremony
tion Co.,
                                                service for
Ltd.
                                                conferences
                                                and sales of
                                                craft gifts

Particulars about subsidiaries gained and disposed during the reporting period
√ Applicable □ Inapplicable

                                            Purpose for acquiring or                  Way of acquiring or disposing        Influence on the overall
        Name of subsidiary               disposing the subsidiary in the              the subsidiary in the reporting      production and business
                                                reporting period                                   period                        performance

Anhui Subway Cordial Wine
                                         Company development needs                   Establishment
Co., Ltd.

Shanghai         Hongbang     Culture
                                         Company strategy adjustment                 Write-off
Communication Co., Ltd.


5. Particulars about significant projects invested by non-raised funds

√ Applicable □ Inapplicable
                                                                                                                         Unit: RMB Ten Thousand Yuan

                                                                   Accumulati
                                           Amount of
                       Total planed                          ve         amount
    Name of                               input during                                 Progress of      Gains from      Disclosure date        Disclosure
                        amount of                            actually        input
       project                            the reporting                                  project            project        (if any)       index (if any)
                       investment                            as        of      the
                                             period
                                                             period-end

Relocation and
Technological
Transform         on
                              80,000                 9,539                  77,210           95.00%                     29 Mar. 2012
the Brewage of
Base Wine and
the supporting
                                                                                 27
                                                                     2014 Annual Report of Anhui Gujing Distillery Company Limited


facilities
projects

Total                     80,000            9,539           77,210         --             --             --             --


VII. Predict the operating results of Jan.-Mar. 2015

Warning of possible loss or considerable YoY change of the accumulated net profit made during the period-begin to the end of the
next reporting period according to prediction, as well as explanations on the reasons:
□ Applicable √ Inapplicable


VIII. Particulars about special purpose entities controlled by the Company

Naught


IX. Outlook of the Company’s future development

(I) Industry development prospects of the Company
Since the recent 3 years, as the growth rate of the macro-economy slowed down, the transformation unsmooth and
the consumption been blocked, the prohibition, the detailing, warning and normalization of the renovation of the
“three public consumptions”, and the liquor industry especially the high-grade liquor were suffering great impact,
the sales of the high-grade products constantly declined, the channels, market and products structure began to step
into the profound adjustment phase with the liquor Industry kicked off the shuffle as well as the liquor pattern was
being reconstitution. In 2015, the macro-economic environment and industry development environment was still
not encouraging and the liquor-making industry reform was still not touched the root as well as the industry
mainly appeared the following characteristics:
1. The mass wine market will appear “crowded” phenomenon
The high-end wine be blocked and gone downward with the mass wine became the growth power of the industry
certainty became a common understanding. In Y2015, whether the national famous wine or the regional brand will
extend the momentum of the power generation of the mass wine thus must bring the products, channels and
market congestion of the mass wine market.
3. Category replacement is intensifying with the personalized custom-made sprung up
As the knowledge of the wine and the pursue of the health concept of the people, the white spirit will face with the
fierce category competition, and the replacement competition such as the grape, spirit, beer, and fruit juice wine
will not be neglected; and the Y2015 will be the normalization year of the liquor custom wine organization with
more wine companies will establish the professional custom departments or the custom wine companies and will
cultivate the growth point by the differentiated products.
4. The whole nation surfing the internet with the wine enterprises embracing the internet
Surfing the internet became the plan of 2015 among multiple of the wine enterprises, of which either in virtue of
the professional platform such as Taobao, Tmall and JD, or independently developed the client-side, thus the “one
website one shop” will become the necessary of the wine enterprises, which meant the “one enterprise + one
website” will develop to become the tendency of “one enterprise + one website + one online shop”.
  (II) Development strategy of the Company
The Company takes the “returning to the first camp of the liquor-making industry” and constructing the
“manufacturing empire” as the strategy target of the Company, and embraces which, the development strategy of
                                                                  28
                                                           2014 Annual Report of Anhui Gujing Distillery Company Limited


the Company indicates in the following aspects:
1. Insist to develop in the optimization, speed up the process of “adjustment, enhancing, remolding and
transformation”, adjust the products structure, improve the products quality, strengthen the talents resources
development and management, perfect the pressure transmission mechanism, intensify the examine execution,
enhance the personnel quality, optimize the talents structure and forge the enterprise team with all-win harmony;
2. Insist to execute the overall innovation strategy, enhance the self innovation ability, combine the technical
innovation, management innovation, system innovation and concept innovation, accelerate the enterprise
information construction, realize the resources optimizing configuration and information sharing and exert the
synergistic effect;
3. Insist to execute the operation strategy of the combination of brand-driving and products promotion, walk on
the brand road with differentiation and personalization, intensify the brand construction, overall enhance the brand
image, strengthen the brand-driving effect, strive for the returning of the first army group of the Chinese liquor
through 3 to 5 years fighting and make great efforts to become the best liquor enterprise of China.
4. Become the friendly enterprise that be friendly to the shareholders, employees, customers, partners, society and
environment and actively build the harmony enterprise.
(III) Operation plan of Y2015
In 2015, the company operating revenue plan on the basis of not less than 2014 years, efforts to achieve
growth.
(IV) Operation risks of the Company
1. The risks of the constantly deterioration of the competition environment. The main products of the Company
attribute to the popular consumption products, and accompanied with the products layout adjustment of each
enterprise, part of the high-end brand had turned to the mass region, thus the Company would face with fiercer
competition environment that bring certain uncertain influences on the future sales for the Company.
2. Risks of the industry policies. According to the relevant policies of the nation, the liquor industry which the
Company engaged in was not attributed to the industry encouraged by the nation, if the nation executed the
adjustment on the current liquor industry, for example, the aspects such as the taxation, price and land, would
cause restriction for the liquor industry that lead certain harmful influences on the production and operation of the
Company.
3. Risks of the counterfeit and inferior and as well as the infringing products. The market image of the liquor
products of the Company is favorable with high fine reputation, and the liquor industry is the industry with higher
profits rate. Impelled by the profits, the illegal personnel or the enterprises produced and sold the counterfeit and
inferior and as well as the infringing products involved with the brand of the Company. If such illegal operating
activities had not received efficient resistance, would cause significant harmful influences on the development of
the Company.
4. Risks of the environmental protection. The Company attributes to the liquor-making industry, there would be
certain “three wastes” in the process of the production, although currently the Company had set up a whole set of
the environmental protection system for handling and preventing the incidents that pollute the environments,
which had passed the reviewed and inspection as well as acceptance by the environmental protection department
that met with the national environmental protection standard, however, as the nation paying more and more
attention on the environmental protection issue, the standard of which would become stricter and stricter and the
Company would face with certain environmental protection risks in the future.
(V) The Board of Directors will adopt the following operation measures.
Aims at the current situation of the industry development and according to the development strategy target as well
as the 2015 operation plan of the Company, the Board of Directors of the Company will insist the spirit of the 18th

                                                         29
                                                                    2014 Annual Report of Anhui Gujing Distillery Company Limited


National People's Congress,the 18th Third Plenary Session and the central, provincial and municipal economic
work conference as the guidance, tightly embrace the “one core”, make great efforts to construct “three normalcy”,
accurately execute the “five measurements”, focus the “six embrace” to grasp the implement, forge a iron army
team and stably promote the Company to step towards to the strategy target.
1. Embrace “one core” refers to embrace the core target of the main business strategy target of the liquor
unmoved.
2. Construct the “three normalcy” refers to the new concept, new thinking and new mode. Only the Company
builds up the new normalcy could be the first to completed the enterprise transformation and promote the
enterprise shaping, thus to realize the corner overtaking.
3. Accurately execute the “five measurements” refers to the integrating marketing to ensure the achievement of
the target; cultivate the talents to ensure the aftereffect of the development; upgrade the management to ensure the
operating efficiency; strengthen the supervision to ensure the “Sanzheng” ecology; optimize the organization
structure to ensure the decomposition and landing of the strategy target.
In 2015, the Board of Directors of the Company will lead the whole employees of Gujing to face the difficulty, to
take the enterprise core value as the guidance, to cooperate with absolute sincerity and courage to act, to grow
stronger and larger together of Gujing Company that make great efforts to become the most respectful as well as
the most popular liquor-making enterprise.

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

Naught


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

√ Applicable □ Inapplicable
Detailed in the report "the tenth day, five, 29, important accounting policies and accounting estimates change".


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

Naught


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

√ Applicable □ Inapplicable
The subsidiaries newly included in the consolidated scope

                     Name of the company                                                  Reasons of changes

            Anhui Subway Cordial Wine Co., Ltd.                                      Investment and establishment




                                                                  30
                                                                       2014 Annual Report of Anhui Gujing Distillery Company Limited


The 3rd Session of the 7th Board of Directors reviewed and approved the Proposal on Investing and Establishing the Wholly-owned
Subsidiary on 29 Aug. 2014. The Company held 100% control right of it and included which into the consolidated scope of the
financial statement of 2014.


XIV. 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:
√ Applicable □ Inapplicable
According to the Proposal on the Profit Distribution of 2013 of the Company approved by Annual General Meeting on 20 Jul. 2014,
the Company distributed the cash dividends to the whole shareholders of RMB 0.35 per share which amounted to RMB 176,260,000
calculated by the issued shares amount of 503,600,000 shares.

                                            Special explanation of the cash dividend policy

Whether conformed with the regulations of the Articles of
association or the requirements of the resolutions of the Yes
shareholders’ meeting:

Whether the dividend standard and the proportion were definite
                                                                      Yes
and clear:

Whether the relevant decision-making process and the system
                                                                      Yes
were complete:

Whether the independent director acted dutifully and exerted the
                                                                      Yes
proper function:

Whether the medium and small shareholders had the chances to
fully express their suggestions and appeals, of which their legal Yes
interest had gained fully protection:

Whether the conditions and the process met the regulations and
was transparent of the adjustment or altered of the cash dividend Inapplicable
policy:

The Company’s preplans on profit distribution and turning capital reserve into share capital for the recent three years (including the
reporting year):
1. The Company’s plan on cash distribution in 2012 was as follows: a cash of RMB 5 (tax included) was distributed for each 10
shares, with no capital reserves turned into share capitals.
2. The Company’s preplan on cash distribution in 2013 was as follows: a cash of RMB 3.5 (tax included) was distributed for each 10
shares, with no capital reserves turned into share capitals.
3. The Company’s preplan on cash distribution in 2014 was as follows: a cash of RMB 2(tax included) was distributed for each 10
shares, with no capital reserves turned into share capitals.
Cash dividend in the recent three years
                                                                                                                           Unit: RMB Yuan

                           Amount of cash       Net profit belonging The ratio accounting The amount offered            The proportion
    Dividend year         dividend (including    to shareholders of        in net profit which   and re-purchased the     offered and
                                 tax)           the listed company             belongs to        shares by cash that    re-purchased the

                                                                      31
                                                                        2014 Annual Report of Anhui Gujing Distillery Company Limited


                                                    in consolidated      shareholders of the   included in the cash    shares by cash that
                                                     statement of          listed company in           bonus          included in the cash
                                                    dividend year            consolidated                                     bonus
                                                                              statement

2014                            100,720,000.00        597,041,887.34                  16.87%

2013                            176,260,000.00        622,004,915.79                  28.34%

2012                            251,800,000.00        725,589,286.31                  34.70%

Although the company obtains profits and the parent company’s undistributed profit is positive during the reporting period, no cash
dividend distribution pre-plan is put forward.
□Applicable √ Inapplicable


XV. Preplan for profit distribution and turning capital reserve into share capital in the
reporting period

√ Applicable □ Inapplicable

Bonus shares for every 10 shares (shares)                                                                                                    0

Dividend for every 10 shares (RMB Yuan)
                                                                                                                                      2.00
(including tax)

Shares turned from capital reserve for every 10
shares (share)
Total shares as the basis for the allocation preplan
                                                                                                                               503,600,000
(share)
Total cash dividends (RMB Yuan) (tax included)                                                                              100,720,000.00

Distributable profit (RMB Yuan)                                                                                           1,990,080,289.98

Proportion of cash bonus in the total of profit
                                                                                                                                   100.00%
distribution

                                                            Cash dividend policy:



               Specific explanation of preplan for profit distribution or preplan for turning capital reserve into share capital

The Company planed to based on the total shares at the year-end of 503,600,000 shares to distribute the dividends with a cash of
RMB 2 (tax included) to the whole shareholders for each 10 shares which was of RMB100,720,000.00 and the retained profits of
RMB1,889,360,289.98 would all transfer to the next year.


XVI. 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 29 Apr. 2015.
Whether the listed company and its subsidiaries were belongs to the heavily polluting industries stimulated by the state department of
environmental protection
□ Yes √ No □ Inapplicable


                                                                      32
                                                                   2014 Annual Report of Anhui Gujing Distillery Company Limited


Whether there were any significant society security problems of the listed company and its subsidiaries
□ Yes √ No □ Inapplicable
Whether had been administrative punished in the reporting period
□ Yes √ No □ Inapplicable


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

There was no any activity of field researches, visits and interviews received during the reporting period of the Company.




                                                                  33
                                                                   2014 Annual Report of Anhui Gujing Distillery Company Limited




                                       Section V. Significant Events

I. Corporate governance

The situation of the Company’s governance did not differ in principle from the Company Law and the relevant CSRC requirements
in the reporting period.


II. Significant lawsuits or arbitrations

□ Applicable √ Inapplicable
The Company was not involved in any significant lawsuit or arbitration in the reporting period.


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

Naught


IV. Bankruptcy and reorganization

Naught


V. Asset transactions

1. Asset acquisition

Naught

2. Sale of assets

Naught


3. Business combination

Naught


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

Naught




                                                                 34
                                                                        2014 Annual Report of Anhui Gujing Distillery Company Limited


VII. Significant related-party transactions

1. Related-party transactions concerning routine operation

Naught


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

Naught


3. 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 related-party transactions

Naught


VIII. 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
There was no such situation of the Company.




                                                                   35
                                                                  2014 Annual Report of Anhui Gujing Distillery Company Limited


(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


(1) Violation of the external guarantees

Naught


3. Other significant contracts

Naught


4. Other significant transactions

Naught


IX. 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


2. If the Company’s assets or projects existing earnings prediction, and the reporting period is among the
prediction period, it shall explain on whether the assets or projects reach the original earnings prediction
and relevant reason

Naught


X. Particulars about engagement and disengagement of CPAs firm

CPAs firm engaged at present

Name of domestic CPAs firm                           Ruihua Certified Public Accountants (LLP)

Remuneration of domestic CPAs firm (RMB Ten
                                                     110
Thousand Yuan)

Consecutive years of the audit services provided by 2


                                                                36
                                                                     2014 Annual Report of Anhui Gujing Distillery Company Limited


domestic CPAs firm

Name of the certified public accountants from the
                                                        Yang Ganlin, Chen Lianwu
domestic CPAs firm

Reengage the CPAs firm at current period or not?
□ Yes √ No
Change the CPAs firm during the audit period or not?
□ Yes √ No
Particulars on engaging the audit firm for the internal control, financial adviser or sponsor
√ Applicable □ Inapplicable
In 2014, the Company engaged the Ruihua Certified Public Accountants (LLP) control audit CPAs of the Company.


XI. Explanation of the Supervisory Committee and Independent Directors (if applicable) on
the “Non-standard Auditor’s Report” issued by the CPAs firm during the reporting period

Inapplicable


XII. Punishment and rectification

Explanation on rectification:
Inapplicable
Particulars about the directors, supervisors, senior management staffs and shareholders holding over 5% shares of the Company
involving in illegal trading the Company’s stocks and the Company has disclose to recover the illegal income
□ Applicable √ Inapplicable


XIII. Particulars about trading suspension and termination faced after the disclosure of
annual report

Naught


XIV. Other significant events

Naught


XV. Significant events of subsidiaries of the Company

Naught


XVI. Corporate bonds issued by the Company

Naught




                                                                   37
                                                                       2014 Annual Report of Anhui Gujing Distillery Company Limited




                            Section VI. Change in Shares & Shareholders

I. Change in shares

1. Change in shares
                                                                                                                             Unit: Share

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

                                                                                 Capitalizat
                                                  Percenta   New      Bonus         ion of                                      Percenta
                                     Number                                                     Other   Subtotal   Number
                                                    ge       shares   shares       capital                                        ge
                                                                                   reserve

I. Restricted shares                        900     0.00%                                                                 900     0.00%

1. Shares held by the state

2.    Shares        held      by
state-owned corporations

3. Shares held by other
                                            900     0.00%                                                                 900     0.00%
domestic investors

Among which: shares held
by domestic corporations

Shares held by domestic
                                            900     0.00%                                                                 900     0.00%
individuals

4. Shares held by foreign
investors

Among which: Shares held
by foreign corporations

Shares held by foreign
individuals

II. Non-restricted shares           503,599,100 100.00%                                                            503,599,100 100.00%

1. RMB ordinary shares              383,599,100 76.17%                                                             383,599,100 76.17%

2.   Domestically          listed
                                    120,000,000 23.83%                                                             120,000,000 23.83%
foreign shares

3. Overseas listed foreign
shares

4. Other

III. Total shares                   503,600,000 100.00%                                                            503,600,000 100.00%

Reason for the changes in share capital



                                                                      38
                                                                          2014 Annual Report of Anhui Gujing Distillery Company Limited



Approval for changes in share capital
□ Applicable √ Inapplicable
Transfer for changes in share capital
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
□ Applicable √ Inapplicable


2. List of change of restricted shares

Naught


II. Issuance and listing of securities

1. Securities issued in the previous three years

Naught


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
Total    number     of                                                                         preferred          share
common                                        Total     number       of                        holders     who     had
shareholders at the                     27,298 shareholders on the                     28,216 resumed their voting                       0
end of the reporting                          fifth trading day                                right at the end of
period                                                                                         the reporting period
                                                                                               (if any) (see note 8)

             Particulars about shares held by shareholders with a shareholding percentage over 5% or the Top 5 of them

                                         Sharehold                   Increas Number                          Pledged or frozen shares
                                                      Total shares                         Number of
     Name of              Nature of          ing                     e/decre      of
                                                      held at the                           tradable
   shareholder           shareholder      percentag                   ase      non-trada                 Status of shares Number of shares
                                                      period-end                           shares held
                                            e (%)                    during ble shares


                                                                      39
                                                                          2014 Annual Report of Anhui Gujing Distillery Company Limited



                                                                        the      held
                                                                      reportin
                                                                         g
                                                                      period

ANHUI GUJING
GROUP              State-owned                        271,354,02
                                             53.88%                                     271,354,022 Pledged               114,000,000
COMPANY            corporation                                   2
LIMITED

AGREED
BUYBACK
                   Domestic
SPECIAL
                   non-stated-owned           2.98% 15,000,000                           15,000,000
ACCOUNT OF
                   corporation
GF SECURITIES
CO., LTD.

UBS
                   Foreign
(LUXEMBOUR                                    1.88%       9,464,298                        9,464,298
                   corporation
G) S.A.

GREENWOODS
                   Foreign
CHINA ALPHA                                   1.86%       9,386,973                        9,386,973
                   corporation
MASTER FUND

KGI ASIA           Foreign
                                              1.56%       7,861,437                        7,861,437
LIMITED            corporation

                   Foreign
NORGES BANK                                   1.14%       5,720,312                        5,720,312
                   corporation

CCB-Yinhua-Sel
ected Securities
Investment Fund Other                         0.94%       4,709,805                        4,709,805
of No. 88 of Dow
Jones

CHINA
MERCHANTS          State-owned
                                              0.78%       3,928,244                        3,928,244
SECURITIES         corporation
(HK) CO., LTD

GOLDEN
                   Foreign
CHINA                                         0.70%       3,786,434                        3,786,434
                   corporation
MASTER FUND

3W GREATER
                   Foreign
CHINA FOCUS                                   0.70%       3,529,479                        3,529,479
                   corporation
FUND

Strategic   investor    or       general
                                           Inapplicable
corporation becoming a top ten



                                                                        40
                                                                     2014 Annual Report of Anhui Gujing Distillery Company Limited



shareholder due to placing of new
shares (if any) (Notes 3)

                                         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.

                                         Shares held by the top ten non-restricted share holders

                                                                                                               Type of shares
        Name of shareholder              Number of non-restricted shares held at the period-end
                                                                                                            Type           Number

ANHUI GUJING GROUP                                                                                 Renminbi
                                                                                    271,354,022                            271,354,022
COMPANY LIMITED                                                                                    ordinary shares

AGREED BUYBACK SPECIAL
                                                                                                   Renminbi
ACCOUNT OF GF SECURITIES                                                             15,000,000                                 15,000,000
                                                                                                   ordinary shares
CO., LTD.

                                                                                                   Domestically
UBS (LUXEMBOURG) S.A.                                                                 9,464,298 listed foreign                   9,464,298
                                                                                                   shares

                                                                                                   Domestically
GREENWOODS CHINA ALPHA
                                                                                      9,386,973 listed foreign                   9,386,973
MASTER FUND
                                                                                                   shares

                                                                                                   Domestically
KGI ASIA LIMITED                                                                      7,861,437 listed foreign                   7,861,437
                                                                                                   shares

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NORGES BANK                                                                           5,720,312 listed foreign                   5,720,312
                                                                                                   shares

CCB-Yinhua-Selected Securities
                                                                                                   Renminbi
Investment Fund of No. 88 of Dow                                                      4,709,805                                  4,709,805
                                                                                                   ordinary shares
Jones

CHINA MERCHANTS                                                                                    Renminbi
                                                                                      3,928,244                                  3,928,244
SECURITIES (HK) CO., LTD                                                                           ordinary shares

                                                                                                   Domestically
GOLDEN CHINA MASTER FUND                                                              3,786,434 listed foreign                   3,786,434
                                                                                                   shares

                                                                                                   Domestically
3W GREATER CHINA FOCUS
                                                                                      3,529,479 listed foreign                   3,529,479
FUND
                                                                                                   shares



                                                                   41
                                                                                 2014 Annual Report of Anhui Gujing Distillery Company Limited



                                                     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        the      top     10
shareholders       participating        in     the
                                                     Inapplicable
margin trading business (if any) (see
note 4)


Company top 10 common shareholders, top 10 infinite sale conditions common shareholders in trade agreement to buy back whether
during the reporting period


√Yes     □No
Wide hair negotiable securities co., LTD., shareholders agreement dedicated buyback account for puning letter macro industrial
investment co., LTD., during the reporting period agreed to buy back the initial exchanges involving stock quantity and proportion
and report as the final agreed repurchase exchange for stock volume, and proportions of the same, 15000000 shares, accounting for
2.98% of the total equity.


2. Particulars about the controlling shareholder

Corporation

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

ANHUI GUJING                                                                                                             Making         beverage,
GROUP COMPANY                       Liang Jinhui            16 Jan. 1995      151947437            353,380,000           construction   materials
LIMITED                                                                                                                  and plastic products

Future           development
                                    Inapplicable
strategy

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

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



                                                                               42
                                                                          2014 Annual Report of Anhui Gujing Distillery Company Limited



the reporting period

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


3. Particulars about the actual controller

Corporation

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

The People’s
Government of Bozhou

Future        development
                                 Inapplicable
strategy

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

Shares      held   by     the
controlling shareholder
in         other        listed
                                 Inapplicable
companies by 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%

                                                     Anhui Gujing Group Company Limited


                                                                              53.88%

                                                       Anhui Gujing Distillery Co., Ltd.




The actual controller controls the Company via trust or other ways of asset management
□ Applicable √ Inapplicable



                                                                        43
                                                    2014 Annual Report of Anhui Gujing Distillery Company Limited



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




                                                   44
                                                                   2014 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
Liang      of the                                        20 Jul.       19 Jul.
                         Incumbent Male             50
Jinhui     Board of                                      2014          2017
           Directors

           General
Zhou                                                     20 Jul.       19 Jul.
           Manager,      Incumbent Male             41
Qingwu                                                   2014          2017
           Director

           Vice
           General
           Manager,
           Secretary
Ye         of the                                        20 Jul.       19 Jul.
                         Incumbent Male             41
Changqing Board of                                       2014          2017
           Directors,
           Chief
           Accountan
           t, Director

Wang                                                     20 Jul.       19 Jul.
           Director      Incumbent Male             50
Feng                                                     2014          2017

Yang                                                     20 Jul.       19 Jul.
           Director      Incumbent Male             47
Xiaofan                                                  2014          2017

                                                         20 Jul.       19 Jul.
Yan Lijun Director       Incumbent Male             44
                                                         2014          2017

Wang       Independe                                     20 Jul.       19 Jul.
                         Incumbent Male             53
Ruihua     nt Director                                   2014          2017

           Independe                                     20 Jul.       19 Jul.
Wang Gao                 Incumbent Male             50
           nt Director                                   2014          2017

Song       Independe                                     17 Nov.       19 Jul.
                         Incumbent Male             53
Shuyu      nt Director                                   2014          2017



                                                              45
                                                                         2014 Annual Report of Anhui Gujing Distillery Company Limited



            Chairman
            of the
                                                               20 Jul.       19 Jul.
Xu Peng     Supervisor Incumbent Male                     45
                                                               2014          2017
            y
            Committee

Niu                                                            20 Jul.       19 Jul.
            Supervisor Incumbent Male                     44
Haiting                                                        2014          2017

Fu                                                             20 Jul.       19 Jul.
            Supervisor Incumbent Male                     45
Qiangxin                                                       2014          2017

Hu                                                             20 Jul.       19 Jul.
            Supervisor Incumbent Male                     49
Wenchao                                                        2014          2017

Lu                                                             20 Jul.       19 Jul.
            Supervisor Incumbent Male                     35
Duicang                                                        2014          2017

            General
                                                               20 Jul.       19 Jul.
Yan Lijun Manager       Incumbent Male                    44
                                                               2014          2017
            Assistant

            General
Zhai                                                           20 Jul.       19 Jul.
            Manager     Incumbent Male                    44                                  1,200                            1,200
Liangdong                                                      2014          2017
            Assistant

            General
Zhang                                                          20 Jul.       19 Jul.
            Manager     Incumbent Male                    46
Lihong                                                         2014          2017
            Assistant

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. Liang Jinhui, 50 year-old, is Political Engineer who has educational experience of graduate student, incumbent Director and
president of the Company and Gujing Group. 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, Fifth and Sixth
Board of Directors
(II) Mr. Zhou Qingwu, 41 year-old, is Economist who has educational experience of undergraduate college. At present, he is Director
and 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 and 6th Board of Directors and Vice General Manager.
(III) Mr. Ye Changqing, 41 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 5 th and 6th Board of Directors, Chief Accountant.


                                                                    46
                                                                      2014 Annual Report of Anhui Gujing Distillery Company Limited



(IV) Mr. Wang Feng, 50 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 and 6th Board of Directors.
(V) Mr. Yang Xiaofan, 47 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   and 6th Board of Directors.
(VI) Yan Lijun, male, 44 year-old, bachelor degree with Senior Taster. Now he is Director, Assistant of GM of the Company, GM of
Bozhou Gujin Sale Co., Ltd. In Aug. 1995, he began to work. He once worked as salesman of Sale Company, District Manager,
Director of Market Research, Vice Manager of Planning Department, Director of Hefei Strategic Operations Center and GM of the
Company
(VII) Mr. Wang Ruihua, 53 year-old, doctor degree in accounting, Incumbent Independent Director of the Company, Director of
MBA Education Centre of Central University of Finance and Economics, Dean of School of Business of Central University of
Finance and Economics, tutor of PHD student, Independent Director of ZHONG KE SAN HUAN, DATANG TELECOM
TECHNOLOGY CO., LTD. and Sinolink Securities Co Ltd. He ever took post of Deputy Director of the Graduate Student
Department of Central University of Finance and Economics. (VIII) Mr. Wu Cisheng, 52 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.
(VIII) Wang Gao, Male, 50 years old, Doctor of Sociology,Professor of Marketing in China Europe International Business School.
Academic Director of Chief Marketing Officer (CMO) Project, Co-Director of Chinese Enterprise Globalization Research Center. He
once worked as Associate Professor, Deputy Dean of Department of Marketing in School of Economics and Management, Tsinghua
University, deputy director of China's Retail Research Center Academic Director of Harvard - central Europe - tsinghua university
senior managers (SEPC) project. Strategic Analysis Manager of Minute Maid Branch of Coca-Cola Company and senior counselor of
The Information Resources Co., Ltd. (IRI).
(IX) Song Shuyu, male, 53 years old, who has educational experience of undergraduate college. Senior Engineer, Master of Chinese
wine. Now, he is Deputy Secretary General of China Alcoholic Drinks Association, Secretary-general of Liquor Branch Association,
Secretary General of Market Professional Committee, Secretary General of White Wine Club Technical Committee, specialist who
enjoy the special allowance of the state council. He also is member of Chinese liquor standardization technical committee, Deputy
Secretary General of strong-flavor, Feng-flavour, soybean-flavor and rice flavour Liquor Technical Committee of Chinese Liquor
Standardization Technical Committee, Chairman of Committee of Te-flavour Chinese spirits and Laobaigan-flavour Chinese spirits
standardization technical committee.
(X) Mr. Xu Peng, 45 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


                                                                  47
                                                                   2014 Annual Report of Anhui Gujing Distillery Company Limited



of Bozhou Gujing Sales Company.
(XI) Mr. Niu Haiting, 44 year-old, has educational experience of undergraduate college. He is incumbent Supervisor of the Company,
Member of Party Committee, Chairman of the Labor Union 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, Director of the
Office Party and Chief Inspector of Safety Management Center.
(XII) Mr. Fu Qiangxin, 45 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.
(XIII) Mr. Hu Wenchao, is 49 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.
(XIV) Mr. Lu Duicang, 35 year-old, has educational experience of undergraduate college. Now, he is incumbent Supervisor of the
Company and GM of Hui Xin Finance. 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.
(XV)Mr. Zhai Liangdong, Male, 44-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,
Deputy Director, Director of Gujing Group Office; Director of corporate office.
(XVI) Mr. Zhang Lihong, Male, 46-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, and Chief Inspector of Comprehensive Service Center.
Employment in shareholders’ entities
√ Applicable □ Non-Applicable

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

                                                              Chairman of
                                                              the Board of
 LIANG                                                        Directors,
                 Anhui Gujing Group Co., Ltd.                                  1 May 2014                           Yes
 JINHUI                                                       Chairman of
                                                              Party
                                                              Committee

                                                              Deputy
                                                              Chairman of
                                                              Party
 WANG FENG Anhui Gujing Group Co., Ltd.                                        1 Aug. 2010                          Yes
                                                              Committee,
                                                              Chairman of
                                                              Discipline



                                                                 48
                                                                      2014 Annual Report of Anhui Gujing Distillery Company Limited



                                                               Inspection
                                                               Committee

 YANG                                                          Vice
                  Anhui Gujing Group Co., Ltd.                                    1 Nov. 2009                         Yes
 XIAOFAN                                                       President

                                                               Deputy
 ZHOU                                                          Chairman of
                  Anhui Gujing Group Co., Ltd.                                    1 Nov. 2009                         No
 QINGWU                                                        Party
                                                               Committee

                                                               Chief
                                                               Inspector of
 FU
                  Anhui Gujing Group Co., Ltd.                 Financial          1 Jul. 2014                         Yes
 QIANGXIN
                                                               Management
                                                               Center

 HU                                                            Chief of HR
                  Anhui Gujing Group Co., Ltd.                                    1 Jun. 2012                         Yes
 WENCHAO                                                       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

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
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 Ten Thousand Yuan

                                                                                                              Total         Total amount
                                                                                         Total amount
                                                                                                           compensation of payment got
                                                                       Incumbent or of payment got
      Name             Title          Gender             Age                                                  from            from the
                                                                            not             from the
                                                                                                           shareholders     shareholders’
                                                                                           Company
                                                                                                                               entities

LIANG             Chairman of     Male                          50 Incumbent                       102.7      21.62                 124.32


                                                                  49
                                                  2014 Annual Report of Anhui Gujing Distillery Company Limited



JINHUI       the Board of
             Directors

             Director,
ZHOU
             General          Male             41 Incumbent               94.02                          94.02
QINGWU
             Manager

             Director, Vice
             General
             Manager,
YE           Secretary of
                              Male             41 Incumbent               86.26                          86.26
CHANGQING the Board of
             Directors,
             Chief
             Accountant

WANG FENG Director            Male             50 Incumbent                   0      96.52               96.52

YANG                                                                                 96.52
             Director         Male             47 Incumbent                   0                          96.52
XIAOFAN

WANG         Independent
                              Male             53 Incumbent                 7.5                            7.5
RUIHUA       Director

             Independent
WANG GAO                      Male             50 Incumbent                 7.5                            7.5
             Director

SONG         Independent
                              Male             53 Incumbent                 7.5                            7.5
SHUYU        Director

             Chairman of
XU PENG      the Supervisory Male              45 Incumbent               78.87                          78.87
             Committee

NIU HAITING Supervisor        Male             44 Incumbent                   0      36.24               36.24

FU                                                                                   38.49
             Supervisor       Male             45 Incumbent                   0                          38.49
QIANGXIN

HU                                                                                   59.18
             Supervisor       Male             49 Incumbent                   0                          59.18
WENCHAO

LU DUICANG Supervisor         Male             35 Incumbent                   0      43.9                 43.9

YAN LIJUN    Director         Male             44 Incumbent               95.65                          95.65

             General
ZHAI
             Manager          Male             44 Incumbent               78.87                          78.87
LIANGDONG
             Assistant

             General
ZHANG
             Manager          Male             46 Incumbent               78.87                          78.87
LIHONG
             Assistant

Total                --              --   --            --               637.74     392.47            1030.21




                                                50
                                                                    2014 Annual Report of Anhui Gujing Distillery Company Limited



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

       Name                  Post              Type              Date                                  Reason

 YU LIN             Director           Former            23 Apr. 2014

                                       Left as the
                    Independent
 WU CISHENG                            service term      19 Jun. 2014
                    Director
                                       expired

                                       Left as the
                    Independent
 LIU LIBIN                             service term      19 Jun. 2014
                    Director
                                       expired

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. 2014, the total number of current employees in the Company is 5,937
1. Particulars about professional categories

         Professional category                             Number of personnel                                   Proportion

          Production staff                                       4440                                           74.79%

          Sales staff                                            588                                            9.90%

          Technical staff                                        282                                            4.75%

          Financial staff                                         95                                            1.60%

          Administrative staff                                   532                                            8.96%

          Total                                                  5937                                           100.00%




                                                                  51
                                                                          2014 Annual Report of Anhui Gujing Distillery Company Limited




                         Financial staff, Administrative staff
                                                                   Professional categories
                 Technical staff,
                                         8.96%



                    Sales staff

                                                                                                            Production staff

                                                                                                            Sales staff
                                                                               Production staff
                                                                                                            Technical staff

                                                                                                            Financial staff

                                                                                                            Administrative staff




2. Level of education:

          Level of education                                        Number (person)                                 proportion

     High school and below                                              4619                                       77.80%

     Junior college                                                     700                                        11.79%

     Bachelor degree                                                    597                                        10.06%

     Master degree or above                                              21                                         0.35%

     Total                                                              5937                                        100%


                                  Bachelor degree    MaMaster degree or above            Level of education

                 Junior collegeeducation



                 education                                                                             High school and below
                                                                                                       Junior college
                                                           High school and below, 77.80%
                                                                                                       Bachelor degree
                                                                                                       Master degree or above




                                                                        52
                                                                    2014 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, 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 20 th 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




                                                                  53
                                                                          2014 Annual Report of Anhui Gujing Distillery Company Limited



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

                                             2013 Annual Report
                                             of      the   Board     of
                                                                                                                   On      the         Cninfo
                                             Directors,
                                                                                                                   website
                                             2013Annual Report
                                                                                                                   Announcement           on
                                             and            Abstract,
                                                                                                                   Resolutions         Passed
 2013             Annual                     Proposal      on   2013
                                                                          All the proposals                        on the 2013 Annual
 Shareholders’            20 Jun. 2014      Annual             Profit                        21 Jun. 2014
                                                                          were passed.                             Shareholders’
 General Meeting                             Distribution          and
                                                                                                                   General            Meeting
                                             Transfer of Capital
                                                                                                                   (No.          2014-020)
                                             Reserve to Common
                                                                                                                   http://www.cninfo.co
                                             Shares, Proposal on
                                                                                                                   m.cn
                                             Employing          Audit
                                             Institution for 2014

2. Particulars about temporary shareholders’ general meeting

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

                                                                                                                   On      the         Cninfo
                                             Proposal               on                                             website
                                             Replacing          2013                                               Announcement           on
                                             Annual             Audit                                              Resolutions         Passed
 The 1st Temporary                           Institution, Proposal                                                 on           The        1st
 Shareholders’                              about using saving All the proposals                                  Temporary
                           18 Feb. 2014                                                       19 Feb. 2014
 General Meeting in                          raise                 fund were passed.                               Shareholders’
 2014                                        perpetually                                                           General Meeting in
                                             supplement                                                            2014                  (No.
                                             circulating fund        of                                            2014-008)
                                             the Company                                                           http://www.cninfo.co
                                                                                                                   m.cn

                                                                                                                   On      the         Cninfo
                                                                                                                   website
                                                                                                                   Announcement           on
                                                                                                                   Resolutions         Passed
 The 2   nd
              Temporary                      Proposal               on                                             on     the     The     2nd
 Shareholders’                              Replacing                    All the proposals                        Temporary
                           17 Nov. 2014                                                       18 Nov. 2014
 General Meeting in                          Independent Director were passed.                                     Shareholders’
 2014                                        of the Company                                                        General Meeting in
                                                                                                                   2014                  (No.
                                                                                                                   2014-032)
                                                                                                                   http://www.cninfo.co
                                                                                                                   m.cn




                                                                     54
                                                                        2014 Annual Report of Anhui Gujing Distillery Company Limited



3. Special Shareholders’ General Meeting required by the preferred stockholder with voting rights
recovered

None


III. Performance of the Independent Directors during the Reporting Period

1. Particulars about the independent directors attending the board sessions and the shareholders’ general meetings


                                Particulars about the independent directors attending the board sessions

                                                                                                                            Failing to present
                                                                     Presence by
 Name of independent      Due presence         Presence in                                Entrusted                         in person for two
                                                                   telecommunicati                        Absence (times)
        directors             (times)         person (times)                           presence (times)                     consecutive
                                                                     on (times)
                                                                                                                            sessions or not

 WANG RUIHUA                              9                    2                   7                  0                 0 No

 WANG GAO                                 4                    1                   3                  0                 0 No

 SONG SHUYU                               0                    0                   0                  0                 0 No

 Presence of independent directors in
                                                                                                                                              1
 shareholders’ general meeting (times)


2. Particulars about independent directors propose objection on relevant events


Whether independent directors propose objection on relevant events or not?
□ Yes √ No
The independent directors didn’t propose objection on relevant events during the reporting period.


3. Other explanation on performance of independent directors


Whether the advices of independent directors for the Company were adopted or not?
√ Yes □ No
Explanation on the advices of independent directors for the Company being adopted or not adopted
During reporting period, the independent director of the Company strictly un line with related laws and regulation of Articles of
Associations, the independent directors perform their duties to propose professional opinions or suggestions to the operation of the
Company. During reporting period, independent directors propose independent opinions to the events needed, played its role in
maintaining the legal interest of the shareholders of the Company.


IV. Performance of the Special Committees under the Board during 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 strategy.



                                                                      55
                                                                   2014 Annual Report of Anhui Gujing Distillery Company Limited



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 2014.
(2) Upon discussion with Ruihua Certified Public Accountants for the 2014 annual audit, it determined the schedule for the financial
report and internal control audit for 2014.
(3) It communicated in advance with the CPAs firm and independent directors before the CPAs firm came to the Company and
started the 2014 annual audit.
(3) It reviewed the short form of the preliminary financial statements prepared by the financial department of the Company for the
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 2014 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 staffs 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,


                                                                 56
                                                                   2014 Annual Report of Anhui Gujing Distillery Company Limited



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,
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.




                                                                 57
                                                                     2014 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 and the stipulations of 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 2014 Annual Internal Control published on the Cninfo website on 29 April 2015.

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, and 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     29 April 2015
 control

 Index for disclosure of whole
                                        Cninfo website (www.cninfo.com.cn) “2014 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

 Ruihua Certified Public Accountants (Special General Partnership) believe, Anhui Gujing Distillery Co., Ltd. maintained effective
 internal control of financial statements in all significant aspects on 31 Dec. 2014 in accordance with Basic Standards for Internal
                                                                   58
                                                                      2014 Annual Report of Anhui Gujing Distillery Company Limited


 Control and relevant regulations.

 Disclosure date of whole article of
                                       29 April 2015
 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 CPAs firm issues an Auditor’s Report on Internal Control with non-standard opinion or not?
□ Yes √ No
Whether the Auditor’s Report on Internal Control from the CPAs firm is in consistent with the Self-appraisal Report from the Board
or not?
√ Yes □ No
Whether the CPAs firm issues an Auditor’s Report on Internal Control with non-standard opinion or not?
□ Yes √ No
Whether the Auditor’s Report on Internal Control from the CPAs firm is in consistent with the Self-appraisal Report from the Board
or not?
√ 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.




                                                                  59
                                                                     2014 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                                         Apr. 27 2015

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

 Reference number of audit report                                     Ruihua SZ [2015] No. 48390019

 Name of CPA                                                          Yang Ganlin, Chen Lianwu




                                                       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. (“Gujing”), which comprise the consolidated
and the Company’s balance sheet as at December 31, 2014, 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, 2014 and consolidated operating results and cash
flow in 2014 as well as the operating results at 31 Dec. 2014and the operating results & cash flow in 2014 of Anhui Gujing Distillery

                                                                   60
                                                                  2014 Annual Report of Anhui Gujing Distillery Company Limited


Co., Ltd..



II. Financial Statement
Unit of statements in the notes appended to financial report is RMB Yuan
1. Consolidated balance sheet
Prepared by Anhui Gujing Distillery Company Limited
                                                           31 Dec. 2014
                                                                                                              Unit: RMB Yuan

                   Item                                 Closing balance                           Opening balance

 Current Assets:

    Monetary funds                                                    718,460,442.79                          1,381,930,710.96

    Settlement reserves

    Intra-group lendings

    Financial assets measured at fair
 value of which changes are recorded in                                      303,919.60
 current profits and losses

    Derivative financial assets

    Notes receivable                                                  505,893,430.66                            154,408,425.31

    Accounts receivable                                                     4,337,953.26                            6,374,469.99

    Accounts paid in advance                                               35,711,617.98                         90,217,698.50

    Premiums receivable

    Reinsurance premiums receivable

    Receivable     reinsurance    contract
 reserves

    Interest receivable                                                     4,274,666.66

    Dividend receivable

    Other accounts receivable                                               7,967,903.24                            6,296,326.20

    Financial assets purchased under
 agreements to resell

    Inventories                                                      1,227,182,774.09                         1,075,033,137.30

    Assets held for sale

    Non-current assets due within 1 year

    Other current assets                                             1,501,552,476.11                           980,093,922.21

 Total current assets                                                4,005,685,184.39                         3,694,354,690.47

 Non-current assets:

    Loans by mandate and advances


                                                                61
                                            2014 Annual Report of Anhui Gujing Distillery Company Limited


granted

  Available-for-sale financial assets             88,332,932.00                            24,075,687.00

  Held-to-maturity investments

  Long-term accounts receivable

  Long-term equity investment

  Investing real estate                           32,074,356.24                            35,188,079.66

  Fixed assets                                  1,724,134,467.11                        1,266,481,752.59

  Construction in progress                        61,637,510.96                           377,338,939.54

  Engineering materials

  Disposal of fixed assets

  Production biological assets

  Oil-gas assets

  Intangible assets                              306,488,782.60                           315,224,921.54

  R&D expense

  Goodwill

  Long-term deferred expenses                    131,921,179.23                            60,898,594.60

  Deferred income tax assets                      63,243,753.50                            43,371,896.87

  Other non-current assets

Total of non-current assets                     2,407,832,981.64                        2,122,579,871.80

Total assets                                    6,413,518,166.03                        5,816,934,562.27

Current liabilities:

  Short-term borrowings

  Borrowings from Central Bank

  Customer bank deposits and due to
banks and other financial institutions

  Intra-group borrowings

  Financial liabilities measured at fair
value of which changes are recorded in
current profits and losses

  Derivative financial liabilities

  Notes payable                                  258,452,214.00                           235,770,000.00

  Accounts payable                               404,634,196.58                           442,935,399.44

  Accounts received in advance                   377,503,471.86                           147,257,393.88

  Financial assets sold for repurchase

  Handling charges and commissions

                                           62
                                                2014 Annual Report of Anhui Gujing Distillery Company Limited


payable

  Payroll payable                                    220,198,521.28                           231,343,202.17

  Tax payable                                        468,679,523.63                           599,513,448.19

  Interest payable

  Dividend payable

  Other accounts payable                             456,572,505.42                           373,903,452.51

  Reinsurance premiums payable

  Insurance contract reserves

  Payables     for     acting   trading   of
securities

  Payables for acting underwriting of
securities

  Liabilities held for sale

  Non-current liabilities due within 1
year

  Other current liabilities

Total current liabilities                           2,186,040,432.77                        2,030,722,896.19

Non-current liabilities:

  Long-term borrowings

  Bonds payable

       Of which: preferred shares

                    Perpetual bonds

  Long-term payables

  Long-term payroll payables

  Specific payables

  Estimated liabilities

  Deferred income                                     40,839,961.86                            43,455,409.03

  Deferred income tax liabilities                      5,586,793.44

  Other non-current liabilities

Total non-current liabilities                         46,426,755.30                            43,455,409.03

Total liabilities                                   2,232,467,188.07                        2,074,178,305.22

Owners’ equity:

  Share capital                                      503,600,000.00                           503,600,000.00

  Other equity instruments

       Of which: preferred shares

                                               63
                                                         2014 Annual Report of Anhui Gujing Distillery Company Limited


                   Perpetual bonds

    Capital reserves                                         1,294,938,493.19                           1,294,938,493.19

    Less: Treasury stock

    Other comprehensive income                                    16,669,604.07                             -843,229.50

    Specific reserves

    Surplus reserves                                          256,902,260.27                             256,902,260.27

   Provisions for general risks

    Retained profits                                         2,108,940,620.43                           1,688,158,733.09

 Total equity attributable to owners of
                                                             4,181,050,977.96                           3,742,756,257.05
 the Company

   Minority interests

 Total owners’ equity                                       4,181,050,977.96                           3,742,756,257.05

 Total liabilities and owners’ equity                       6,413,518,166.03                           5,816,934,562.27


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


Chief of the accounting division: Zhu Jiafeng


2. Balance sheet of the Company

                                                                                                        Unit: RMB Yuan

                    Item                        Closing balance                           Opening balance

 Current Assets:

    Monetary funds                                            593,001,536.78                            1,040,360,357.51

    Financial assets measured at fair
 value of which changes are recorded in                             278,509.60
 current profits and losses

    Derivative financial assets

    Notes receivable                                          286,449,264.42                              81,472,414.44

    Accounts receivable                                            1,608,829.64                             1,297,542.13

    Accounts paid in advance                                       5,506,676.65                             1,288,277.31

    Interest receivable                                            4,274,666.66

   Dividend receivable

    Other accounts receivable                                 124,826,309.55                             139,654,563.53

    Inventories                                              1,197,978,799.15                           1,036,496,459.02

    Assets held for sale

    Non-current assets due within 1 year

                                                        64
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  Other current assets                          1,497,612,148.31                          980,093,922.21

Total current assets                            3,711,536,740.76                        3,280,663,536.15

Non-current assets:

  Available-for-sale financial assets             88,332,932.00                            24,075,687.00

  Held-to-maturity investments

  Long-term accounts receivable                    4,793,366.46                             4,494,950.37

  Long-term equity investment                    338,089,408.32                           308,089,408.32

  Investing real estate                           30,151,635.36                            33,124,717.82

  Fixed assets                                  1,525,364,298.59                        1,057,111,133.85

  Construction in progress                        61,531,773.90                           377,239,903.56

  Engineering materials

  Disposal of fixed assets

  Production biological assets

  Oil-gas assets

  Intangible assets                              192,318,384.28                           197,787,553.94

  R&D expense

  Goodwill

  Long-term deferred expenses                    131,864,366.43                            59,482,540.30

  Deferred income tax assets                      35,421,614.18                            34,095,084.20

  Other non-current assets

Total of non-current assets                     2,407,867,779.52                        2,095,500,979.36

Total assets                                    6,119,404,520.28                        5,376,164,515.51

Current liabilities:

  Short-term borrowings

  Financial liabilities measured at fair
value of which changes are recorded in
current profits and losses

  Derivative financial liabilities

  Notes payable                                   93,602,214.00                            26,150,000.00

  Accounts payable                               402,837,653.24                           437,297,694.54

  Accounts received in advance                  1,064,055,921.66                          830,722,853.80

  Payroll payable                                 79,329,070.21                            87,936,100.97

  Tax payable                                    168,778,299.92                           205,717,464.45

  Interest payable

  Dividend payable

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  Other accounts payable                       255,065,310.80                           153,888,199.87

  Liabilities held for sale

  Non-current liabilities due within 1
year

  Other current liabilities

Total current liabilities                     2,063,668,469.83                        1,741,712,313.63

Non-current liabilities:

  Long-term borrowings

  Bonds payable

       Of which: preferred shares

                    Perpetual bonds

  Long-term payables

  Long-term payroll payables

  Specific payables

  Estimated liabilities

  Deferred income                               40,839,961.86                            43,455,409.03

  Deferred income tax liabilities                5,584,087.19

  Other non-current liabilities

Total non-current liabilities                   46,424,049.05                            43,455,409.03

Total liabilities                             2,110,092,518.88                        1,785,167,722.66

Owners’ equity:

  Share capital                                503,600,000.00                           503,600,000.00

  Other equity instruments

       Of which: preferred shares

                    Perpetual bonds

  Capital reserves                            1,247,162,107.35                        1,247,162,107.35

  Less: Treasury stock

  Other comprehensive income                    16,669,604.07                              -843,229.50

  Specific reserves

  Surplus reserves                             251,800,000.00                           251,800,000.00

  Retained profits                            1,990,080,289.98                        1,589,277,915.00

Total owners’ equity                         4,009,312,001.40                        3,590,996,792.85

Total liabilities and owners’ equity         6,119,404,520.28                        5,376,164,515.51




                                         66
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3. Consolidated income statement

                                                                                                        Unit: RMB Yuan

                        Item                       Closing balance                         Opening balance

 I. Total operating revenues                                  4,650,855,881.72                         4,580,575,654.71

 Including: Sales income                                      4,650,855,881.72                         4,580,575,654.71

           Interest income

           Premium income

           Handling charge and commission
 income

 II. Total operating costs                                    3,980,555,815.23                         3,766,069,970.22

 Including: Cost of sales                                     1,459,072,913.24                         1,384,137,091.08

           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                          666,912,988.72                           631,171,183.76

           Selling and distribution expenses                  1,304,206,036.06                         1,279,550,577.02

           Administrative expenses                              579,424,693.56                           510,185,897.33

           Financial expenses                                   -37,751,610.36                           -47,011,977.06

           Asset impairment loss                                     8,690,794.01                            8,037,198.09

 Add: Gain/(loss) from change in fair
                                                                      121,035.00
 value (“-” means loss)

         Gain/(loss) from investment (“-”
                                                                105,142,601.27                            10,050,415.19
 means loss)

         Including:   share    of   profits   in
 associates and joint ventures

         Foreign exchange gains (“-” means
 loss)

 III. Business profit (“-” means loss)                        775,563,702.76                           824,556,099.68

         Add: non-operating income                               28,566,056.14                            31,597,842.75


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         Including: Gains on disposal of
                                                           625,342.92                                734,264.74
non-current assets

     Less: non-operating expense                         7,925,251.76                              4,242,753.03

         Including: Losses on disposal of
                                                         2,759,691.62                              2,120,610.71
non-current assets

IV. Total profit (“-” means loss)                    796,204,507.14                            851,911,189.40

     Less: Income tax expense                          199,162,619.80                            229,906,273.61

V. Net profit (“-” means loss)                       597,041,887.34                            622,004,915.79

     Net profit attributable to owners of
                                                       597,041,887.34                            622,004,915.79
the Company

     Minority shareholders’ income

VI. After-tax net amount of other
                                                        17,512,833.57                             -2,936,767.38
comprehensive incomes

     After-tax     net     amount     of other
comprehensive incomes attributable to                   17,512,833.57                             -2,936,767.38
owners of the Company

         (I) Other comprehensive incomes
that will not be reclassified into gains and
losses

           1. Changes in net liabilities or
assets with a defined benefit plan upon
re-measurement

           2. Enjoyable shares in other
comprehensive incomes in investees that
cannot be reclassified into gains and
losses under the equity method

         (II) Other comprehensive incomes
that will be reclassified into gains and                17,512,833.57                             -2,936,767.38
losses

           1. Enjoyable shares in other
comprehensive incomes in investees that
will be reclassified into gains and losses
under the equity method

           2. Gains and losses on fair
value    changes      of    available-for-sale          17,512,833.57                             -2,936,767.38
financial assets

           3.    Gains      and     losses   on
reclassifying                held-to-maturity
investments        into     available-for-sale


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 financial assets

            4. Effective hedging gains and
 losses on cash flows

            5. Foreign-currency financial
 statement translation difference

            6. Other

      After-tax     net        amount    of other
 comprehensive incomes attributable to
 minority shareholders

 VII. Total comprehensive incomes                                   614,554,720.91                            619,068,148.41

      Attributable        to    owners    of   the
                                                                    614,554,720.91                            619,068,148.41
 Company

      Attributable              to       minority
 shareholders

 VIII. Earnings per share

      (I) Basic earnings per share                                            1.19                                       1.24

      (II) Diluted earnings per share                                         1.19                                       1.24


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


Chief of the accounting division: Zhu Jiafeng


4. Income statement of the Company

                                                                                                             Unit: RMB Yuan

                     Item                                 2014                                       2013

 I. Total sales                                                   2,640,452,479.82                           2,529,549,854.01

   Less: cost of sales                                            1,476,012,978.04                           1,398,337,758.52

      Business taxes and surcharges                                631,981,946.23                             592,720,228.35

      Distribution expenses                                        128,260,320.96                             182,732,468.72

      Administrative expenses                                      385,897,886.00                             309,058,351.45

      Financial costs                                               -31,777,767.71                             -44,325,968.34

      Impairment loss                                                9,067,474.85                               7,286,854.02

   Add: gain/(loss) from change in fair
                                                                       110,210.00
 value (“-” means loss)

      Gain/(loss) from investment (“-”
                                                                   572,118,594.50                             600,946,599.56
 means loss)

      Including: income form investment


                                                             69
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on associates and joint ventures

II. Business profit (“-” means loss)                 613,238,445.95                            684,686,760.85

  Add: non-operating income                             17,634,363.74                             16,000,980.87

     Including: Gains on disposal of
                                                           585,411.86                                495,288.46
non-current assets

  Less: non-operating expense                            3,669,574.78                              3,242,473.29

     Including: Losses on disposal of
                                                         1,788,158.02                              1,299,935.04
non-current assets

III. Total profit (“-” means loss)                   627,203,234.91                            697,445,268.43

  Less: Income tax expense                              50,140,859.93                             37,902,840.47

IV. Net profit (“-” means loss)                      577,062,374.98                            659,542,427.96

V. After-tax net amount of other
                                                        17,512,833.57                             -2,936,767.38
comprehensive incomes

  (I) Other comprehensive incomes that
will not be reclassified into gains and
losses

     1. Changes in net liabilities or
assets with a defined benefit plan upon
re-measurement

     2.   Enjoyable        shares   in    other
comprehensive incomes in investees
that cannot be reclassified into gains
and losses under the equity method

  (II) Other comprehensive incomes
that will be reclassified into gains and                17,512,833.57                             -2,936,767.38
losses

     1.   Enjoyable        shares   in    other
comprehensive incomes in investees
that will be reclassified into gains and
losses under the equity method

     2. Gains and losses on fair value
changes of available-for-sale financial                 17,512,833.57                             -2,936,767.38
assets

     3.     Gains         and    losses     on
reclassifying                held-to-maturity
investments        into     available-for-sale
financial assets

     4. Effective hedging gains and
losses on cash flows


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        5.    Foreign-currency          financial
 statement translation difference

        6. Other

 VI. Total comprehensive incomes                             594,575,208.55                           656,605,660.58

 VII. Earnings per share

     (I) Basic earnings per share                                       1.15                                    1.31

     (II) Diluted earnings per share                                    1.15                                    1.31


5. Consolidated cash flow statement

                                                                                                     Unit: RMB Yuan

                        Item                         2014                                    2013

 I. Cash flows from operating activities:

   Cash       received         from    sale     of
                                                            5,299,356,137.71                        5,381,770,280.57
 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 financial
 assets measured at fair value of which
 changes are recorded into current gains
 and losses

   Cash received from interest, handling
 charges and commissions

   Net        increase         of     intra-group
 borrowings

   Net increase of funds in repurchase
 business

   Tax refunds received                                          107,163.11


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  Other cash received relating to
                                                       171,461,104.20                           299,273,978.50
operating activities

Subtotal of cash inflows from operating
                                                      5,470,924,405.02                        5,681,044,259.07
activities

  Cash paid for goods and services                    1,517,387,902.41                        1,673,212,674.71

  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

  Cash paid to and for employees                       989,911,967.81                           924,834,475.73

  Various taxes paid                                  1,620,441,094.09                        1,483,773,600.56

  Other cash payment relating to
                                                       955,689,150.82                           960,968,152.76
operating activities

Subtotal     of    cash    outflows       from
                                                      5,083,430,115.13                        5,042,788,903.76
operating activities

Net cash flows from operating activities               387,494,289.89                           638,255,355.31

II. Cash flows from investing activities:

  Cash received from withdrawal of
                                                      2,287,057,026.56                          900,000,000.00
investments

  Cash       received     from   return    on
                                                        92,975,082.74                            10,050,415.19
investments

  Net cash received from disposal of
fixed assets, intangible assets and other                1,144,535.30                             2,831,977.74
long-term assets

  Net cash received from disposal of
subsidiaries or other business units

     Other cash received relating to
                                                         1,850,000.00                            35,423,586.00
investing activities

Subtotal of cash inflows from investing
                                                      2,383,026,644.60                          948,305,978.93
activities

  Cash paid to acquire fixed assets,
                                                       387,438,488.77                           557,480,975.37
intangible assets and other long-term


                                                 72
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assets

   Cash paid for investment                              2,831,392,713.89                        1,880,000,000.00

   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
                                                         3,218,831,202.66                        2,437,480,975.37
investing activities

Net cash flows from investing activities                 -835,804,558.06                        -1,489,174,996.44

III.     Cash        Flows    from    Financing
Activities:

       Cash      received      from       capital
contributions

       Including:      Cash    received    from
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
activities

       Repayment of borrowings

       Cash paid for interest expenses and
                                                          176,260,000.00                           251,800,000.00
distribution of dividends or profit

        Including: dividends or profit paid
by subsidiaries to minority shareholders

        Other cash payments relating to
financing activities

Sub-total       of     cash    outflows    from
                                                          176,260,000.00                           251,800,000.00
financing activities

Net cash flows from financing activities                 -176,260,000.00                          -251,800,000.00

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

V. Net increase in cash and cash
                                                         -624,570,268.17                        -1,102,719,641.13
equivalents

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      Add: Opening balance of cash and
                                                          1,306,930,710.96                        2,409,650,352.09
 cash equivalents

 VI. Closing balance of cash and cash
                                                           682,360,442.79                         1,306,930,710.96
 equivalents


6. Cash flow statement of the Company

                                                                                                   Unit: RMB Yuan

                     Item                          2014                                    2013

 I. Cash flows from operating activities:

   Cash       received      from    sale      of
                                                          3,109,799,921.89                        3,136,291,164.98
 commodities and rendering of service

   Tax refunds received                                        107,163.11

   Other cash received relating to
                                                            99,709,660.72                           116,309,895.62
 operating activities

 Subtotal of cash inflows from operating
                                                          3,209,616,745.72                        3,252,601,060.60
 activities

   Cash paid for goods and services                       1,657,562,664.94                        1,826,604,908.68

   Cash paid to and for employees                          444,498,190.80                           428,367,064.51

   Various taxes paid                                      964,627,298.20                           938,402,383.86

   Other cash payment relating to
                                                            67,606,275.31                           124,356,345.13
 operating activities

 Subtotal     of    cash    outflows        from
                                                          3,134,294,429.25                        3,317,730,702.18
 operating activities

 Net cash flows from operating activities                   75,322,316.47                           -65,129,641.58

 II. Cash flows from investing activities:

   Cash received from retraction of
                                                          1,961,242,567.80                          900,000,000.00
 investments

   Cash       received     from    return    on
                                                           557,438,369.11                           600,946,599.56
 investments

   Net cash received from disposal of
 fixed assets, intangible assets and other                   1,059,792.33                               709,777.79
 long-term assets

   Net cash received from disposal of
 subsidiaries or other business units

   Other cash received relating to
                                                             1,850,000.00                            35,423,586.00
 investing activities

 Subtotal of cash inflows from investing                  2,521,590,729.24                        1,537,079,963.35

                                                     74
                                                     2014 Annual Report of Anhui Gujing Distillery Company Limited


activities

   Cash paid to acquire fixed assets,
intangible assets and other long-term                     373,798,440.05                           547,137,594.99
assets

   Cash paid for investment                              2,502,613,426.39                        1,922,998,976.70

   Net cash paid to acquire subsidiaries
and other business units

   Other cash payments relating to
investing activities

Subtotal        of     cash   outflows     from
                                                         2,876,411,866.44                        2,470,136,571.69
investing activities

Net cash flows from investing activities                 -354,821,137.20                          -933,056,608.34

III.     Cash        Flows    from    Financing
Activities:

       Cash      received      from       capital
contributions

       Cash received from borrowings

       Cash received from issuance of
bonds

       Other cash received relating to
financing activities

Subtotal of cash inflows from financing
activities

       Repayment of borrowings

       Cash paid for interest expenses and
                                                          176,260,000.00                           251,800,000.00
distribution of dividends or profit

        Other cash payments relating to
financing activities

Sub-total       of     cash    outflows    from
                                                          176,260,000.00                           251,800,000.00
financing activities

Net cash flows from financing activities                 -176,260,000.00                          -251,800,000.00

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

V. Net increase in cash and cash
                                                         -455,758,820.73                        -1,249,986,249.92
equivalents

        Add: Opening balance of cash and
                                                         1,040,360,357.51                        2,290,346,607.43
cash equivalents

VI. Closing balance of cash and cash                      584,601,536.78                         1,040,360,357.51

                                                    75
                                                                                    2014 Annual Report of Anhui Gujing Distillery Company Limited


 equivalents


7. Consolidated statement of changes in owners’ equity

2014
                                                                                                                                     Unit: RMB Yuan

                                                                                          2014

                                                         Equity attributable to owners of the Company

                                            Other equity
                                                                                       Other                                         Minorit    Total
            Item                             instruments                    Less:                                General
                               Share                             Capital              compre Specific Surplus              Retaine     y       owners’
                                         Prefer Perpet                     treasury                               risk
                               capital                           reserve              hensive reserve reserve              d profit interests equity
                                          red    ual     Other              stock                                reserve
                                                                                      incomes
                                         shares bonds

 I. Balance at the 503,60                                        1,294,9                                                   1,688,1             3,742,7
                                                                                      -843,22          256,902
 end         of          the 0,000.                              38,493.                                                   58,733.             56,257.
                                                                                         9.50          ,260.27
 previous year                     00                                 19                                                        09                  05

    Add: change of
 accounting policy

          Correction of
 errors in previous
 periods

          Business
 mergers under the
 same control

          Other

 II. Balance at the 503,60                                       1,294,9                                                   1,688,1             3,742,7
                                                                                      -843,22          256,902
 beginning of the 0,000.                                         38,493.                                                   58,733.             56,257.
                                                                                         9.50          ,260.27
 year                              00                                 19                                                        09                  05

 III.         Increase/
 decrease         in     the                                                          17,512,                              420,781             438,294
 period (“-” means                                                                   833.57                              ,887.34             ,720.91
 decrease)

    (I)                Total
                                                                                      17,512,                              597,041             614,554
 comprehensive
                                                                                       833.57                              ,887.34             ,720.91
 incomes

    (II)           Capital
 increased              and
 reduced by owners

        1. Common
 shares increased

                                                                               76
                            2014 Annual Report of Anhui Gujing Distillery Company Limited


by shareholders

       2. Capital
increased by
holders of other
equity instruments

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

       4. Other

                                                                -176,26          -176,26
  (III)           Profit
                                                                 0,000.0         0,000.0
distribution
                                                                      0                0

       1.
Appropriations to
surplus reserves

       2.
Appropriations to
general             risk
provisions

       3.
                                                                -176,26          -176,26
Appropriations to
                                                                 0,000.0         0,000.0
owners              (or
                                                                      0                0
shareholders)

       4. Other

  (IV)       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

                           77
                                                                         2014 Annual Report of Anhui Gujing Distillery Company Limited


 making up losses

        4. Other

 (V)             Specific
 reserve

        1. Withdrawn
 for the period

        2. Used in the
 period

 (VI) Other

                            503,60                     1,294,9                                                  2,108,9             4,181,0
 IV.             Closing                                                   16,669,          256,902
                            0,000.                     38,493.                                                  40,620.             50,977.
 balance                                                                    604.07          ,260.27
                               00                           19                                                      43                   96

2013
                                                                                                                          Unit: RMB Yuan

                                                                               2013

                                                 Equity attributable to owners of the Company

                                      Other equity
                                                                                                                          Minorit
                                       instruments                          Other                                                    Total
           Item                                                                                                             y
                                                                 Less:                                General
                            Share Prefe              Capital           compre Specific Surplus         Retaine           owners’
                                                             treasury                            risk           interest
                                          Perpet                                                                          equity
                            capital rred             reserve          hensive reserve reserve          d profit
                                           ual Other           stock                           reserve             s
                                    share                             incomes
                                          bonds
                                      s

 I. Balance at the                                     1,294,9                                                  1,356,1             3,375,4
                            503,600                                        2,093,5          218,736
 end        of        the                              38,493.                                                  19,112.             88,108.
                            ,000.00                                          37.88          ,964.73
 previous year                                              19                                                      84                   64

    Add: change of
 accounting policy

        Correction of
 errors in previous
 periods

        Business
 mergers under the
 same control

        Other

 II. Balance at the                                    1,294,9                                                  1,356,1             3,375,4
                            503,600                                        2,093,5          218,736
 beginning of the                                      38,493.                                                  19,112.             88,108.
                            ,000.00                                          37.88          ,964.73
 year                                                       19                                                      84                   64

 III.        Increase/                                                     -2,936,7         38,165,             332,039             367,268
 decrease        in   the                                                    67.38           295.54             ,620.25             ,148.41

                                                                    78
                             2014 Annual Report of Anhui Gujing Distillery Company Limited


period (“-” means
decrease)

  (I)              Total
                                 -2,936,7                        622,004          619,068
comprehensive
                                   67.38                          ,915.79         ,148.41
incomes

  (II)         Capital
increased            and
reduced by owners

     1. Common
shares increased
by shareholders

     2. Capital
increased by
holders of other
equity instruments

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

     4. Other

                                                                 -289,96          -251,80
  (III)            Profit                       38,165,
                                                                  5,295.5         0,000.0
distribution                                     295.54
                                                                       4                0

        1.
                                                38,165,          -38,165,
Appropriations to
                                                 295.54           295.54
surplus reserves

        2.
Appropriations to
general              risk
provisions

        3.
                                                                 -251,80          -251,80
Appropriations to
                                                                  0,000.0         0,000.0
owners               (or
                                                                       0                0
shareholders)

        4. Other

  (IV)        Internal
carry-forward         of
owners’ equity

        1.          New


                            79
                                                                                    2014 Annual Report of Anhui Gujing Distillery Company Limited


 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

 (V)            Specific
 reserve

        1. Withdrawn
 for the period

        2. Used in the
 period

 (VI) Other

                                                              1,294,9                                                         1,688,1              3,742,7
 IV.            Closing 503,600                                                       -843,22           256,902
                                                              38,493.                                                         58,733.              56,257.
 balance                      ,000.00                                                    9.50              ,260.27
                                                                     19                                                              09                05


8. Statement of changes in owners’ equity of the Company

2014
                                                                                                                                          Unit: RMB Yuan

                                                                                           2014

                                         Other equity instruments                                  Other
                                                                                        Less:                                                      Total
             Item              Share                                      Capital                 comprehe Specific       Surplus     Retaine
                                         Preferre Perpetu                              treasury                                                  owners’
                              capital                        Other        reserve                  nsive        reserve    reserve    d profit
                                         d shares al bonds                              stock                                                     equity
                                                                                                  incomes

 I. Balance at the                                                                                                                    1,589,2
                              503,600,                                1,247,162                   -843,229.               251,800,0              3,590,996
 end of the previous                                                                                                                  77,915.
                               000.00                                      ,107.35                         50                 00.00                ,792.85
 year                                                                                                                                       00

   Add: change of
 accounting policy

        Correction of
 errors in previous

                                                                               80
                                                 2014 Annual Report of Anhui Gujing Distillery Company Limited


periods

         Other

II. Balance at the                                                                            1,589,2
                               503,600,   1,247,162           -843,229.           251,800,0             3,590,996
beginning of the                                                                              77,915.
                                000.00      ,107.35                 50                00.00               ,792.85
year                                                                                               00

III.          Increase/
decrease         in     the                                  17,512,83                        400,802 418,315,2
period (“-” means                                               3.57                        ,374.98      08.55
decrease)

   (I)                Total
                                                             17,512,83                        577,062 594,575,2
comprehensive
                                                                  3.57                        ,374.98      08.55
incomes

   (II)          Capital
increased               and
reduced by owners

       1. Common
shares increased
by shareholders

       2. Capital
increased by
holders of other
equity instruments

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

       4. Other

                                                                                              -176,26
   (III)              Profit                                                                            -176,260,
                                                                                              0,000.0
distribution                                                                                              000.00
                                                                                                    0

         1.
Appropriations to
surplus reserves

         2.
                                                                                              -176,26
Appropriations to                                                                                       -176,260,
                                                                                              0,000.0
owners                  (or                                                                               000.00
                                                                                                    0
shareholders)

         3. Other

   (IV)          Internal

                                               81
                                                                               2014 Annual Report of Anhui Gujing Distillery Company Limited


 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

 (V)            Specific
 reserve

        1. Withdrawn
 for the period

        2. Used in the
 period

 (VI) Other

                                                                                                                               1,990,0
 IV.            Closing 503,600,                                    1,247,162                16,669,60             251,800,0              4,009,312
                                                                                                                               80,289.
 balance                       000.00                                 ,107.35                     4.07                 00.00                ,001.40
                                                                                                                                    98

2013
                                                                                                                                 Unit: RMB Yuan

                                                                                      2013

                                        Other equity instruments                              Other
                                                                                   Less:                                                    Total
             Item             Share                                  Capital                 comprehe Specific     Surplus     Retaine
                                        Preferre Perpetu                          treasury                                                owners’
                              capital                       Other    reserve                  nsive      reserve    reserve    d profit
                                        d shares al bonds                          stock                                                   equity
                                                                                             incomes

 I. Balance at the 503,60                                                                                                      1,219,7
                                                                    1,247,162                2,093,537             213,634,7              3,186,191
 end of the previous 0,000.0                                                                                                   00,782.
                                                                      ,107.35                      .88                 04.46                ,132.27
 year                               0                                                                                               58

   Add: change of
 accounting policy

        Correction of
 errors in previous

                                                                          82
                                          2014 Annual Report of Anhui Gujing Distillery Company Limited


periods

         Other

II. Balance at the 503,60                                                              1,219,7
                                   1,247,162          2,093,537            213,634,7             3,186,191
beginning of the 0,000.0                                                               00,782.
                                     ,107.35                 .88               04.46               ,132.27
year                           0                                                            58

III.          Increase/
decrease         in     the                            -2,936,76           38,165,29 369,577 404,805,6
period (“-” means                                        7.38                 5.54 ,132.42        60.58
decrease)

   (I)                Total
                                                       -2,936,76                       659,542 656,605,6
comprehensive
                                                           7.38                        ,427.96      60.58
incomes

   (II)          Capital
increased               and
reduced by owners

       1. Common
shares increased
by shareholders

       2. Capital
increased by
holders of other
equity instruments

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

       4. Other

                                                                                       -289,96
   (III)              Profit                                               38,165,29             -251,800,
                                                                                       5,295.5
distribution                                                                    5.54               000.00
                                                                                             4

         1.
                                                                           38,165,29 -38,165,
Appropriations to
                                                                                5.54 295.54
surplus reserves

         2.
                                                                                       -251,80
Appropriations to                                                                                -251,800,
                                                                                       0,000.0
owners                  (or                                                                        000.00
                                                                                             0
shareholders)

         3. Other

   (IV)          Internal

                                        83
                                                                         2014 Annual Report of Anhui Gujing Distillery Company Limited


 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

 (V)          Specific
 reserve

        1. Withdrawn
 for the period

        2. Used in the
 period

 (VI) Other

                          503,60                                                                                           1,589,2
 IV.          Closing                                           1,247,162                  -843,229.           251,800,0              3,590,996
                          0,000.0                                                                                          77,915.
 balance                                                          ,107.35                        50                00.00                ,792.85
                               0                                                                                                 00



Note 3: Company Profile
  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

                                                                       84
                                                                             2014 Annual Report of Anhui Gujing Distillery Company Limited



are listed in Shenzhen Stock exchange.

  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 235 million, the total amount of shares were 235 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 2014, the accumulated total amount of issued capital was 503.6 million shares, see the note 6.24.

  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.


                                                                          85
                                                                                2014 Annual Report of Anhui Gujing Distillery Company Limited



  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 27 April, 2015. 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

(Ministry of Finance issued order No.33, the Ministry of Finance revised order No.76) on15 February 2006, and revised Accounting Standards

(order 41 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 (2014 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 2014. 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 (2014 Revision) issued by China Securities Regulatory Commission (CSRC) in 2014.



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 1 January to 31 December.

4.2 Operating cycle

  Normal business cycle is realized by the Company in cash or cash equivalents from the purchase of assets for processing until. The company

has a 12 -month operating cycle, and its assets and liabilities as liquidity criteria for the classification.

4.3 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.

4.4 Business combination
                                                                              86
                                                                             2014 Annual Report of Anhui Gujing Distillery Company Limited



  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.

4.4.1 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.

4.4.2 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.

  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 adjusted.

  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


                                                                           87
                                                                              2014 Annual Report of Anhui Gujing Distillery Company Limited



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.

  For a business combination not involving enterprise under common control, which achieved in stages that involves multiple exchange

transactions, according to ―The notice of the Ministry of Finance on the issuance of Accounting Standards Interpretation No. 5‖ (CaiKuai [2012] No.

19) and Article 51 of ―Accounting Standards for Business Enterprises No.33 - Consolidated Financial Statements‖ on the ―package deal‖ criterion

(see Note 4.5.2), to judge the multiple exchange transactions whether they are the "package deal". If it belong to the ―package deal‖ in reference to

the preceding paragraphs of this section and the Notes described in 4.13 ―long-term investment‖ accounting treatment, if it does not belong to the

―package deal‖ to distinguish the individual financial statements and the consolidated financial statements related to the accounting treatment:

  In the individual financial statements, the total value of the book value of the acquiree's equity investment before the acquisition date and the

cost of new investment at the acquisition date, as the initial cost of the investment, the acquiree's equity investment before the acquisition date

involved in other comprehensive income, in the disposal of the investment will be in other comprehensive income associated with the use of

infrastructure and the acquiree directly related to the disposal of assets or liabilities of the same accounting treatment (that is, except in accordance

with the equity method of accounting in the defined benefit plan acquiree is remeasured net changes in net assets or liabilities other than in the

corresponding share of the lead, and the rest into the current investment income).

  In the combination financial statements, 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

previously-held equity interest in the acquiree involved in other comprehensive income and other comprehensive income associated with the

purchase of the foundation should be used party directly related to the disposal of assets or liabilities of the same accounting treatment (that is,

except in accordance with the equity method of accounting in the acquiree is remeasured defined benefit plans other than changes in net liabilities

or net assets due to a corresponding share of the rest of the acquisition date into current investment income).

4.5 Preparation of the consolidated financial statements

4.5.1 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.
                                                                            88
                                                                             2014 Annual Report of Anhui Gujing Distillery Company Limited



  Once the change in the relevant facts and circumstances leading to the definition of the relevant elements involved in the control of the change,

the company will be re-evaluated.

4.5.2 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’/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. Other comprehensive income related to the former subsidiary's equity investment, using the foundation and the acquiree

directly related to the disposal of the same assets or liabilities are accounted when the control is lost (ie, in addition to the former subsidiary is

remeasured at the net defined benefit plan or changes in net assets and liabilities resulting from, the rest are transferred to the current investment

income). The retained interest is subsequently measured according to the rules stipulated in the - ―Chinese Accounting Standards for Business


                                                                           89
                                                                                 2014 Annual Report of Anhui Gujing Distillery Company Limited



Enterprises No.2 - Long-term equity investment‖ or ―Chinese Accounting Standards for Business Enterprises No.22 - Determination and

measurement of financial instruments‖. See Note 4.13 Long-term equity investments and Note 4.9 Financial instruments for details.

   The company used multiple transactions step deal with disposal of the subsidiary's equity investment until the loss of control, need to distinguish

between equity until the disposal of a subsidiary's loss of control over whether the transaction is package deal. Terms of the transaction disposition

of equity investment in a subsidiary, subject to the following conditions and the economic impact of one or more of cases, usually indicates that

several transactions should be accounted for as a package deal:①these transactions are considered simultaneously, or in the case of mutual

influence made, ②these transactions as a whole in order to achieve a complete business results; ③the occurrence of a transaction depends on

occurs at least one other transaction; ④a transaction look alone is not economical, but when considered together with other transaction is

economical. If they does not belong to the package deal, each of them separately, as the case of a transaction in accordance with ―without losing

control over the disposal of a subsidiary part of a long-term equity investments― (see Note 4.13.2, 4)) and ―due to the disposal of certain equity

investments or other reasons lost control of a subsidiary of the original‖ (see previous paragraph) principles applicable accounting treatment. Until

the disposal of the equity investment loss of control of a subsidiary of the transactions belonging to the package deal, the transaction will be used

as a disposal of a subsidiary and the loss of control of the transaction. However, before losing control of the price of each disposal entitled to share

in the net assets of the subsidiary's investment corresponding to the difference between the disposal, recognized in the consolidated financial

statements as other comprehensive income, loss of control over the transferred together with the loss of control or loss in the period.

4.6 Joint arrangement

   A joint arrangement is an arrangement of which two or more parties have joint control. A joint arrangement is either a joint operation or a joint

venture, depending of the rights and obligation of the Company in the joint arrangement. A joint operation is a joint arrangement whereby the

Company has rights to the assets, andobligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the

Company has rights to the net assets of the arrangement.

   The Company accounts for joint ventures using the equity method, see Note 4.13.2.2 for details.

   The company, a joint operator, recognizes in relation to its interest in a joint operation:(a)its assets, including its share of any assets held

jointly;(b)its liabilities, including its share of any liabilities incurred jointly;(c)its revenue from the sale of its share of the output arising from the joint

operation;(d)its share of the revenue from the sale of the output by the joint operation; and (e)its expenses, including its share of any expenses

incurred jointly.

   When the Company enters into a transaction with a joint operation in which it is a joint operator, such as a sale or contribution of assets, the

Company, prior to disposal of the assets to a third party by the joint operation, recognizes gains and losses resulting from such a transaction only to

the extent of the other parties' interests in the joint operation. When there is evidence of a reduction in the net realizable value of the assets to be

sold or contributed to the joint operation, or of an impairment loss of those assets which is in line with provision stipulated by CAS 8, those losses

are recognized fully by the Company. When there is evidence of a reduction in the net realizable value of the assets to be purchased or of an

impairment loss of those assets, the Company shall recognize its share of those losses.

4.7 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
                                                                               90
                                                                                2014 Annual Report of Anhui Gujing Distillery Company Limited



measured reliably and have low risks of change.

4.8 Foreign exchange

4.8.1 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.

4.8.2 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 ①those relating to foreign currency borrowings specifically for

construction and acquisition of qualifying assets, which are capitalized in accordance with the principle of capitalization of borrowing costs, ②

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

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

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

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

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

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

recognized in profit or loss for the current period or as capital reserve.

4.9 Financial instruments

4.9.1 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.

4.9.2 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;

                                                                             91
                                                                                2014 Annual Report of Anhui Gujing Distillery Company Limited



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:

  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.

  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
                                                                              92
                                                                              2014 Annual Report of Anhui Gujing Distillery Company Limited



  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.

4.9.3 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 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.

4.9.4 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;

                                                                            93
                                                                                 2014 Annual Report of Anhui Gujing Distillery Company Limited



   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 norretained 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.

4.9.5 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 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 is recognized in profit or loss for the current period.

4.9.6 Derecognition of financial liabilities

   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

                                                                              94
                                                                                 2014 Annual Report of Anhui Gujing Distillery Company Limited



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.

4.9.7 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 gain or loss caused by the fair value change of the hedging instrument which the hedging is

highly efficiency will be recorded into specific period in accordance with the hedging accounting according the hedging relationship. Except for the

hedging above, the resulting gain and loss of other derivatives 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.

4.9.8 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.

4.9.9 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.

4.10 Receivables

   The receivables by the Company include account receivables, and other receivables.

   (1) Criteria for recognition of bad debts:

   The Company carries out an inspection on the balance sheet date. Where there is any objective evidence proving that the receivables have

been impaired, an impairment provision shall be made:

   1) A serious financial difficulty occurs to the issuer or debtor;

   2) The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the payment of interests or the principal, etc.;

   3) The debtor will probably become bankrupt or carry out other financial reorganizations;

                                                                              95
                                                                               2014 Annual Report of Anhui Gujing Distillery Company Limited



   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 CNY 2,000,000.00 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 those 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.

   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)



                                                                             96
                                                                              2014 Annual Report of Anhui Gujing Distillery Company Limited



 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 3 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 reversed.

4.11 Inventories

  (1) Classification of inventory

  The Company’s inventory mainly includes raw materials, semi-finished product, work-in-progress and finished products.

  (2) Valuation method of inventories

  Inventories are initially carried at the actual cost. Cost of inventories includes 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.

                                                                            97
                                                                                2014 Annual Report of Anhui Gujing Distillery Company Limited



   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.

4.12 Held-for-sale assets

   A non-current asset is classified as held-for-sale if all of the following conditions are satisfied:

   a. the asset is immediately sellable at its current condition per usual sales term applicable to the type of assets to which it belongs;

   b. the Company's has completed official decision to dispose the asset;

   c. the Company has entered into irrevokable sales contract with the purchaser; and

   d. the sales will be completed within one year.

   Amortisation or depreciation of the held-for-sale asset ceases at the time of classification. The asset is measured at the lower of its book value

and its classification date fair value minus disposal costs upon classification. Held-for-sale non-current assets include individual assets and disposal

groups. If a disposal group satisfy the conditions of the asset group defined by CAS 8 - Asset Impairment and includes goodwill arising from

business combination allocated in accordance with CAS 8 or the disposal group is an operation with an asset group, the disposal group include

goodwill arising from business combination.

   Individual non-current assets held for sale and assets of disposal groups held for sale are collectively presented on the (consolidated) statement

of financial position as a line item of current assets. Liabilities of disposal groups held for sale are collectively presented on the (consolidated)

statement of financial position as a line item of current liabilities.

   A held-for-sale asset or held-for-sale disposal group is reclassified from held-for-sale when the conditions for classification of the asset (disposal

group) as held-for-sale are no longer satisfied and is measured at the lower of its classification date book value minus cumulative depreciation,

amortisation and impairment as if it has not been reclassified as held-for-sale and it recoverable amount as of the date on which the conditions for

classification of the asset (disposal group) as held-for-sale are no longer satisfied.

4.13 Long-term equity investments

   Long-term equity investments referred to in this section refer to the Company invested entity has control, joint control or significant influence over

the long-term equity investments. The Company invested does not have control, joint control or significant influence over the long-term equity

investments as financial assets available for sale or at fair value and the changes included financial assets through profit or loss, which refer to the

accounting policies in Note 4. 9 ―financial instruments‖.

   Joint control is the Company control over an arrangement in accordance with the relevant stipulations are common, related activities and the

arrangement must be after sharing control participants agreed to the decision-making. Significant influence is the Company s financial and

operating policies of the entity has the right to participate in decision-making, but cannot control or with other parties joint control over those

                                                                              98
                                                                             2014 Annual Report of Anhui Gujing Distillery Company Limited



policies.

4.13.1 Determination of Investment cost

   The cost of a long-term equity investment acquired through business combination under common control is measured at the acquirer's share of

the combination date book value of the acquiree's net equity in the ultimate controller's consolidated financial statements. The difference between

the cost and book value of cash paid, non-monetary assets transferred and liabilities assumed is adjusted to capital reserves, and to retained

earnings if capital reserves is insufficient. If the consideration is transferred by way of issuing equity instruments, the face value of the equity

instruments issued is recognised in share capital and the difference between the cost of the face value of the equity instruments issued is adjusted

to capital reserves, and to retained earnings if capital reserves is insufficient. Where a business combination under common control is achieved by

multiple acquisition of the acquiree's shareholding, the multiple acquisitions shall be assessed to determine whether the multiple acquistions shall

be viewed as one single transaction. If the multiple acquistions shall be viewed as one single transaction, the multiple acquistions shall be

accounted for as one single transaction accordingly. If the multiple acquisitions shall not be viewed as one single transaction, the difference

between the cost of combination and the sum of the book value of the investment in the acquiree immediately before the combination and the book

value of the consideration transferred to acquire additional shareholding is adjusted to capital reserves, and to retained earnings if capital reserves

is insufficient. Cumulative other comprehensive income associated with the investment recognised as a result of the treatment of equity method or

available-for-sale financial assets prior to the combination is not affected by the combination.

   The cost of a long-term equity investment acquired through business combination not under common control is the fair value of the assets

transferred, liabilities incurred or assumed and equity instruments issued. Where a business combination not under common control is achieved by

multiple acquisition of the acquiree's shareholding, the multiple acquisitions shall be assessed to determine whether the multiple acquistions shall

be viewed as one single transaction. If the multiple acquistions shall be viewed as one single transaction, the multiple acquistions shall be

accounted for as one single transaction accordingly. If the multiple acquisitions shall not be viewed as one single transaction, the cost of

combination is measured at the sum of book value of the investment in the acquiree immediately before the combination and cost of acquisition of

additional shareholding. If the investment prior to the combination is measured by fair value, cumulative other comprehensive income associated

with the investment prior to the combination is not affected by the combination. If the investment prior to the combination is measured as an

available-for-sale financial asset, the difference between the fair value and the book value of the investment immediately before the combination

and the associated cumulative other comprehensive income recognised prior to the combination are carried to profit or loss.

   All expenses incurred directly associated with the acquisition by the acquirer, including expenditure of audit, legal services, valuation and

consultancy and other administrative expenses, are recognised in profit or loss for the period during which the acquisition occurs.

   Long-term equity investments acquired not through business combination are measured at cost on initial recognition. Depending on the way of

acquisition, the cost of acquisition can be the total cash paid, the fair value of equity instrument issued, the contract price, the fair value or book

value of the assets given away in the case of non-monetary asset exchange, or the fair value of the relevant long-term equity investments. The cost

of acquisition of a long-term equity investment acquired not through business combination also includes all directly associated expenses, applicable

taxes and fees, and other necessary expenses. The cost of a long-term equity investment, which enables the Company has significant influence or

joint control over the acquiree which is achieved through additional investment, is measured as the fair value determined in accordance with CAS

22 - Financial Instruments: Recognition and Measurement plus the cost of additional investment.

                                                                           99
                                                                              2014 Annual Report of Anhui Gujing Distillery Company Limited



4.13.2 Subsequent Measurement

  To be invested joint control (except constitute common operator) or long-term equity investments significant influence are accounted for using the

equity method. In addition, the Company's financial statements using the cost method of accounting for long-term equity can exercise control 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.

  The carrying amount of an long-term equity investment measured using the equity method is adjusted by the Company's share of the investee's

net profit and other comprehensive income, which is recognised as investment income and other comprehensive income respectively. The carrying

amount of a long-term equity investment measured using the equity method is reduced by profit distribution or cash dividends announced by the

investee. The carrying amount of a long-term equity investment measured using the equity method is also adjusted by the investee's equity

movement other than net profit, other comprehensive income and profit distribution, which is adjusted to capital reserves. The net profit of the

investee is adjusted by the fair value of the investee's identifiable assets as at acquistion. The financial statements and hence the net profit and

other comprehensive income of an investee which does not adopt accounting policies or accounting period uniform with the Company is adjusted

by the Company's accounting policies and accounting period. The Company's share of unrealised profit or loss arising from related party

transactions between the Company and an associate or joint venture is deducted from investment income. Unrealised loss arising from related

party transactions between the Company and an associate or joint venture which is associated with asset impairment is not adjusted. Where assets

transferred to an associate or joint venture which form part of the Company's investment in the investee but which does not enable the Company

obtain control over the investee, the cost of the additional investment acquired is measured at the fair value of assets transferred and the difference

between the cost of the additional investment and the book value of the assets transferred is recognised in profit or loss. Where assets transferred

to an associate or joint venture form an operation, the difference between the consideration received and the book value of the assets transferred in

recognised in profit or loss. Where assets transferred from an associate or joint venture form an operation, the transaction is accounted for in

accordance with CAS 20 - Business Combination, any gain or loss is reocgnised in profit or loss.

  The Company's share of an investee's net loss is limited by the sum of the book value of the long-term equity investment and other net long-term

investments in the investees. The Company has obligation to share additional net loss of the investee, the estimated share of loss recognised as

accrued liabilities and investment loss. Where the Company has unrecognised share of loss of the investee when the investee generates net profit,

the Company's unrecognised share of loss is reduced by the Company's share of net profit and when the Company's unrecognised share or loss is

eliminated in full, the Company's share of net profit, if any, is recognised as investment income.

  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
                                                                           100
                                                                                2014 Annual Report of Anhui Gujing Distillery Company Limited



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

   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 4.5.2 applies. For disposal

of long-term equity investments in any situation other than the fore-mentioned situation, the difference between the book value of the investment

disposed and the consideration received is recognised in profit or loss.

   The long-term equity investment is measured by the equity method both before and after part disposal of the investment, cumulative other

comprehensive income relevant to the investment recognised prior to the acquistion is treated in the same manner that the investee disposes the

relevant assets or liabilities proportionate to the disposal. The investee's equity movement other than net profit, other comprehensive income and

profit distribution is reocgnised in profit or loss proportionate to the disposal.

   The long-term equity investment is measured at cost both before and after part disposal of the investment, cumulative other comprehensive

income relevant to the investment recognised, as a result of accounting by equity method or recognition and measurement principles applicable to

financial instruments, prior to the Company's acquisition of control over the investee is treated in the same manner that the investee disposes the

relevant assets or liabilities and recognised in profit or loss proportionate to the disposal. The investee's equity movement other than net profit,

other comprehensive income and profit distribution, as a result of accounting by equity method, is reocgnised in profit or loss proportionate to the

disposal.

   The Company's control over an investee is lost due to partial disposal of investment in the investee and the Company continues to have

significant influence over the investee after the partial disposal, the investment in measured by the equity method in the Company's separate

financial statements; the Company's control over an investee is lost due to partial disposal of investment in the investee and the Company ceases

to have significant influence over the investee after the partial disposal, the investment in measured in accordance with the recognition and

measurement principles applicable to financial instruments in the Company's separate financial statements and the difference between the fair

value and the book value of the remaining investment at the date of loss of control is recognised in profit or loss. Cumulative other comprehensive

income relevant to the investment recognised, as a result of accounting by equity method or recognition and measurement principles applicable to

financial instruments, prior to the Company's acquisition of control over the investee is treated in the same manner that the investee disposes the

relevant assets or liabilities on the date of loss of control. The investee's equity movement other than net profit, other comprehensive income and

profit distribution, as a result of accounting by equity method, is reocgnised in profit or loss when control is lost. Where the remaining investment is

measured by equity method, the fore-mentioned other comprehensive income and other equity movement are recognised in profit or loss

proportionate to the disposal; Where the remaining investment is measured in accordance with the recognition and measurement principles
                                                                             101
                                                                                2014 Annual Report of Anhui Gujing Distillery Company Limited



applicable to financial instruments, the fore-mentioned other comprehensive income and other equity movement are recognised in profit or loss in

full.

   The Company's joint control or significant influence over an investee is lost due to partial disposal of investment in the investee, the remaining

investment in the investee is measured in accordance with the recognition and measurement principles applicable to financial instruments, the

difference between the fair value and the book value of the remaining investment at the date of loss of joint control or significant influence is

recognised in profit or loss.Cumulative other comprehensive income relevant to the investment recognised, as a result of accounting by equity

method, prior to the partial disposal is treated in the same manner that the investee disposes the relevant assets or liabilities on the date of loss of

joint control or significant influence. The investee's equity movement other than net profit, other comprehensive income and profit distribution is

reocgnised in profit or loss when joint control or significant influence is lost.

   The Company's control over an investee is lost through multiple disposals and the multiple disposals shall be viewed as one single transaction,

the multiple disposals is accounted for one single transaction which result in the Company's loss of control over the investee. Each difference

between the consideration received and the book value of the investment disposed is recognised in other comprehensive income and reclassified in

full to profit or loss at the time when control over the investee is lost.

4.14 Investment property

   Investment property is held to earn rentals or for capital appreciation or for both. Investment property includes leased or ready to transfer after

capital appreciation land use rights and leased buildings. 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 it 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 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 cannot 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.

4.15 Fixed assets


                                                                             102
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  (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 equipment 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 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.

4.16 Construction in progress

                                                                            103
                                                                            2014 Annual Report of Anhui Gujing Distillery Company Limited



  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 4.20.

4.17 Borrowing costs

  Borrowing costs include interest, amortization of discounts or premiums related to borrowings, ancillary costs incurred in connection with the

arrangement of borrowings, and exchange differences arising from foreign currency borrowings.

  The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized. The amounts

of other borrowing costs incurred are recognized as an expense in the period in which they are incurred. Qualifying assets are asset (fixed assets,

investment property and inventories, etc.) that necessarily take a substantial period of time for acquisition, construction or production to get ready

for their intended use or sale.

  Where funds are borrowed for a specific-purpose, the amount of interest to be capitalized is the actual interest expense incurred on that

borrowing for the period less any bank interest earned from depositing the borrowed funds before being used on the asset or any investment

income on the temporary investment of those funds.

  Where funds are borrowed for a general-purpose, the amount of interest to be capitalized on such borrowings is determined by applying a

weighted average interest rate to the weighted average of the excess amounts of accumulated expenditure on the asset over and above the

amounts of specific-purpose borrowings.

  During the capitalization period, exchange differences related to a specific-purpose borrowing denominating in foreign currency are all

capitalized. Exchange differences in connection with general-purpose borrowings are recognized in profit or loss in the period in which they are

incurred.

  Assets qualified for capitalization are the fixed assets, investment&e