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个股公告正文

古井贡B:2015年年度报告(英文版)

日期:2016-04-26附件下载

Gujing Distillery   Original Chinese Spirits                      The 2015 Annual Report




             ANHUI GUJING DISTILLERY COMPANY LIMITED

                                 THE 2015 ANNUAL REPORT

                                      Announcement No. 2016-007




                                               April 2016
Gujing Distillery   Original Chinese Spirits                                     The 2015 Annual Report




                                 Section I Important Statements

The Board of Directors, Supervisory Committee, directors, supervisors and senior management of
Anhui Gujing Distillery Company Limited (hereinafter referred to as the “Company”) hereby
guarantee that the information presented in this Report is factual, accurate and complete, and shall
be jointly and severally liable for any false information, misleading statements or material
omissions carried in this Report.
All directors attended the board meeting for the review of this Report.
The Board has considered and approved the following preliminary plan for profit distribution:
Based on the total shares of the Company on 31 December 2015, a cash dividend of RMB2.00 (tax
inclusive) per 10 shares will be distributed to all shareholders of the Company. No bonus shares will
be granted, nor will any capital reserves be converted 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
carried in this Report is factual, accurate and complete.
The future plans and some other forward-looking statements mentioned in this Report shall not be
considered as virtual promises of the Company to investors. Therefore, investors are kindly
reminded to pay attention to possible investment risks.
Gujing Distillery        Original Chinese Spirits                                                                  The 2015 Annual Report




                                                            Contents




Section I Important Statements ........................................................................................................ 2

Section II Corporate Profile and Financial Results ........................................................................ 5

Section III Business Profile ............................................................................................................... 9

Section IV Management Discussion and Analysis ......................................................................... 10

Section V Significant Events ........................................................................................................... 30

Section VI Share Changes and Information about Shareholders................................................ 36

Section VII Preference Shares......................................................................................................... 42

Section VIII Directors, Supervisors, Senior Management and Employees ................................ 43

Section IX Corporate Governance ................................................................................................. 50

Section X Financial Report ............................................................................................................. 57

Section XI Documents Available for Reference ........................................................................... 152




                                                                  ~3~
Gujing Distillery    Original Chinese Spirits                                                The 2015 Annual Report




                                                Definitions
Term                                              Definition

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

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

Gujing Group                                      Anhui Gujing Group Co., Ltd.




                                                   ~4~
Gujing Distillery        Original Chinese Spirits                                                         The 2015 Annual Report



                     Section II Corporate Profile and Financial Results

I Corporate information

Stock name                             Gujing Distillery, Gujing Distillery B

Stock code                             000596, 200596

Stock exchange                         Shenzhen Stock Exchange

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

Abbr. of the Company name in           古井
Chinese

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

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

Legal representative                   Liang Jinhui

Registered address                     Gujing Town, Bozhou City, Anhui Province, P.R.China

Zip code                               236820

Office address                         Gujing Town, Bozhou City, Anhui Province, P.R.China

Zip code                               236820

Company website                        http://www.gujing.com

Email                                  gjzqb@gujing.com.cn


II Contact information

                                              Company Secretary                        Representative for Securities Affairs

Name                                          Ye Changqing                             Ma Junwei

                                              Gujing Town, Bozhou City, Anhui          Gujing Town, Bozhou City, Anhui
Address
                                              Province, P.R.China                      Province, P.R.China

Tel.                                          (0558) 5712231                           (0558)5710057

Fax                                           (0558)5317706                            (0558)5317706

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


III Information disclosure and place where this Report is kept

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

Website designated       by the China Securities        http://www.cninfo.com.cn


                                                               ~5~
Gujing Distillery             Original Chinese Spirits                                                           The 2015 Annual Report

Regulatory Commission (CSRC) for the publication
of this Report

Place where this Report is kept                               Company Secretary Office


IV Company registration and alteration

Organization code                                        15194000-8

Changes in main business activities since the
                                                         No changes
Company was listed (if any)

Changes of the controlling shareholder (if
                                                         No changes
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

Accountants writing signatures              Lin Wanqiang, yangganlin

Sponsor engaged by the Company to continuously perform its supervisory function during the Reporting Period
□ Applicable √ Not applicable
Financial advisor engaged by the Company to continuously perform its supervisory function during the Reporting Period
□ Applicable √ Not applicable


VI Accounting and financial results

Whether the Company performed any retroactive adjustments to or restatement of its accounting data due to changes of accounting
policies or correction of accounting errors
□ Yes √ No

                                                    2015                  2014                  +/-%                     2013

Operating revenues (RMB)                         5,253,411,479.40      4,650,855,881.72                12.96%         4,580,575,654.71

Net     profit        attributable     to
shareholders     of     the    Company            715,578,369.68         597,041,887.34                19.85%           622,004,915.79
(RMB)
Net     profit    attributable  to
shareholders of the Company after                 682,760,794.86         568,353,541.08                20.13%           593,950,787.12
exceptional profit and loss (RMB)
Net operating cash flow (RMB)                     790,109,535.01         387,494,289.89                103.90%          638,255,355.31

Basic earnings per share
                                                              1.42                    1.19             19.33%                     1.24
(RMB/share)


                                                                      ~6~
Gujing Distillery               Original Chinese Spirits                                                      The 2015 Annual Report


Diluted      earnings           per    share
                                                              1.42                  1.19            19.33%                      1.24
(RMB/share)

Weighted average return on equity
                                                           15.91%               15.05%              0.86%                    17.47%
(%)

                                               31 December 2015      31 December 2014        +/-%               31 December 2013

Total assets (RMB)                                7,183,147,641.13      6,413,518,166.03            12.00%         5,816,934,562.27

Net       assets        attributable      to
shareholders       of     the     Company         4,833,721,630.08      4,181,050,977.96            15.61%         3,742,756,257.05
(RMB)


VII Differences in accounting data under domestic and overseas accounting standards

1. Differences in the net profit and the net assets disclosed in the financial reports prepared under
international and Chinese accounting standards

□ Applicable √ Not applicable

No such differences for the Reporting Period.


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

□ Applicable √ Not applicable

No such differences for the Reporting Period.


VIII Financial results by quarter

                                                                                                                            Unit: RMB

                                                      1Q                   2Q                 3Q                       4Q

Operating revenues                                1,667,266,446.81      1,045,776,382.11   1,301,371,823.31        1,238,996,827.17

Net       profit        attributable      to
                                                   302,810,177.34         77,694,626.83     120,106,124.85           214,967,440.66
shareholders of the Company
Net     profit    attributable to
shareholders of the Company after                  297,882,968.56         70,375,635.65     103,842,076.48           210,660,114.17
exceptional profit and loss
Net operating cash flow                             308,110,106.39        28,107,551.44     331,313,368.07           122,578,509.11

Whether there are any material differences between the financial indicators above or their summations and those which have been
disclosed in quarterly or semi-annual reports
□ Yes √ No


IX Exceptional profit/loss
√ Applicable □ Not applicable

                                                                     ~7~
Gujing Distillery            Original Chinese Spirits                                                        The 2015 Annual Report

                                                                                                                             Unit: RMB

                       Item                              2015              2014                 2013                   Note

Profit/loss on disposal of non-current assets
(including    offset       amount      of   asset         -990,695.19    -2,134,348.70         -1,394,990.98
impairment provisions)

Government grants charged to the profit/loss
for the Reporting Period (except for the
government grants closely related to the
                                                        19,931,320.03     6,045,394.97          6,438,091.17
business of the Company and given at a
fixed quota or amount in accordance with
the States uniform standards)

Profit/loss   on    fair     value   changes    of
transactional financial assets and liabilities
&    investment     profit     on    disposal   of
transactional financial assets and liabilities
                                                         7,842,274.38    17,233,109.00        10,050,415.19
as well as financial assets available for sale,
except for effectively hedging business
related to normal business operations of the
Company

Impairment provision reversal for accounts
receivable on which the impairment test is                       0.00       382,500.00                  0.00
carried out separately

Non-operating income and expense other
                                                        16,973,709.12    16,729,758.11        22,311,989.53
than the above

Less: Corporate income tax                              10,939,033.52     9,568,067.12          9,351,376.24

Total                                                   32,817,574.82    28,688,346.26        28,054,128.67             --

Explanation of why the Company classified an item as exceptional profit/loss according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Profit and Loss,
or reclassified any exceptional profit/loss item given as an example in the said explanatory announcement to recurrent profit/loss
□ Applicable √ Not applicable
No such cases in the Reporting Period.




                                                                 ~8~
Gujing Distillery        Original Chinese Spirits                                                            The 2015 Annual Report




                                           Section III Business Profile

I Main business scope in the Reporting Period

We are mainly engaged in the production and sale of distilled spirits and packaging materials, as well as deep processing and hi-tech
development of agricultural and sideline products. The “Original Chinese Spirits of Gu Jing” are our main product.
After nearly four years of adjustment, Chinas distilled spirits industry has entered a new normal state characteristic of
medium-and-slow-speed development. The period of high-speed growth has passed for the industry and its development has shifted
from a sharp decline to the relatively steady state at present.
In 2015, the value of our “Gujing Distillery” brand exceeded RMB37.555 billion, putting it on the Top 500 Asian Brands, the Hurun
Top 200 Brands 2015 and the BrandZ Top 100 Chinese Brands in Value.


II Significant changes in the main assets

1. Significant changes in the main assets

Not applicable


2. Main assets overseas

□ Applicable √ Not applicable


III Core competitiveness analysis

No significant changes occurred to our core competitiveness during the Reporting Period.




                                                                  ~9~
Gujing Distillery        Original Chinese Spirits                                                             The 2015 Annual Report




                     Section IV Management Discussion and Analysis

I Overview

In the Reporting Period, Chinas economy encountered various hits and challenges, building up the downward pressure on it. Still in
a “hibernation period” before recovery, Chinas distilled spirits industry saw increasing competition. Despite the complicated internal
and external environments, the Company, upon the common efforts of the Board and all the staff, upheld its corporate values of “Be
Honest, Make Good Wine, Make Ourselves Better and Make the World Better”, overcame difficulties and forged ahead. As a result,
all of our objectives set for the year 2015 were successfully fulfilled.
For the year 2015, the Company achieved operating revenues of RMB5.253 billion, up 12.96% from last year; total profit of
RMB966 million, representing a year-on-year growth of 21.36%; net profit of RMB716 million, rising19.85% from last year; an EPS
of RMB1.42/share, up 19.33% from last year; and net operating cash flow of RMB790million, soaring103.90% from the year earlier.
(I) The Company innovated patterns, and expanded new markets
1) The Company positively explored new marketing patterns, and started the 5.0 era of Gujing distilled spirits. In the Reporting
Period, the Company promoted customized businesses such as Wuji Cellar, Wuji Exchange Shop, Healthy Wine in Jar, and
Health-care Wine. The Company started the Gujing 5.0 era, constructed an integrated operation pattern of front-end customer
introduction, middle-end experience, and trail-end settlement, and provided consumers with sustainable purchasing and consuming
experience.
2) The Company formed a complete network internally and externally, and sustainably improved brand power. Gujing always took
brand building as the priority for all marketing efforts. As for external network, the Company continued to help the World Expo
entered into Milan, and promoted Chinese distilled spirits into the world again. As for internal network, the Company held 5.19
Cellar Open Ceremony, enabled 9.9 Wine God Square (also as the Autumn Brew Ceremony), held the Gujing Distillery Original
Chinese Spirits Hefu High-speed Rail Starting Ceremony, successfully registered Vintage Liquor, and continuously improved the
brand image of Gujing Distillery, winning a brand value of RMB37.555 billion.
3) The Company deeply carried forward marketing construction, and planned national strategic layout. In 2015, the Company
continued to expand Anhui market, started in Henan market; strengthened business promotion through breakthroughs in clients,
products, and organizations, and obtained stage effects. At the same time, marketing efforts in strategic nodes such as Bejing,
Shanghai and Shenzhen were rapidly advanced.
4) The Company optimized product system, and adjusted marketing competition strategy. In the Reporting Period, the Company
optimized the Original Chinese Spirits series according to market demand; accomplished product upgrade for the Original Chinese
Spirits series in Anhui province, and sustainably impelled the three-link project and channel-sinking process.
(II) The Company innovated quality management pattern, and stably improved the quality of distilled spirits
1) The Company innovated quality management, and strengthened quality management and control. The Company introduced
automatic production technology of distilled spirits, transformed toward new industrial trends of automation and intelligence. The
135 Refine Quality management pattern, which was the independently innovated quality management pattern with unique Gujing
feature, won the high appraisal of National Quality Management Benchmarking by the Ministry of Industry and Information
Technology.
2) The Company increased on science and technology innovation, and made multiple breakthroughs for scientific research
achievements. 2 achievements won as one of the Ten Excellent Scientific and Technological Achievements in Chinese Distilled
Spirits Science and Technology Convention, 1 achievement won the Second Prize among Science and Technology Progress Prizes


                                                                ~ 10 ~
Gujing Distillery       Original Chinese Spirits                                                             The 2015 Annual Report

issued by China Alcoholic Drinks Association, 1 achievement won the Third Prize among Science and Technology Progress Prizes in
Anhui province, 1 achievement won the award for Significant and Rational Advice and Technology Improvement Result in Anhui
Province, and 1 scientific achievement won as one of the Ten Technology Innovation Achievements in Anhui Staff.
(III) The Company optimized organizations and structures, and improved skills of the management staff
1) The Company effectively conducted the activity of Post Measurement. The Company perfected human resources management
mechanism, further optimized the Companys originations and structures, position systems, and successfully conducted career path
construction.
2) The Company conducted talent team construction. The Company targeted to carry out the cultivation and training for core
marketing talents, core technological talents, and core management talents, and obtained good training effects.
(IV) The Company strengthened company culture construction, and improved brand image
With the guidance of the Companys core values of “Be Honest, Make Good Wine, Make Ourselves Better and Make the World
Better”, the Companys atmosphere and ecology became more healthy and positive. The results of “new environment, new
atmosphere, new motion, and new performance” gradually showed up, creating a good internal environment of “fair people and fair
works, justice and fairness, as well as fair atmosphere”. The Company supervised and urged every employee to become the executer
and transmitter of Gujings contribution culture.
(V) In the Reporting Period, there were still shortcomings as below of the Company.
1) The transformation of the Company has not been accomplished, the pressure of regional competitions still kept pushing, and the
Company needed more guarantee resources;
2) Internal labor cost sustainably rose up, and employee needs became more diversified.


II Analysis of main business

1. Overview

See “I. Overview” in “Management Discussion and Analysis”.


2. Revenues and costs

(1) Breakdown of operating revenues

                                                                                                                         Unit: RMB

                                          2015                                        2014

                                              As a percentage of                          As a percentage of
                                                                                                                      +/-%
                             Amount           operating revenues         Amount           operating revenues
                                                     (%)                                          (%)

Operating revenues        5,253,411,479.40               100.00%       4,650,855,881.72               100.00%                12.96%

By business segment

Manufacturing             5,253,411,479.40               100.00%       4,650,855,881.72               100.00%                12.96%

By product

Distilled spirits         5,118,622,287.57                 97.44%      4,525,663,475.64                 97.31%               13.10%

Hotel services               83,118,805.82                 1.58%          76,460,229.81                 1.64%                8.71%

                                                             ~ 11 ~
Gujing Distillery       Original Chinese Spirits                                                                   The 2015 Annual Report


Other                         51,670,386.01                   0.98%            48,732,176.27                   1.05%                 6.03%

By geographical segment

North China                 297,439,265.75                    5.66%           375,113,132.66                   8.06%             -20.71%

Central China              4,435,362,515.78                   84.43%      3,632,413,502.07                     78.10%              22.11%

South China                 518,051,081.70                    9.86%           641,172,562.92                   13.79%            -19.20%

Overseas                          2,558,616.17                0.05%             2,156,684.07                   0.05%               18.64%


(2) Business segments, products or geographical segments contributing over 10% of the operating revenues
or profit

√ Applicable □ Not applicable
                                                                                                                                Unit: RMB

                                                                                       Operating                           Gross profit
                        Operating                              Gross profit                             Operating cost:
                                          Operating cost                           revenue: YoY                           margin: YoY
                         revenue                                 margin                                   YoY +/-%
                                                                                         +/-%                                 +/-%

By business segment

Manufacturing        5,253,411,479.40 1,509,536,099.28                 71.27%               12.96%                3.46%              2.64%

By product

Distilled spirits    5,118,622,287.57 1,456,785,874.42                 71.54%               13.10%                5.98%              1.91%

Hotel services         83,118,805.82        34,151,473.72              58.91%                   8.71%           -17.32%            12.93%

Other                  51,670,386.01        18,598,751.14              64.01%                   6.03%           -56.92%            52.60%

By geographical segment

North China           297,439,265.75       116,582,792.92              60.80%               -20.71%             -22.76%              1.04%

Central China        4,435,362,515.78 1,223,283,285.57                 72.42%               22.11%               11.47%              2.63%

South China           518,051,081.70       168,847,248.71              67.41%               -19.20%             -19.65%              0.18%

Overseas                 2,558,616.17            822,772.08            67.84%               18.64%               49.82%            -6.70%

Main business data of the prior year restated according to the changed statistical caliber for the Reporting Period
□ Applicable √ Not applicable


(3) Whether revenue from physical sales is higher than service revenue

√ Yes □ No

  Business segment                Item                 Unit                     2015                    2014                +/-%

                       Sales volume              Ton                               71,829.51               66,608.13                 7.84%
Distilled spirits
                       Output volume             Ton                               77,105.07               65,680.19               17.39%
brewage
                       Inventory                 Ton                                8,262.69                2,987.13             176.61%

Reason for any over 30% YoY movements in the data above


                                                                ~ 12 ~
Gujing Distillery       Original Chinese Spirits                                                              The 2015 Annual Report

√ Applicable □ Not applicable
Mainly due to an increase in our orders, the closing inventory stood at 8,262.69 tons, representing a year-on-year surge of176.61%.


(4) Execution progress of major signed sales contracts in the Reporting Period

□ Applicable √ Not applicable


(5) Breakdown of operating costs

By business segment
                                                                                                                           Unit: RMB

                                                       2015                                    2014

                                                           As a percentage                        As a percentage
Business segment            Item                                                                                          +/-%
                                           Amount          of operating costs     Amount         of operating costs
                                                                  (%)                                   (%)

Food
                    Direct materials    1,084,012,660.40              73.29% 1,041,435,552.23              73.01%                0.28%
manufacturing

Food
                    Direct labor cost    164,561,013.89               11.13%    147,507,978.36             10.34%                0.78%
manufacturing

Food                Manufacturing
                                         127,413,435.90                 8.61%   101,989,180.53                7.15%              1.46%
manufacturing       expenses

Food
                    Fuels                 80,798,764.23                 5.46%    83,662,436.07                5.87%            -0.40%
manufacturing

By product
                                                                                                                           Unit: RMB

                                           2015                                         2014
        Product                                As a percentage of                            As a percentage of           +/-%
                               Amount                                        Amount
                                               operating costs (%)                           operating costs (%)

Distilled spirits           1,456,785,874.42                96.51%        1,374,595,147.19               94.21%                   5.98%

Hotel services                 34,151,473.72                  2.26%          41,303,525.82                2.83%                -17.32%

Other                          18,598,751.14                  1.23%          43,174,240.23                2.96%                -56.92%


(6) Changes in the scope of the consolidated financial statements for the Reporting Period

√ Yes □ No
In order to make full use of our environmental protection facilities, technology and talents, we decided, upon deliberation, to
incorporate Anhui Yuanqing Environmental Protection Co., Ltd. with a registered capital of RMB16 million. We held 100% equity
interests of the new subsidiary, which was included in the scope of our consolidated financial statements for the year 2015.




                                                              ~ 13 ~
Gujing Distillery         Original Chinese Spirits                                                         The 2015 Annual Report

(7) Major changes in the business, products or services in the Reporting Period

□ Applicable √ Not applicable


(8) Main customers and suppliers

Main customers

Total sales to top five customers (RMB)                                                                           1,079,135,971.01

Total sales to top five customers as a percentage of the
                                                                                                                            20.54%
total sales for the Reporting Period (%)

Information about top five customers

                                                                                         As a percentage of the total sales for the
    No.                        Customer                       Sales amount (RMB)
                                                                                                   Reporting Period (%)

1          Distributor A                                               531,197,951.92                                       10.11%

2          Distributor B                                               165,056,283.86                                        3.14%

3          Distributor C                                               148,418,510.37                                        2.83%

4          Distributor D                                               144,039,703.63                                        2.74%

5          Distributor E                                                90,423,521.23                                        1.72%

Total                               --                                1,079,135,971.01                                      20.54%


Other information about the main customers
□ Applicable √ Not applicable
Main suppliers

Total purchases from top five suppliers (RMB)                                                                       416,084,731.49

Total purchases from top five suppliers as a percentage of
                                                                                                                            30.53%
the total purchases for the Reporting Period (%)

Information about top five suppliers

                                                                                         As a percentage of the total purchases for
    No.                           Supplier                   Purchase amount (RMB)
                                                                                                 the Reporting Period (%)

1            Supplier A                                                209,135,946.13                                       15.34%

2            Supplier B                                                 60,749,348.79                                        4.46%

3            Supplier C                                                 51,130,858.45                                        3.75%

4            Supplier D                                                 48,763,195.22                                        3.58%

5            Supplier E                                                 46,305,382.90                                        3.40%

Total                                --                                416,084,731.49                                       30.53%


Other information about the main suppliers
□ Applicable √ Not applicable


                                                             ~ 14 ~
Gujing Distillery        Original Chinese Spirits                                                            The 2015 Annual Report

3. Expense

                                                                                                                           Unit: RMB

                                      2015                  2014               +/-%             Reason for any significant change

Selling expenses                  1,557,800,618.96       1,304,206,036.06          19.44%

Administrative expenses              543,822,606.51        579,424,693.56           -6.14%

                                                                                              The earnings cycles of bank financial
Financial costs                      -20,334,406.40        -37,751,610.36          46.14%
                                                                                              products changed.


4. R&D input

√ Applicable □ Not applicable
We carried out R&D projects in the current year to study and develop new products, improve the quality of our products, study the
intelligent brewage technique and new brewage technique.
Our achievements in R&D: 2 achievements won as one of the Ten Excellent Scientific and Technological Achievements in Chinese
Distilled Spirits Science and Technology Convention, 1 achievement won the Second Prize among Science and Technology Progress
Prizes issued by China Alcoholic Drinks Association, 1 achievement won the Third Prize among Science and Technology Progress
Prizes in Anhui province
Information about R&D input

                                                 2015                           2014                              +/-%

Number of R&D personnel                                         506                             423                          19.62%
R&D personnel as a percentage
                                                              8.65%                           7.12%                           1.53%
in the total employees
R&D input (RMB)                                       162,495,000.00               152,790,000.00                             6.35%
R&D input as a percentage in
                                                              3.09%                           3.29%                           -0.20%
operating revenues
Capitalized R&D input (RMB)                                     0.00                            0.00                          0.00%
Capitalized R&D input as a
percentage in the total R&D                                   0.00%                           0.00%                           0.00%
input
Reasons for any significant YoY change in the percentage of the R&D input in the operating revenues
□ Applicable √ Not applicable
Reason for any sharp variation in the percentage of the capitalized R&D input and rationale
□ Applicable √ Not applicable


5. Cash flow

                                                                                                                           Unit: RMB

                Item                             2015                           2014                              +/-%

Subtotal   of     operating   cash
                                                    6,505,710,652.03             5,470,924,405.02                            18.91%
inflow

Subtotal   of     operating   cash                  5,715,601,117.02             5,083,430,115.13                            12.44%


                                                               ~ 15 ~
Gujing Distillery       Original Chinese Spirits                                                             The 2015 Annual Report

outflow

Net operating cash flow                                790,109,535.01                  387,494,289.89                       103.90%

Subtotal of investment cash
                                                   2,279,338,189.57                   2,383,026,644.60                       -4.35%
inflow

Subtotal of investment cash
                                                   2,610,714,434.30                   3,218,831,202.66                      -18.89%
outflow

Net investment cash flow                           -331,376,244.73                    -835,804,558.06                        60.35%

Subtotal   of   financing    cash
                                                       100,720,000.00                  176,260,000.00                       -42.86%
outflow

Net financing cash flow                            -100,720,000.00                    -176,260,000.00                        42.86%

Net increase in cash and cash
                                                       358,013,290.28                 -624,570,268.17                       157.32%
equivalents

Explanation of why the data above varied significantly

√ Applicable □ Not applicable
1. Mainly due to an increase in our orders, the net operating cash flow for the Reporting Period was RMB790,109,535.01,
representing a surge of103.90% from the year earlier.
2. Mainly because the payment for construction decreased as the industrial park was almost completed, the net investment cash flow
for the Reporting Period was RMB-331,376,244.73 up 60.35% from last year.
3. Mainly due to a decrease in the distributed cash dividends, the net financing cash flow for the Reporting Period was
RMB-100,720,000.00, rising 42.86% on a year-on-year basis.
4. Mainly due to an increase in the order proceeds, the net increase in cash and cash equivalents for the Reporting Period was
RMB358,013,290.28, soaring157.32% from last year.
Reason for any big difference between the net operating cash flow and the net profit for the Reporting Period
□ Applicable √ Not applicable


III Analysis of non-core business

□ Applicable √ Not applicable


IV Analysis of assets and liabilities

1. Significant changes in the asset composition

                                                                                                                           Unit: RMB

                            31 December 2015                  31 December 2014

                                           As a                                As a      Change in
                                       percentage of                       percentage of percentage Reason for any significant change
                        Amount                               Amount
                                        total assets                        total assets    (%)
                                           (%)                                 (%)

Monetary funds      1,087,319,158.77         15.14%       718,460,442.79        11.20%       3.94%

                                                                ~ 16 ~
Gujing Distillery           Original Chinese Spirits                                                                    The 2015 Annual Report


Accounts
                           4,948,074.84          0.07%          4,337,953.26          0.07%          0.00%
receivable

Inventories             1,396,712,050.87        19.44% 1,227,182,774.09              19.13%          0.31%

Investment
                           9,715,451.89          0.14%         32,074,356.24          0.50%         -0.36%
property

Fixed assets            1,691,028,804.32        23.54% 1,724,134,467.11              26.88%         -3.34%

Construction       in
                          62,562,971.78          0.87%         61,637,510.96          0.96%         -0.09%
progress


2. Assets and liabilities measured at fair value

√ Applicable □ Not applicable
                                                                                                                                        Unit: RMB

                                         Profit/loss on
                                                            Cumulative fair     Impairment
                                           fair value                                             Purchased in       Sold in the
                          Opening                           value changes provided in the                                               Closing
        Item                             changes in the                                           the Reporting      Reporting
                           balance                            charged to        Reporting                                               balance
                                           Reporting                                                 Period            Period
                                                                equity            Period
                                            Period

Financial assets

1.        Financial
assets measured
at fair value with
fair         value
changes included
in the profit and          303,919.60        42,203.41                   0.00              0.00    2,706,702.10 10,530,672.80           322,223.28
loss     for    the
Reporting Period
(excluding
derivative
financial assets)

2.
Available-for-sale 65,332,932.00                     0.00 50,416,376.59                    0.00 98,131,881.88                   0.00 213,881,190.47
financial assets

Subtotal           of
                        65,636,851.60        42,203.41 50,416,376.59                       0.00 100,838,583.98 10,530,672.80 214,203,413.75
financial assets

Total      of   the
                        65,636,851.60        42,203.41 50,416,376.59                       0.00 100,838,583.98 10,530,672.80 214,203,413.75
above

Financial
                                  0.00               0.00                0.00                                 0.00              0.00           0.00
liabilities

Significant changes in the measurement attributes of the main assets in the Reporting Period
□ Yes √ No



                                                                    ~ 17 ~
Gujing Distillery       Original Chinese Spirits                                                               The 2015 Annual Report

V Investments made

1. Total investments made

□ Applicable √ Not applicable


2. Significant equity investments made in the Reporting Period

□ Applicable √ Not applicable


3. Significant non-equity investments ongoing in the Reporting Period

□ Applicable √ Not applicable


4. Financial investments

(1) Securities investments

√ Applicable □ Not applicable
                                                                                                                                   Unit: RMB
                                                     Gain/los
                                                                     Cumulat
 Variety                                             s on fair
                                       Account                       ive fair   Purchas Sold in    Gain/los
          Code of Name of Initial                      value
   of                                    ing Opening                  value     ed in the the      s in the Closing Account Source
                                                     changes
          securitie securitie investm  measure book                  changes     Reporti Reporti   Reporti book
securitie                                             in the
                                        ment   value                 charged       ng      ng         ng     value ing title of funds
             s         s      ent cost               Reporti
    s                                   model                           to       Period Period      Period
                                                        ng
                                                                      equity
                                                      Period
                                                                                                                       Availabl
Domesti                                    Fair                                                                        e-for-sal
                              29,532,               39,944,          -1,406,0 3,506,7                        42,045,               Own
c/overse 601988 ZGYH                       value              0.00                          0.00      0.00             e
                                  821.53            580.00             97.39      68.39                       251.00               funds
as stock                                   method                                                                      financia
                                                                                                                       l asset

                                                                                                                       Availabl
Domesti                                    Fair                                                                        e-for-sal
                              20,571,               25,388,          -2,265,0 3,491,11                       26,614,               Own
c/overse 000001 PAYH                       value              0.00                          0.00      0.00             e
                                  856.79            352.00             25.89       6.69                       442.80               funds
as stock                                   method                                                                      financia
                                                                                                                       l asset

                                                                                                                       Availabl
Domesti                                    Fair                                                                        e-for-sal
                              91,133,                                 54,087, 91,133,                        145,221               Own
c/overse 600373 ZWCM                       value      0.00    0.00                          0.00      0.00             e
                                  996.80                              499.87     996.80                      ,496.67               funds
as stock                                   method                                                                      financia
                                                                                                                       l asset

                              141,238               65,332,           50,416, 98,131,                        220,055               213,881,
Total                                         --              0.00                          0.00      0.00                 --
                              ,675.12               932.00            376.59     881.88                      ,562.60                 190.47


                                                              ~ 18 ~
Gujing Distillery             Original Chinese Spirits                                                                         The 2015 Annual Report


Disclosure       date    of   the
announcement about the
boards consent for the
securities investment

Disclosure       date    of   the
announcement about the
general meetings consent
for        the          securities
investment (if any)


(2) Investment in financial derivatives

√ Applicable □ Not applicable
                                                                                                                                         Unit: RMB'0,000

                                                                                                                                          Ratio of
                                                                                                                                          investm
                                                                                                                                            ent
                                                                                                                                          amount
                                                                                                                                           at the
                                                                                       Investm                                 Investm
                                                                                                                      Amount              end of
                                     Type of                                             ent       Pursed Sold in
                                                                                                              Actual             ent
                    Related-p                      Initial                          provided amount     the
                        derivati                                                       amount      in the    the
                                                                                                              gain/lo
Operati Relati   arty            investm Commence Terminat                             for            period
                           ve                                at the Reporti Reporti           at the           ss for
ng party on transactio             ent   ment date ion date                         impairm           to the
                        investm                             beginnin ng       ng              end of            the
               n or not          amount                                              ent (if         Compan
                          ent                               g of the Period Period             the            period
                                                                                      any)            y's net
                                                             period                          period
                                                                                                     asset at
                                                                                                                                          the end
                                                                                                                                           of the
                                                                                                                                          period
                                                                                                                                            (%)

Reverse                              Reverse
repurch                              repurch
                                                                             16 Dec.   18,071.2             18,262.
ase of     N/A      No               ase of                  0 6 Jan. 2015                                                        0.00     0.00% 191.26
                                                                             2015              2                48
national                             national
debt                                 debt

                                                                                       18,071.2             18,262.
Total                                                        0      --          --                                                0.00     0.00% 191.26
                                                                                               2                48

Source of derivatives investment
                                                  All from the Company's own funds
funds

Lawsuit (if applicable)                           No lawsuits

Disclosure         date         of          the
                                                  30 Aug. 2013
announcement about the boards

                                                                             ~ 19 ~
Gujing Distillery               Original Chinese Spirits                                                              The 2015 Annual Report

consent        for        the       derivative
investment (if any)

Disclosure           date          of      the
announcement about the general
meetings consent for the derivative
investment (if any)

Risk analysis and risk control
measures for positions held in
derivatives in the Reporting Period The Company had controlled the relevant risks strictly according to the Derivatives Investment
(including but not limited to market Management System.
risk, liquidity risk, credit risk,
operational risk, legal risk, etc.)

Changes in market price or fair
value of derivatives invested in the
Reporting Period (specific methods
used and relevant assumption and Naught
parameter settings shall be disclosed
for   analysis       of     fair   value   of
derivatives)

Significant          changes        in     the
Companys accounting policies and
specific accounting principles for Naught
derivatives in the Reporting Period
as compared to the prior 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
Special    opinions          expressed     by
                                                 corresponding supervision mechanism for the financial derivative instrument business and
independent directors concerning
                                                 formulated reasonable accounting policy as well as specific principles of financial accounting;
the       Companys                 derivatives
                                                 the derivative Investment business developed separately took national debts as mortgage object,
investment and risk control
                                                 which was met with the cautious and steady risks management principle and the interest of the
                                                 Company and shareholders. Therefore, agreed the Company to develop the derivative
                                                 Investment business of reverse repurchase of national debt not more than the limit of RMB0.3
                                                 billion.


5. Use of funds raised

√ Applicable □ Not applicable


(1) Overview of the use of raised funds

√ Applicable □ Not applicable
                                                                        ~ 20 ~
Gujing Distillery        Original Chinese Spirits                                                                                         The 2015 Annual Report

                                                                                                                                                    Unit: RMB'0,000

                                                                          Total
                                                                                                           Proportion
                                         Total                      amount of                                                                                   Amount
                                                                                      Total amount of the total
                                        amount                          the raise                                               Total       Usage and             of the
                                                  Total amount                              of the         amount of
                          Total         of the                           funds                                                amount of whereabouts               raise
                                                        of the                        accumulative               the
 Raised      Raised     amount of used raise                             which                                                the raise     of the raise          funds
                                                  accumulative                         raise funds accumulative
  years     methods      the raise     funds of                         changed                                               funds had     funds had which left
                                                    used raise                              which          raise funds
                          funds           the                        the usage                                                not been          not been         unused
                                                        funds                          changed the              which
                                      Reporting                     during the                                                  used             used            over 2
                                                                                            usage          changed the
                                        Period                      Reporting                                                                                     years
                                                                                                                usage
                                                                        Period

                                                                                                                                           Deposited
                                                                                                                                           in             the
           Private                                                                                                                         special
2011                   122,749.95 2,856.64          107,012.74                    0                    0          0.00% 7,006.93                                           0
           offering                                                                                                                        account for
                                                                                                                                           raised
                                                                                                                                           proceeds

Total          --      122,749.95 2,856.64          107,012.74                    0                    0          0.00% 7,006.93                   --                      0

                                                        Overview of the use of raised funds

The usage of the raise funds of the Company executed steadily as planed without any change.


(2) Projects invested with raised funds as promised

√ Applicable □ Not applicable
                                                                                                                                                    Unit: RMB0,000

                                                                                                                       Date
                       Project                                                                   Investment when the                                            Material
 Projects invested                                                          Accumulative                                           Profit          Reach
                      changed        Raised Investment Input in                                      progress      project                                      change in
with raised capital                                                           input up to                                        generated              the
                        or not       capital      after           the                                up to the     reaches                                           the
 as promised and                                                                      the                                          in the         expected
                      (including input as adjustment Reporting                                   period-end             the                                      project
 investments with                                                             period-end                                         Reporting profit or
                      partially promised          (1)            Period                          (%) (3)= expected                                             feasibility
over-raised capital                                                                   (2)                                         Period             not
                      changed)                                                                        (2)/(1)      usable                                         or not
                                                                                                                  condition

Commitment investment projects
Technological
                                                                                                                                Couldnt be
Transform on the                                                                                                  30     Apr.
Brewage        of No                  13,500 12,194.42            477.74              12,247.9        100.44%                   individually Yes                No
High-quality Base                                                                                                 2014
                                                                                                                                  measured
Wine
Construction      of
                                                                                                                                Couldnt be
Base          Wine                                                                                                30     Apr.
Blending & Filling No                 68,600 65,921.06           2,239.9          59,643.42            90.48%                   individually Yes                No
Centre          and                                                                                               2014
                                                                                                                                  measured
Ancillary Facilities


                                                                        ~ 21 ~
Gujing Distillery              Original Chinese Spirits                                                         The 2015 Annual Report


                                                                                                          Couldnt be
Construction         of                                                                     30     Apr.
Marketing                 No            27,500      27,500    139     18,096.36   65.80%                  individually Yes    No
Network                                                                                     2014
                                                                                                            measured

                                                                                                          Couldnt be
Construction    of                                                                          31 Dec.
                   No                   17,000      17,000      0     17,025.06   100.15%                 individually Yes    No
Brand Promotion                                                                             2012
                                                                                                            measured

Subtotal             of
promised                       --      126,600 122,615.48 2,856.64   107,012.74     --           --                      --        --
investment projects

Investments of over-raised capital

N/A

Total                          --      126,600 122,615.48 2,856.64   107,012.74     --           --                      --        --

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

Explanation          on
significant changes
                          Naught
in    feasibility    of
projects

Amount, usage and
usage progress of Not applicable
over-raised capital

Change      of      the
implementation
location    of      any Not applicable
raised           funds
investment project

Adjustment of the
implementation
method      of      any Not applicable
raised           funds
investment project

Advanced         input Applicable
and exchange of In accordance with the explanation of the Particulars on the Private Issuance of A-share of Anhui Gujing
any raised funds Distillery Co., Ltd. and the Listing Announcement, “Before the raised proceeds being in place, the Company can
investment project use the self-raised proceeds to input preliminarily in accordance with the actual progress of raised proceeds


                                                               ~ 22 ~
Gujing Distillery              Original Chinese Spirits                                                              The 2015 Annual Report

                            investment projects; after the raised proceeds being in place, the Company can use the raised proceeds to replace
                            the self-raised proceeds preliminarily input”. And the Proposal on Using the Raised Proceeds to Replace the
                            Self-raised Proceeds Preliminarily Input to the Raised Proceeds Investment Projects was reviewed and approved
                            at the 7th Session of the 6th Board of Directors, which agreed to use the raised proceeds to replace the self-raised
                            proceeds of RMB27,058,143.42 preliminarily input to the raised proceeds investment projects. The above funds
                            replacement was completed on 6 January 2012.

Idle raised capital
for        temporarily
                            Not applicable
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 quality with the
Outstanding raised
                            principles of practicing strict economy, the Company further strengthened the project expenses control,
funds      in     project
                            supervisor and management in the process of the execution which reduced the total cost of the investment project
implementation
                            of the raised funds. 2. The surplus reason of the marketing network construction project was due to the rather big
and reasons
                            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           of
                            Deposited in the special account for raised proceeds.
unused              raise
capital

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


(3) Change of projects invested with raised funds

□ Applicable √ Not applicable
No such cases in the Reporting Period.


VI Sale of major assets and equity interests

1. Sale of major assets

□ Applicable √ Not applicable
No such cases in the Reporting Period.




                                                                     ~ 23 ~
Gujing Distillery           Original Chinese Spirits                                                                        The 2015 Annual Report

2. Sale of major equity interests

□ Applicable √ Not applicable


VII Main controlled and joint stock companies

√ Applicable □ Not applicable

Main subsidiaries and joint stock companies with an over 10% influence on the Companys net profits
                                                                                                                                            Unit: RMB

                   Relationshi Main business
 Company                                     Registered                                                  Operating        Operating
                   p with the     scope                               Total assets    Net assets                                           Net profits
    name                                      capital                                                    revenues           profits
                    Company

                                Wholesales of
                                distilled spirit,
Bozhou                          construction
                                                       84,864,497. 1,494,601,431. 155,661,630. 5,113,240,885. 662,143,680. 483,232,704.
Gujing Sales Subsidiary materials,
                                                               89                83            62                    14               79             55
Co., Ltd                        feeds            and
                                assistant
                                materials

Bozhou                          Manufacture
                                                       86,660,268.                    157,218,771.                        37,460,100.9 28,229,912.8
Gujing Glass Subsidiary and               sale    of                 194,396,540.66                    208,446,436.73
                                                               98                              73                                     4                  4
Co., Ltd                        glass products

Bozhou                          Collect          and
Gujing                          sale              of
                                                       1,000,000.0
Waste              Subsidiary recycled glass                           1,829,671.38 1,404,806.20 12,404,132.88             151,718.37       136,074.09
                                                                0
Reclamation                     bottle,      glass,
Co., Ltd                        wastebasket

                                Production,
                                publish, design
                                and proxy of
Anhui
                                ads in China;
Jinyunlai
                                ceremony               2,000,000.0
Culture       & Subsidiary                                            73,327,063.32 2,966,248.30 370,990,579.32 6,487,924.48 4,712,523.95
                                service          for            0
Media       Co.,
                                conferences as
Ltd.
                                well as sales
                                of        gifts in
                                arts and crafts

Bozhou                          Administrative
Gujing                          license items: 30,000,000.                            31,128,392.4
                   Subsidiary                                         31,405,113.57                      4,036,747.86      592,510.36       445,261.86
Packing Co.,                    Naught;                        00                                  3
Ltd.                            General


                                                                         ~ 24 ~
Gujing Distillery        Original Chinese Spirits                                                                 The 2015 Annual Report

                           operating
                           items:
                           providing
                           packing          for
                           Gujing Brand,
                           serials       wine,
                           fruit           and
                           vegetable
                           wine,         health
                           wine of Gujing
                           Brand

Bozhou
                           Transportation
Gujing                                            6,945,195.6
                Subsidiary ,     sales     and                    3,587,200.60 2,475,117.02              0.00           0.00           0.00
Transportatio                                              4
                           repair service
n Co., Ltd

                           Hotel
                           management
                           (Except          for
                           catering
                           management
                           and            hotel
                           operation);
Shanghai                   self-owned
Gujing                     housing rental;
                                                  54,000,000.                    101,542,679.                   10,060,938.2
Jinhao Hotel Subsidiary establish                               223,789,626.33                  76,758,815.82                  7,526,499.96
                                                          00                              29                              3
Management                 branch. (If the
Co., Ltd.                  enterprise
                           operation
                           involves         the
                           administrative
                           licensing,        it
                           shall     operate
                           based on the
                           license).

                           Accommodati
                           on and parking
                           services; lunch
Bozhou                     processing,
Gujing Hotel Subsidiary sales               of    628,000.00      1,516,297.89    631,477.80     6,359,990.00    663,325.23     574,173.56
Co., Ltd.                  alcohol         and
                           tobacco         and
                           sales of daily
                           commodity

                                                                    ~ 25 ~
Gujing Distillery       Original Chinese Spirits                                                             The 2015 Annual Report


                           Research and
                           promotion      of
                           the
                           engineering
                           and
                           technology;
                           information
                           System
                           planning      and
                           design;
                           computer
                           software      and
                           hardware,
                           network
Anhui                      communicatio
Swisse Will                n         system
                                                50,000,000.                   51,153,420.9
Science     & Subsidiary design,                              62,424,784.49                  9,168,068.19 5,275,143.78 5,008,722.78
                                                        00                              4
Technology                 development
Co., Ltd.                  and         sales;
                           enterprise
                           management
                           consulting and
                           services.      (If
                           the enterprise
                           operation
                           involves       the
                           administrative
                           licensing      or
                           qualification,
                           it shall operate
                           based on the
                           license        or
                           qualification)

                           Production
Anhui
                           and sales of
Subway                                          30,000,000.                   27,939,973.8
                Subsidiary other       liquor                 31,403,553.42                  1,438,397.73 -2,063,076.14 -2,060,026.14
Cordial Wine                                            00                              6
                           (compound
Co., Ltd.
                           wine)

Anhui                      Production,
Yuanqing                   release, design
                                                16,000,000.                   16,000,000.0
Environment Subsidiary and acting of                          16,000,000.00                          0.00          0.00         0.00
                                                        00                              0
al Protection              the     domestic
Co., Ltd.                  advertising;


                                                                ~ 26 ~
Gujing Distillery        Original Chinese Spirits                                                              The 2015 Annual Report

                           meeting
                           etiquette
                           service      and
                           craft gift sales

Subsidiaries obtained or disposed in the Reporting Period
√ Applicable □ Not applicable

                                               How subsidiary was obtained or disposed
              Subsidiary name                                                                Impact on overall operation and results
                                                         in the Reporting Period

Anhui Yuanqing Environmental Protection
                                              Set up
Co., Ltd.

Information about the main controlled and joint stock companies
Notes: see the “IX Equities in the subsidiaries of Section X”.


VIII Structured bodies controlled by the Company

□ Applicable √ Not applicable


IX Outlook for the future development of the Company

(I) Industrial development prospect of the company
In recent two years, with slowdown of economic growth of China, Chinese economy has entered a new normal. And supply-side
reform enables motive force for economic transformation and upgrade to accumulate and break through. Accordingly, liquor sector of
China has entered a new normal for development at medium and low speed, high-speed growth period of the sector has gone, and the
sector is in an adjustment and restructuring period. Structural division has appeared, and it takes time for the sector to walk out of the
winter all-roundly. The following features are mainly manifested in liquor sector in 2016:
1) Consumption structure is being adjusted and competition on mid-end market is keener
With continuous in-depth adjustment of the sector, consumption has returned to be rational, price for products has gradually returned
to a reasonable level, and mass consumption has become a main force of consumer products. With rise of mass consumption,
demands for medium-and-low-end liquors will keep an inflexible growth, and competition on medium-end market will be keener.
2) The industry has entered a new normal and integration has become a trend
With change of macro-economic situation and in-depth adjustment of the sector, growth speed of liquor sector will slow down,
competition will be further keener, and it will enter a struggling and crawling development stage. The sector will start entering an
all-round competition era in terms of brand influence, product quality, marketing level and innovation capability, competition in the
sector will be keener and integration in the sector will be accelerated.
3) New and old channels will be integrated and marketing will be innovated constantly
With rapid development of the internet, Internet Plus has become a general trend, and new sales modes and emerging channels
represented by B2B, B2C and O2O have been maturing and growing constantly. Internet renovation for traditional channels has been
speeding up, liquor enterprises have been transforming and reforming gradually, integrating with the internet, marketing has been
innovated constantly, and delicacy management for corporate marketing has been implemented.
4) Personalized products in terms of tailoring and crowd funding embrace large-scale development
Liquor will return to its original consumption nature, a consumer sovereignty era will come, consumer demands will be manifested in
diversification, differentiation, personality and experiencing, liquor enterprises will speed up expansion of their business of tailored
liquors, and market of tailored liquors will be a fighting place for manufacturers. With increase of online crowd funding projects of

                                                                   ~ 27 ~
Gujing Distillery         Original Chinese Spirits                                                          The 2015 Annual Report

liquors on mainstream websites such as Taobao and JD, crow funding for liquors has been developing rapidly, and more and more
internet crowd funding products will be launched in the future.
5) Healthy liquors build new consumption habit
With upgrade of consumption, age structure and consumption habit of consumers are changing, they pay more attention to wine
drinking in a healthy and civilized way. To meet demands of consumers, liquor enterprises have been developing healthy liquors and
building new habits for liquor consumption.
(II) Development strategy of the company
1) Stick to developing in optimization, speed up the process of adjustment, upgrade, renovation and transformation, adjust structure
of products, improve their quality, enhance human resource development and management, improve the pressure transmission
mechanism, intensify assessment execution, improve quality of personnel, optimize the talent structure and build a corporate team for
harmonious and win-win development.
2) Stick to implementing all-round innovation strategy, improve self-reliant innovation capability, combine technical, managerial,
institutional and concept innovations, speed up corporate informatization construction, achieve optimized configuration of resources
and information sharing and give to full play of coordination effect.
3) Stick to implementing brand promotion, enhance brand building, improve brand image all-roundly and endeavor to become the
best liquor enterprise in China.
4) Become an enterprise with social responsibility, venture to shoulder the responsibility for stockholders, customers, partners, the
society and the environment, and build a harmonious enterprise actively.
(III) Operating revenue plan of the company in 2016
Efforts will be made in achieving growth of operating revenue of the company in 2016 on the basis of maintaining the figure in 2015.
(IV) Operating risk of the company
1) Macro-economy has entered a new normal, economic development has slowed down, liquor sector is facing continuous
adjustment, and quite a few uncertain and unfavorable factors exist on the market.
2) Structure of products is being upgraded and adjusted, consumption is being developed in a diversified way, consumption has
returned to be rational, mass consumption has become a main trend, and competition of medium and low grade liquors has been
keener.
3) Reform of marketing channels, transformation of consumption groups and consumption structure and impact of the internet on
traditional marketing channels.
4) Unfavorable impact of fake and inferior products and right-infringing products and false propaganda.
(V) Operating measures
In 2016, facing the industrial development situation, combining strategic development target of the company and its operating plan in
2016, the company will set liquor, its main line, as the core, and carry out 5+5 Strategies all-roundly, namely operate with five-star
standard centering round Strategy 5.0 and advance to the strategic target of the company steadily following the spirits of the 18th
National Peoples Congress of CCP and the third, fourth and fifth plenary sessions of the 18th National Peoples Congress of CCP.
1) Marketing
Further improve brand building, innovate marketing modes, optimize brand structure, explore brand internationalization road and
promote global transmission of liquor culture actively. Follow 5+5 Strategies of the company, set Strategy 5.0 as an approach,
intensify implementation of Three Links and build a model market with solid strength, physical entities and actual efficiency. Explore
small enterprise assessment mode actually, arouse initiative of individuals and make innovations of modes according to actual market
situation
2) Production operation
Enhance cost control in production process, push forward internal marketing operation of the company and further accelerate
automation, informatization and intelligence process. And explore green brewing and smart manufacture in accordance with 5+5
Strategies of the company supported with Strategy 5.0.

                                                              ~ 28 ~
Gujing Distillery           Original Chinese Spirits                                                          The 2015 Annual Report

3) Quality management
Ensure quality of products, following high levels of relevant standards, inspection of products and scientific and research
technologies. Stick to bottom line of food safety standard without wavering, enhance research and development strength and improve
traditional production techniques constantly. Further implement 125 Lean Quality management mode and improve quality of
products continuously following 5+5 Strategies of the company.
4) Corporate cultural construction
In 2016, the company will continue carrying out its core values of “Behaving decently, brewing good wines, cultivating moral
character of employees and benefiting the society”, and implementing cultural construction in place. Combine the spirit of “Being
Strict and Practical in Three Aspects” and cultural construction of the company so as to propel cultural construction of the enterprise
steadily.
The year of 2016 is the starting year of the 13th Five-year Plan of the country, a critical year for its deepening reform
comprehensively, and a critical year for Gujing Group to seize opportunities and push its operating performance to a higher level.
The board of directors of the company will lead the whole staff to brave difficulties, unit with utmost sincerity, venture to shoulder
responsibilities and endeavor to achieve its established operating objective.


X Visits paid to the Company for purposes of research, communication, interview, etc.

1. In the Reporting Period

√ Applicable □ Not applicable

            Date of visit                  Way of visit              Type of visitor            Index to main inquiry information

                                                                                            See the record chart of the investor
                                                                                            relation activities disclosed on the
11 Nov. 2015                      Field research              Institution
                                                                                            irm.cninfo.com.cn    of   SZSE     on   11
                                                                                            November 2015

Times of visit                                                                                                                       1

Number of visiting institutions                                                                                                     38

Number of visiting individuals                                                                                                       0

Number of other visitors                                                                                                             0

Significant undisclosed information disclosed,
                                                                                                                                    否
revealed or leaked




                                                              ~ 29 ~
Gujing Distillery        Original Chinese Spirits                                                              The 2015 Annual Report




                                           Section V Significant Events

I Profit distribution and converting capital reserves into share capital for common
shareholders

Formulation, execution or adjustments of profit distribution policy, especially cash dividend policy, for common shareholders in the
Reporting Period
□ Applicable √ Not applicable
The Companys plans (preplans) for distributing common stock dividend and turning capital reserve into share capital for the recent
three years (including the reporting year):
1. 2013 profits distribution proposal of the Company: distributed the cash of RMB3.5 (tax included) for every 10 shares without any
converting capital reserve into share capital;
2.2014 profits distribution proposal of the Company: distributed the cash of RMB2 (tax included) for every 10 shares without any
converting capital reserve into share capital;
3. 2015 profits distribution proposal of the Company: distributed the cash of RMB1 (tax included) for every 10 shares without
converting capital reserve into share capital
Cash dividend distribution of the Company to common shareholders over the past three years (including the Reporting Period)
                                                                                                                             Unit: RMB

                                                     Net profits        Proportion in net
                                                   attributable to     profits attributable
                                                      common              to common
                          Cash dividends         shareholders of the   shareholders of the                            Ratio of cash
                                                                                               Cash dividends in
        Year                                                                                                        dividends in other
                          (tax included)          Company in the        Company in the           other forms
                                                                                                                          forms
                                                    consolidated          consolidated
                                                 statements for the    statements for the
                                                        year                year (%)

2015                          50,360,000.00           715,578,369.68                   7.04%                 0.00                0.00%

2014                         100,720,000.00           597,041,887.34                16.87%                   0.00                0.00%

2013                         176,260,000.00           622,004,915.79                28.34%                   0.00                0.00%

The Company made profits in the Reporting Period and the profits distributable to common shareholders of the Company was
positive, but it did not put forward a preliminary plan for cash dividend distribution to its common shareholders
□ Applicable √ Not applicable


II Preliminary plan for profit distribution and converting capital reserves into share capital
for the Reporting Period

√ Applicable □ Not applicable

Bonus shares for every 10 shares (share)                                                                                                 0



                                                                   ~ 30 ~
Gujing Distillery        Original Chinese Spirits                                                              The 2015 Annual Report


Dividend for every 10 shares (RMB) (tax included)                                                                                     1.00

Additional shares converted from capital reserves
                                                                                                                                        0
for every 10 shares (share)

Total shares as the basis for the preliminary plan for                                                                         503,600,000
profit distribution (share)

Total cash dividends (RMB) (tax included)                                                                                  50,360,000.00

Distributable profits (RMB)                                                                                             2,587,051,422.29

Percentage of cash dividends in the total distributed                                                                             100.00%
profits

                                                          Cash dividend policy

Other

               Details about the preliminary plan for profit distribution and converting capital reserves 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
RMB1(tax included) to the whole shareholders for each 10 shares which was of RMB50,360,000.00 and the retained profits of
RMB2,536,691,422.29would all transfer to the next year.


III Fulfillment of commitments

1. Commitments of the Company, its shareholders, actual controller, acquirer, directors, supervisors,
senior management staff or other related parties fulfilled in the Reporting Period or ongoing at the
period-end

□Applicable √ Not applicable
No such cases in the Reporting Period.


2. Where there had been an earnings forecast for an asset or project and the Reporting Period was still
within the forecast period, explain why the forecast has been reached for the Reporting Period.

□Applicable √ Not applicable


IV Occupation of the Company’s funds by the controlling shareholder or its related parties
for non-operating purposes

□ Applicable √ Not applicable
No such cases in the Reporting Period.


V Explanations given by the Board of Directors, the Supervisory Committee and the
independent directors (if any) regarding the “auditor’s non-standard report” issued by the
CPAs firm for the Reporting Period

□ Applicable √ Not applicable

                                                               ~ 31 ~
Gujing Distillery       Original Chinese Spirits                                                              The 2015 Annual Report

VI YoY changes in accounting policies, estimations and methods

□ Applicable √ Not applicable
No such cases in the Reporting Period.


VII Retroactive restatement due to correction of material accounting errors in the Reporting
Period

□ Applicable √ Not applicable
No such cases in the Reporting Period.


VIII YoY changes in the scope of the consolidated financial statements

√ Applicable □ Not applicable
For fully exerting the effectiveness of the current environmental protection facilities resources, technologies resources and the talants
resources, after the research, the Company decided to set up Anhui Yuanqing Environmental Protection Co., Ltd. with the registered
capital of RMB16 million. The Company held 100% controll right of which and included which into the scope of the 2015
consolidated finanical statement.


IX Engagement and disengagement of CPAs firm

CPAs firm at present

Name of the domestic CPAs firm                         Ruihua CPAs (LLP)

The Companys payment for the domestic CPAs firm
                                                       110
(RMB0,000)

Consecutive years of the audit service provided by
                                                       3
the domestic CPAs firm

Names of the certified public accountants from the
                                                       Lin Wanqiang, yangganlin
domestic CPAs firm

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

CPAs firm, financial advisor or sponsor engaged for internal control audit
√ Applicable □ Not applicable
In 2015, the Company engaged the Ruihua CPAs (LLP) as the internal control audit CPAs of the Company.


X Possibility of listing suspension or termination after disclosure of this Report

□ Applicable √ Not applicable


XI Bankruptcy and reorganization

□ Applicable √ Not applicable

                                                              ~ 32 ~
Gujing Distillery       Original Chinese Spirits                                          The 2015 Annual Report

No such cases in the Reporting Period.


XII Significant litigations and arbitrations

□ Applicable √ Not applicable
No such cases in the Reporting Period.


XIII Punishments and rectifications

□ Applicable √ Not applicable
No such cases in the Reporting Period.


XIV Credit conditions of the Company as well as its controlling shareholder and actual
controller

□ Applicable √ Not applicable


XV Implementation of any equity incentive plan, employee stock ownership plan or other
incentive measures for employees

□ Applicable √ Not applicable
No such cases in the Reporting Period.


XVI Significant related-party transactions

1. Related-party transactions relevant to routine operation

□ Applicable √ Not applicable
No such cases in the Reporting Period.


2. Related-party transactions regarding purchase or sales of assets or equity interests

□ Applicable √ Not applicable
No such cases in the Reporting Period.


3. Related-party transitions regarding joint investments

□ Applicable √ Not applicable
No such cases in the Reporting Period.


4. Credits and liabilities with related parties

□ Applicable √ Not applicable
No such cases in the Reporting Period.

                                                   ~ 33 ~
Gujing Distillery       Original Chinese Spirits            The 2015 Annual Report

5. Other significant related-party transactions

□ Applicable √ Not applicable
No such cases in the Reporting Period.


XVII Significant contracts and execution

1. Entrustment, contracting and leasing

(1) Entrustment

□ Applicable √ Not applicable
No such cases in the Reporting Period.


(2) Contracting

□ Applicable √ Not applicable
No such cases in the Reporting Period.


(3) Leasing

□ Applicable √ Not applicable
No such cases in the Reporting Period.


2. Significant guarantees

□ Applicable √ Not applicable
No such cases in the Reporting Period.


3. Entrusted cash management

(1) Entrusted asset management

□ Applicable √ Not applicable
No such cases in the Reporting Period.


(2) Entrusted loans

□ Applicable √ Not applicable
No such cases in the Reporting Period.


4. Other significant contracts

□ Applicable √ Not applicable

                                                   ~ 34 ~
Gujing Distillery        Original Chinese Spirits                                                           The 2015 Annual Report

No such cases in the Reporting Period.


XVIII Other significant events

□ Applicable √ Not applicable
No such cases in the Reporting Period.


XIX Significant events of subsidiaries

□ Applicable √ Not applicable


XX Social responsibilities

√ Applicable □ Not applicable
As for the social responsibilities executed by the Company in the Reporting Period, please refer to the Report of the Social
Responsibilities disclosed on www.cninfo.com.cn on 26 April 2016.
Whether the Company or any of its subsidiaries is a heavily polluting business identified by the environmental protection authorities
of China
□ Yes √ No □ Not applicable


XXI Corporate bonds

Corporate bonds publicly offered and listed on the stock exchange, which were undue before the approval date of this Report or were
due but could not be redeemed in full
No




                                                             ~ 35 ~
Gujing Distillery       Original Chinese Spirits                                                             The 2015 Annual Report




         Section VI Share Changes and Information about Shareholders

I. Share changes

1. Share changes

                                                                                                                                Unit: share

                                         Before                         Increase/decrease (+/-)                           After

                                                                               Increase
                                                             New      Bonus      from
                                   Number       Percentage                                 Other     Subtotal    Number         Percentage
                                                             issues   shares    capital
                                                                               reserves

I. Restricted shares                     900        0.00%                                                                 900       0.00%

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

Among which: Shares held
                                         900        0.00%                                                                 900       0.00%
by domestic corporations

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

1 RMB common shares               383,599,100     76.17%                                                        383,599,100        76.17%

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

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

Reasons for the share changes
□ Applicable √ Not applicable
Approval of share changes
□ Applicable √ Not applicable
Transfer of share ownership
□ Applicable √ Not applicable
Effects of share changes on the basic EPS, diluted EPS, net assets per share attributable to common shareholders of the Company and
other financial indexes over the prior year and the prior period
□ Applicable √ Not applicable
Other contents that the Company considers necessary or is required by the securities regulatory authorities to disclose
□ Applicable √ Not applicable


2. Changes in restricted shares

□ Applicable √ Not applicable



                                                                ~ 36 ~
Gujing Distillery        Original Chinese Spirits                                                                 The 2015 Annual Report

II Issuance and listing of securities

1. Securities (excluding preference shares) issued in the Reporting Period

□ Applicable √ Not applicable


2. Changes in total shares of the Company and the shareholder structure, as well as the asset and liability
structures

□ Applicable √ Not applicable


3. Existing staff-held shares

□ Applicable √ Not applicable


III Shareholders and actual controller

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

                                                                                                                   Total number
                                                                                                                   of preference
                                                                                                                   shareholders
                               Total number of
                                                                                                                   with resumed
                               common                                    Total     number        of
Total     number                                                                                                   voting rights
                               shareholders at the                       preference shareholders
of       common                                                                                       Not applicab at the prior                Not
                      23,539 prior      month-end                  19,299 with resumed voting
shareholders at                                                                                                  le month-end         applicable
                               before          the                       rights at the period-end
the period-end                                                                                                     before       the
                               disclosure of this                        (if any) (see Note 8)
                                                                                                                   disclosure of
                               Report
                                                                                                                   this Report (if
                                                                                                                   any)       (see
                                                                                                                   Note 8)

                    Shareholdings of shareholders with a shareholding percentage over 5% or the top 10 shareholders

                                                                                     Number                       Pledged or frozen shares
                                     Shareholding Total shares Increase/decrease        of       Number of
        Name of        Nature of
                                      percentage     held at the     during the      restricted non-restricted    Status of       Number of
     shareholder      shareholder
                                         (%)         period-end Reporting Period      shares     shares held       shares             shares
                                                                                       held

ANHUI GUJING
GROUP                State-owned
                                          53.89% 271,404,022                50,000               271,404,022 Pledged              114,000,000
COMPANY              corporation
LIMITED

UBS                  Foreign
                                           2.43% 12,233,480              2,769,182                12,233,480
(LUXEMBOURG) corporation

                                                                   ~ 37 ~
Gujing Distillery        Original Chinese Spirits                                                         The 2015 Annual Report

S.A.

GAOLING               Foreign
                                          2.21% 11,110,642           7,324,208              11,110,642
FUND,L.P.             corporation

                      Foreign
NORGES BANK                               1.99% 10,002,859           4,282,547              10,002,859
                      corporation

CHINA
SECURITIES
                      State-owned
FINANCE                                   1.88%     9,447,999        9,447,999               9,447,999
                      corporation
CORPORATION
LIMITED

GREENWOODS
                      Foreign
CHINA       ALPHA                         1.71%     8,627,598         -759,375               8,627,598
                      corporation
MASTER FUND

CENTRAL
HUIJIN                State-owned
                                          1.30%     6,543,600        6,543,600               6,543,600
INVESTMENT            corporation
CO., LTD.

CHINA         INT'L
CAPITAL CORP
                      Foreign
HONG        KONG                          1.12%     5,647,960        5,452,360               5,647,960
                      corporation
SECURITIES
LTD

BANK            OF
CHINA LIMITED
-     FULLGOAL
REFORM
                      Other               0.85%     4,300,021        4,300,021               4,300,021
POWER HYBRID
SECURITIES
INVESTMENT
FUNDS

CHINA
MERCHANTS             State-owned
                                          0.77%     3,852,802          -75,442               3,852,802
SECURITIES            corporation
(HK) CO., LTD.

Strategic investor or general
corporation becoming a top ten
                                    Inapplicable
shareholder due to placing of
new shares (if any) (Notes 3)

Explanation     on      associated Among the shareholders above, no affiliated relationship exists between the Companys controlling
relationship or persons acting in shareholder—Anhui Gujing Group Company Limited—and other shareholders, nor they are parties
concert        among            the acting in concert as defined in the Administrative Measures on Information Disclosure of Changes

                                                                ~ 38 ~
Gujing Distillery       Original Chinese Spirits                                                             The 2015 Annual Report

above-mentioned shareholders: in Shareholding of Listed Companies. As for other shareholders, the Company does not know
                                  whether they are related parties or whether they belong to parties acting in concert as defined in the
                                  Administrative Measures on Information Disclosure of Changes in Shareholding of Listed
                                  Companies.

                                        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

                                                                                                         RMB
ANHUI       GUJING       GROUP
                                                                                            271,404,022 ordinary           271,404,022
COMPANY LIMITED
                                                                                                         share

                                                                                                         Domestically
UBS (LUXEMBOURG) S.A.                                                                        12,233,480 listed foreign      12,233,480
                                                                                                         share

                                                                                                         Domestically
GAOLING FUND,L.P.                                                                            11,110,642 listed foreign      11,110,642
                                                                                                         share

                                                                                                         Domestically
NORGES BANK                                                                                  10,002,859 listed foreign      10,002,859
                                                                                                         share

CHINA                SECURITIES                                                                          RMB
FINANCE        CORPORATION                                                                     9,447,999 ordinary            9,447,999
LIMITED                                                                                                  share

                                                                                                         Domestically
GREENWOODS               CHINA
                                                                                               8,627,598 listed foreign      8,627,598
ALPHA MASTER FUND
                                                                                                         share

                                                                                                         RMB
CENTRAL                  HUIJIN
                                                                                               6,543,600 ordinary            6,543,600
INVESTMENT CO., LTD.
                                                                                                         share

CHINA INT'L CAPITAL CORP                                                                                 Domestically
HONG KONG SECURITIES                                                                           5,647,960 listed foreign      5,647,960
LTD                                                                                                      share

BANK OF CHINA LIMITED-
FULLGOAL               REFORM                                                                            RMB
POWER                   HYBRID                                                                 4,300,021 ordinary            4,300,021
SECURITIES          INVESTMENT                                                                           share
FUNDS

                                                                                                         Domestically
CHINA               MERCHANTS
                                                                                               3,852,802 listed foreign      3,852,802
SECURITIES (HK) CO., LTD.
                                                                                                         share

Explanation     on     associated Among the shareholders above, no affiliated relationship exists between the Companys controlling

                                                             ~ 39 ~
Gujing Distillery            Original Chinese Spirits                                                           The 2015 Annual Report

relationship    or/and        persons shareholder—Anhui Gujing Group Company Limited—and other shareholders, nor they are parties
acting in concert among the top acting in concert as defined in the Administrative Measures on Information Disclosure of Changes
ten tradable shareholders and in Shareholding of Listed Companies. As for other shareholders, the Company does not know
between the top ten tradable whether they are related parties or whether they belong to parties acting in concert as defined in the
shareholders and the top ten Administrative Measures on Information Disclosure of Changes in Shareholding of Listed
shareholders                            Companies.

Explanation on the top 10
                                        The first majority shareholder of the Company—Gujing Group—started to conduct “refinancing
shareholders participating in the
                                        securities lending” from November 2014, which ceased at the beginning of April 2015. Up to 31
margin trading business (if any)
                                        December 2015, the lent shares have been all returned.
(see note 4)

Did any top 10 common shareholders or the top 10 common shareholders not subject to trading moratorium of the Company carry
out an agreed buy-back in the Reporting Period?
□ Yes √ No
The top 10 common shareholders or the top 10 common shareholders not subject to trading moratorium of the Company had not
carried out any agreed buy-back in the Reporting Period.


2. Information about the controlling shareholder

Nature of the controlling shareholder: Local state-owned holding
Type of the controlling shareholder: Corporation

     Name of controlling              Legal representative
                                                             Date of establishment        Credibility code      Main business scope
          shareholder                 / company principal

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

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

Change of the controlling shareholder during the Reporting Period
□ Applicable √ Not applicable
There was no any change of the controlling shareholder of the Company in the Reporting Period.


3. Information about the actual controller

Nature of the actual controller: Local management organization for state-owned assets
Type of the actual controller: Corporation

                                              Legal
                                                                 Date of
    Name of actual controller            representative /                            Organization code           Business scope
                                                              establishment
                                            company


                                                                   ~ 40 ~
Gujing Distillery        Original Chinese Spirits                                                  The 2015 Annual Report

                                          principal

The Peoples Government of
                                      Not applicable                    Not applicable     Not applicable
Bozhou

Shares held by the controlling
shareholder    in    other   listed
companies      by    holding      or Not applicable
shareholding        during     the
Reporting Period

Change of the actual controller during the Reporting Period
□ Applicable √ Not applicable
There was no any change of the actual controller of the Company in the Reporting Period.
Ownership and control relations between the actual controller and the Company



                                          The Peoples Government of Bozhou



                                        Anhui Gujing Group Company Limited




                                      Anhui Gujing Distillery Company Limited


The actual controller controls the Company via trust or other ways of asset management
□ Applicable √ Not applicable


4. Other corporate shareholders with a shareholding percentage above 10%

□ Applicable √ Not applicable


5. Limits on the Company’s shares held by its controlling shareholder, actual controller, reorganizer and
other commitment subjects

□ Applicable √ Not applicable




                                                              ~ 41 ~
Gujing Distillery       Original Chinese Spirits                      The 2015 Annual Report



                                      Section VII Preference Shares

□ Applicable √ Not applicable

No preference shares in the Reporting Period.




                                                   ~ 42 ~
         Gujing Distillery         Original Chinese Spirits                                                             The 2015 Annual Report



                  Section VIII Directors, Supervisors, Senior Management and

                                                                   Employees
         I Changes in shareholdings of directors, supervisors and senior management
                                                                                                   Increase Decrease
                                                                                        Opening      in the    in the         Other        Closing
                                                              Starting    Ending
  Name       Office title Incumbent/former Gender Age         date of     date of     shareholding Reporting Reporting increase/decrease shareholding
                                                               tenure     tenure
                                                                                        (share)     Period    Period         (share)        (share)
                                                                                                    (share)   (share)

             Chairman
Liang
             of the          Current           Male     51 2014-06-20 2017-06-19
Jinhui
             Board

Zhou         Director,
                             Current           Male     42 2014-06-20 2017-06-19
Qingwu       GM

             Director,
             Deputy
             General
Ye           Manager,
                             Current           Male     42 2014-06-20 2017-06-19
Changqing Secretary of
             the Board,
             Chief
             Accountant

Wang
             Director        Current           Male     51 2014-06-20 2017-06-19
Feng

Yang
             Director        Current           Male     48 2014-06-20 2017-06-19
Xiaofan

             Director,
Yan Lijun                    Current           Male     45 2014-06-20 2017-06-19
             GM

Wang         Independent
                             Current           Male     54 2014-06-20 2017-06-19
Ruihua       director

             Independent
Wang Gao                     Current           Male     51 2014-06-20
             director                                                    2017-06-19

Song         Independent
                             Current           Male     54 2014-11-17
Shuyu        director                                                    2017-06-19

             Chairman
             of the
Xu Peng                      Current           Male     46 2014-06-20 2017-06-19
             Supervisory
             Committee

Niu          Supervisor Current                Male     45 2014-06-20 2017-06-19

                                                                         ~ 43 ~
          Gujing Distillery         Original Chinese Spirits                                                          The 2015 Annual Report

Haiting

Fu
              Supervisor Current                Male     46 2014-06-20 2017-06-19
Qiangxin

Hu
              Supervisor Current                Male     50 2014-06-20 2017-06-19
Wenchao

Lu
              Supervisor Current                Male     36 2014-06-20 2017-06-19
Duicang

              General
Zhai
              Manager         Current           Male     45 2014-06-20 2017-06-19           1,200                                                1,200
Liangdong
              Assistant

              General
Zhang
              Manager         Current           Male     47 2014-06-20 2017-06-19
Lihong
              Assistant

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


          II Particulars about changes of Directors, Supervisors and Senior Executives

          N/A


          III Resumes of important personnel

          Main working experience of current directors, supervisors and senior management staff
          (I) Mr. Liang Jinhui, 51year-old, is Political Engineer who has educational experience of graduate student, incumbent Director and
          president of the Company and Gujing Group, secretary of the party committee。 He ever took the post of MD of Sales Company,
          GM, Deputy GM, GM, Supervisor of Third Supervisory Committee and Director of the Fourth, Fifth and Sixth Board of Directors
          (II) Mr. Zhou Qingwu, 42 year-old, is Economist who has educational experience of graduate student. At present, he is Director and
          General Manager of the Company, Vice Secretary of CPC of Gujing Group. He had ever acted as 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, 42 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; had ever acted Chief Auditor of Audit Department, Vice
          Manager of Audit Department and Vice Supervisor and Supervisor of Auditing& Supervision Department; and Supervisor of the
          Fourth Supervisory Committee; Director and Secretary of the 5th and 6th Board of Directors, Chief Accountant.
          (IV) Mr. Wang Feng, 51 year-old, is Senior Economic Engineer who is postgraduate degree holder, incumbent Director, Deputy
          Secretary of CPC of Gujing Group and Secretary of Discipline Inspection Commission. He had ever acted as 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, 48 year-old, holder of master degree. At present, he is Director and Vice President of Gujing Group. 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, 45 year-old, bachelor degree with Senior Taster. Now he is Director, Assistant of GM of the Company, GM of
          Bozhou Gujin Sale Co., Ltd. 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
                                                                       ~ 44 ~
Gujing Distillery       Original Chinese Spirits                                                         The 2015 Annual Report

(VII) Mr. Wang Ruihua, 54 year-old, doctor degree in accounting, Not Practicing Certified Public Accountant. Accounting Professor
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.
(VIII) Wang Gao, Male, 51 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, 54 years old, who has educational experience of graduate student. 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, 46 year-old, has educational experience of undergraduate college. He is incumbent Chief Supervisor of the
Company. And he had ever acted as Deputy Director and Director of Finance Second Office of Finance Department of the Company,
Manager of Finance Department of Anhui Laobada Co., Ltd., and Vice Manager and Manager of Finance Department of the
Company, Deputy General Manager and Chief Supervisor of Market Supervision Department of Bozhou Gujing Sales Company.
(XI) Mr. Niu Haiting, 45 year-old, has educational experience of undergraduate college. He is incumbent Supervisor of the Company,
Director of Gujing Group,Hefei Office, Secretary-general of Anhui Wine Industry Association, 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, Chairman of The Labor Union.
(XII) Mr. Fu Qiangxin, 46 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 50 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, 36 year-old, has educational experience of undergraduate college, Senior Accountant. 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, Director of Finance Management Center of Gujing Group.
(XV)Mr. Zhai Liangdong, Male, 45-year-old, achieved the Master degree. He is now acting as General Manager Assistant of the
Company, Chairman of the Board of Bozhou Ruineng Heat and Power Co., Ltd. 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 and Chief Inspector
of Administrative Center.
(XVI) Mr. Zhang Lihong, Male, 47-year-old, economic engineering, achieved the Bachelor degree. He is now acting as General

                                                           ~ 45 ~
Gujing Distillery        Original Chinese Spirits                                                           The 2015 Annual Report

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, Director of Human Resource
Center of the Company.
Post-holding in shareholder units
√Applicable □ Not applicable

 Name of the
                                                          Position in
person holding                                                                                                  Receives payment
                                                                the        Beginning date    Ending date of
any post in any          Name of the shareholder unit                                                                from the
                                                         shareholder        of office term    office term
  shareholder                                                                                                   shareholder unit?
                                                               unit
      unit

                                                        Chairman of
                                                        the Board of
                                                        Directors,
Liang Jinhui      Anhui Gujing Group Co., Ltd.                              2014-05-01                         Yes
                                                        Chairman of
                                                        Party
                                                        Committee

                                                        Deputy
                                                        Chairman of
                                                        Party
                                                        Committee,
Wang Feng         Anhui Gujing Group Co., Ltd.                               2010-08-01                        Yes
                                                        Chairman of
                                                        Discipline
                                                        Inspection
                                                        Committee

                                                        Vice
Yang Xiaofan      Anhui Gujing Group Co., Ltd.                             2009-11-01                          Yes
                                                        President

                                                        Deputy
                                                        Chairman of
Zhou Qingwu       Anhui Gujing Group Co., Ltd.                             2009-11-01                          No
                                                        Party
                                                        Committee

                                                        Director      of
Niu Haiting       Anhui Gujing Group Co., Ltd.          Anhui Hefei 2015-10-16                                 Yes
                                                        Office

                                                        Chief
                                                        Inspector     of
Fu Qiangxin       Anhui Gujing Group Co., Ltd.          Financial          2014-07-01                          Yes
                                                        Management
                                                        Center

                                                        Chief of HR
Hu Wenchao        Anhui Gujing Group Co., Ltd.                             2012-06-01                          Yes
                                                        Center


                                                        ~ 46 ~
Gujing Distillery           Original Chinese Spirits                                                         The 2015 Annual Report


Notes          to
                     The above-mentioned personnel, though they take posts in shareholders entities, comply with the relevant
post-holding in
                     employment requirements of Company Law, Securities Law and never were disciplined by CSRC, other relevant
shareholder
                     departments and the Stock Exchange.
units

Post-holding in other units
√Applicable □ Not applicable

  Name of the
                                                                                                                  Receives payment
person holding                                                  Position in   Beginning date    Ending date of
                                 Name of other unit                                                                     from the
any post in any                                                 other unit     of office term     office term
                                                                                                                  shareholder unit?
shareholder unit

                      Anhui Huixin Finance Investment Group
Lu Duicang                                                    GM              2014-07-01                          Yes
                     Co., Ltd.

Notes           to
post-holding in Anhui Huixin Finance Investment Group Co., Ltd. is the wholly own subsidiary of Anhui Gujing Group Co., Ltd.
other units

Particulars about the Company's current directors, supervisors and senior executives punishments from Securities Regulatory
Institution of recent three years in Reporting Period
□ Applicable √ Not applicable


IV Remuneration for directors, supervisors and senior management

Decision-making procedure, determining basis and actual payment for the remuneration of directors, supervisors and senior
management
Decision-making procedure, determination basis and actual remuneration payment 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 Auditors 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.
Remuneration of the directors, supervisors and senior management of the Company during the reporting period is as follow:
                                                                                                                    Unit: RMB0,000

                                                                                                                   Whether gained
                                                                                                     Total
                                                                                                                    remuneration
                                                                                                 remuneration
        Name               Position            Gender          Age            Current/former                       from the related
                                                                                                gained from the
                                                                                                                    parties of the
                                                                                                  Company
                                                                                                                        Company



                                                             ~ 47 ~
Gujing Distillery        Original Chinese Spirits                                                     The 2015 Annual Report


                    Chairman of the
Liang Jinhui                           Male                         51 Current                               Yes
                    Board

Zhou Qingwu         Director, GM       Male                         42 Current                        98.62 No

                    Director, Deputy
                    General Manager,
Ye Changqing        Secretary of the   Male                         42 Current                        90.46 No
                    Board,Chief
                    Accountant

Wang Feng           Director           Male                         51 Current                               Yes

Yang Xiaofan        Director           Male                         48 Current                               Yes

Yan Lijun           Director, GM       Male                         45 Current                      101.22 No

                    Independent
Wang Ruihua                            Male                         54 Current                          7.5 No
                    director

                    Independent
Wang Gao                               Male                         51 Current                          7.5 No
                    director

                    Independent
Song Shuyu                             Male                         54 Current                          7.5 No
                    director

                    Chairman of the
Xu Peng             Supervisory        Male                         46 Current                        82.61 No
                    Committee

Niu Haiting         Supervisor         Male                         45 Current                               Yes

Fu Qiangxin         Supervisor         Male                         46 Current                               Yes

Hu Wenchao          Supervisor         Male                         50 Current                               Yes

Lu Duicang          Supervisor         Male                         36 Current                               Yes

                    General Manager
Zhai Liangdong                         Male                         45 Current                        82.61 Yes
                    Assistant

                    General Manager
Zhang Lihong                           Male                         47 Current                        82.61 No
                    Assistant

Total                          --              --            --                  --                 560.63         --

Situations of equity incentives awarded to the directors, supervisors and senior management of the Company during the Reporting
Period
□ Applicable √ Not applicable


V About employees

1. Number of employee, professional structure and education


Amount of the incumbent employees of the Company                                                                        5,141



                                                         ~ 48 ~
Gujing Distillery       Original Chinese Spirits                                                         The 2015 Annual Report


Amount of the incumbent employees of the main subsidiaries                                                                   707

Total amount of the incumbent employees                                                                                    5,848

Total number of employees accepted salaries(person)                                                                        5,848

Number of retirees whose retirement pension shall be borne by
                                                                                                                             693
the Company and the main subsidiaries

                                                      Professional structure

                            Category                                                         Number

Production personnel                                                                                                       4,436

Sales personnel                                                                                                              550

Technicians                                                                                                                  279

Financial personnel                                                                                                          103

Administrative personnel                                                                                                     480

Total                                                                                                                      5,848

                                                           Education

                            Category                                                         Number

High school or below                                                                                                       4,516

Junior college                                                                                                               722

Bachelor                                                                                                                     586

Master or above                                                                                                               24

Total                                                                                                                      5,848


2. Remuneration policy

The remuneration policy was conducted strictly in line with the related law and regulations of the state, and the plan of operation
performance and profits of the Company and the relevant remuneration policy management.


3. Employee training plans

Employee training is significant in the Human resource management. The Company always pay high attention to the employee
training and development, the Company sets up effective training plan combining with the current situation of the Company, annual
plan, nature of the post and the demand of employee learning, which includes new employee induction training, on-job training,
front-line employee operating skills training, management improvement training and part-time study. Continuously improve the
whole quality of the employees, realized a win-win situation and progress between the Company and the employees.


4. Particulars about labor outsourcing

□ Applicable √ Not applicable




                                                            ~ 49 ~
Gujing Distillery       Original Chinese Spirits                                                             The 2015 Annual Report




                                  Section IX Corporate Governance

I Basic details of 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 it exists any difference between the corporate governance and the Company Law and relevant rules of CSRC or not?
□ Yes √ No
There is no difference between the corporate governance and the Company Law and relevant rules of CSRC.


II Particulars about the Company’s separation from the controlling shareholder in respect of
business, personnel, assets, organization and financial affairs

The company and the controlling shareholder, Anhui Gujing Group Co., Ltd., realized five independences in terms of business,
personnel, assets, organizations and financial affairs, with separate independent calculation, independent and complete business,
independent operation ability, and independent responsibilities and risks. Majority shareholders cannot surpass the shareholders
general meeting to directly or indirectly interfere with the companys 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.


III Horizontal competition

□ Applicable √ Not applicable




                                                             ~ 50 ~
Gujing Distillery        Original Chinese Spirits                                                                 The 2015 Annual Report

IV Particulars about the annual shareholders’ general meeting and special shareholders’
general meetings held during the reporting period

1. Particulars about the shareholders’ general meeting in reporting period


                                                    Proportion of
                                                                                                                         Index to the
       Session                    Type               investors'          Convening date         Disclosure date
                                                                                                                          disclosed
                                                    participation

                                                                                                                    On     the         cninfo
                                                                                                                    website
The            Annual
                        The              Annual                                                                     Announcement          on
Shareholders
                        Shareholders                           4.35% 2015-05-26             2015-05-27              Resolutions        Passed
General       Meeting
                        General Meeting                                                                             on the 2014 Annual
of 2014
                                                                                                                    Shareholders
                                                                                                                    General Meeting


2. Special Shareholders’ General Meeting applied by the preferred stockholder with restitution of voting
right

□ Applicable √ Not applicable


V Performance of the Independent Directors

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


                               1. Particulars about the independent directors attending the board sessions

      Independent             Sessions        Attendance in       Attendance by     Entrusted         Absence rate       Non-attendanc
        director           required to            person             way of         presence                             e in person for
                          attend during                           telecommunica      (times)                                     two
                          the reporting                               tion                                                consecutive
                               period                                                                                         times

 Wang Ruihua                              3                0                  3                  0                   0   No

 Wang Gao                                 3                0                  3                  0                   0   No

 Song Shuyu                               3                0                  3                  0                   0   No

 General meetings sat in on by                                                                                                            1
 independent directors

Note to non-attendance in person for two consecutive times


2. Particulars about independent directors proposing objection on relevant events

Whether independent directors propose objection on relevant events or not?

                                                                  ~ 51 ~
Gujing Distillery       Original Chinese Spirits                                                            The 2015 Annual Report

 □ Yes √ No
During the reporting period, no independent directors proposed any objection on relevant events of the Company.


3. Other explanations about the duty performance of independent directors

whether advices to the Company from independent directors were adopted or not
√ Yes □ No
Explanation on the advices of independent directors for the Company being adopted or not adopted




VI 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 Companys strategy.
2. Duty performance of the Audit Committee
In the reporting period, five members of the Audit Committee diligently and responsibly performed their duties as stipulated in the
relevant rules of the Company:
(1) It reviewed the periodical reports of the Company in 2015.
(2) Upon discussion with Ruihua Certified Public Accountants for the 2015 annual audit, it determined the schedule for the financial
report and internal control audit for 2015.
(3) It communicated in advance with the CPAs firm and independent directors before the CPAs firm came to the Company and
started the 2015 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 2015 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 Companys 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

                                                             ~ 52 ~
Gujing Distillery           Original Chinese Spirits                                                         The 2015 Annual Report

(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.


VII Performance of the Supervisory Committee

During the reporting period, the Supervisory Committee found whether there was risk in the Company in the supervisory activity
□ Yes √ No
The Supervisory Committee has no objection on the supervised events during the reporting period.


VIII Performance Evaluation and Incentive Mechanism for Senior Management Staff

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 Companys operating
target.


IX Internal Control

1. Particulars about significant defects found in the internal control during reporting period

□ Yes √ No


2. Self-appraisal report on internal control


Disclosure date of the Self-appraisal
                                                   2016-04-26
Report on Internal Control

Disclosure index of the Self-appraisal Cninfo website (www.cninfo.com.cn) “ Anhui Gujing Distillery Company Limited
Report on Internal Control                        2015 Annual Self-assessment Report of Internal Control”

The proportion of total assets included in
evaluation     scope        entities   in   the
                                                                                                                            99.82%
Company's total assets of the consolidated
financial statements

The proportion         of   operation revenue                                                                               99.90%

                                                                 ~ 53 ~
Gujing Distillery        Original Chinese Spirits                                                                   The 2015 Annual Report

included in evaluation scope      entities in
the Company's operation revenue of the
consolidated financial statements

                                                          Defect judging standards

                    Category                              Section XI. Financial Report                      Non-Financial Report

                                                Critical defect: Separate defect or other
                                                defects that result in failure in preventing,
                                                finding out and correcting major wrong
                                                reporting in financial report in time. The
                                                following circumstances are deemed as
                                                critical defects: (1) Ineffective in controlling
                                                                                                   Any of the following circumstances shall
                                                the   environment;     (2)    Malpractice     of
                                                                                                   be deemed as a critical defect, and other
                                                directors,      supervisors     and      senior
                                                                                                   circumstances shall be deemed as major
                                                management officers; (3) According to
                                                                                                   or minor defects according to their
                                                external auditing, theres major wrong
                                                                                                   degree of impact.
                                                reporting in current financial report, which
                                                fails to be found by the company in its (1) Violate national laws, regulations or
                                                operating process; (4) Major defects found standardized documents;
                                                and reported to the top management fail to (2) Major decision making procedure is
Qualitative criteria
                                                be corrected within a reasonable period of not scientific;
                                                time; (5) The supervision of audit committee (3) Lack of systems results in systematic
                                                of the company and its internal audit failure;
                                                department for internal control is ineffective; (4) Critical or major defects fail to be
                                                (6) Other defects that may affect correct rectified;
                                                judgment of users of statements. Major (5) Other circumstances that have major
                                                defect: Separate defect or other defects that impact on the company.
                                                result in failure in preventing, finding out
                                                and correcting wrong reporting in financial
                                                report in time, which shall be noted by the
                                                top management despite of not attaining or
                                                exceeding critical level. Minor defect: Other
                                                internal control defects not constituting
                                                critical or major defects.

                                                Critical defect:
                                                                                              Critical defect: The defect with direct
                                                (1) Wrong reporting ≥0.5% of total operating property loss amounting to over RMB10
                                                revenue;                                      million, has great negative impact on the
                                                (2) Wrong reporting ≥5% of total profit;          company and is disclosed in public in the
Quantitative criteria                           (3) Wrong reporting ≥0.5% of total assets;        form of announcement.

                                                (4) Wrong reporting ≥0.5% of total owners Major defect: The defect with direct
                                                equity.                                            property loss amounting to RMB 1

                                                Major defect:                                      million to RMB10 million (included), or
                                                                                                   is penalized by governmental authority
                                                (1) Wrong reporting ≥0.2% but <0.5% of

                                                                   ~ 54 ~
Gujing Distillery          Original Chinese Spirits                                                           The 2015 Annual Report

                                                  total operating revenue;                     of the country but has not resulted in
                                                  (2) Wrong reporting ≥2% but <5% of total negative impact on the company.
                                                  profit;                                      Minor defect: The defect with direct
                                                  (3) Wrong reporting ≥0.2% but <0.5% of property loss no more than RMB 1
                                                  total assets;                                million (included), or is penalized by

                                                  (4) Wrong reporting ≥0.2% but <0.5% of governmental      authority  of   the

                                                  total owners equity.                     provincial-level or below but has not
                                                                                               resulted in negative impact on the
                                                  Minor defect:
                                                                                               company.
                                                  (1) Wrong reporting < 0.2% of total
                                                  operating revenue;
                                                  (2) Wrong reporting<2% of total profit;
                                                  (3) Wrong reporting<0.2% of total assets;
                                                  (4) Wrong reporting<0.2% of total owners
                                                  equity.

Number of significant defects of financial
                                                                                                                                   0
report (Piece)

Number of significant defects of non-
                                                                                                                                   0
financial report (Piece)

Number of important defects of financial
                                                                                                                                   0
report (Piece)

Number      of      important     defects    of
                                                                                                                                   0
non-financial report (Piece)


X Audit report on internal control

√Applicable □ Not applicable

                                    Audit opinion paragraphs in the Audit Report on Internal Control



Particulars about Audit Report on
                                        Disclosure
Internal Control

Disclosure date of the Audit Report
                                        2016-04-26
on Internal Control

Disclosure index of the Audit
                                        Cninfo website (www.cninfo.com.cn) “Audit Report of Internal Control”
Report on Internal Control

Type of Audit Report on Internal
                                        Unqualified auditor's report
Control

Whether there is significant defect
                                        No
in non-financial report

Whether the CPAs firm issues an Audit Report on Internal Control with non-standard opinion or not?


                                                                  ~ 55 ~
Gujing Distillery      Original Chinese Spirits                                                         The 2015 Annual Report

□ Yes √ No
Whether the Audit Report on Internal Control from the CPAs firm is in consistent with the Self-appraisal Report from the Board or
not?
√ Yes □ No




                                                          ~ 56 ~
Gujing Distillery          Original Chinese Spirits                                                          The 2015 Annual Report



                                           Section X Financial Report
I Audit Report
Type of audit opinion                                              Standard unqualified audit opinion
Date of signing audit report                                       25 April 2016
                                                                   Ruihua Certified Public Accountants (Special General
Name of audit institution
                                                                   Partnership)
Reference number of audit report                                   Ruihua SZ [2016] No.48390003
Name of CPA                                                        Lin Wanqiang, yangganlin

                                                         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 Companys balance sheet as at December 31, 2015, the consolidated and the Companys income statement, the consolidated
and the Companys cash flow statement, the consolidated and the Companys 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 auditors 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
entitys 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 entitys 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 Peoples 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, 2015 and consolidated operating results and cash
flow in 2015 as well as the operating results at December 31, 2015 and the operating results & cash flow in 2015 of Anhui Gujing
Distillery Co., Ltd..


II Financial statements
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 December 2015
                                                                                                                           Unit: RMB
                    Item                                Closing balance                                Opening balance
Current Assets:
  Monetary funds                                                      1,087,319,158.77                                718,460,442.79
  Settlement reserves
  Intra-group lendings
  Financial assets measured at fair                                         322,223.28                                     303,919.60
value of which changes are recorded in

                                                              ~ 57 ~
Gujing Distillery         Original Chinese Spirits                           The 2015 Annual Report

current profits and losses
  Derivative financial assets
  Notes receivable                                        539,442,903.31            505,893,430.66
  Accounts receivable                                         4,948,074.84            4,337,953.26
  Accounts paid in advance                                 80,373,083.59             35,711,617.98
  Premiums receivable
  Reinsurance premiums receivable
   Receivable       reinsurance   contract
reserves
  Interest receivable                                                 0.00            4,274,666.66
  Dividend receivable
  Other accounts receivable                                   8,617,955.68            7,967,903.24
  Financial assets purchased under
agreements to resell
  Inventories                                            1,396,712,050.87          1,227,182,774.09
  Assets held for sale
  Non-current assets due within 1 year
  Other current assets                                   1,500,970,860.37          1,501,552,476.11
Total current assets                                     4,618,706,310.71          4,005,685,184.39
Non-current assets:
  Loans by mandate and advances
granted
  Available-for-sale financial assets                     313,881,190.47             88,332,932.00
  Held-to-maturity investments
  Long-term accounts receivable
  Long-term equity investment
  Investing real estate                                       9,715,451.89           32,074,356.24
  Fixed assets                                           1,691,028,804.32          1,724,134,467.11
  Construction in progress                                 62,562,971.78             61,637,510.96
  Engineering materials
  Disposal of fixed assets
  Production biological assets
  Oil-gas assets
  Intangible assets                                       298,372,239.96            306,488,782.60
  R&D expense
  Goodwill
  Long-term deferred expenses                             127,815,668.37            131,921,179.23
  Deferred income tax assets                               61,065,003.63             63,243,753.50
  Other non-current assets
Total of non-current assets                              2,564,441,330.42          2,407,832,981.64
Total assets                                             7,183,147,641.13          6,413,518,166.03
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
                                                     ~ 58 ~
Gujing Distillery           Original Chinese Spirits                          The 2015 Annual Report

value of which changes are recorded in
current profits and losses
  Derivative financial liabilities
  Notes payable                                              93,768,583.00           258,452,214.00
  Accounts payable                                          378,187,452.07           404,634,196.58
  Accounts received in advance                              608,565,152.50           377,503,471.86
  Financial assets sold for repurchase
  Handling charges and commissions
payable
  Payroll payable                                           253,901,700.72           220,198,521.28
  Tax payable                                               358,087,353.80           468,679,523.63
  Interest payable
  Dividend payable
  Other accounts payable                                    452,193,188.94           368,868,463.74
  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                                 138,135,604.82            87,704,041.68
Total current liabilities                                  2,282,839,035.85         2,186,040,432.77
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                                            46,123,314.33            40,839,961.86
  Deferred income tax liabilities                            20,463,660.87             5,586,793.44
  Other non-current liabilities
Total non-current liabilities                                66,586,975.20            46,426,755.30
Total liabilities                                          2,349,426,011.05         2,232,467,188.07
Owners equity:
  Share capital                                             503,600,000.00           503,600,000.00
  Other equity instruments
     Of which:       preferred shares
                    Perpetual bonds
  Capital reserves                                         1,294,938,493.19         1,294,938,493.19
  Less:    Treasury stock
  Other comprehensive income                                 54,481,886.51            16,669,604.07
  Specific reserves

                                                       ~ 59 ~
Gujing Distillery          Original Chinese Spirits                                                      The 2015 Annual Report

  Surplus reserves                                                  256,902,260.27                              256,902,260.27
  Provisions for general risks
  Retained profits                                                2,723,798,990.11                             2,108,940,620.43
Total equity attributable to owners of
                                                                  4,833,721,630.08                             4,181,050,977.96
the Company
  Minority interests
Total owners equity                                               4,833,721,630.08                             4,181,050,977.96
Total liabilities and owners equity                               7,183,147,641.13                             6,413,518,166.03


Legal representative:      Liang Jinhui                       Person-in-charge of the accounting work:   Ye Changqing

Chief of the accounting division:     Zhu Jiafeng


2. Balance sheet of the Company

                                                                                                                     Unit: RMB
                    Item                              Closing balance                            Opening balance
Current Assets:
  Monetary funds                                                    548,650,832.84                              593,001,536.78
  Financial assets measured at fair
value of which changes are recorded in                                    322,223.28                                278,509.60
current profits and losses
  Derivative financial assets
  Notes receivable                                                  288,101,188.68                              286,449,264.42
  Accounts receivable                                                    4,350,437.24                              1,608,829.64
  Accounts paid in advance                                               5,876,678.41                              5,506,676.65
  Interest receivable                                                                                              4,274,666.66
  Dividend receivable
  Other accounts receivable                                         107,625,019.85                              124,826,309.55
  Inventories                                                     1,374,311,894.88                             1,197,978,799.15
  Assets held for sale
  Non-current assets due within 1 year
  Other current assets                                            1,500,000,000.00                             1,497,612,148.31
Total current assets                                              3,829,238,275.18                             3,711,536,740.76
Non-current assets:
  Available-for-sale financial assets                               313,881,190.47                               88,332,932.00
  Held-to-maturity investments
  Long-term accounts receivable                                                                                    4,793,366.46
  Long-term equity investment                                       354,089,408.32                              338,089,408.32
  Investing real estate                                                  9,715,451.89                            30,151,635.36
  Fixed assets                                                    1,471,584,047.66                             1,525,364,298.59
  Construction in progress                                              62,355,022.07                            61,531,773.90
  Engineering materials
  Disposal of fixed assets
  Production biological assets
  Oil-gas assets
  Intangible assets                                                 187,468,810.92                              192,318,384.28
  R&D expense

                                                          ~ 60 ~
Gujing Distillery           Original Chinese Spirits                          The 2015 Annual Report

  Goodwill
  Long-term deferred expenses                               127,815,668.37           131,864,366.43
  Deferred income tax assets                                 42,154,627.44            35,421,614.18
  Other non-current assets
Total of non-current assets                                2,569,064,227.14         2,407,867,779.52
Total assets                                               6,398,302,502.32         6,119,404,520.28
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                                                 828,583.00            93,602,214.00
  Accounts payable                                          371,636,772.06           402,837,653.24
  Accounts received in advance                              659,484,624.07          1,064,055,921.66
  Payroll payable                                            88,513,920.05            79,329,070.21
  Tax payable                                               237,459,964.06           168,778,299.92
  Interest payable
  Dividend payable
  Other accounts payable                                    268,035,753.60           225,495,751.43
  Liabilities held for sale
  Non-current liabilities due within 1
year
  Other current liabilities                                  61,660,494.13            29,569,559.37
Total current liabilities                                  1,687,620,110.97         2,063,668,469.83
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                                            46,123,314.33            40,839,961.86
  Deferred income tax liabilities                            20,463,660.87             5,584,087.19
  Other non-current liabilities
Total non-current liabilities                                66,586,975.20            46,424,049.05
Total liabilities                                          1,754,207,086.17         2,110,092,518.88
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                                 54,481,886.51            16,669,604.07

                                                       ~ 61 ~
Gujing Distillery             Original Chinese Spirits                                         The 2015 Annual Report

  Specific reserves
  Surplus reserves                                                    251,800,000.00                   251,800,000.00
  Retained profits                                                  2,587,051,422.29                 1,990,080,289.98
Total owners equity                                                 4,644,095,416.15                 4,009,312,001.40
Total liabilities and owners equity                                 6,398,302,502.32                 6,119,404,520.28


3. Consolidated income statement

                                                                                                              Unit: RMB
                       Item                              Closing balance                  Opening balance
I. Total operating revenues                                         5,253,411,479.40                 4,650,855,881.72
Including:      Sales income                                        5,253,411,479.40                 4,650,855,881.72
          Interest income
          Premium income
          Handling charge and commission
income
II. Total operating costs                                           4,392,354,606.21                 3,980,555,815.23
Including:      Cost of sales                                       1,509,536,099.28                 1,459,072,913.24
          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                                 790,205,631.87                   666,912,988.72
          Selling and distribution expenses                         1,557,800,618.96                 1,304,206,036.06
          Administrative expenses                                     543,822,606.51                   579,424,693.56
          Financial expenses                                          -20,334,406.40                   -37,751,610.36
          Asset impairment loss                                        11,324,055.99                        8,690,794.01
Add: Gain/(loss) from change in fair
                                                                             42,203.41                       121,035.00
value (“-” means loss)
    Gain/(loss) from investment (“-”
                                                                       69,256,030.30                   105,142,601.27
means loss)
     Including:     share of profits in
associates and joint ventures
        Foreign exchange gains (“-” means
loss)
III. Business profit (“-” means loss)                               930,355,106.90                   775,563,702.76
        Add:    non-operating income                                   44,974,004.61                    28,566,056.14
       Including: Gains on disposal of
                                                                             68,505.82                       625,342.92
non-current assets
        Less:   non-operating expense                                      9,059,670.65                     7,925,251.76
       Including: Losses on disposal of
                                                                           1,059,201.01                     2,759,691.62
non-current assets
IV. Total profit (“-” means loss)                                   966,269,440.86                   796,204,507.14
        Less:   Income tax expense                                    250,691,071.18                   199,162,619.80


                                                            ~ 62 ~
Gujing Distillery         Original Chinese Spirits                                               The 2015 Annual Report

V. Net profit (“-” means loss)                            715,578,369.68                              597,041,887.34
     Net profit attributable to owners of
                                                            715,578,369.68                              597,041,887.34
the Company
     Minority shareholders income
VI. After-tax net amount of other
                                                             37,812,282.44                               17,512,833.57
comprehensive incomes
    After-tax net amount of other
comprehensive incomes attributable to                        37,812,282.44                               17,512,833.57
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                     37,812,282.44                               17,512,833.57
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                          37,812,282.44                               17,512,833.57
financial 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
          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                            753,390,652.12                              614,554,720.91
   Attributable      to    owners   of   the
                                                            753,390,652.12                              614,554,720.91
Company
     Attributable          to       minority
shareholders
VIII. Earnings per share
     (I) Basic earnings per share                                      1.42                                       1.19
     (II) Diluted earnings per share                                   1.42                                       1.19


Legal representative:     Liang Jinhui                Person-in-charge of the accounting work:   Ye Changqing

Chief of the accounting division:    Zhu Jiafeng




                                                     ~ 63 ~
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4. Income statement of the Company

                                                                                             Unit: RMB
                    Item                              2015                      2014
I. Total sales                                               3,007,068,150.18          2,640,452,479.82
  Less:    cost of sales                                     1,536,318,251.80          1,476,012,978.04
     Business taxes and surcharges                            748,278,391.57            631,981,946.23
     Distribution expenses                                    194,497,701.34            128,260,320.96
     Administrative expenses                                  393,964,851.14            385,897,886.00
     Financial costs                                           -19,235,711.99            -31,777,767.71
     Impairment loss                                            8,555,178.79              9,067,474.85
  Add: gain/(loss) from change in fair
                                                                   53,028.41                110,210.00
value (“-” means loss)
    Gain/(loss) from investment (“-”
                                                              574,517,573.20            572,118,594.50
means loss)
     Including:     income   from
investment on associates and joint
ventures
II. Business profit (“-” means loss)                        719,260,089.14            613,238,445.95
  Add:     non-operating income                                32,153,857.76             17,634,363.74
    Including: Gains on disposal of
                                                                                            585,411.86
non-current assets
  Less:    non-operating expense                                6,944,814.78              3,669,574.78
    Including: Losses on disposal of
                                                                  494,461.74              1,788,158.02
non-current assets
III. Total profit (“-” means loss)                          744,469,132.12            627,203,234.91
  Less:    Income tax expense                                  46,777,999.81             50,140,859.93
IV. Net profit (“-” means loss)                             697,691,132.31            577,062,374.98
V. After-tax net amount of other
                                                               37,812,282.44             17,512,833.57
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                       37,812,282.44             17,512,833.57
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                        37,812,282.44             17,512,833.57
assets
     3.    Gains and    losses   on
reclassifying       held-to-maturity
investments into available-for-sale
financial assets

                                                      ~ 64 ~
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     4. Effective hedging gains and
losses on cash flows
     5. Foreign-currency financial
statement translation difference
     6. Other
VI. Total comprehensive incomes                               735,503,414.75            594,575,208.55
VII. Earnings per share
    (I) Basic earnings per share                                         1.39                      1.15
    (II) Diluted earnings per share                                      1.39                      1.15


5. Consolidated cash flow statement

                                                                                             Unit: RMB
                    Item                              2015                      2014
I. Cash flows from operating activities:
  Cash received from sale of
                                                             6,316,130,596.88          5,299,356,137.71
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                                         13,999,000.00                107,163.11
  Other cash received relating to
                                                              175,581,055.15            171,461,104.20
operating activities
Subtotal of cash inflows from operating
                                                             6,505,710,652.03          5,470,924,405.02
activities
  Cash paid for goods and services                           1,758,283,730.78          1,517,387,902.41
  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

                                                      ~ 65 ~
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charges and commissions
  Cash for paying policy dividends
  Cash paid to and for employees                       1,000,365,212.81           989,911,967.81
  Various taxes paid                                   1,872,063,119.51          1,620,441,094.09
  Other cash payment relating to
                                                       1,084,889,053.92           955,689,150.82
operating activities
Subtotal of cash        outflows       from
                                                       5,715,601,117.02          5,083,430,115.13
operating activities
Net cash flows from operating activities                790,109,535.01            387,494,289.89
II. Cash flows from investing activities:
  Cash received from withdrawal of
                                                       2,205,995,542.82          2,287,057,026.56
investments
  Cash received        from   return    on
                                                         63,870,974.91             92,975,082.74
investments
   Net cash received from disposal of
fixed assets, intangible assets and other                     87,371.84             1,144,535.30
long-term assets
  Net cash received from disposal of
subsidiaries or other business units
     Other cash received relating to
                                                            9,384,300.00            1,850,000.00
investing activities
Subtotal of cash inflows from investing
                                                       2,279,338,189.57          2,383,026,644.60
activities
   Cash paid to acquire fixed assets,
intangible assets and other long-term                   237,769,057.80            387,438,488.77
assets
  Cash paid for investment                             2,372,945,376.50          2,831,392,713.89
  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
                                                       2,610,714,434.30          3,218,831,202.66
investing activities
Net cash flows from investing activities               -331,376,244.73           -835,804,558.06
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
                                                        100,720,000.00            176,260,000.00
distribution of dividends or profit
     Including:     dividends or profit

                                                   ~ 66 ~
Gujing Distillery          Original Chinese Spirits                             The 2015 Annual Report

paid by subsidiaries          to     minority
shareholders
     Other cash payments relating to
financing activities
Sub-total of cash          outflows         from
                                                              100,720,000.00            176,260,000.00
financing activities
Net cash flows from financing activities                     -100,720,000.00           -176,260,000.00
IV. Effect of foreign exchange rate
changes on cash and cash equivalents
V. Net increase in cash and cash
                                                              358,013,290.28           -624,570,268.17
equivalents
     Add: Opening balance of cash
                                                              682,360,442.79           1,306,930,710.96
and cash equivalents
VI. Closing balance of cash and cash
                                                             1,040,373,733.07           682,360,442.79
equivalents


6. Cash flow statement of the Company

                                                                                             Unit: RMB
                    Item                              2015                      2014
I. Cash flows from operating activities:
  Cash received from sale of
                                                             3,095,958,832.08          3,109,799,921.89
commodities and rendering of service
  Tax refunds received                                         13,999,000.00                107,163.11
  Other cash received relating to
                                                               83,789,843.81             99,709,660.72
operating activities
Subtotal of cash inflows from operating
                                                             3,193,747,675.89          3,209,616,745.72
activities
  Cash paid for goods and services                           1,750,534,302.48          1,657,562,664.94
  Cash paid to and for employees                              439,242,793.90            444,498,190.80
  Various taxes paid                                         1,069,706,330.70           964,627,298.20
  Other cash payment relating to
                                                               58,446,169.89             67,606,275.31
operating activities
Subtotal of cash           outflows         from
                                                             3,317,929,596.97          3,134,294,429.25
operating activities
Net cash flows from operating activities                     -124,181,921.08             75,322,316.47
II. Cash flows from investing activities:
  Cash received from retraction of
                                                             2,152,485,489.19          1,961,242,567.80
investments
  Cash received        from        return    on
                                                              569,743,711.19            557,438,369.11
investments
   Net cash received from disposal of
fixed assets, intangible assets and other                                0.00             1,059,792.33
long-term assets
  Net cash received from disposal of
subsidiaries or other business units
  Other cash received relating to
                                                                9,384,300.00              1,850,000.00
investing activities
Subtotal of cash inflows from investing
                                                             2,731,613,500.38          2,521,590,729.24
activities
   Cash paid to acquire fixed assets,
intangible assets and other long-term                         219,472,454.26            373,798,440.05
assets

                                                      ~ 67 ~
Gujing Distillery      Original Chinese Spirits                          The 2015 Annual Report

  Cash paid for investment                            2,323,189,828.98         2,502,613,426.39
  Net cash paid to acquire subsidiaries
and other business units
  Other cash payments relating to
investing activities
Subtotal of cash       outflows     from
                                                      2,542,662,283.24         2,876,411,866.44
investing activities
Net cash flows from investing activities               188,951,217.14          -354,821,137.20
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
                                                       100,720,000.00           176,260,000.00
distribution of dividends or profit
     Other cash payments relating to
financing activities
Sub-total of cash       outflows    from
                                                       100,720,000.00           176,260,000.00
financing activities
Net cash flows from financing activities              -100,720,000.00          -176,260,000.00
IV. Effect of foreign exchange rate
changes on cash and cash equivalents
V. Net increase in cash and cash
                                                        -35,950,703.94         -455,758,820.73
equivalents
     Add: Opening balance of cash
                                                       584,601,536.78          1,040,360,357.51
and cash equivalents
VI. Closing balance of cash and cash
                                                       548,650,832.84           584,601,536.78
equivalents




                                                  ~ 68 ~
Gujing Distillery       Original Chinese Spirits                                                        The 2015 Annual Report
7. Consolidated statement of changes in owners’ equity

2015
                                                                                                                                                                                 Unit: RMB
                                                                                                        2015
                                                                       Equity attributable to owners of the Company
           Item                            Other equity instruments                                                                                             Minority     Total owners
                                                                                       Less:      Other                              General
                                                                                                            Specific
                             Share capital Preferred Perpetual       Capital reserve treasury comprehensive          Surplus reserve   risk     Retained profit interests       equity
                                                               Other                                        reserve
                                            shares    bonds                            stock     incomes                             reserve
I. Balance at the end of
                         503,600,000.00                             1,294,938,493.19          16,669,604.07           256,902,260.27           2,108,940,620.43             4,181,050,977.96
the previous year
  Add:      change     of
accounting policy
     Correction of errors
in previous periods
    Business mergers
under the same control
       Other
II. Balance at the
                      503,600,000.00                                1,294,938,493.19          16,669,604.07           256,902,260.27           2,108,940,620.43             4,181,050,977.96
beginning of the year
III. Increase/ decrease in
the period (“-” means                                                                       37,812,282.44                                     614,858,369.68               652,670,652.12
decrease)
  (I)             Total
                                                                                              37,812,282.44                                     715,578,369.68               753,390,652.12
comprehensive 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

                                                                                        ~ 69 ~
Gujing Distillery         Original Chinese Spirits                                       The 2015 Annual Report
equity
       4. Other
  (III) Profit distribution                                                                                             -100,720,000.00               -100,720,000.00
     1. Appropriations to
surplus reserves
    2. Appropriations to
general risk provisions
    3. Appropriations to
                                                                                                                        -100,720,000.00               -100,720,000.00
owners (or 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 making up losses
       4. Other
(V) Specific reserve
     1. Withdrawn for
the period
     2.    Used     in   the
period
(VI) Other
IV. Closing balance            503,600,000.00        1,294,938,493.19          54,481,886.51           256,902,260.27   2,723,798,990.11          4,833,721,630.08
2014
                                                                                                                                                          Unit: RMB
                                                                                         2014
           Item
                                                        Equity attributable to owners of the Company                                       Minority    Total owners


                                                                        ~ 70 ~
Gujing Distillery        Original Chinese Spirits                                                          The 2015 Annual Report
                                           Other equity instruments                         Less:      Other                             General                       interests        equity
                                                                                                                 Specific
                             Share capital Preferred Perpetual         Capital reserve    treasury comprehensive          Surplus reserve risk       Retained profit
                                                               Other                                             reserve
                                            shares    bonds                                 stock     incomes                             reserve
I. Balance at the end of
                         503,600,000.00                                1,294,938,493.19              -843,229.50          256,902,260.27            1,688,158,733.09               3,742,756,257.05
the previous year
  Add:      change     of
accounting policy
     Correction       of
errors   in     previous
periods
    Business mergers
under the same control
     Other
II. Balance at the
                      503,600,000.00                                   1,294,938,493.19              -843,229.50          256,902,260.27            1,688,158,733.09               3,742,756,257.05
beginning of the year
III. Increase/ decrease in
the period (“-” means                                                                           17,512,833.57                                      420,781,887.34                 438,294,720.91
decrease)
  (I)             Total
                                                                                                  17,512,833.57                                      597,041,887.34                 614,554,720.91
comprehensive 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
   (III)            Profit
                                                                                                                                                    -176,260,000.00                -176,260,000.00
distribution
     1.   Appropriations

                                                                                            ~ 71 ~
Gujing Distillery        Original Chinese Spirits                                    The 2015 Annual Report
to surplus reserves
     2. Appropriations
to      general    risk
provisions
     3. Appropriations
to      owners     (or                                                                                             -176,260,000.00    -176,260,000.00
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 making up losses
       4. Other
(V) Specific reserve
     1. Withdrawn for
the period
     2.    Used   in   the
period
(VI) Other
IV. Closing balance          503,600,000.00            1,294,938,493.19      16,669,604.07        256,902,260.27   2,108,940,620.43   4,181,050,977.96




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

2015
                                                                                                                                          Unit: RMB


                                                                          ~ 72 ~
Gujing Distillery        Original Chinese Spirits                                                         The 2015 Annual Report
                                                                                                          2015
                                                    Other equity instruments                         Less:        Other
             Item                                                                                                             Specific                                     Total owners
                                Share capital   Preferred   Perpetual            Capital reserve   treasury   comprehensive              Surplus reserve Retained profit
                                                                        Other                                                 reserve                                         equity
                                                 shares      bonds                                   stock       incomes
I. Balance at the end of the
                             503,600,000.00                                     1,247,162,107.35              16,669,604.07              251,800,000.00 1,990,080,289.98 4,009,312,001.40
previous year
  Add:       change       of
accounting policy
     Correction of errors
in previous periods
     Other
II.   Balance     at     the
                               503,600,000.00                                   1,247,162,107.35              16,669,604.07              251,800,000.00 1,990,080,289.98 4,009,312,001.40
beginning of the year
III. Increase/ decrease in
the period (“-” means                                                                                       37,812,282.44                               596,971,132.31   634,783,414.75
decrease)
   (I) Total comprehensive
                                                                                                              37,812,282.44                               697,691,132.31   735,503,414.75
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
  (III) Profit distribution                                                                                                                              -100,720,000.00 -100,720,000.00
     1. Appropriations to
surplus reserves
    2. Appropriations to
                                                                                                                                                         -100,720,000.00 -100,720,000.00
owners (or shareholders)


                                                                                          ~ 73 ~
Gujing Distillery        Original Chinese Spirits                                                         The 2015 Annual Report
       3. 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 making up losses
       4. Other
(V) Specific reserve
     1. Withdrawn for the
period
       2. Used in the period
(VI) Other
IV. Closing balance            503,600,000.00                                   1,247,162,107.35              54,481,886.51               251,800,000.00 2,587,051,422.29 4,644,095,416.15
2014
                                                                                                                                                                               Unit: RMB
                                                                                                          2014
                                                    Other equity instruments                         Less:        Other
               Item                                                                                                            Specific                                     Total owners
                                Share capital   Preferred Perpetual              Capital reserve   treasury   comprehensive               Surplus reserve Retained profit
                                                                        Other                                                  reserve                                         equity
                                                 shares    bonds                                     stock       incomes
I. Balance at the end of
                         503,600,000.00                                         1,247,162,107.35                 -843,229.50              251,800,000.00 1,589,277,915.00 3,590,996,792.85
the previous year
  Add:       change       of
accounting policy
     Correction of errors
in previous periods
       Other
II.  Balance      at  the
                          503,600,000.00                                        1,247,162,107.35                 -843,229.50              251,800,000.00 1,589,277,915.00 3,590,996,792.85
beginning of the year

                                                                                           ~ 74 ~
Gujing Distillery        Original Chinese Spirits            The 2015 Annual Report
III. Increase/ decrease in
the period (“-” means                                          17,512,833.57        400,802,374.98   418,315,208.55
decrease)
   (I) Total comprehensive
                                                                 17,512,833.57        577,062,374.98   594,575,208.55
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
  (III) Profit distribution                                                           -176,260,000.00 -176,260,000.00
     1. Appropriations to
surplus reserves
    2. Appropriations to
                                                                                      -176,260,000.00 -176,260,000.00
owners (or shareholders)
     3. 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 making up losses
     4. Other


                                                    ~ 75 ~
Gujing Distillery      Original Chinese Spirits                      The 2015 Annual Report
(V) Specific reserve
     1. Withdrawn for the
period
     2. Used in the period
(VI) Other
IV. Closing balance          503,600,000.00       1,247,162,107.35       16,669,604.07        251,800,000.00 1,990,080,289.98 4,009,312,001.40




                                                            ~ 76 ~
Gujing Distillery          Original Chinese Spirits                                                                          The 2015 Annual Report


                          Section XI Documents Available for Reference


Note 1: 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
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

                                                                      ~ 77 ~
Gujing Distillery          Original Chinese Spirits                                                                      The 2015 Annual Report

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 2015, the accumulated total amount of issued capital was 503.6 million shares, see the note 6.24.
The company registered in Gujing town, Bozhou city, Anhui province.
As of the reporting date, cumulative number of shares of the Company was 503.6 million See Note 6.24 for details.The approved business scope
of the Company: grain procurement (operation by license), manufacture of distilled spirits, beer, red wine, facilities for wine making, packaging
materials, and glass bottles, alcohol, feeds, grease (limited to the by-products from alcohol manufacture), development of high-tech,
biotechnology development agricultural and sideline products deep processing, sales of goods from own production.
The parent company of the group and ultimate parent company is the Anhui Gujing Group Co., Ltd.

The financial statement is approved by the resolution of board of directors on 25 April, 2016. According to the articles of association, the financial

statements will be submitted to the shareholders meeting for consideration.

The combination scope includes total 11 subsidiaries in 2015, please see the note 8 ―The equity in other main entities‖ for details. The combination

scope increase 1 subsidiary than prior year and please see the note 7 ―Changes of scope of consolidation financial statements‖ for details.



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

2015. 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
The company and subsidiaries are mainly engaged in liquor production and sales. The company formulates the specific accounting policies and
accounting estimates for revenue recognition and other transactions and events in accordance with the actual business operation characteristics of


                                                                    ~ 78 ~
Gujing Distillery            Original Chinese Spirits                                                                       The 2015 Annual Report

the company and subsidiaries, and provisions of the relevant accounting standard for business enterprises, please see the note 4.23 ―Revenue‖ for
details. The description of significant account judgment and estimates made by management please see the note 4.28 ―Significant account
judgment and 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

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


                                                                         ~ 79 ~
Gujing Distillery           Original Chinese Spirits                                                                             The 2015 Annual Report


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 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


                                                                         ~ 80 ~
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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.

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.


                                                                       ~ 81 ~
Gujing Distillery          Original Chinese Spirits                                                                          The 2015 Annual Report


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

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.

Where loss of control over a subsidiary results from multiple transactions (agreements), asssessment shall be made as to whether the multiple

agreements shall be viewed as a whole as a single transaction. Multiple agreements giving rise to loss of control over a subsidiary is generally

viewed as a whole as a single transaction if the terms, conditions and economic implications of the multiple agreements satisfy one or more of the

following conditions: 1) the agreements are entered into simultaneously or taking into account the implication of each other; 2) the business

objective cannot be achieved without successful completion of all the agreements; 3)the occurrance of one agreement is dependent on the result of

at least another one agreement; and/or 4) any one single agreement is not recognised as economic and the agreements as a whole is economic.

Where multiple agreements do not satisfy the conditions of being viewed as a single transaction, each agreement shall be treated and accounted

for in accordance with the provisions of disposal of long-term equity investments not resulting loss of control (see Note 4.13.2.4) or loss of control

due to disposal of shares or other events (see the previous paragraph). Where nultiple agreements satisfy the conditions of being viewed as a

single transaction, each agreement shall be treated and accounted for as a transaction which results in loss of control; differences between the

consideration for disposals prior to loss of control and the net assets proportionate to the shares disposed prior to loss of control are recognised as

other comprehensive income in the consolidated financial statements and transfered to profit or loss at the time of loss of control.

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.



                                                                      ~ 82 ~
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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

measured reliably and have low risks of change.

4.8 Foreign exchange

4.8.1 Translation in foreign exchange transactions

Transactions denominated in foreign currencies are translated into the functional currency using the transaction-date spot exchange rates. Where a

transaction is conducted purely for the purpose of exchange one currency into another currency, the exchange rate used to translate the foreign

currency into the functional currency is the exchange rate that is actually used for the currency exchange.

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, ②hedging 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

                                                                          ~ 83 ~
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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;

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

4.9.2.1 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.

4.9.2.2 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

                                                                        ~ 84 ~
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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.

4.9.2.3 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.

4.9.2.4 Financial assets available-for-trade

Financial assets available-for-trade include non-derivative financial assets that are designated on initial recognition as available for trade, and

financial assets that are not classified as financial assets at fair value through profit or loss, loans and receivables or investment held-to-maturity.

Financial assets available-for-trade are subsequently measured at fair value, and gains or losses arising from changes in the fair value are

recognized as other comprehensive income and included in the capital reserve, except that impairment losses and exchange differences related to

amortized cost of monetary financial assets denominated in foreign currencies are recognized in profit or loss, until the financial assets are

derecognized, at which time the gains or losses are released and recognized in profit or loss.

Interests obtained and dividends declared by the investee during the period in which the financial assets available-for-trade are held, are

recognized in investment gains.

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.

4.9.3.1 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.

4.9.3.2 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.

                                                                         ~ 85 ~
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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:

a. the rights to receive cash flows from the asset have expired;

b. the enterprise has transferred its rights to receive cash flows from the asset to a third party under a pass-through arrangement; or

c. 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.

4.9.5.1 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

                                                                        ~ 86 ~
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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.

4.9.5.2 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

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

                                                                         ~ 87 ~
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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 Company 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.
4.10.1 Impairment of receivables
Receivables are assessed for impairment on balance sheet dates. An impairment allowance for receivables is recognised if any of the following is
present upon assessment:
a. significant financial difficulty of the issuer or obligor; or
b. a breach of contract, such as a default or delinquency in interest or principal payments; or
c. it is probable that the borrower will enter bankruptcy or other financial reorganisation; or
d. other objective evidence indicating impairment.
4.10.2 Impairment allowance for receivables
4.10.2.1 Receivables of individual significance subject to individual assessment and the relevant impairment allowance
Individual receivables equal to or over CNY 2,000,000.00 are classified as receivables of individual significance.
Receivables of individual significance are individually assessed for impairment. Receivables of individual significance assessed as non-impaired
upon individual assessment are incorporated into portfolios of financial assets of similar credit risk characteristics for assessment for impairment
by portfolio. Receivables of individual significance assessed as impaired upon individual assessment are no longer subject to assessment for
impairment by portfolio.
4.10.2.2 Portfolios of receivables of similar credit risk characteristics and the relevant impairment allowance
A. Classification of portfolios
Receivables of individual insignificance and non-impaired receivables of individual significance upon individual assessment are classified into
portfolios of financial assets on the basis of similarity and relevance of credit risk characteristics. Credit risk characteristics represent the ability of

the issuers or obligors to make payments in accordance with contracts and future cash flows of the relevant assets.Evidence of portfolios:


                         Portfolio                                                                         Criteria

 Portfolio by age                                             Age of receivables

 Related party portfolios                                     Entities within the scope of the consolidation.
B. Impairment allowance for portfolios
Impairment allowance for portfolios is measured with reference to portfolio structure, credit risk characteristics (the ability of the issuers or obligors
to make payments in accordance with contracts) of each portfolio, historical experience, current market economic conditions, and recognised
impairment in each portfolio.
Measurement method for impairment allowance for portfolios


                                           Portfolio                                                                  Measurement method

 Portfolio by age                                                                                Age analysis method

 Related party portfolios                                                                        No allowance for bad debt


                                                                           ~ 88 ~
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a. Impairment allowance measured by age analysis

                       Age group                                 Proportion to accounts receivable (%)             Proportion to other receivables (%)

 Less than 1 year (inclusive, same applies to the

 following)

 Including: 1 to 6 months                                                                            1.00                                                1.00


              7 to 12 months                                                                         5.00                                                5.00


 1 to 2 years                                                                                       10.00                                             10.00


 2 to 3 years                                                                                       50.00                                             50.00


 Over 3 years                                                                                      100.00                                           100.00

4.10.2.3 Receivables of individual insignificance subject to individual assessment
Receivables of individual insignificance are individually assessed for impairment is any of the following is present:
there is disagreement with the issuer or obligor; or are subject to litigation; or it is clearly evidential that the issuer or obligor is very likely not
capable of fulfilling its commitments.
When a receivable of individual insignificance is impaired upon individual assessment for impairment, impairment loss is recognised as the excess
of its carrying amount over the present value of its future cash flows and an impairment allowance of the same amount is recognised.
4.10.3 Reversal of impairment allowance for receivables
After the impairment is recognised, if events subsequent to the recognition of the impairment are objectively evidential that the impairment no
longer exists, the impairment allowance and impairment loss are reversed; however, the reversal shall not cause the carrying amount of the
receivable exceeds its carrying amount as at the reversal date as if no impairment allowance was recognised.

4.11 Inventories
4.11.1 Classification of inventory
The Company’s inventory mainly includes raw materials, semi-finished product, work-in-progress and finished products.
4.11.2 Costing 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.
4.11.3 Determination of net realisable value of inventories and impairment allowance for inventories
Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion, the estimated costs
necessary to make the sale and relevant taxes. Net realizable value is determined on the basis of clear evidence obtained, and takes into
consideration the purpose of holding inventories and effect of post balance sheet events.
At the balance sheet date, inventories are measured at the lower of the cost and net realizable value. If the net realizable value is below the cost
of inventories, a provision for decline in value of inventories is made. The provision for inventories decline in value is determined normally by the
difference of the cost of individual item less its realizable value. For large quantity and low value items of inventories,
provision for decline in value is made based on categories of inventories. For items of inventories relating to a product line that are produced and
marketed in the same geographical area, have the same or similar end users or purposes, and cannot be practicably evaluated separately from
other items in that product line provision for decline in value is determined on an aggregate basis.
After the provision for decline in value of inventories is made, if the circumstances that previously caused inventories to be written down below
cost no longer exist so that the net realizable value of inventories is higher than their cost, the original provision for decline in value is reversed
and the reversal is included in profit or loss for the period.
                                                                         ~ 89 ~
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4.11.4 Physical inventories are managed by the perpetual inventory taking system.
4.11.5 Amortisation of low value consumables and packaging materials
Low value consumables and packaging materials are fully amortised at the time of issuance.

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 in this section refers to the long-term investment through which the Company has control, joint control, or material

influence on the investee. Long-term equity investments through which the Company does not have control, joint control or material influence on

the investee shall be recognised as available-for-sale financial assets or financial assets measured by fair value with changes in fair value

recognised in profit or loss. See Note 4.9 for details.

Joint control is the contractually agreed sharing of control over an economicactivity, and exists only when the strategic financial and operating

decisionsrelating to the activity require the unanimous consent of the parties sharingcontrol. Significant influence is the power to participate in the

financial and operatingpolicy decisions of the investee but is not control or joint control over thosepolicies.

4.13.1 Determination of Investment cost

Long-term equity investment acquired through business combination under common control are 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

initial cost and cash paid, non-monetary assets transferred and liabilities assumed by is adjusted to capital reserves, and to retained earnings if


                                                                         ~ 90 ~
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capital reserves are insufficient. If the consideration is paid by issuing equity instruments, the initial cost 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, with the face value of the

equity instruments issued recognised as share capital and the difference between the intial cost and the face value of the equity instruments issued

adjusted to capital reserves, and to retained earnings if capital reserves is insufficient.For business combination involving entities under common

control achieved through multiple transactions (acquistion in stages), the multiple agreements are assessed to determine whether they should be

viewed as a lump-sum purchase. Where multiple agreements of an acquisition in stages are viewed as a lump-sum purchase, the transactions are

viewed as one transation that acquire the control power. Where multiple agreements of an acquisition fail the conditions of a lump-sum purchase,

long-term equity investment acquired through business combination under common control are 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 initial cost,

and the book value of the long-term equity investment before combination date and considerations paid to acquire new shares on the combination

date, is adusted to capital reserves, and toretained earnings if capital reserves are insufficient.

Long-term equity investment acquired through business combination not under common control is measured at combination cost on the

combination date. The combination cost includes assets contributed by the purchaser, lialilities iccurred or assumed by, and fair value of the equity

instruments issued by the acquirer. For business combination involving entities not under common control achieved through multiple transactions

(acquistion in stages), the multiple agreements are assessed to determine whether they should be viewed as a lump-sum purchase. Where multiple

agreements of an acquisition in stages are viewed as a lump-sum purchase, the transactions are viewed as one transation that acquire the control

power. Where multiple agreements of an acquisition fail the conditions of a lump-sum purchase, long-term equity investment acquired through

business combination not under common control are measured at the sum of the original book value of the equity investment on the investee and

the new investment cost, which is regarded as the new initial cost of the long-term investment when transferred to cost method. If the original equity

is measured by equity method, not accounting treatment is applied to relevant other comprehensive income temporarily.

Audit, legal services, valuation, and other directly associated administrative expenses incurred by the acquirer are recognised in profit or loss on the

transaction dates.

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. When the Company increase investment to have material influence or joint control, but not control

over the investee, long-term investments are measured at the sum of fair value of initial equity investment and cost of new investment as defined in

CAS22-Recognition and Measurement of Financial Assets.

4.13.2 Subsequent measurement and recognition and measurement of gain or loss

Where a long-term equity investment gives the Company either joint control or significant influence over the respective investee, the investment is

subsequently measured using the equity method.

Where a long-term equity investment gives the Company control over the respective investee, the investment is subsequently measured at cost.



                                                                       ~ 91 ~
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4.13.2.1 Long-term equity investments measured at cost

A long-term equity investment is measured at cost of investment, excluding declared cash dividends or profit pending distribution included in the

consideration paid. Investment income for the relevant period from a long-term equity investment measured at cost is recognised as the Company's

share of the cash dividends or profit declared for distribution by the investee.

4.13.2.2 Long-term equity investments measured using the equity method

When the cost of a long-term equity investment measured using the equity method on initial recognition exceeds the Company's share of the fair

value of the respective investee's net identifiable assets, no adjustment is made to the cost of the investment for the excess. When the Company's

share of the fair value of an investee's net identifiable assets exceeds the cost of the respective long-term equity investment measured using the

equity method on initial recognition, adjustment is made to the cost of the investment for the difference and the difference is carried to profit or loss

for the period during which the investment is recognised.

Investment income or loss and other comprehensive income for the relevant period from a long-term equity investment measured using the equity

method is measured at the Company's share of the net profit or loss and other comprehensive income of the respective investee for the relevant

period, and the book value of long-term equity investments is adjusted accordingly. If the investee declares profit distribution or cash dividends,

long-term equity investments are reduced by the Company’s share of declared profit distribution or cash dividends in the investee.Long-term equity

investments will be adjusted and capital reserves are recognised with variationsother than net profit or loss, other comprehensive income, and profit

distribution. When computing the Company's share of the net profit or loss of the investee for the relevant period, net profit or loss of the investee

for the relevant period is adjusted, if necessary, for the fair value of the investee's identifiable assets and identifiable liabilities on acquisition and the

Company's accounting policies and accounting period. Investment income and other comprehensive income is recognised accordingly. The

computation of the Company's share of the net profit or loss of the investee for the relevant period also eliminates unrealised profit and lossarising

from transactions between the Company and the investee (a joint venture or associate, whichever is applicable) and contributing or selling assets to

the investee which forms an operation,to the extent of the Company's share calculated by the Company's shareholding in the investee for the

relevant period, except for the unrealised loss resulted from impairment of transferred assets. When contributing assets to the joint venture or

associate by the Company forms an operation and the investor acquires the long-term equity investment without control, long-term equity

investments are measured at fair value of the contributed operations, with the difference between initial investment cost and book value of the

contributed operation fully recognised in profit or loss for the period. When selling assets to the joint venture or associate by the Company forms an

operation, the difference between considerations received and book value of the operation is fully recognised in profit and loss for the period. When

purchasing assets from the joint venture or associate by the Company belongs to an operation, income and losses are fully recognised as specified

in CAS20-Business Combination.

When the Company's share of an investee's net loss exceeds the sum of the carrying amount of the respective long-term equity investment

measured using the equity method and other investments in the investee, the carrying amount of the long-term equity investment and other

investments in the investee is reduced to zero. If the Company is obliged to share loss of the investee after its long-term equity investment and

other investments have been reduced to zero, an investment loss and provision is recognised to the extent of the estimated obligation. If the

investee reports profit in subsequent periods, the Company only recognises its share of profit after its share of profit equals the share of loss not

recognised.

                                                                        ~ 92 ~
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For long-term equity investments in associates and joint ventures which had been held by the Company before its first time adoption of new

accounting standards, where the initial investment cost of a long-term equity investment exceeds the Company’s share in the investee’s net assets

at the time of acquisition, the excess is amortised and is recognised in profit or loss on a straight line basis over the original remaining life.

4.13.2.3 Acquisition of minority interests

If minority interests in an investee is acquired by the Company, during the Company's preparation of the consolidated financial statements, the

difference between the Company's cumulative share of the investees net assets calculated on the basis of the new shareholding in the investee

from the acquisition date (or combination date) and the Company's investment in the investee following the minority interest acquisition is adjusted

to capital reserves, and to retained earnings if capital reserves is insufficient.

4.13.2.4 Disposal of long-term equity investments

On the consolidated financial statements, when partly disposal of a long-term equity investment in a subsidiary which does not cause loss of control

over the subsidiary, the difference between the consideration for disposal and the net identifiable asset given away proportionate to the disposed

shares in the subsidiary is recognised in equity; partly disposal of a long-term equity investment in a subsidiary which cause loss of control over the

subsidiary is accounted for in accordance with Note 4.5.2.

The difference between the consideration for disposal of long-term equity investments and the carrying amount of the long-term equity investments

disposed is recognised in profit or loss for the period during which the investments are disposed.

When a long-term equity investment measured using the equity method is disposed and the residual equity after disposal is still measured using

equity method, the respective cumulative other comprehensive income recognised in equity proportionate to the disposed investment shall adopt

the same accounting treatment as the investee disposes relevant assets or liabilities directly. Movement in invstee’s equity other than changes in

net profit or loss, other comprehensive income, and profit distribution is recognised in profit or loss proportionally.

When a long-term equity investment measured using the cost method is disposed and the residual equity after disposal is still measured using cost

method, other comprehensive income,which is recognised by equity method or recognition and measurement applicable to financial instruments

prior to the Company's acquisition of control over the investee, shall adopt the same accounting treatment as the the investee disposes relevant

assets or liabilities directly on the date of loss of control, and profit or loss is recognised proportionally. Movement in invstee’s equity other than

changes in net profit or loss, other comprehensive income, and profit distribution is recognised in profit or loss proportionally.

Where 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 is measured by equity method in the Company's separate financial

statements; where 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 is 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 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, which is recognised by equity method or recognition and measurement principles applicable to financial

instruments prior to the Company's acquisition of control over the investee,shall adopt the same accounting treatment as the the investee disposes

relevant assets or liabilities directly on the date of loss of control, The investee's equity movement other than changes in net profit or loss, other


                                                                        ~ 93 ~
Gujing Distillery           Original Chinese Spirits                                                                      The 2015 Annual Report


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 applicable to financial instruments, the fore-mentioned other comprehensive income and other equity movement are fully

recognised in profit or loss.

Where 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, which is recognised by equity method

or recognition and measurement principles applicable to financial instruments prior to the Company's acquisition of control over the investee, shall

adopt the same accounting treatment as the the investee disposes relevant assets or liabilities directly on the date of loss of control, The investee's

equity movement other than changes in net profit or loss, 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 Company's control over an investee is lost through multiple disposals and the multiple disposals can be viewed as a lum-sum

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

Difference between the consideration received and the book value of the investment disposed at each time of disposal is recognised in other

comprehensive income and reclassified in full to profit or loss at the period 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 20 ―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.


                                                                      ~ 94 ~
Gujing Distillery           Original Chinese Spirits                                                                        The 2015 Annual Report


Derecognised when the investment property is disposed of or permanently withdrawn from use and the expected economic benefits can not be

obtained from the disposal of investment property. Proceeds on disposal of investment property is sold, transferred, retired or damaged through

profit or loss after deducting the book value and related taxes.

4.15 Fixed assets
4.15.1 Definition
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.
4.15.2 Depreciation of fixed assets
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:


                                                                                             Estimated residual value
                      Category                                 Expected useful life                                             Depreciation (%)
                                                                                                        (%)

Houses and building                                                           8.00-35.00                       3.00-5.00                   2.70-12.10


Machineries                                                                   8.00-10.00                       3.00-5.00                   9.50-12.10


Vehicles                                                                              4.00                           3.00                       24.25


Administrative equipment and others                                                   3.00                           3.00                       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.
4.15.3 Assessment for impairment and impairment allowance
Impairment and provisions of fixed assets are disclosed on Note 4.20 Impairment of non-current and non-financial assets.
4.15.4 Recognition and measurement of fixed assets held under financial lease
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.
4.15.5 Other relevant information
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
The cost of construction in progress is measured at the actual expenditure incurred, including construction expenditure and capitalisation of
                                                                       ~ 95 ~
Gujing Distillery           Original Chinese Spirits                                                                           The 2015 Annual Report

borrowing costs and other applicable costs incurred prior to the completion. An item of construction in progress is reclassified to fixed asset upon
completion.
See Note 4.20 for details of assessment for impairment of construction in progress and impairment allowance for construction in progress.

4.17 Borrowing costs
Borrowing costs include interests on loans, amortisation of discount or premium, ancillary expenses, and foreign exchange difference on loans
denominated in foreign currencies. Borrowing costs directly associated with the acquisition of construction of a qualifying asset are eligible for
capitalisation. Capitalisation starts when expenditure on the qualifying asset is incurred, borrowing costs are incurred, or production or
construction of the qualifying asset for its intended use or sales is started, whichever is later. Capitalisation stops when the qualifying assets reach
the condition of its intended use or sales. All other borrowing costs are recognised in profit or loss for the period during which they are incurred.
When a loan is taken out specifically for the construction of a particular qualifying asset, the interest expense capitalised for a particular period is
the residual amount after deducting interest income from unused facilities for the period and/or income from temporary investment of the unused
facilities for the period from the interest expense incurred for the period. Borrowing costs on general purpose financing is calculated by multiplying
the weighted average of the excess of cumulative capital expenditure over the designated financing facilities with the capitalisation rate of general
purpose financing. Capitalisation rate of general purpose financing is calculated as the weighted average of the interest rates of general purpose
financing.
Foreign exchange difference on designated financing denominated in foreign currencies incurred during the capitalisation period is wholly
capitalised. Foreign exchange difference on general purpose financing denominated in foreign currencies is recognised in profit or loss for the
period during which it is incurred.
A qualifying asset is an item of fixed assets, investment property, inventories, etc. which requires substantial period of time for the construction or
production for its intended use of sales.
If the construction or production of a qualifying asset stops for a period longer than three months, capitalisation of borrowing costs is suspended
until the construction or production is resumed.

4.18 Intangible assets
4.18.1 Intangible asset
An intangible asset is an identifiable non-monetary asset without a physical form which is owned or control by the Company.
Intangible assets are measured at cost on initial recognition. If it is probable that economic benefits associated with expenditure directly
associated with an item of intangible assets will flow to the Company and the cost of the expenditure can be reliably measured, the expenditure is
measured as part of the intangible asset's initial cost; all other expenditure is recognised in profit or loss for the period during which it is incurred.
Land use rights acquired are generally recognised as intangible assets. In the case of self-constructed building, the costs of acquiring the
respective land use right(s) and the costs of building construction are separately recognised and measured as intangible assets and fixed assets
respectively. In the case of purchased building, the costs of acquisition are allocated to land use right(s) and building; if the reasonable allocation
is impossible, the costs of acquisition as a whole are recognised and measured as fixed assets.
For an item of intangible assets which is with a finite useful life, the residual amount after deducting its estimated residual value and previously
recognised impairment from its cost is amortised over its estimated remaining useful life using the straight-line method starting from the month in
which it reaches the conditions of its intended use of sales. Intangible assets with infinite useful life are not amortised.
Useful lives of intangible assets are review on each balance-sheet date. If circumstances indicate that there is a change in the useful life of an
item of intangible assets with a finite useful life, a change in accounting estimates is carried out. If circumstances indicate that the useful life of an
item of intangible assets with infinite useful life becomes finite, the useful life of the intangible asset is estimated and the intangible asset is
amortised accordingly.
4.18.2 Research and development expenditure
A research and development project is divided into research stage and development stage.
Expenditure incurred during the research stage is recognised in profit or loss for the period during which it is incurred.

                                                                        ~ 96 ~
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Expenditure incurred during the development stage is recognised as intangible assets if all of the following conditions are satisfied:
a. it is technically feasible to complete the intangible asset so that it can be used or sold; and
b. the Company has clear intention to complete the intangible asset and to use it or sell it; and
c. it is evidential that the intangible asset will generate economic benefits either by selling the intangible asset itself or the goods produced by the
intangible asset or by using it internally; and
d. there are sufficient technical, financial and other resources to complete the intangible asset and the Company is able to use it or sell it, and
e. expenditure incurred in the development stage of the intangible asset can be reliably measured.
Where a research and development project cannot be separated into the research stage and development stage, all expenditure incurred for the
project is recognised in profit or loss for the period during which it is incurred.
4.18.3 Assessment for impairment and impairment allowance
See Note 4.20 for details of assessment for impairment of intangible assets and impairment allowance for intangible assets.

4.19 Deferred charges
An item of deferred charges is an expense incurred which brings economic benefits to the Company for a period exceeding one year starting from
transaction date. An item of deferred charges is amortised over its estimated useful life using the straight-line method.

4.20 Impairment of non-current assets
Non-current non-monetary assets, such as fixed assets, construction in progress, intangible assets with finite useful life, investment property
measured by cost, and long-term equity investments in subsidiaries, joint ventures and associates, are assessed for impairment on each
balance-sheet date. If circumstances on a balance-sheet date indicate that a non-current non-monetary asset is impaired, the recoverable amount
of the asset is estimated. The recoverable amounts of goodwill, intangible assets with infinite useful live and intangible assets which have not yet
reached the conditions of their intended use or sales are estimated at least once a year regardless of whether there is indication of impairment.
If the carrying amount of a non-current non-monetary asset exceeds its estimated recoverable amount, the excess of the carrying amount over the
estimated recoverable amount is recognised as impairment allowance and an impairment loss of the same amount is recognised. The estimated
recoverable amount of an asset is the higher of the residual amount after deducting disposal expense of the asset from its fair value and the
present value of its future cash flows. Where there is a sales contract for an asset and the contract is entered into for an arm's length transaction,
the fair value of the asset is the contract price; where there isn't a sales contract for an asset but there is an active market for it, the fair value of
the asset is price offered by the buyer; where there is neither a sales contract nor an active market for an asset, the fair value of the asset is best
estimate based on all available information. The disposal cost of an asset includes legal expenses, applicable taxes and fees and transportation
costs directly associated with the asset's disposal and all direct costs necessary to bring the asset to its sellable condition. The present value of an
asset's future cash flows is calculated by multiplying the cash flows arising from continual use of the asset and its disposal by an appropriate
discount rate. Impairment allowance is generally calculated on the basis of individual assets. If it is not possible to estimate the recoverable
amount of a individual asset, the recoverable amount of a cash-generating unit to which the asset belongs is estimated. A cash-generating unit is
the smallest combination of assets that is capable of cash flow generation.
Goodwill separately presented on the (consolidated) financial statements is allocated to cash-generating units or groups of units that are expected
to benefit from the synergy of business combination for impairment testing. Where the recoverable amount a cash-generating unit (or group of
units) is lower than its carrying amount, an impairment loss is recognised. The impairment loss is firstly allocated to the goodwill allocated to the
unit (or group of units) and then to individual assets pro rota on the basis of the carrying amount of each asset in the unit (or group of unites)
Impairment loss recognised in accordance with this section is irreversible in subsequent periods.

4.21 Employee Benefits
The employee benefits of the company include short-term employee benefits, post-employment benefits, termination benefits and other long-term
employee benefits:
Short-term employee benefits includes wages, bonuses, allowances and subsidies, welfare, health insurance , maternity insurance, work injury


                                                                        ~ 97 ~
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insurance, housing funds, labor union funds, employee education funds, non-monetary benefits and etc. Short-term employee benefits are
recognised as liabilitiesand profit or loss account or the costs associated with the asset during the accounting period when employees actually
provide services.The non -monetary benefits are measured at fair value.
Post-employment benefits include defined contribution plans and defined benefit plans. Defined contribution plan which includes the basic pension,
unemployment insurance and annuities shall be recognised as cost of related assets or profit or loss.
When the Company terminates the labor relationship with employees prior to the employment contracts, or encourages employees to accept
voluntary redundancy compensation proposals in this company, a provision shall be recognised for the compensation arising from the termination
of employment relationship with employees at the time when the Company can not unilaterally withdraw layoff proposal termination benefits
provided due to termination of employment, or the company ensures the costs related to the payment for termination benefits related to the
restructuring, which one is early to confirm employee benefits liabilities, and recorded as profit or loss. However, if termination benefits can not be
fully paid after twelve months of the reporting date,the liability shall be processed in accordance with other long-term employee benefits.
Retirement plan adopts the same principles as the termination benefits. The salaries and insurance to be paid from the date when employees stop
providing services to the date of normal retirementshall be recognised in profit or loss (termination benefits) when satisfying the requirements of a
provision.
Other long-term employee benefits provided by the company to employees that is in line with defined contribution plans shall adopt the accounting
treatment in accordance with defined contribution plans, otherwise the accounting treatment of defined benefit plans.

4.22 Provisions
A contingent liability is recognised as provision if all or the following conditions are satisfied:
a. it is a present obligation assumed by the Company; and
b. it is probable that the fulfillment of the obligation will cause economic benefit flows from the Company; and
c. the amount of the obligation can be reliably measured.
A provision is measured on a balance-sheet date as the best estimate of the amount that is required for the fulfillment of the present obligation
after taking into account of the risks and uncertainty associated with the respective contingent events and the time value of money.
If the amount required for settlement of a provision is wholly or partly reimbursed by a third party, the reimbursement is recognised separately as
an asset to the extent of the carrying amount of the provision if it is probable that the reimbursement becomes receivable.

4.23 Revenue
4.23.1 Revenue from sales of goods
Revenue arising from sales of goods are recognised if all of the following conditions are satisfied: significant risks and rewards attached to the
ownership of the goods have been transferred to the buyer; and the Company neither retains continual involvement with management generally
associated with the ownership of the goods nor exercise effective control over the goods sold; and the amount of revenue can be reliably
measured; and it is probable that economic benefits arising from the sales will flow to the Company; and expenses incurred or to be incurred
associated with the goods sold can be reliably measured.
Revenue arising from domestic sales of goods is recognized when goods are dispatched and delivered to the buyer, when significant risks and
rewards attached to the ownership of the goods sold are passed to the buyer, when neither continual involvement in the rights normally associated
with the ownership of the goods sold nor effective control over the goods controls are retained, when revenue arising from the goods sold is
reliably measurable, when inflow of future economic benefits is probable, and when cost incurred or to be incurred associated with the goods sold
is reliably measurable. Revenue arising from non-domestic sales of goods is recognized when goods are loaded on board and when the export
clearance with the custom is completed.
4.23.2 Revenue from rendering of services
When the outcome of service rendered can be reliably estimated, revenue arising from rendering of the service is recognised based on
percentage of completion on the respective balance-sheet date. The percentage of completion of service rendered is determined by the proportion
that costs incurred to date bear to the estimated total costs.

                                                                         ~ 98 ~
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The outcome of service rendered can be reliably estimated if all of the following conditions are satisfied: a. the amount of revenue can be reliably
measured; b. it is probable that associated economic benefits will flow to the Company; c. the percentage of completion of service rendered can
be reliably measured; and d. costs incurred to date and to be incurred can be reliably measured.
When the outcome of service rendered cannot be reliably estimated, revenue is recognised to the extent that costs incurred to date and to be
incurred are expected to be reimbursed and costs incurred to date are recognised in profit or loss for the periods during which they are incurred.
When costs incurred are not expected to be reimbursed, no revenue is recognised.
If a contract entered into by the Company and a counter party involves both sales of goods and rendering of services and revenue arising from
goods sold and services rendered can be distinguished, revenue from sales of goods and rendering of services are separately accounted for; if,
however, revenue arising from goods sold and services rendered cannot be distinguished or can be distinguished but cannot be separately
measured, all revenue is accounted for as revenue arising from sales of goods.
4.23.3 Royalty income
Royalties are recognised on an accrual basis in accordance with the substance of the relevant agreement.
4.23.4 Interest income
Interest income is determined by the length of time over which the Company's finance resources are used by other parties using the effective
interest rate method.

4.24 Government Grants

A government grant is a transfer of monetary and non-monetary assets from the government to the Company for no consideration, excluding

resources transferred to the Company by the government in the capacity of shareholder. Government grants include grants related to assets and

grants related to income.

Government grants obtained by the Company which are relevant to construction or acquisition of long-term assets are classified as asset-related

government grants; all other government grants are classified as revenue-related government grants. For government grants without speficied

beneficiary, the Company performs classification in accordance with the following criteria.

a. Where a grant is obtained for a specified project, the grant is spitted into asset-related and revenue related portions proportionate to the project's

investment to expense ratio; the classification is reviewed on each balance sheet date and revised if necessary.

b. Where a grant is obtained for general purpose, the grant as a whole is classified as a revenue-related government grant.

If a government grant is in the form of monetary assets, it is measured at the amount received or receivable. If a government grant is in the form of

non-monetary assets, it is measured by fair value of the assets; if the fair value of the assets granted cannot be reliably measured, the grant is

measured by nominal value of the assets and is recognised immediately in profit or loss for the relevant period.

In general, the Company recognises a government grant when it is actually received and measures at the amount actually received. However, a

government grant may be recognised as receivable if it is objectively evidential on the reporting date that conditions for the grant receipt are

satisfied and that the grant is receivable. A government grant is recognised as receivable if all following conditions are satisfied:

a. the amount of the grant is expressly stipulated in official publication by the authorised governmental agency or can be reasonably estimated in

accordance with fiscal pronouncement issued by the authorised governmental agency and the estimate is not subject to significant uncertainty;

b. the grant is offcially disclosed as part of publicly disclosed fiscal subsidised projects by the local fiscal government bodies in accordance with the

Government Information Disclosure Directives and is managed in accordance with the fiscal plan published and the management of the grant if not

entity specific, ie. every eligible entity is entitled to apply;


                                                                      ~ 99 ~
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c. the term for payment is expressly stipulated in the offical pronouncement and the payment is backed by fiscal planning so that it is reasonable to

expect receipt within the term of the payment; and

d. other conditions (in applicable) need to be satisfied taking into account the Company's circumstances.

Grants related to assets are recognised as deferred income and amortised over the useful life of the relevant assets using the straight-line method.

A grant related to income is recognised as deferred income if it is related to expenses or loss to be incurred in the future and is carried to profit or

loss for the period during which the relevant expenses or loss are recognised; it is recognised in profit or loss for the period during which it is

received or becomes receivable if it is related to expenses or loss already incurred.

Where a recognised grant becomes repayable, the amount repayable is firstly charged to the remaining deferred income (if any); the remaining

amount after charge to deferred income is recognised in profit or loss for the period during which it becomes repayable.

4.25 Deferred tax assets and deferred tax liabilities

4.25.1 Current income tax

The current income tax liability (asset) on a balance-sheet date is measured at the amount of current income tax payable (receivable) computed in

accordance with the relevant tax law. Current income tax expense is computed on the basis of taxable profit (loss) which is the amount after the

adjustment of the relevant accounting profit (loss) in accordance with the relevant tax law.

4.25.2 Deferred tax assets and deferred tax liabilities

Deferred tax assets and deferred tax liabilities are recognised on an accrual basis for the temporary difference between the carrying amounts of

assets and liabilities and their tax bases and the temporary difference arising from difference in recognition criteria for assets and liabilities between

CAS and relevant tax provisions.

No deferred tax liability is recognised for the taxable temporary difference arising from the initial recognition of goodwill and the initial recognition of

assets and liabilities acquired or assumed resulting from transactions which are not business combination and which do not have impact on both

accounting profit and taxable profit (deductable tax loss) at the time of their occurrence. Similarly, deferred tax liability is not recognised for taxable

temporary difference associated with investments in subsidiaries, associates and joint ventures if the Company can control the reverse of the

temporary difference and it is probable that the temporary difference is not expected to reverse in the foreseeable future. Except for the

circumstances described hereabove, deferred tax liability is recognised for all other taxable temporary difference.

No deferred tax asset is recognised for the deductable temporary difference arising from the initial recognition of assets and liabilities acquired or

assumed resulting from transactions which are not business combination and which do not have impact on both accounting profit and taxable profit

(deductable tax loss) at the time of their occurrence. Similarly, deferred tax asset is not recognised for deductable temporary difference associated

with investments in subsidiaries, associates and joint ventures if the Company can control the reverse of the temporary difference and it is probable

that the temporary difference is not expected to reverse in the foreseeable future. Except for the circumstances described hereabove, deferred tax

asset is recognised for all other deductable temporary difference to the extent that it is probable that taxable profit will be available against which

the deductible temporary difference can be utilised.

Deferred tax asset is recognised for deductable tax loss and tax credit carrying forward to the extent that it is probable that taxable profit will be

available against which the deductable tax loss and tax credit carrying forward can be utilised.


                                                                      ~ 100 ~
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Deferred tax assets and deferred tax liabilities are measured on a balance-sheet date on the basis of tax rates expected to be applicable in

accordance with relevant tax law at the time when the relevant assets are recovered or relevant liabilities settled.

The carrying amount of deferred tax assets is reviewed on each balance-sheet date. If it is probable that insufficient taxable profit is available to

utilise the deferred tax assets, the carrying amount of deferred tax assets is reduced. When it is probable that sufficient taxable profit becomes

available after the carrying amount of deferred tax assets has been reduced, the reduction is reversed.

4.25.3 Income tax expenses

Income tax expenses include current income tax expenses and deferred income tax expenses.

All current income tax expenses (credit) and deferred income tax expenses (gains) are recognised in profit or loss for the relevant period except for

a. current income tax and deferred income tax on transactions and events which are accounted for in other comprehensive income or directly in

equity, which are included in other comprehensive income or directly recognised in equity depending on the treatment of its underlying transactions

and events, and b. deferred income tax arising from business combination, which is accounted for as an adjustment to the carrying amount of the

respective goodwill.

4.25.4 Offsetting of income tax

A current income tax liability and current income tax asset are presented on (consolidated) financial statements after netting only if the Company is

permitted by law to settle the asset and liability net in cash and is planning to do so or to simultaneously recover the asset and settle the liability.

A deferred tax asset and deferred tax liability are presented on (consolidated) financial statements after netting only if all of the following conditions

are satisfied: the Company is permitted by law to settle the current asset and liability related to an income tax net in cash; and the deferred tax

asset and deferred tax liability arising from that income tax is levied by the same tax authority on the same entity or on different entities but the

relevant entities are planning to settle the underlying income tax net in cash or simultaneously recover the relevant assets and settle the relevant

liabilities during each future period during which significant deferred tax assets and deferred tax liabilities are reversed.

4.26 Lease

A financial lease is a lease which in substance transfers all risks and rewards attached to the ownership of the leased asset to the leasee although

the ownership of the leased asset ultimately may or may not be transferred. An operating lease is any lease that does not fall within the meaning of

a financial lease.

4.26.1 Operating lease to which the Company is the leasee

Lease payments for a operating lease to which the Company is the leasee is amortised over the lease term using the straight-line method and

recognised in the cost of the relevant asset or as expense, whichever is applicable. Initial expenses incurred for activities directly attributable to the

lease are recognised in profit or loss for the period during which they are incurred. Contingent rental payments are recognised in profit or loss when

they are incurred.

4.26.2 Operating lease to which the Company is the leasor

Rental income from an operating lease to which the Company is the leasor is amortised over the lease term using the straight-line method.

Significant initial expenses incurred for activities directly attributable to the lease are capitalised at the time when they are incurred and amortised

over the lease term in the same manner as the amortisation of rental income; insignificant expenses initial expenses incurred for activities directly

                                                                      ~ 101 ~
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attributable to the lease are recognised in profit or loss for the period during which they are incurred. Contingent rental income is recognised in

profit or loss when it is received or becomes receivable.

4.26.3 Financial lease to which the Company is the leasee

At the commencement of a financial lease to which the Company is the Leasee, the lower of the lease-commencement-date fair value of the leased

asset and the present value of the minimum lease payment is recognised as the cost of the leased asset; the minimum lease payment is

recognised as a long-term payable; and the excess of the long-term payable over the amount recognised as the cost of the leased asset is

recognised as unrecognised lease expenditure. Expenses incurred during the negotiation and signing of the lease contract for activities directly

attributable to the lease are recognised as part of the cost of the leased asset. The residual amount after deducting the unrecognised lease

expenditure from the long-term payable is divided into non-current liability and non-current liability due within one year depending on maturity and

presented on (consolidated) financial statements separately.

The unrecognised lease expenditure is amortised over the lease term using the effective interest rate method and the amortisation is recognised as

lease expense in profit or loss for the relevant period. Contingency lease rental is recognised in profit or loss when it is incurred.

4.26.4 Financial lease to which the Company is the leasor

At the commencement of a financial lease to which the Company is the leasor, the sum of the minimum lease rental receivable and the initial

expenses incurred for activities directly attributable to the lease is recognised as the initial amount of the respective financial lease rental receivable;

unguaranteed residual value is recorded, if any; the excess of the present value of the sum of the minimum lease rental receivable, the initial

expenses incurred for activities directly attributable to the lease and the unguaranteed residual value over the sum itself is recognised as

unrecognised lease income. The residual amount after deducting the unrecognised lease income from the financial lease rental receivable is

divided into non-current receivable and non-current receivable due within one year depending on maturity and presented on (consolidated) financial

statements separately.

The unrecognised lease income is amortised over the lease term using the effective interest rate method and the amortisation is recognised as

lease income in profit or loss for the relevant period. Contingency lease rental income is recognised in profit or loss when it is received or becomes

receivable.

4.27 Changes in major accounting policies and accounting estimates

4.27.1 Change of accounting policies

There is no significant change of accounting policies for the company during the reporting period.

4.27.2 Change of accounting estimates

There is no significant change of accounting estimates for the company during the reporting period.

4.28 Significant account judgment and estimates

During the application of accounting policies, judgements, estimates and presumption need to be made for elements of financial statements which

cannot be precisely measured due to inherent uncertainty existing in operation activities. The judgements, estimates and presumption are made on

the basis of the Company's past experience and other relevant factors. The exercise of judgements, estimates and presumption has impact on the

measurement of revenue, expenses, assets and liabilities and the disclosure of contingent liabilities on the balance-sheet date. However, the

                                                                     ~ 102 ~
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inherent uncertainty of the judgements, estimates and presumption may result in future significant adjustments to be made to the measurement of

the affected assets and liabilities.

The judgements, estimates and presumption are reviewed regularly on the basis of going concern. Where a change in accounting estimates is

applicable, its impact on financial statements is recognised in the period during which the change occurs if the change has impact on the financial

statements for that period only; and in subsequent periods if the change also has impact on the financial statements for subsequent periods.

Significant elements of financial statements and areas that are subject to judgements, estimates and presumption on the balance-sheet date

include the following.

4.28.1 Classification of lease

The Company classifies leases as operating lease and financing lease according to the rule stipulated in the Accounting Standard for Business

Enterprises No. 21--Leasing. The management shall make analysis and judgment on whether the risks and rewards related to the title of leased

assets has been transferred to the leaser, or whether the Company has substantially held the risks and rewards related to the ownership of leased

assets.

4.28.2 Recognition of impairment allowance for receivables

In accordance with accounting policies applicable to receivables, loss arising from impairment of receivables is accounted for by allowance.

Impairment of receivables are assessed on the basis of the collectability of receivables and the assessment requires judgements and estimates

exercised by the management. Difference between actual results and the estimates will have impact on the carrying amount of receivables and the

recognition and reverse of impairment allowance for receivable for the period during which the estimates are changed.

4.28.3 Recognition of impairment allowance for inventories

In accordance with accounting policies applicable to inventories, impairment allowance for inventories is recognised for inventories of which the

carrying amount exceeds the net realisable value and inventories which are obsolete or have impaired salability. Loss arising from impairment of

inventories is measured on the basis of the salability and net realisable value of the respective inventories. Judgements and estimates regarding

impairment allowance for inventories require conclusive evidence obtained by the management and consideration of the purpose of inventory

holding, impact of post balance-sheet-date events and other relevant factors. Difference between actual results and the estimates will have impact

on the carrying amount of inventories and the recognition and reverse of impairment allowance for inventories for the period during which the

estimates are changed.

4.28.4 Fair value of financial instruments

Fair value of financial instruments which are not quoted in an active market are measured by valuation techniques such as the discounted cash flow

model, etc. Estimates of future cash flows, credit risks, market movement and relevance and choice of the appropriate discount rates are required

for the measurement. Inherent uncertainty is inevitable in making these estimates and the change of estimates will have impact of the fair value of

the respective financial instruments.

4.28.5 Impairment of financial assets available-for-sale

Impairment of available-for-sale financial assets and hence recognition of impairment loss recognised in profit or loss general depend on estimates

and presumption made by the management. In making the judgements and estimates, the Company assesses the extent and duration that the cost

                                                                   ~ 103 ~
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