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个股公告正文

古井贡B:2016年年度报告(英文版)

日期:2017-04-28附件下载

Gujing Distillery   Original Chinese Spirits                Annual Report 2016




            ANHUI GUJING DISTILLERY COMPANY LIMITED


                               THE 2016 ANNUAL REPORT




                                               April 2017
  Gujing Distillery   Original Chinese Spirits                               Annual Report 2016


                                        Important Statements

The board of directors (the “Board”), the supervisory board (the “Supervisory Board”), as
well as the directors, supervisors and senior executive officers of Anhui Gujing Distillery
Company Limited (the “Company”) hereby guarantee the factuality, accuracy and
completeness of the contents of this Report, and shall be jointly and severally liable for any
false representation, misleading statements or material omissions in this Report.
Liang Jinhui, head of the Company, Ye Changqing, accounting head for this Report, and Zhu
Jiafeng, head of the accounting department (head of accounting), hereby guarantee that the
Financial Report carried in this Report is factual, accurate and complete.
All directors attended the board meeting for the review of this Report.
Any plans for the future and 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.
The Board has considered and approved the following proposal for profit distribution: Based
on the total shares of the Company on December 31, 2016, a cash dividend of RMB6.00 (tax
inclusive) per 10 shares will be distributed to all shareholders of the Company. No bonus
shares will be granted, nor will any capital reserve be converted into share capital.
This Annual Report and its abstract have been prepared in both Chinese and English. Should
there be any discrepancies or misunderstandings between the two versions, the Chinese
version shall prevail.




                                                 ~2~
    Gujing Distillery        Original Chinese Spirits                                                                Annual Report 2016



                                 Anhui Gujing Distillery Company Limited

                                  Table of Contents for Annual Report 2016




Section I Important Statements, Contents and Definitions ............................................................ 3

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

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

Section IV Performance Discussion and Analysis ......................................................................... 10

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

Section VI Share Changes and Shareholders’ Profile ................................................................... 38

Section VII Preference Shares......................................................................................................... 44

Section VIII Directors, Supervisors, Senior Executive Officers and Staff .................................. 45

Section IX Corporate Governance ................................................................................................. 53

Section X Financial Report ............................................................................................................. 60

Section XI Documents Available for Reference ........................................................................... 171




                                                                  ~3~
   Gujing Distillery    Original Chinese Spirits                                                      Annual Report 2016




                                                   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.

Huanghelou                                           Wuhan Tianlong Jindi Technology Development Co., Ltd




                                                      ~4~
       Gujing Distillery      Original Chinese Spirits                                                        Annual Report 2016



                  Section II Corporate Profile and Key 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.                                   古井

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

Abbr. (if any)                          GU JING

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

                                                          Board Secretary                      Securities Representative

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)5710099                          (0558)5710099

E-mail                                         gjzqb@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, Shanghai Securities News, Ta Kung Pao (HK)
information disclosure

Website designated         by the China Securities       http://www.cninfo.com.cn
Regulatory Commission (CSRC) for the publication
of this Report


                                                                ~5~
    Gujing Distillery           Original Chinese Spirits                                                       Annual Report 2016


Place where this Report is kept                            The Board Secretary’s Office


IV Company registration and alteration

Credibility code                                     913400001519400083

Changes in main business activities of the
                                                     No changes
Company after going public (if any)

Changes of controlling shareholder (if any)          No changes


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             Pan Xinhua, Zhang Xianfa

Sponsor engaged by the Company to continuously perform its supervisory function during this Reporting Period

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


VI Key financial results

Indicate by tick mark whether the Company retroactively restated any of its accounting data due to changes of accounting policies or
correction of accounting errors.
□ Yes √ No

                                                   2016                  2015                  +/-%                  2014

Operating revenues (RMB)                       6,017,143,660.56       5,253,411,479.40                14.54%      4,650,855,881.72

Net     profit        attributable    to
shareholders     of     the   Company            829,630,063.38         715,578,369.68                15.94%        597,041,887.34
(RMB)
Net    profit    attributable   to
shareholders of the Company
                                                 792,534,098.54         682,760,794.86                16.08%        568,353,541.08
before exceptional profit and loss
(RMB)
Net cash flows from operating
                                               1,183,231,808.06         790,109,535.01                49.76%        387,494,289.89
activities (RMB)

Basic earnings per share
                                                            1.65                     1.42             16.20%                  1.19
(RMB/share)

Diluted earnings per share                                  1.65                     1.42             16.20%                  1.19

                                                                   ~6~
      Gujing Distillery           Original Chinese Spirits                                                      Annual Report 2016

(RMB/share)

Weighted average return on equity
                                                             15.88%               15.91%             -0.03%                  15.05%
(%)

                                             December 31, 2016        December 31, 2015       +/-%              December 31, 2014

Total assets (RMB)                              8,736,205,153.86         7,183,147,641.13            21.62%        6,413,518,166.03

Net       assets        attributable    to
shareholders       of     the   Company         5,595,121,383.96         4,833,721,630.08            15.75%        4,181,050,977.96
(RMB)


VII Differences in accounting data under domestic and foreign accounting standards

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

□ Applicable √ Not applicable

No such differences for this Reporting Period.


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

□ Applicable √ Not applicable

No such differences for this Reporting Period.


VIII Key financial results by quarter

                                                                                                                          Unit: RMB

                                                     1Q                      2Q                 3Q                      4Q

Operating revenues                               1,843,478,461.71         1,201,556,245.02   1,460,526,002.88        1,511,582,950.95

Net       profit        attributable    to
                                                   344,007,925.98           87,047,536.64     151,384,181.93          247,190,418.83
shareholders of the Company
Net     profit    attributable     to
shareholders of the Company                        339,439,775.36           83,796,577.13     128,287,249.62          241,010,496.43
before exceptional profit and loss
Net cash flows from operating
                                                   475,909,121.05          -149,796,508.06    876,734,575.48           -19,615,380.41
activities

Indicate by tick mark 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                                                        Annual Report 2016

                                                                                                                              Unit: RMB

                         Item                               2016            2015                2014                   Note

Profit/loss on disposal of non-current assets
(including      offset       asset    impairment           -6,319,619.72     -990,695.19       -2,134,348.70
provisions)

Government       subsidies      charged   to     the
profit/loss for this Reporting Period (except
for the government grants closely related to
                                                           25,336,275.56   19,931,320.03        6,045,394.97
the business of the Company and given at a
fixed quota or amount in accordance with
the State’s uniform standards)

Profit/loss    on   fair    value    changes     of
transactional financial assets and liabilities
& investment income from disposal of
transactional financial assets and liabilities             16,263,956.97    7,842,274.38       17,233,109.00
as well as financial assets available for sale,
except for effective hedges related to routine
operations of the Company

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

Non-operating income and expense other
                                                           14,343,655.95   16,973,709.12       16,729,758.11
than the above

Less: Corporate income tax effects                         12,229,198.63   10,939,033.52        9,568,067.12

        Minority interests effects (after tax)               299,105.29             0.00                 0.00

Total                                                      37,095,964.84   32,817,574.82       28,688,346.26             --



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 this Reporting Period.




                                                                    ~8~
      Gujing Distillery      Original Chinese Spirits                                                             Annual Report 2016




                                            Section III Business Profile

I Main business scope for this Reporting Period

Is the Company subject to any disclosure requirements for special industries?

No.
The Company specializes in the production and marketing of distilled spirits.
No changes have occurred to the main business of the Company in this Reporting Period. And the main products of the Company are
the original Chinese spirits series, the traditional Gujing spirits series and the light Gujing spirits series.
As one of China’s traditional top eight liquor brands, the Company is committed to superior quality. Its spirits comes from quality
grain and water adopting a unique technique and is well stored. With its spirits produced in Bozhou, known as “a city good for
health”, the Company promotes a healthy drinking concept. It also introduces China’s distilled spirits culture to the world through
tours to New York and Milan.


II Significant changes in main assets

1. Significant changes in main assets

Not applicable


2. Main assets overseas

□ Applicable √ Not applicable


III Core competitiveness analysis

No significant changes occurred to the core competitiveness of the Company in this Reporting Period.




                                                                  ~9~
   Gujing Distillery        Original Chinese Spirits                                                                Annual Report 2016




                       Section IV Performance Discussion and Analysis

I Overview

2016 marked the first year of China’s 13th Five-Year Plan for Economic and Social Development, as well as a year to carry through
the supply-side structural reform. Consumers have attached more importance to quality. And along with the deep change and rebound
in the distilled spirits industry, the fundamentals of famous distillers in China have kept improving. Under such circumstances,
upholding the values of “Be Honest, Offer Quality Spirits, Be Stronger and Be Helpful to the Society” and following the “Distilled
Spirits 5.0” strategy, the Company strengthened branding and quality improvement, as well as improved its operation by adopting a
series of effective measures. As a result, the operating goals that the Board had set for the year were achieved.
For 2016, the Company achieved, on a consolidated basis, operating revenues of RMB6.017 billion, up 14.54% compared with a year
earlier; total profit of RMB1.15 billion, up 19.09% from last year; net profit of RMB0.830 billion, representing a year-on-year
growth of 15.94%; earnings per share of RMB1.65, 16.20% higher than last year; and net operating cash flows of RMB1.183 billion,
representing a 49.76% increase on a year-on-year basis.
(I) Focusing on Strategy 5.0, and constantly enhancing the core competitiveness of the major business of liquor
1. “Double brands” open up the new pattern. Faced with a complex economic environment in the reporting period, the Company has
actively sought the extensional development, continued to deploy throughout the entire country and give play to the effect of synergy
and integration.
2. Efforts in deep cultivation of market construction. In 2016, the Company continued to make efforts in “sinking organization,
channels and personnel”, implement contact point management, split sales terminal units and stimulate dynamism; strengthened
target budgeting, process KPI and performance appraisal, and constantly cultivated market construction.
3. Continuous optimization of the product system. The Original Chinese Spirits is granted with the title of “1985-2015 Chinese
Liquor Historical Landmark Product” by China National Food Industry Association. 37℃ Bo Ju liquor, the healthy new product, has
been successfully launched, opening up a new pattern of thinking for developing the healthy liquors under Gujing Distillery; the
Original Chinese Spirits G20, Gujing Distillery 1989 has been launched innovatively, continuously enriching product lines.
4. Constant enhancement of the brand value reputation. The brand construction has been vigorously promoted with a series of
activities and promotion events organized. Gujing Distillery has entered the Middle and East Europe by grasping the strategic
opportunity of “One Belt One Road”. The value of the brand Gujing Distillery has reached RMB49.259 billion during the reporting
period.
(II) Innovating management tools and methods, activating management dynamism and improving scientific and technological
innovation
1. Exploration of internal marketization and informationization of in-depth application. In the reporting period, the Company has
implemented the appraisal mechanism for internal marketization, which activated the internal dynamism and motivation; the projects
such as Customer Relationship Management (CRM) and Unified Call Center have made phased progress.
2. Scientific and technological innovation has been intensified with a number of breakthroughs made. Two projects have been
selected into the list of key R&D projects under the 13th Five-Year Plan, one item of technological achievements have passed the
provincial accreditation of scientific and technological achievements, four items of technological achievements have been converted
and applied into production, and two items have passed the review based on the local standard at the provincial level. The
academician workstation and the state-level post-doctoral research workstation have successfully passed the performance appraisal,
Anhui Solid State Fermentation Engineering Technology Research Center has passed the quality acceptance, the state-level corporate


                                                              ~ 10 ~
   Gujing Distillery        Original Chinese Spirits                                                                Annual Report 2016

technological center has been rated excellent in the annual appraisal, and the Company has won Anhui Quality Award.
(III) Optimizing the contents of appraisal, and improving the skill of the management staff
1. The company has optimized the contents of performance appraisal, intensified the strength of rewards and punishments, revised
and improved the appraisal system, simplified the relevant indicators, highlighted the key points and publicized the results.
2. The company has applied the echelon construction of talents, carrying out the targeted nurture and development of core marketing
staff, core technical staff and core management staff, which has achieved good results.
(IV) Continuing to promote the corporate brand image by centering around “Two learn one to do learning education” and Gujing’s
core values
In the reporting period, the Company has strengthened its educational guidance by vigorously conducting the educational activities
themed with “three-strict and three-honest” and “four-consciousness”, and deepening the implementation of the series learning and
discussion activities on “Two learn one to do learning education” and “aim at keeping up by acting”. The Company has combined its
corporate values of “behaving decently, brewing good wines, cultivating moral character of employees and benefiting the society”
with Party built companies, promoting the integration of Party governance and building a learning, innovative and appreciative
company.
(V) Pressure and weaknesses in the Company during the reporting period
1. Pressure of the regional competitions and increasing costs of the traditional manufacturing industry.
2. Insufficient motivation for staff growth and inflexible corporate mechanism.
3. Unthorough capillary management and existence of “laziness, tiredness, stubbornness and squeamishness” to different extents.


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

                                          2016                                         2015

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

Operating revenues        6,017,143,660.56                100.00%       5,253,411,479.40               100.00%                    14.54%



Manufacturing             6,017,143,660.56                100.00%       5,253,411,479.40               100.00%                    14.54%



Distilled spirits         5,876,233,721.58                   97.66%     5,118,622,287.57                   97.44%                 14.80%

Hotel services                83,773,044.79                  1.39%         83,118,805.82                   1.58%                  0.79%



                                                               ~ 11 ~
    Gujing Distillery        Original Chinese Spirits                                                                    Annual Report 2016


Other                         57,136,894.19                    0.95%            51,670,386.01                   0.98%                  10.58%



North China                  345,881,952.52                    5.75%           297,439,265.75                   5.66%                  16.29%

Central China               5,285,863,801.21                   87.84%      4,435,362,515.78                     84.43%                 19.18%

South China                  383,674,353.55                    6.38%           518,051,081.70                   9.86%               -25.94%

Overseas                          1,723,553.28                 0.03%             2,558,616.17                   0.05%               -32.64%


(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        6,017,143,660.56 1,523,585,779.51                  74.68%               14.54%                0.93%                 3.41%



Distilled spirits    5,876,233,721.58 1,451,465,873.25                  75.30%               14.80%               -0.37%                 3.76%

Hotel services           83,773,044.79      35,526,066.93               57.59%                   0.79%             4.02%               -1.32%

Other                    57,136,894.19      36,593,839.33               35.95%               10.58%               96.75%            -28.06%



North China             345,881,952.52     127,359,850.64               63.18%               16.29%                9.24%                 2.38%

Central China        5,285,863,801.21 1,264,533,247.94                  76.08%               19.18%                3.37%                 3.66%

South China             383,674,353.55     131,266,223.31               65.79%               -25.94%             -22.26%               -1.62%

Overseas                  1,723,553.28           426,457.62             75.26%               -32.64%             -48.17%                 7.42%

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                     2016                    2015                   +/-%

                        Sales volume             Ton                                81,634.15               71,829.51                  13.65%
Distilled spirits
                        Output volume            Ton                                83,766.51               77,105.07                    8.64%
brewage
                        Inventory                Ton                                12,594.11                8,262.69                  52.42%

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

                                                                 ~ 12 ~
    Gujing Distillery        Original Chinese Spirits                                                              Annual Report 2016

√ Applicable □ Not applicable
     Mainly due to the inventory preparation for the Spring Festival and increased consolidated scope, the closing inventory stood at
12,594.11 tons, representing a year-on-year surge of 52.42%.


(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

                                                        2016                                   2015

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

Food
                    Direct materials    1,079,095,302.80               70.83% 1,084,012,660.40             73.29%              -0.45%
manufacturing

Food
                    Direct labor cost     164,611,344.55               10.80%   164,561,013.89             11.13%                  0.03%
manufacturing

Food                Manufacturing
                                          127,651,145.25                8.38%   127,413,435.90                8.61%                0.19%
manufacturing       expenses

Food
                    Fuels                  80,108,080.65                5.26%    80,798,764.23                5.46%            -0.85%
manufacturing

By product
                                                                                                                             Unit: RMB

                                           2016                                         2015
  Business segment                             As a percentage of                            As a percentage of            +/-%
                               Amount                                       Amount
                                               operating costs (%)                           operating costs (%)

Distilled spirits           1,451,465,873.25                95.27%        1,456,785,874.42               96.51%                    -0.37%

Hotel services                 35,526,066.93                   2.33%         34,151,473.72                2.26%                     4.02%

Other                          36,593,839.33                   2.40%         18,598,751.14                1.23%                    96.75%


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

√ Yes □ No

 The Company obtained 51% equities of Wuhan Tianlong Yellow Crane Tower Co., Ltd for the enterprise merger not under the same

 control during the Reporting Period, and newly established the subsidiaries Anhui Gujing Yunshang Electronic Commerce Co., Ltd

 and Anhui Zhenrui Contruction Project Co., Ltd.; The Company newly established sub-subsuaiaries Bozhou Gujing Distillery

                                                               ~ 13 ~
      Gujing Distillery      Original Chinese Spirits                                                           Annual Report 2016


    Marketing Co., Ltd, Wuhan Ya shibo Technology Co., Ltd, and Wuhan Junya Sales Co., Ltd; The Company liquidated its subsidiary

    Bozhou Gujing Packaging Co., Ltd in the current year.


(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)                                                                                944,817,094.34

Total sales to top five customers as a percentage of the total
sales for the Reporting Period (%)                                                                                             15.71%

The related-party sales from sales to top five customers as a
                                                                                                                                0.00%
percentage of the 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                                                 552,657,163.86                                        9.18%

2            Distributor B                                                 179,050,471.48                                        2.98%

3            Distributor C                                                  93,213,613.77                                        1.55%

4            Distributor D                                                  63,598,453.69                                        1.06%

5            Distributor E                                                  56,297,391.54                                        0.94%

Total                               --                                     944,817,094.34                                       15.71%


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

Total purchases from top five suppliers (RMB)                                                                          437,477,126.73

Total purchases from top five suppliers as a percentage of the
                                                                                                                               31.38%
total purchases for the Reporting Period (%)

The related-party purchase of purchases from top five suppliers
as a percentage of the total purchases for the Reporting Period                                                                 0.00%
(%)

Information about top five suppliers

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

1              Supplier A                                                 186,441,168.02                                       13.38%


                                                                ~ 14 ~
    Gujing Distillery       Original Chinese Spirits                                                            Annual Report 2016


2            Supplier B                                                     77,941,297.39                                       5.59%

3            Supplier C                                                     59,698,625.66                                       4.28%

4            Supplier D                                                     57,609,299.20                                       4.13%

5            Supplier E                                                     55,786,736.46                                       4.00%

Total                               --                                     437,477,126.73                                      31.38%


Other information about the main suppliers
□ Applicable √ Not applicable


3. Expense

                                                                                                                           Unit: RMB

                                     2016                  2015                 +/-%             Reason for any significant change

Selling expenses                  1,980,127,377.89      1,557,800,618.96            27.11%

Administrative expenses            556,513,607.99         543,822,606.51               2.33%

                                                                                               The interest of financing products
Financial costs                     -30,253,967.33        -20,334,406.40            -48.78%
                                                                                               increased.


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 items were selected to the National 13th Five Year Key Research Plan, and 1 technological achievement
passed the provincial technological achievement ratification, 4 technological achievements were transformed to apply to production,
and 2 provincial local standards were reviewed. Academician workstation and national post-doctoral scientific research station
passed performance evaluation, Anhui Solid State Fermentation Engineering Technology Research Center was approved, and the
annual assessment of Provincial Corporate Technology Center was excellent.
Information about R&D input

                                                2016                             2015                               +/-%

Number of R&D personnel                                        586                               506                           15.81%
R&D personnel as a percentage
                                                            10.14%                             8.65%                            1.49%
in the total employees
R&D input (RMB)                                      189,540,000.00                 162,495,000.00                             16.64%
R&D input as a percentage in
                                                             3.15%                             3.09%                            0.06%
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

                                                              ~ 15 ~
   Gujing Distillery         Original Chinese Spirits                                                           Annual Report 2016

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                            2016                             2015                              +/-%

Subtotal   of    operating   cash
                                                  7,393,896,952.67                6,505,710,652.03                           13.65%
inflow

Subtotal   of    operating   cash
                                                  6,210,665,144.61                5,715,601,117.02                            8.66%
outflow

Net operating cash flow                           1,183,231,808.06                  790,109,535.01                           49.76%

Subtotal of investment cash
                                                  3,411,470,839.90                2,279,338,189.57                           49.67%
inflow

Subtotal of investment cash
                                                  4,952,490,817.51                2,610,714,434.30                           89.70%
outflow

Net investment cash flow                         -1,541,019,977.61                 -331,376,244.73                         -365.04%

Subtotal of financing cash
                                                        1,000,000.00                           0.00                         100.00%
inflow

Subtotal   of    financing   cash
                                                   155,736,537.45                   100,720,000.00                           54.62%
outflow

Net financing cash flow                            -154,736,537.45                 -100,720,000.00                          -53.63%

Net increase in cash and cash
                                                   -512,524,707.00                  358,013,290.28                         -243.16%
equivalents

Explanation of why the data above varied significantly

√ Applicable □ Not applicable
1. Mainly due to an increase of sales revenue, the net operating cash flow for the Reporting Period was RMB 1,183,231,808.06,
representing a surge of 49.76% from the year earlier;
2. Mainly due to the payment for subsidiary equity, the net investment cash flow for the Reporting Period was RMB
-1,541,019,977.61, dropping 365.04% from last year;
3. Mainly because Yellow Crane Tower repaid the borrowing money to original big shareholders, the net financing cash flow for the
Reporting Period was RMB-154,736,537.45, dropping 53.63% on a year-on-year basis;
4. Mainly due to due to the payment for subsidiary equity, the net increase in cash and cash equivalents for the Reporting Period was
RMB -512,524,707.00, dropping 243.16% 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
                                                               ~ 16 ~
     Gujing Distillery          Original Chinese Spirits                                                            Annual Report 2016

IV Analysis of assets and liabilities

1. Significant changes in the asset composition

                                                                                                                               Unit: RMB

                             December 31, 2016                   December 31, 2015

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

Monetary funds           532,909,026.07           6.10% 1,087,319,158.77            15.14%      -9.04%

Accounts
                           12,287,262.88          0.14%        4,948,074.84          0.07%       0.07%
receivable

Inventories             1,786,433,036.50         20.45% 1,396,712,050.87            19.44%       1.01%

Investment
                            8,402,944.74          0.10%        9,715,451.89          0.14%      -0.04%
property

Fixed assets            1,865,691,585.06         21.36% 1,691,028,804.32            23.54%      -2.18%

Construction       in
                           71,771,324.26          0.82%       62,562,971.78          0.87%      -0.05%
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          322,223.28         -5,598.43                 0.00                  21,229,606.20 37,105,003.63      429,190.68
loss     for    the
Reporting Period
(excluding
derivative
financial assets)

2.                      213,881,190.47                0.00 -24,449,878.06                    216,262,513.42   1,664,273.56 404,029,552.27


                                                                   ~ 17 ~
    Gujing Distillery           Original Chinese Spirits                                                    Annual Report 2016

Available-for-sale
financial assets

Subtotal           of
                        214,203,413.75       -5,598.43 -24,449,878.06                237,492,119.62 38,769,277.19 404,458,742.95
financial assets

Total      of   the
                        214,203,413.75       -5,598.43 -24,449,878.06                237,492,119.62 38,769,277.19 404,458,742.95
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


3. The limitation of assets right at the end of Reporting Period

At the end of Reporting Period, the Company had freezed bank deposits RMB5,060,000.00; The pledge of bank’s acceptance bill was
RMB33,483,200.00. There were no cases of use limitation due to pledge and mortgage or deposits overseas with limited repatriation.
Remarks: for details, please see XII Contingency in Note.




                                                              ~ 18 ~
   Gujing Distillery          Original Chinese Spirits                                                                 Annual Report 2016



V Investments made

1. Total investments made

√Applicable □ Not applicable

            Investment in the report period (RMB)                               Investment over the same period last year (yuan)                                    Change range

                                                1,032,262,513.42                                                         280,756,681.88                                                           267.67%


2. Significant equity investments made in the Reporting Period

√ Applicable □ Not applicable
                                                                                                                                                                                               Unit: RMB

                                                                                                                          progress                Investment
                                                                                                                          up to the               gains and    Whether
                                                                                                                                                                          Disclosure
              Major        Investment   Investment       Shareholding     Funds                  Investment Products date of the Estimated         losses of   involved                Disclosure index (if
  Name                                                                                Partners                                                                             date (if
             business       method        amount            ratio       resources                  period       type        assets      profits      the       with the                        any)
                                                                                                                                                                             any)
                                                                                                                          liabilities             Reporting    lawsuits
                                                                                                                          statement                 period

Wuhan                                                                                                                    At the end                                                    For details, see the
Tianlong                                                                                                                 of May                                                        Announcement
Yellow      Production                                                                                                   2016, the                                                     About
Crane       and sales                                                   Own                                              51%                                                           Acquisition of
                           Acquisition 816,000,000.00         51.00%                                                                                           No         04/29/2016
Tower       of distilled                                                funds                                            equity of                                                     Assetts of the
Wine        spirits                                                                                                      Wuhan                                                         Company released
Industry                                                                                                                 Tianlong                                                      on April 29, 2016
Co., Ltd                                                                                                                 Yellow                                                        on

                                                                                                  ~ 19 ~
   Gujing Distillery            Original Chinese Spirits                                                          Annual Report 2016

                                                                                                                    Crane                                                     www.cninfo.com.cn
                                                                                                                    Tower
                                                                                                                    Wine
                                                                                                                    Industry
                                                                                                                    Co., Ltd
                                                                                                                    had been
                                                                                                                    transferred
                                                                                                                    to the
                                                                                                                    Company.

Total            --               --     816,000,000.00          --         --         --      --           --           --                               --         --                --


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/loss
                                                                                        on fair     Cumulative
                      Code of                     Initial                                                                                      Gain/loss                               Sourc
    Variety of                     Name of                     Accounting               value        fair value     Purchased in   Sold in the
                                                                          Opening book                                                          in the   Closing book
                      securitie                 investment     measuremen              changes        changes      the Reporting   Reporting                          Accounting title e of
    securities                    securities                                 value                                                             Reporting    value
                                                                 t model                in the      charged to         Period        Period
                         s                         cost                                                                                         Period                                 funds
                                                                                       Reportin        equity
                                                                                       g Period
Domestic/oversea                                               Fair value                                                                     139,416.7                   Available-for-sal Own
                      601988 ZGYH              44,385,674.20                42,045,251.00   0.00 -5,720,879.69 15,500,203.87 647,351.18                   51,177,224.00
s stock                                                        method                                                                                 5                   e financial asset funds

                                                                                            ~ 20 ~
   Gujing Distillery         Original Chinese Spirits                                                          Annual Report 2016

Domestic/oversea                                            Fair value                                                          1,016,922.3 142,175.3                   Available-for-sal Own
                    000001 PAYH           70,317,243.98                  26,614,442.80   0.00 -3,187,740.07 50,762,309.55                               73,172,089.90
s stock                                                     method                                                                       8         9                    e financial asset funds

Domestic/oversea                                            Fair value   145,221,496.6          -15,030,072.6                                           130,191,424.0 Available-for-sal Own
                    600373 ZWCM           91,133,996.80                                  0.00                            0.00         0.00       0.00
s stock                                                     method                  7                      7                                                       0 e financial asset funds

                              GF
                                          150,000,000.0 Fair value                                              150,000,000.0                           149,488,814.3 Available-for-sal Own
fund                          Securitie                                           0.00           -511,185.63                          0.00       0.00
                                                        0 method                                                            0                                      7 e financial asset funds
                              s Nast

                                          355,836,914.9                  213,881,190.4          -24,449,878.0 216,262,513.4 1,664,273.5 281,592.1 404,029,552.2
Total                                                            --                      0.00
                                                        8                           7                      6                2            6         4               7

Disclosure date of the announcement
about the board’s consent for the
securities investment

Disclosure date of the announcement
about the general meeting’s consent
for the securities investment (if any)


(2) Investment in financial derivatives

□ Applicable √ Not applicable


5. Use of funds raised

√ Applicable □ Not applicable


(1) Overview of the use of raised funds

√ Applicable □ Not applicable

                                                                                         ~ 21 ~
   Gujing Distillery            Original Chinese Spirits                                                                   Annual Report 2016

                                                                                                                                                                                                           Unit: RMB'0,000

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

                                                                                                                                                                                        Deposited in the
                                                                                                                                                                                        special account
2011               Private offering          122,749.95            1,735.38          108,748.12                  0.00              0.00                0.00%              5,271.55                                        0.00
                                                                                                                                                                                        for raised
                                                                                                                                                                                        proceeds

Total                      --                122,749.95            1,735.38          108,748.12                  0.00              0.00                0.00%              5,271.55              --                        0.00

                                                                                       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: RMB’0,000

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


                                                                                                     ~ 22 ~
   Gujing Distillery            Original Chinese Spirits                                          Annual Report 2016

Commitment investment projects

                                                                                                                                    Couldn’t be
Technological Transform on the
Brewage of High-quality Base No                             13,500    12,194.42       0.00     12,247.9     100.44%    04/30/2014   individually Yes        No
Wine
                                                                                                                                      measured

                                                                                                                                    Couldn’t be
Construction of Base Wine
Blending & Filling Centre and No                            68,600    65,921.06   1,499.03    61,142.45      92.75%    04/30/2014   individually Yes        No
Ancillary Facilities
                                                                                                                                      measured

                                                                                                                                    Couldn’t be
Construction       of      Marketing
                                         No                 27,500      27,500     236.35     18,332.71      66.66%    04/30/2014   individually Yes        No
Network
                                                                                                                                      measured

                                                                                                                                    Couldn’t be
Construction of Brand Promotion No                          17,000      17,000        0.00    17,025.06     100.15%    12/31/2012   individually Yes        No
                                                                                                                                      measured

Subtotal of promised investment
                                              --           126,600   122,615.48   1,735.38   108,748.12      --          --                            --        --
projects

Investments of over-raised capital

N/A

Total                                         --           126,600   122,615.48   1,735.38   108,748.12      --          --                            --        --

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

Explanation       on       significant
                                         Naught
changes in feasibility of projects



                                                                                   ~ 23 ~
      Gujing Distillery            Original Chinese Spirits                                                             Annual Report 2016


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

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


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

                                             Applicable

                                             In accordance with the explanation of the Particulars on the Private Issuance of A-share of Anhui Gujing Distillery Co., Ltd. and the Listing Announcement,
                                             “Before the raised proceeds being in place, the Company can use the self-raised proceeds to input preliminarily in accordance with the actual progress of
Advanced input and exchange of
                                             raised proceeds investment projects; after the raised proceeds being in place, the Company can use the raised proceeds to replace the self-raised proceeds
any     raised   funds       investment
                                             preliminarily input”. And the Proposal on Using the Raised Proceeds to Replace the Self-raised Proceeds Preliminarily Input to the Raised Proceeds
project
                                             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
Outstanding      raised      funds      in
                                             under the premise of guaranteeing the project quality with the principles of practicing strict economy, the Company further strengthened the project expenses
project      implementation           and
                                             control, supervisor and management in the process of the execution which reduced the total cost of the investment project of the raised funds. 2. The surplus
reasons
                                             reason of the marketing network construction project was due to the rather big changes of the liquor market environment and the third party logistics system
                                             gradually becoming more and more mature and at the same time, the Company would no more execute the center project of Hefei Logistics for reducing the


                                                                                                    ~ 24 ~
    Gujing Distillery       Original Chinese Spirits                                                          Annual Report 2016

                                   fixed operating cost of the Company, which caused the capital surplus of the project.

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

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


(3) Change of projects invested with raised funds

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




                                                                                           ~ 25 ~
      Gujing Distillery          Original Chinese Spirits                                                                      Annual Report 2016

VI Sale of major assets and equity interests

1. Sale of major assets

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


2. Sale of major equity interests

□ Applicable √ Not applicable


VII Main controlled and joint stock companies

√ Applicable □ Not applicable
Main subsidiaries and joint stock companies with an over 10% influence on the Company’s net profits
                                                                                                                                            Unit: RMB

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

                               Wholesales
                               of distilled
Bozhou                         spirit,
Gujing                         constructio                        1,754,196,495.4 157,916,415.0 5,523,858,938.1 572,541,811.9 412,646,277.7
                 Subsidiary                      84,864,497.89
Sales     Co.,                 n materials,                                        2                 3                 1               3                 9
Ltd                            feeds       and
                               assistant
                               materials

Anhui                          Manufactur
Longrui                        e and sale                                              187,058,787.6
                 Subsidiary                      86,660,268.98 215,341,849.55                            204,117,202.03 33,847,514.73 29,858,971.65
Glass Co.,                     of glass                                                              4
Ltd                            products

Wuhan
Tianlong
                               Production
Yellow
                               and sales of 400,000,000.0 1,027,152,789.2 705,325,583.2
Crane            Subsidiary                                                                              354,950,364.64 55,623,357.07 42,220,477.84
                               distilled         0                                 1                 7
Tower Wine
                               spirit
Industry
Co., Ltd

Shanghai                       Hotel
Gujing                         manageme                                                110,626,934.0
                 Subsidiary                      54,000,000.00 216,313,145.21                             77,317,480.22 11,913,961.39 9,084,254.78
Jinhao                         nt and                                                                7
Hotel                          house lease

                                                                        ~ 26 ~
      Gujing Distillery      Original Chinese Spirits                                                              Annual Report 2016

Manageme
nt Co., Ltd.

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

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

Anhui Gujing Yunshang Electric                                                        Optimizing the internal business structure and
                                              Invest and set up
Commerce Co., Ltd                                                                     enhancing the endogenous power

Anhui Zhenrui Construction Project Co.,                                               Optimizing the internal business structure and
                                              Invest and set up
Ltd                                                                                   enhancing the endogenous power
                                                                                      Strengthening the development of the Company’s
                                                                                      main business distilled spirit, speeding the
Wuhan Tianlong Yellow Crane Tower             Enterprise merger not under the
                                                                                      national layout of   products market, and
Wine Industry Co., Ltd                        same control
                                                                                      improving the Company’s brand influence and
                                                                                      business scale.


Bozhou Gujing Packaging Co., Ltd.             Cancellation of the liquidation

Remarks: see the “VIII Equities in the subsidiaries in Notes of Financial Statement”


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
1. Bottoming rebound of industrial adjustment with recovery growth, and industrial development entering a new normal
Over the five years since the continuous adjustment of the liquor sector, many major liquor companies have adjusted their product
structure and sunk their channels, shifting the focus from famous liquor to “people’s” liquor to adapt to the market changes where the
competitions have continued to increase for the medium- and low-end market. The industrial concentration has been increasing with
obvious differentiation.
In recent years, China’s leading famous liquor companies have basically completed their adjustment in their teams, strategies and
products. By virtue of their powerful brand influence and sustained recovery of product quality, the top famous liquor companies
have experienced marked growth and defined their deployment; regional small and medium sized liquor companies are faced with
the shuffle, with the regional famous liquors at the sandwich layer and the industrial development in a new normal.
2. Obvious upgrade of liquor consumption - coming of quality-oriented consumption and pursuit of healthy intake of liquors
In recent years, with the continued increase in people’s incomes, the social public consumption has been constantly upgrading,
resulting in consumers’ pursuit in the quality-oriented consumption style. When it comes to liquor specifically, people have started to
purse a healthy intake style such as less intake and intake of quality and branded liquors. In China Food and Drinks Fair 2017,
“healthy liquor” once again became the highly concerned focus topic. Many famous liquor producers launched their new healthy
liquors to hit the potential market, and the Company’s 37℃ Bo JU was exhibited again for sale.
3. The liquor sector will enter a new era with the integration of channels, and the focus of the strength point will lie in the terminals

                                                               ~ 27 ~
   Gujing Distillery         Original Chinese Spirits                                                         Annual Report 2016

Under the in-depth adjustment of the liquor sector, liquor companies are gradually making revolutions and transformations,
consumption is fragmentized and diversified, and new channels are emerging continuously. Modes such as crowd funding,
customization and E-commerce that focus on consumers (terminal C) will only serve as a supplement instead of becoming the market
mainstream within a short period. Thus, the traditional channels in the liquor sector will not die out. The strength point of future
channels will focus on terminals (terminal B), the online and offline integration of which (terminal B) will be built through the
Internet, and thus, the future liquor sector will enter a new era with the integration of channels.
(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 2017
Efforts will be made in achieving growth of operating revenue of the company in 2017 on the basis of maintaining the figure in 2016.
(IV) Operating risk of the company
1. Macro-economy has entered a new normal, liquor sector has reached the adjustment bottom, famous liquor companies have shown
marked signs for growth, and market competitions have further intensified.
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. Unfavorable impact of fake and inferior products and right-infringing products.
(V) Operating measures
1. Marketing
Continue to expand and cultivate the market, further promote refined operation management of market, and build a solid base market
and major core market. Stick to common revitalization of multiple markets, actively promote the deployment throughout the entire
country, and give play to the synergy effect. Continue to enhance the brand and implement the promotion of the internationalization
of the Gujing Distillery culture.
2. Product management
Continue to strengthen the development of science and technology, focus on the development of new products and converted
application of the achievements, further promote “green brewing”, accelerate the automation and intelligence process, vigorously
explore new automated production line renovation projects, fully reproduce and promote projects with positive results, and make new
breakthroughs in automation renovation.
3. Cost control
Implement the cycle management of asset operation by centering around the Company’s business process; intensity the control of
selling expenses and improve the effectiveness of investing selling expenses; optimize the product design and development process
by controlling the process and from the root for product R&D and design; continue to explore internal marketization modes, refine

                                                               ~ 28 ~
   Gujing Distillery        Original Chinese Spirits                                                         Annual Report 2016

internal appraisal mechanisms, and highlight the key points through deep cultivation, thus effectively advancing cost control
management.
4. Human resource
Improve staff promotion and remuneration system, thoroughly open up “two gateways” and “management gateway”, further define
position ranking and dynamic appraisal, confirm remuneration and performance based on the level of position, and manage
professional technical staff in a hierarchical manner based on their inventions and technical level under the “technology gateway”;
establish appraisal indicators. Build up the mechanism of “creation and innovation”, namely, platform for creation and platform for
innovation, fully develop young people, and optimize human resource allocation, thus providing a bigger space and platform for
employees to grow and improve.
5. Corporate cultural construction
Continue the in-depth promotion and implementation of Gujing’s core values, drive the mental construction through corporate
cultural construction, and fully improve the political competence of Party members and management staff. Play the model and
leading role of Party members, and stick to “aim at keeping up by acting”, strengthen “four-consciousness”, thus creating a good
environment with Party members and management staff taking the lead and staff members acting consciously.
In 2017, while continuing to center around terminal users, the Company will firmly boost Strategy 5.0, implement “five-star
operation” and “capillary” management in a comprehensive way, and fully motivate staff activity and creativity in an effort to
successfully achieving all the operating targets.


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

1. In the Reporting Period

□ Applicable √ Not applicable




                                                            ~ 29 ~
     Gujing Distillery        Original Chinese Spirits                                                             Annual Report 2016




                                           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 2015 Annual Meeting of Shareholders held on May 26, 2016 considered and approved the Company’s Interest Distribution
Scheme in 2015 that based on the total shares 503,600,000 of the Company on December 31, 2015, cash dividend was distributed at
RMB 1,00 per 10 shares(including tax), and the total distributed cash dividend was RMB50,360,000,00(including tax).

                                                 Special explanation of cash dividend policy

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

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

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

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

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

Whether the conditions and the process met the regulations and
                                                                        The cash dividend policy of the Company was not adjusted or
was transparent of the adjustment or altered of the cash dividend
                                                                                                    altered
policy:

The Company’s plans (preplans) for distributing common stock dividend and turning capital reserve into share capital for the recent
three years (including the reporting year)
1. 2014 profits distribution plan of the Company: distributed the cash of RMB2.00 (tax included) for every 10 shares without any
converting capital reserve into share capital;
2.2015 profits distribution plan of the Company: distributed the cash of RMB1.00 (tax included) for every 10 shares without any
converting capital reserve into share capital;
3. 2016 profits distribution proposal of the Company: distributed the cash of RMB6.00 (tax included) for every 10 shares without
converting capital reserve into share capital
                                                                                                                            Unit: RMB

                          Cash dividends             Net profits         Proportion in net                           Ratio of cash
                                                                                               Cash dividends in
          Year                                                                                                     dividends in other
                          (tax included)            attributable to    profits attributable      other forms
                                                                                                                         forms

                                                                   ~ 30 ~
     Gujing Distillery        Original Chinese Spirits                                                              Annual Report 2016

                                                    common                to common
                                               shareholders of the    shareholders of the
                                                Company in the         Company in the
                                                  consolidated           consolidated
                                               statements for the      statements for the
                                                         year              year (%)

2016                          302,160,000.00        829,630,063.38                 36.42%                    0.00                  0.00%

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%

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

Dividend for every 10 shares (RMB) (tax included)                                                                                     6.00

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)                                                                                 302,160,000.00

Distributable profits (RMB)                                                                                             3,307,203,353.63

Percentage of cash dividends in the total distributed                                                                             100.00%
profits

                                                            Cash dividend policy

The minimum proportion of cash dividend from profit distribution this time should be 20% when the Company distributed the profits
under the condition that the Company was in mature stage with large capital cost.

               Details about the preliminary plan for profit distribution and converting capital reserves into share capital

The Company planned to based on the total shares at the year-end of 503,600,000 shares to distribute the dividends with a cash of
RMB6.00 (tax included) for each 10 shares with the total amount of RMB302,160,000.00and the retained unallocated profits of
RMB3,005,043,353.63 would all transfer to the next year.




                                                                 ~ 31 ~
     Gujing Distillery       Original Chinese Spirits                                                     Annual Report 2016

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


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
     The Company obtained 51% equities of Wuhan Tianlong Yellow Crane Tower Co., Ltd for the enterprise merger not under the
same control during the Reporting Period, and newly established the subsidiaries Anhui Gujing Yunshang Electronic Commerce Co.,
Ltd and Anhui Zhenrui Contruction Project Co., Ltd.; The Company newly established sub-subsuaiaries Bozhou Gujing Distillery
Marketing Co., Ltd, Wuhan Ya shibo Technology Co., Ltd, and Wuhan Junya Sales Co., Ltd; The Company liquidated its subsidiary

                                                          ~ 32 ~
     Gujing Distillery       Original Chinese Spirits                                                   Annual Report 2016

Bozhou Gujing Packaging Co., Ltd in the current year.


IX Engagement and disengagement of CPAs firm

CPAs firm at present

Name of the domestic CPAs firm                          Ruihua CPAs (LLP)

The Company’s payment for the domestic CPAs firm
                                                        140
(RMB’0,000)

Consecutive years of the audit service provided by
                                                        4
the domestic CPAs firm

Names of the certified public accountants from the
                                                        Pan Xinhua, Zhang Xianfa
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 2016, 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
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


                                                              ~ 33 ~
     Gujing Distillery       Original Chinese Spirits                                     Annual Report 2016

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.


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.




                                                        ~ 34 ~
     Gujing Distillery       Original Chinese Spirits                                                         Annual Report 2016

(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
No such cases in the Reporting Period.


XVIII Social Responsibilities

1. Implementation of social responsibilities in precision poverty alleviation

(1) Summary of annual precision poverty alleviation
In accordance with the requirements of the State, Anhui Provincial Party Committee and Government, and Bozhou Municipal Party
Committee and Government on precision poverty alleviation, the Company has established targeted support towards 17 poor families
in Bali village, Wuma town, Qiaocheng District, Bozhou. The Company has established a complete and formal long-term mechanism
for poverty alleviation targeted at those families. A supporting policy of one file for one family, one card for one family, and one
policy for one family has been implemented based on the principle of “organizations are responsible for villages and cadres are
responsible for families”, and files have been created based on family members, major labor force, farmland and income structure of
poor families in each poor village. The Company has made some achievements in poverty alleviation through its efforts over the past

                                                            ~ 35 ~
        Gujing Distillery          Original Chinese Spirits                                                                   Annual Report 2016

year.

(2) Subsequent plan for precision poverty alleviation
First, the Company will continue to engage in poverty alleviation and strengthen its efforts in targeted support towards poor families;
second, the Company will continue to implement the supporting policy of the Provincial Party Committee and Government and the
Municipal Party Committee and Government, soundly advancing the poverty alleviation work in line with the requirements of
relevant poor counties to carry out the social responsibility.

2. Implementation of other social responsibilities
The Company disclosed its Corporate Social Responsibility Report 2016 on 28 April 2017 (see http://www.cninfo.com.cn for more
details)
Whether the Company or any of its subsidiaries belongs to a heavily polluting business identified by the environmental protection
authorities of China

                     Name of
  Name of                                   Quantity
                      major                                 Distribution                    Pollutant discharge
company or                        Way of         of                           Discharge                             Total      Permitted       Excess
                     pollutant                             of discharge                          standard
 subsidiary                      discharge discharge                       concentration                          discharge discharge discharge
                 and typical                                   outlet                          implemented
 company                                        outlet
                     pollutant

Anbui
                                                           Main                            GB27631-2011 Table
Gujing
                COD              Direct     1              discharge       67.88mg/L       2 Direct Discharge     154.66       155.05      0
Distillery
                                                           outlet                          (COD≤100mg/L)
Co., Ltd.

Anbui
                                                           Main                            GB27631-2011 Table
Gujing
                NH3-N            Direct     1              discharge       6.74mg/L        2 Direct Discharge     15.36        15.53       0
Distillery
                                                           outlet                          (NH3-N≤10mg/L)
Co., Ltd.

Construction and operation of pollution prevention and management
Existing sewage treatment facilities operate well, meeting the discharge standard.
Whether the Social Responsibility Report has been released
√ Yes □ No

                                                         Corporate Social Responsibility Report

                                                                        Whether including               Standard of report disclosure
                          Whether including Whether including
        Nature of                                                       information about
                           information about information about
        enterprise                                                            corporate        Domestic standard              Foreign standard
                              environment                society
                                                                              governance

                                                                                             ISO 26000:2010
                                                                                             Guidance on Social
                                                                                             Responsibility and
State-owned                                                                                  Guidance from
                          Yes                   Yes                     Yes                                             GRI
enterprise                                                                                   Shenzhen Stock
                                                                                             Exchange on Social
                                                                                             Responsibility of Listed
                                                                                             Companies under

                                                                        ~ 36 ~
     Gujing Distillery          Original Chinese Spirits                                                       Annual Report 2016

                                                                                Shenzhen Stock
                                                                                Exchange

Particulars of specific items

1. Whether the Company has passed the environmental
                                                                  Yes
management system (ISO14001)

2. Annual expenditure on environmental protection (RMB
                                                                                                                           826.29
‘0,000)

3. Performance in reducing the discharge of three wastes
                                                                  A total of 2,278,460tons of water was treated in 2016.
including “waster gas, waste water and waste residues”

4. Expenditure in the enhancement of employees’ individual
knowledge and skills to improve their ability in professional                                                              193.97
development (RMB ‘0,000)




XIX Other significant events

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


XX Significant events of subsidiaries

□ Applicable √ Not applicable




                                                                ~ 37 ~
     Gujing Distillery         Original Chinese Spirits                                                            Annual Report 2016



         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%                                         300        300       1,200       0.00%

3   Shares held by other
                                         900        0.00%                                         300        300       1,200       0.00%
domestic investors

Among which: Shares held
                                         900        0.00%                                         300        300       1,200       0.00%
by domestic corporations

II. Non-restricted shares         503,599,100    100.00%                                      -300          -300 503,598,800      100.00%

1 RMB common shares               383,599,100     76.17%                                      -300          -300 383,598,800      76.17%

2 Domestically listed foreign
                                  120,000,000     23.83%                                           0           0 120,000,000      23.83%
shares

III. Total shares                 503,600,000    100.00%                                           0           0 503,600,000      100.00%

Reasons for the share changes
√Applicable □ Not applicable
During this Reporting Period, the shareholdings of outgoing senior management personnel in the Company were unlocked half a year
after they left the Company.
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

                                                                ~ 38 ~
     Gujing Distillery       Original Chinese Spirits                                                                    Annual Report 2016

                                                                                                                                    Unit: share

                                            Amount of
                                                                 Amount of
                                          restricted shares
        Name of           Opening                              restricted shares Closing restricted        Reason for        Date of easing
                                            to be eased
    shareholder       Restricted shares                        increased during        shares              restriction         restriction
                                          during Reporting
                                                               Reporting Period
                                               Period

                                                                                                        Leaving of senior Six months after
Zhai Liangdong                      900                                     300                 1,200
                                                                                                         executive          leaving

Total                               900                                     300                 1,200          --                     --


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
                                             common                                  Total number of
                                                                                                                                    resumed
Total number of common                       shareholders at                         preference shareholders
                                                                                                                                    voting rights
shareholders at the                 21,272 the prior                         16,875 with resumed voting                         0                   0
                                                                                                                                    at the prior
period-end                                   month-end before                        rights at the period-end
                                                                                                                                    month-end
                                             the disclosure of                       (if any) (see Note 8)
                                                                                                                                    before the
                                             this Report
                                                                                                                                    disclosure of
                                                                                                                                    this Report
                                                                                                                                    (if any) (see
                                                                                                                                    Note 8)

                                                                 ~ 39 ~
       Gujing Distillery       Original Chinese Spirits                                                            Annual Report 2016


                           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
                                      Nature of
        Name of shareholder                        percentage      held at the   during the      restricted non-restricted   Status of     Status of
                                    shareholder
                                                        (%)        period-end Reporting Period    shares    shares held       shares        shares
                                                                                                   held

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

                                    Foreign
GAOLING FUND,L.P.                                          2.47% 12,446,408                                   12,446,408
                                    corporation

                                    Foreign
UBS (LUXEMBOURG) S.A.                                      2.41% 12,150,199                                   12,150,199
                                    corporation

                                    Foreign
NORGES BANK                                                2.28% 11,458,346                                   11,458,346
                                    corporation

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

CHINA INT'L CAPITAL CORP
                                    Foreign
HONG       KONG      SECURITIES                            1.20%    6,067,462                                  6,067,462
                                    corporation
LTD

NATIONAL SOCIAL
                                    State-owned
 SECURITY FUND                                             0.99%    4,970,485                                  4,970,485
                                    corporation
 PORTFOLIO 113

GREENWOODS                  CHINA Foreign
                                                           0.98%    4,939,963                                  4,939,963
ALPHA MASTER FUND                   corporation

CHINA LIFE INSURANCE
CO.,                                State-owned
                                                           0.90%    4,536,754                                  4,536,754
LTD.-DIVIDEND-INDIVIDUAL corporation
BONUS -005L-FH002SHEN

MORGAN STANLEY & CO.                Foreign
                                                           0.76%    3,833,134                                  3,833,134
INTERNATIONAL PLC                   corporation

Strategic investors or the general legal person
due to the placement of new shares become         N/A
the top 10 shareholders(if any)(see Note 3)

                                                  Among the above shareholders, the Company's controlling shareholder, Anhui Gujing Group Co.,
                                                  Ltd., has no relationship with other shareholders and does not belong to the acting-in-concert
Explanation on associated relationship among
                                                  stipulated in the Administrative Measures on Information Disclosure of Changes in Shareholding
the above-mentioned shareholders or
                                                  of Listed Companies. In addition, the relationship between other shareholders is unknown, and it is
explanation on acting-in-concert
                                                  unknown whether it belongs to the acting-in-concert stipulated in the Administrative Measures on
                                                  Information Disclosure of Changes in Shareholding of Listed Companies.

                                Particulars about shares held by top 10 shareholders not subject to trading moratorium

                                                                ~ 40 ~
     Gujing Distillery       Original Chinese Spirits                                                            Annual Report 2016


                                                                                                                                 Type of share
                                                  Number of shares held not subject to trading moratorium at the end
             Name of shareholder                                                                                          Type of
                                                                             of the period                                                Amount
                                                                                                                            share

                                                                                                                        RMB
ANHUI GUJING GROUP COMPANY
                                                                                                          271,404,022 common             271,404,022
LIMITED
                                                                                                                        shares

                                                                                                                        Domestically
GAOLING FUND,L.P.                                                                                          12,446,408 listed foreign      12,446,408
                                                                                                                        shares

                                                                                                                        Domestically
UBS (LUXEMBOURG) S.A.                                                                                      12,150,199 listed foreign      12,150,199
                                                                                                                        shares

                                                                                                                        Domestically
NORGES BANK                                                                                                 11,458,346 listed foreign     11,458,346
                                                                                                                        shares

                                                                                                                        RMB
CENTRAL HUIJIN ASSETS
                                                                                                             6,543,600 common              6,543,600
MANAGEMENT CO., LTD.
                                                                                                                        shares

                                                                                                                        Domestically
CHINA INT'L CAPITAL CORP HONG
                                                                                                             6,067,462 listed foreign      6,067,462
KONG SECURITIES LTD
                                                                                                                        shares

                                                                                                                        RMB
NATIONAL SOCIAL SECURITY FUND
                                                                                                             4,970,485 common              4,970,485
 PORTFOLIO 113
                                                                                                                        shares

                                                                                                                        Domestically
GREENWOODS CHINA ALPHA MASTER
                                                                                                             4,939,963 listed foreign      4,939,963
FUND
                                                                                                                        shares

CHINA LIFE INSURANCE CO.,                                                                                               RMB
LTD.-DIVIDEND-INDIVIDUAL BONUS                                                                               4,536,754 common              4,536,754
-005L-FH002SHEN                                                                                                         shares

                                                                                                                        Domestically
MORGAN STANLEY & CO.
                                                                                                             3,833,134 listed foreign      3,833,134
INTERNATIONAL PLC
                                                                                                                        shares

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


                                                              ~ 41 ~
     Gujing Distillery         Original Chinese Spirits                                                               Annual Report 2016

acting-in-concert

Explanation on the top 10 shareholders
participating in the margin trading business (if N/A
any) (see note 4)

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


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             01/16/1995              91341600151947437P          construction materials and
COMPANY LIMITED
                                                                                                               plastic products

Shares held by the controlling
shareholder in other listed
                                  The controlling shareholder ANHUI GUJING GROUP COMPANY LIMITED directly
companies by holding or
                                  holds100,000,000 shares of Huaan Securities Co., Ltd. owning the proportion of shares3.55%
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
                                        representative /       Date of
    Name of actual controller                                                      Organization code               Business scope
                                           company          establishment
                                           principal

The People’s Government of
                                       Not applicable                        Not applicable                Not applicable
Bozhou

Shares held by the controlling
                                       Not applicable
shareholder    in   other     listed


                                                                 ~ 42 ~
     Gujing Distillery         Original Chinese Spirits                                    Annual Report 2016

companies      by    holding      or
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 People’s 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




                                                              ~ 43 ~
Gujing Distillery       Original Chinese Spirits                      Annual Report 2016




                                      Section VII Preference Shares

□ Applicable √ Not applicable

No preference shares in the Reporting Period.




                                                   ~ 44 ~
Gujing Distillery          Original Chinese Spirits                                                               Annual Report 2016



     Section VIII Directors, Supervisors, Senior Executive Officers and Staff

I Changes in shareholdings of directors, supervisors and senior management

                                                                                             Increase Decreas
                                                                                  Opening     in the   e in the      Other       Closing
                         Incumbent/form Gende Ag Starting               Ending
    Name    Office title                         date of                date of   shareholdi Reportin Reportin increase/decrea shareholdi
                               er         r    e  tenure                tenure
                                                                                  ng (share) g Period g Period     se (share)   ng (share)
                                                                                             (share)   (share)

            Chairman
Liang                                                      06/20/201 06/19/201
            of the        Current         Male        52
Jinhui                                                     4        7
            Board

                                                           08/24/201 06/19/201
Li Peihui Director        Current         Male        44
                                                           6        7

Zhou        Director,                                      06/20/201 06/19/201
                          Current         Male        43
Qingwu      GM                                             4        7

            Director,                                      06/20/201 06/19/201
Yan Lijun                 Current         Male        46
            GM                                             4        7

            Director,
            Deputy
            GM,
Ye          Secretary
                                                           06/20/201 06/19/201
Changqin of the           Current         Male        43
                                                           4        7
g           Board,
            Chief
            Accountan
            t

            Director,
                                                           08/24/201 06/19/201
Xu Peng Deputy            Current         Male        47
                                                           6        7
            GM

Wang        Independe                                      06/20/201 06/19/201
                          Current         Male        55
Ruihua      nt director                                    4        7

Wang        Independe                                      06/20/201 06/19/201
                          Current         Male        52
Gao         nt director                                    4        7

Song        Independe                                      11/17/201 06/19/201
                          Current         Male        55
Shuyu       nt director                                    4        7

            Chairman
Wang        of the                                         08/24/201 06/19/201
                          Current         Male        52
Feng        Supervisor                                     6        7
            y

                                                                   ~ 45 ~
Gujing Distillery         Original Chinese Spirits                                                               Annual Report 2016

           Committee

Yang                                                      08/24/201 06/19/201
           Supervisor Current            Male        49
Xiaofan                                                   6         7

Fu                                                        08/24/201 06/19/201
           Supervisor Current            Male        47
Qiangxin                                                  6         7

           Employee                                       08/24/201 06/19/201
Zhang Bo                Current          Male        52
           supervisor                                     6         7

Wang       Employee                                       08/24/201 06/19/201
                        Current          Male        48
Zibin      supervisor                                     6         7

Zhang      Deputy                                         08/06/201 06/19/201
                        Current          Male        48
Lihong     GM                                             6         7

Zhu                                                       08/06/201 06/19/201
           GM
Xianghon                Current          Male        43 6           7
           assistant
g

Gao        GM                                             08/06/201 06/19/201
                        Current          Male        47
Jiakun     assistant                                      6         7

Zhai
           GM                                             06/20/201 08/06/201
Liangdon                Former           Male        46                              1,200                                             1,200
           assistant                                      4         6
g

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


II Particulars about changes of Directors, Supervisors and Senior Executives

√Applicable □Not applicable

        Name            Office title         Type                  Date                                  Reason

                                                              08/24/2016        For details, please refer to the announcement of the
Wang Feng            Director          Leave office                             resolution of the 9th meeting of the 7th Board of
                                                                                Directors disclosed on August 6, 2016.

                                                              08/24/2016        For details, please refer to the announcement of the
Yang Xiaofan         Director          Leave office                             resolution of the 9th meeting of the 7th Board of
                                                                                Directors disclosed on August 6, 2016.

                     Chairman of the                          08/24/2016        For details, please refer to the announcement of the
Xu Peng              Supervisory       Leave office                             resolution of the 9th meeting of the 7th Board of
                     Committee                                                  Directors disclosed on August 6, 2016.

                                                              08/24/2016        For details, please refer to the announcement of the
Niu Haiting          Supervisor        Leave office                             resolution of the 9th meeting of the 7th Board of
                                                                                Directors disclosed on August 6, 2016.

                                                              08/24/2016        For details, please refer to the announcement of the
Hu Wenchao           Supervisor        Leave office
                                                                                resolution of the 9th meeting of the 7th Board of


                                                                   ~ 46 ~
Gujing Distillery       Original Chinese Spirits                                                          Annual Report 2016

                                                                         Directors disclosed on August 6, 2016.

                                                                         For details, please refer to the announcement of the
Lu Duicang          Supervisor       Leave office      08/24/2016        resolution of the 9th meeting of the 7th Board of
                                                                         Directors disclosed on August 6, 2016.

                                                                         For details, please refer to the announcement of the
Zhai Liangdong GM assistant          Leave office      08/06/2016        resolution of the 9th meeting of the 7th Board of
                                                                         Directors disclosed on August 6, 2016.


III Resumes of important personnel

The professional background, main working experience and current responsibilities in the company of current directors, supervisors
and senior management staff
(I) Mr. Liang Jinhui, 52 year-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. Li Peihui, 44 year-old, holder of master degree. He is a senior accountant, CPA and member of national leading (backup)
accounting talents. At present, he acts as the Company’s director, executive vice president and CFO of Gujing Group. He had ever
served as deputy GM of Financial Department, GM, deputy chief accountant, chief accountant, Secretary of Board of Directors and
Director of the Company; Chairman of the Board of Anhui Ruijing Business Travel Group Co. and Anhui Huixin Financial
Investment Group.
(III) Mr. Zhou Qingwu, 43 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.
(IV) Mr. Yan Lijun, 46 year-old, holder of master degree with Senior Taster. Now he is Director, deputy executive GM of the
Company, Chairman of the Board and GM of Bozhou Gujing Sales 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
Vice GM of the Company
(V) Mr. Ye Changqing, 43 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 as Chief Auditor of Audit Department, Vice
Manager of Audit Department and Vice Supervisor and Supervisor of Auditing& Supervision Department; and Supervisor of the
Fourth Supervisory Committee; Director and Secretary of the 5 th and 6th Board of Directors, Chief Accountant.
(VI) Mr. Xu Peng, 47 year-old, has educational experience of undergraduate college. He is incumbent Director and Deputy GM of
the Company, Chairman of the Board of Wuhan Tianlong Yellow Crane Tower Liquor Industry Co., Ltd.. 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 and Chairman of the Supervisory Committee
of the Company.
(VII) Mr. Wang Ruihua, 55 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..
(VIII) Wang Gao, Male, 52 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


                                                            ~ 47 ~
Gujing Distillery        Original Chinese Spirits                                                        Annual Report 2016

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, 55 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. Wang Feng, 52 year-old, is Senior Economic Engineer who is postgraduate degree holder, incumbent Chairman of the
Supervisor committee, 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.
(XI) Mr. Yang Xiaofan, 49 year-old, holder of master degree. At present, he is Supervisor and Vice President of Gujing Group. Vice
President and General Manager of Anhui Gujing Real Estates Group Co., Ltd., Assistant to President of Gujing Group; Director of
the 5th   and 6th Board of Directors.
(XII) Mr. Fu Qiangxin, 47 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. Zhang Bo, 52 year-old, bachelor degree, economist, incumbent Employee Supervisor of the Company and Chairman of
the Labor Union of Gujing Group. He once worked as Chairman of the board and GM of Bozhou Gujing Printing Co., Ltd. and
Bozhou Gujing Glassware Manufacturing Co., Ltd. as well as Chairman of the Board of Bozhou Ruineng Heat and Power Co., Ltd..
(XIV) Mr. Wang Zibin, 48 year-old, college degree, CIA and CPA. At present he is Employee Supervisor of the Company and
Director of Audit and Supervisory Centre of the Group. He once served as GM of Auditing Department of Gujing Group and vice
director of Hefei marketing centre of Bozhou Gujing Sales Company.
(XV) Mr. Zhang Lihong, 48 year-old, bachelor degree and economist. He is incumbent Deputy GM of the Company and director of
Administrative Service Centre. He once acted as clerk, Secretary of Operation Department and Market Development Department,
Deputy GM, Director of General Office, Director of Service Centre of Bozhou Gujing Sales Co., Ltd. and Director of HR
Department of the Company.
(XVI) Mr. Zhu Xianghong, 43 year-old, bachelor degree and senior Wine Taster. He is incumbent assistant to GM of the Company,
and GM of Wuhan Tianlong Yellow Crane Tower Liquor Industry Co., Ltd.. He once acted as GM of Product Department of Bozhou
Gujing Sales Co., Ltd., GM of Hefei Office, regional GM of Northern Anhui Province, GM of Anhui Operating Centre and standing
Deputy GM of Sales Company.
(XVII) Mr.Gao Jiakun, bachelor degree, incumbent assistant to GM of the Company. He once served as GM of Production
Management Department, Vice Director of Production Management Centre, Chairman of the Board and GM of Bozhou Pairuite
Packing Products Co., Ltd., the Company’s Director of Finished Products Filling Centre and Production Management Centre.
Post-holding in shareholder units
√Applicable □ Not applicable



                                                            ~ 48 ~
Gujing Distillery         Original Chinese Spirits                                                  Annual Report 2016


  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.                        05/01/2014                         Yes
                                                         Chairman of
                                                         Party
                                                         Committee

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

                                                         Executive
                                                         Vice
Li Peihui           Anhui Gujing Group Co., Ltd.                        05/01/2014                         Yes
                                                         President,
                                                         CFO

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

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

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

                                                         Chairman of
Zhang Bo            Anhui Gujing Group Co., Ltd.         the Labor      10/16/2015                         Yes
                                                         Union

                                                         Chairman of
                                                         Audit and
Wang Zi Bin         Anhui Gujing Group Co., Ltd.                        4/27/2015                          Yes
                                                         Supervision
                                                         Center


                                                         ~ 49 ~
Gujing Distillery          Original Chinese Spirits                                                          Annual Report 2016


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

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
(I) 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 Auditor’s Report issued by certified public accountant, and comprehensive appraisal index is appraised
and discussed by the Remuneration & Appraisal Committee under the Board of Directors.
(III) Actual payment of the remuneration of directors, supervisors and senior management
Payment of the remuneration of directors, supervisors and senior management is with certain amount in advance monthly and
distributed annually according to check.
Remuneration of the directors, supervisors and senior management of the Company during the reporting period is as follow:
                                                                                                                        Unit: RMB’0,000

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

                      Chairman of the
Liang Jinhui                             Male                              52 Current                                   Yes
                      Board

Li Peihui             Director           Male                              44 Current                                   Yes

Zhou Qingwu           Director, GM       Male                              43 Current                           72.90 No

                      Director,          Male                                   Current                                 No
Yan Lijun             Executive Deputy                                     46                                121.46
                      GM

                      Director, Deputy Male                                     Current                                 No
                      General Manager,
Ye Changqing                                                               43                                   68.89
                      Secretary of the
                      Board, Chief

                                                               ~ 50 ~
Gujing Distillery        Original Chinese Spirits                                                    Annual Report 2016

                    Accountant

                    Director, Deputy Male                                 Current                             No
Xu Peng                                                              47                               64.30
                    GM

                    Independent        Male                               Current                             No
Wang Ruihua                                                          55                                7.50
                    director

                    Independent        Male                               Current                             No
Wang Gao                                                             52                                7.50
                    director

                    Independent        Male                               Current                             No
Song Shuyu                                                           55                                7.50
                    director

                    Chairman of the    Male                               Current                             Yes
Wang Feng           Supervisory                                      52
                    Committee

Yang Xiaofan        Supervisor         Male                          49 Current                               Yes

Fu Qiangxin         Supervisor         Male                          47 Current                               Yes

                    Employee           Male                               Current                             Yes
Zhang Bo                                                             52
                    Supervisor

                    Employee           Male                               Current                             Yes
Wang Zibin                                                           48
                    Supervisor

                    Deputy General     Male                               Current                             No
Zhang Lihong                                                         48                               65.22
                    Manager

                    General Manager Male                                  Current                             No
Zhu Xianghong                                                        43                              106.56
                    Assistant

                    General Manager Male                                  Current                             No
Gao Jiakun                                                           47                               55.53
                    Assistant

Total                          --              --             --                    --               577.36         --

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                                                                         5,264

Amount of the incumbent employees of the main subsidiaries                                                                514

Total amount of the incumbent employees                                                                                  5,778

Total number of employees accepted salaries(person)                                                                      5,778

Number of retirees whose retirement pension shall be borne by                                                             781


                                                         ~ 51 ~
Gujing Distillery       Original Chinese Spirits                                                        Annual Report 2016

the Company and the main subsidiaries

                                                      Professional structure

                             Category                                                        Number

Production personnel                                                                                                        4,425

Sales personnel                                                                                                              489

Technicians                                                                                                                  264

Financial personnel                                                                                                          100

Administrative personnel                                                                                                     500

Total                                                                                                                       5,778

                                                            Education

                             Category                                                        Number

High school or below                                                                                                        4,298

Junior college                                                                                                               772

Bachelor                                                                                                                     678

Master or above                                                                                                                30

Total                                                                                                                       5,778


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




                                                           ~ 52 ~
Gujing Distillery       Original Chinese Spirits                                                           Annual Report 2016




                                  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 company’s decisions and legal production and operation activities, and
there is no same trade competition state of the same products between the company and majority shareholders.


III Horizontal competition

□ Applicable √ Not applicable




                                                             ~ 53 ~
Gujing Distillery       Original Chinese Spirits                                                                Annual Report 2016

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’                         10.77% 05/26/2016               05/27/2016               Resolutions Passed
General Meeting
                      General Meeting                                                                                 on the 2015 Annual
of 2015
                                                                                                                      Shareholders’
                                                                                                                      General Meeting

                                                                                                                      On the cninfo
                                                                                                                      website
The First Special                                                                                                     Announcement on
                      Special
Shareholders’                                                                                                        Resolutions Passed
                      Shareholders’                          1.92% 08/23/2016               08/24/2016
General Meeting for                                                                                                   on The First Special
                      General Meeting
2016                                                                                                                  Shareholders’
                                                                                                                      General Meeting for
                                                                                                                      2016


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


                             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                              4               1                     3                                         No

Wang Gao                                 4               0                     4                                         No


                                                                  ~ 54 ~
Gujing Distillery       Original Chinese Spirits                                                           Annual Report 2016


Song Shuyu                           4                  1                  3                                      No

General meetings sat in on by                                                                                                   2
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?
 □ 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
During Reporting Period, the independent directors of the Company made professional opinion or suggestions on the Company's
business decision in strict accordance with the relevant laws, regulations and the Articles of Association of the Company, and
provided independent opinion on issues needing independent directors’ opinion in the independent exercise of their duties, playing a
due role in safeguarding the legitimate rights and interests of the Company's shareholders.


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 Company’s 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 2016.
(2) Upon discussion with Ruihua Certified Public Accountants for the 2016 annual audit, it determined the schedule for the financial
report and internal control audit for 2016.
(3) It communicated in advance with the CPAs firm and independent directors before the CPAs firm came to the Company and
started the 2016 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 2016 annual financial statements again and made the
final resolution.
3. Duty performance of the Nomination Committee
                                                              ~ 55 ~
Gujing Distillery       Original Chinese Spirits                                                           Annual Report 2016

In the reporting period, in strict compliance with the Specific Implementation Rules of the Nomination Committee, the Nomination
Committee vigorously worked on various tasks, which ensured that the senior management staffs of the Company were hired in
compliance with laws and regulations.
(1) In the reporting period, the senior management staff hired by the Company satisfied the requirements of the Company Law and
other relevant laws and regulations. They were qualified as senior management staff. They were not in such a case where the
Company Law should forbid them from being senior management staff. Nor they were forbidden by CSRC from entering the
securities market.
(2) In the reporting period, the senior management staff of the Company were nominated and hired in line with the Company Law
and the Company’s Articles of Association. The hired personnel have never been punished by CSRC, other relevant authorities or
stock exchanges.
4. Duty performance of Remuneration and Appraisal Committee
(1) The Remuneration and Appraisal Committee affiliated to the Board of Directors, according to relevant regulations of
Implementation Rules of Remuneration and Appraisal Committee successfully completed the annual performance appraisal to
directors, supervisors and senior executives in line with standards and procedures of performance appraisal during the reporting
period.
(2) Through the deliberation and assessment of the committee, the consistent opinion was that the general remuneration level
complied with development of the Company; the remuneration level of directors, supervisors and senior executives accurately
reflected the overall performance situation of the Company and individual work performance, which complied with the remuneration
management system; the remuneration plan and procedure of issuing remuneration were in accordance with the laws and did not
violate relevant national laws and regulations.


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 Company’s operating
target.


IX Internal Control

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

□ Yes √ No




                                                             ~ 56 ~
Gujing Distillery           Original Chinese Spirits                                                                   Annual Report 2016

2. Self-appraisal report on internal control


Disclosure date of the Self-appraisal
                                                     04/28/2017
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                           Self-assessment Report of Internal Control”

The proportion of total assets included in
evaluation   scope          entities   in     the
                                                                                                                                         98.37%
Company's total assets of the consolidated
financial statements

The proportion         of   operation revenue
included in evaluation scope           entities in
                                                                                                                                         99.26%
the Company's operation revenue of the
consolidated financial statements

                                                              Defect judging standards

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

                                                                      ~ 57 ~
Gujing Distillery          Original Chinese Spirits                                                             Annual Report 2016

                                                 internal control defects not constituting
                                                 critical or major defects.

                                                 Critical defect:
                                                 (1) Wrong reporting ≥0.5% of total operating
                                                 revenue;
                                                                                                 Critical defect: The defect with direct
                                                 (2) Wrong reporting ≥5% of total profit;
                                                                                                 property loss amounting to over RMB10
                                                 (3) Wrong reporting ≥0.5% of total assets;
                                                                                              million, has great negative impact on the
                                                 (4) Wrong reporting ≥0.5% of total owner’s company and is disclosed in public in the
                                                 equity.                                      form of announcement.
                                                 Major defect:                                   Major defect: The defect with direct
                                                 (1) Wrong reporting ≥0.2% but <0.5% of property loss amounting to RMB 1
                                                 total operating revenue;                        million to RMB10 million (included), or
                                                 (2) Wrong reporting ≥2% but <5% of total is penalized by governmental authority
Quantitative criteria                            profit;                                         of the country but has not resulted in

                                                 (3) Wrong reporting ≥0.2% but <0.5% of negative impact on the company.
                                                 total assets;                                   Minor defect: The defect with direct

                                                 (4) Wrong reporting ≥0.2% but <0.5% of property loss no more than RMB 1
                                                 total owner’s equity.                   million (included), or is penalized by
                                                                                                 governmental     authority   of     the
                                                 Minor defect:
                                                                                                 provincial-level or below but has not
                                                 (1) Wrong reporting < 0.2% of total
                                                                                                 resulted in negative impact on the
                                                 operating revenue;
                                                                                                 company.
                                                 (2) Wrong reporting<2% of total profit;
                                                 (3) Wrong reporting<0.2% of total assets;
                                                 (4) Wrong reporting<0.2% of total owner’s
                                                 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

We believe that the Company has maintained effective internal control on financial report in all significant respects according to the
Basic Rules for Enterprise Internal Control and relevant regulations on December 31, 2016.

                                                                    ~ 58 ~
Gujing Distillery         Original Chinese Spirits                                                        Annual Report 2016


Particulars about Audit Report on
                                       Disclosure
Internal Control

Disclosure date of the Audit Report
                                       04/28/2017
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?
□ 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




                                                               ~ 59 ~
Gujing Distillery       Original Chinese Spirits                                                              Annual Report 2016




                                          Section X Financial Report

I Audit Report
Type of audit opinion                                               Standard unqualified audit opinion

Date of signing audit report                                        April 26, 2017

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

Reference number of audit report                                    RuiHua Shen Zi [2017] No 48380010

Name of CPA                                                         Pan Xinhua, Zhang Xianfa


                                                          Audit Report
To the Shareholders of Anhui Gujing Distillery Co., Ltd.:
We have audited the attached financial statements of Anhui Gujing Distillery Co., Ltd. (“Gujing”), which comprise the consolidated
and the Company’s balance sheet as at December 31, 2016, the consolidated and the Company’s income statement, the consolidated
and the Company’s cash flow statement, the consolidated and the Company’s statement of changes in owners’ equity for the year
then ended, and the notes to financial statements.
I. Responsibilities of the management concerning the financial statements
The management of the Company is responsible for the preparation of these financial statements and fair presentation. These
responsibilities include:   (1) preparing financial statements according to the Accounting Standards for Business Enterprises and
make them a fair presentation; and (2) designing, implementing and maintaining internal control relevant to the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
II. Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in
accordance with the Chinese Certified Public Accountants' Auditing Standards. These standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amount and disclosures in the financial statements. The
procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
entity’s preparation of the consolidation financial statements and fair presentation in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.
An audit also includes evaluating the appropriateness of accounting policies used and reasonableness of accounting estimates made
by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
III. Opinion
In our opinion, the financial statements have been prepared in accordance with the requirements of the Enterprises Accounting
Standards promulgated by the People’s Republic of China in all material respects, and present fairly the consolidated operating
results of Anhui Gujing Distillery Co., Ltd. and its subsidiaries as at December 31, 2016 and consolidated operating results and cash
flow in 2016 as well as the operating results at December 31, 2016 and the operating results & cash flow in 2016 of Anhui Gujing
Distillery Co., Ltd..

                                                               ~ 60 ~
Gujing Distillery          Original Chinese Spirits                                           Annual Report 2016




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
                                                        December 31, 2016
                                                                                                              Unit: RMB

                    Item                               Closing balance                    Opening balance

Current Assets:

  Monetary funds                                                     532,909,026.07                  1,087,319,158.77

  Settlement reserves

  Intra-group lendings

  Financial assets measured at fair
value of which changes are recorded in                                      429,190.68                       322,223.28
current profits and losses

  Derivative financial assets

  Notes receivable                                                   534,386,586.59                    539,442,903.31

  Accounts receivable                                                    12,287,262.88                      4,948,074.84

  Accounts paid in advance                                               74,784,221.59                  80,373,083.59

  Premiums receivable

  Reinsurance premiums receivable

  Receivable        reinsurance    contract
reserves

  Interest receivable                                                      2,843,178.08                             0.00

  Dividend receivable

  Other accounts receivable                                              10,765,397.03                      8,617,955.68

  Financial assets purchased under
agreements to resell

  Inventories                                                      1,786,433,036.50                  1,396,712,050.87

  Assets held for sale

  Non-current assets due within 1 year

  Other current assets                                             1,750,278,829.24                  1,500,970,860.37

Total current assets                                                4,705,116,728.66                 4,618,706,310.71

Non-current assets:

  Loans by mandate and advances


                                                            ~ 61 ~
Gujing Distillery         Original Chinese Spirits                           Annual Report 2016

granted

  Available-for-sale financial assets                     404,029,552.27             313,881,190.47

  Held-to-maturity investments

  Long-term accounts receivable

  Long-term equity investment

  Investing real estate                                       8,402,944.74             9,715,451.89

  Fixed assets                                           1,865,691,585.06           1,691,028,804.32

  Construction in progress                                 71,771,324.26              62,562,971.78

  Engineering materials

  Disposal of fixed assets

  Production biological assets

  Oil-gas assets

  Intangible assets                                       700,684,529.08             298,372,239.96

  R&D expense

  Goodwill                                                478,283,495.29                          0.00

  Long-term deferred expenses                              93,588,397.35             127,815,668.37

  Deferred income tax assets                              107,654,597.15              61,065,003.63

  Other non-current assets                                300,982,000.00                          0.00

Total of non-current assets                              4,031,088,425.20           2,564,441,330.42

Total assets                                             8,736,205,153.86           7,183,147,641.13

Current liabilities:

  Short-term borrowings

  Borrowings from Central Bank

  Customer bank deposits and due to
banks and other financial institutions

  Intra-group borrowings

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

  Derivative financial liabilities

  Notes payable                                            11,298,583.00              93,768,583.00

  Accounts payable                                        340,972,366.21             378,187,452.07

  Accounts received in advance                            623,990,614.91             608,565,152.50

  Financial assets sold for repurchase

  Handling charges and commissions

                                                     ~ 62 ~
Gujing Distillery           Original Chinese Spirits                          Annual Report 2016

payable

  Payroll payable                                           288,027,136.09            253,901,700.72

  Tax payable                                               486,959,651.85            358,087,353.80

  Interest payable

  Dividend payable

  Other accounts payable                                    641,472,271.53            452,193,188.94

  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                                 241,487,812.54            138,135,604.82

Total current liabilities                                  2,634,208,436.13          2,282,839,035.85

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                                            43,978,795.45             46,123,314.33

  Deferred income tax liabilities                           117,287,002.52             20,463,660.87

  Other non-current liabilities

Total non-current liabilities                               161,265,797.97             66,586,975.20

Total liabilities                                          2,795,474,234.10          2,349,426,011.05

Owners’ equity:

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

  Other equity instruments

       Of which:     preferred shares

                                                       ~ 63 ~
Gujing Distillery          Original Chinese Spirits                                                  Annual Report 2016


                  Perpetual bonds

  Capital reserves                                                1,295,405,592.25                          1,294,938,493.19

  Less:    Treasury stock

  Other comprehensive income                                            36,144,477.95                          54,481,886.51

  Specific reserves

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

  Provisions for general risks

  Retained profits                                                3,503,069,053.49                           2,723,798,990.11

Total equity attributable to owners of
                                                                  5,595,121,383.96                          4,833,721,630.08
the Company

  Minority interests                                               345,609,535.80                                           0.00

Total owners’ equity                                             5,940,730,919.76                          4,833,721,630.08

Total liabilities and owners’ equity                             8,736,205,153.86                          7,183,147,641.13


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                                                   225,792,686.26                             548,650,832.84

  Financial assets measured at fair
value of which changes are recorded in                                    429,190.68                                 322,223.28
current profits and losses

  Derivative financial assets

  Notes receivable                                                 449,016,169.03                             288,101,188.68

  Accounts receivable                                                    6,377,346.00                               4,350,437.24

  Accounts paid in advance                                              11,815,064.19                               5,876,678.41

  Interest receivable

  Dividend receivable

  Other accounts receivable                                        105,514,906.34                             107,625,019.85

  Inventories                                                     1,549,397,565.11                           1,374,311,894.88

  Assets held for sale

  Non-current assets due within 1 year

                                                          ~ 64 ~
Gujing Distillery         Original Chinese Spirits                          Annual Report 2016


  Other current assets                                   1,750,000,000.00          1,500,000,000.00

Total current assets                                     4,098,342,927.61          3,829,238,275.18

Non-current assets:

  Available-for-sale financial assets                     403,547,952.27            313,881,190.47

  Held-to-maturity investments

  Long-term accounts receivable

  Long-term equity investment                            1,155,089,408.32           354,089,408.32

  Investing real estate                                    30,846,736.84              9,715,451.89

  Fixed assets                                           1,375,089,823.91          1,471,584,047.66

  Construction in progress                                 68,022,146.66             62,355,022.07

  Engineering materials

  Disposal of fixed assets

  Production biological assets

  Oil-gas assets

  Intangible assets                                       186,370,081.28            187,468,810.92

  R&D expense

  Goodwill

  Long-term deferred expenses                              92,695,064.02            127,815,668.37

  Deferred income tax assets                               36,366,330.90             42,154,627.44

  Other non-current assets                                    982,000.00                         0.00

Total of non-current assets                              3,349,009,544.20          2,569,064,227.14

Total assets                                             7,447,352,471.81          6,398,302,502.32

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                                                28,583.00                828,583.00

  Accounts payable                                        307,649,868.02            371,636,772.06

  Accounts received in advance                           1,003,521,896.65           659,484,624.07

  Payroll payable                                          90,742,908.53             88,513,920.05

  Tax payable                                             320,037,309.94            237,459,964.06

  Interest payable



                                                     ~ 65 ~
Gujing Distillery           Original Chinese Spirits                          Annual Report 2016


  Dividend payable

  Other accounts payable                                    282,570,379.80            268,035,753.60

  Liabilities held for sale

  Non-current liabilities due within 1
year

  Other current liabilities                                  37,589,367.67             61,660,494.13

Total current liabilities                                  2,042,140,313.61          1,687,620,110.97

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                                            42,745,851.74             46,123,314.33

  Deferred income tax liabilities                            15,385,289.84             20,463,660.87

  Other non-current liabilities

Total non-current liabilities                                58,131,141.58             66,586,975.20

Total liabilities                                          2,100,271,455.19          1,754,207,086.17

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                                 37,315,555.64             54,481,886.51

  Specific reserves

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

  Retained profits                                         3,307,203,353.63          2,587,051,422.29

Total owners’ equity                                      5,347,081,016.62          4,644,095,416.15

Total liabilities and owners’ equity                      7,447,352,471.81          6,398,302,502.32


                                                       ~ 66 ~
Gujing Distillery             Original Chinese Spirits                             Annual Report 2016

3. Consolidated income statement

                                                                                                Unit: RMB

                       Item                              2016                      2015

I. Total operating revenues                                     6,017,143,660.56          5,253,411,479.40

Including:     Sales income                                     6,017,143,660.56          5,253,411,479.40

          Interest income

          Premium income

          Handling charge and commission
income

II. Total operating costs                                       4,997,581,551.14          4,392,354,606.21

Including:     Cost of sales                                    1,523,585,779.51          1,509,536,099.28

          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                            955,988,399.10            790,205,631.87

          Selling and distribution expenses                     1,980,127,377.89          1,557,800,618.96

          Administrative expenses                                556,513,607.99            543,822,606.51

          Financial expenses                                      -30,253,967.33            -20,334,406.40

          Asset impairment loss                                   11,620,353.98             11,324,055.99

Add:      Gain/(loss) from change in fair
                                                                       -5,598.43                42,203.41
value (“-” means loss)

        Gain/(loss) from investment (“-”
                                                                  97,837,461.25             69,256,030.30
means loss)

        Including:     share of profits in
associates and joint ventures

        Foreign exchange gains (“-” means
loss)

III. Business profit (“-” means loss)                         1,117,393,972.24           930,355,106.90

        Add:   non-operating income                               41,914,946.46             44,974,004.61


                                                         ~ 67 ~
Gujing Distillery            Original Chinese Spirits                           Annual Report 2016


         Including: Gains on disposal of
                                                                  420,864.59                 68,505.82
non-current assets

     Less:      non-operating expense                            8,554,634.67             9,059,670.65

         Including:       Losses on disposal of
                                                                 6,740,484.31             1,059,201.01
non-current assets

IV. Total profit (“-” means loss)                         1,150,754,284.03            966,269,440.86

     Less:      Income tax expense                           300,436,186.51             250,691,071.18

V. Net profit (“-” means loss)                             850,318,097.52             715,578,369.68

     Net profit attributable to owners of
                                                             829,630,063.38             715,578,369.68
the Company

     Minority shareholders’ income                           20,688,034.14                          0.00

VI. After-tax net amount of other
                                                              -18,337,408.56             37,812,282.44
comprehensive incomes

     After-tax     net     amount     of other
comprehensive incomes attributable to                         -18,337,408.56             37,812,282.44
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                      -18,337,408.56             37,812,282.44
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              -18,337,408.56             37,812,282.44
financial assets

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


                                                        ~ 68 ~
Gujing Distillery              Original Chinese Spirits                                             Annual Report 2016

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                                  831,980,688.96                             753,390,652.12

     Attributable        to    owners    of   the
                                                                   811,292,654.82                            753,390,652.12
Company

     Attributable              to       minority
                                                                    20,688,034.14                                          0.00
shareholders

VIII. Earnings per share

     (I) Basic earnings per share                                            1.65                                          1.42

     (II) Diluted earnings per share                                         1.65                                          1.42


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


Chief of the accounting division: Zhu Jiafeng


4. Income statement of the Company

                                                                                                                     Unit: RMB

                    Item                                  2016                                      2015

I. Total sales                                                   3,308,399,250.03                          3,007,068,150.18

  Less:    cost of sales                                         1,436,794,457.51                          1,536,318,251.80

     Business taxes and surcharges                                857,620,971.74                             748,278,391.57

     Distribution expenses                                        271,599,513.92                             194,497,701.34

     Administrative expenses                                      390,774,681.63                             393,964,851.14

     Financial costs                                               -12,139,559.51                             -19,235,711.99

     Impairment loss                                               13,749,391.73                                   8,555,178.79

  Add:     gain/(loss) from change in fair
                                                                        -5,598.43                                    53,028.41
value (“-” means loss)

     Gain/(loss) from investment (“-”
                                                                  507,037,614.00                             574,517,573.20
means loss)

     Including:                income     from

                                                          ~ 69 ~
Gujing Distillery           Original Chinese Spirits                           Annual Report 2016

investment on associates and joint
ventures

II. Business profit (“-” means loss)                      857,031,808.58             719,260,089.14

  Add:     non-operating income                              35,019,767.09              32,153,857.76

     Including:      Gains on disposal of
non-current assets

  Less:    non-operating expense                                6,151,343.05             6,944,814.78

     Including:      Losses on disposal of
                                                                6,135,718.34               494,461.74
non-current assets

III. Total profit (“-” means loss)                        885,900,232.62             744,469,132.12

  Less:    Income tax expense                               115,388,301.28              46,777,999.81

IV. Net profit (“-” means loss)                           770,511,931.34             697,691,132.31

V. After-tax net amount of other
                                                            -17,166,330.87              37,812,282.44
comprehensive incomes

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

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

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

  (II) Other comprehensive incomes
that will be reclassified into gains and                    -17,166,330.87              37,812,282.44
losses

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

     2. Gains and losses on fair value
changes of available-for-sale financial                     -17,166,330.87              37,812,282.44
assets

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

     4. Effective hedging gains and

                                                       ~ 70 ~
Gujing Distillery             Original Chinese Spirits                             Annual Report 2016

losses on cash flows

       5.    Foreign-currency          financial
statement translation difference

       6. Other

VI. Total comprehensive incomes                                  753,345,600.47            735,503,414.75

VII. Earnings per share

    (I) Basic earnings per share                                            1.53                        1.39

    (II) Diluted earnings per share                                         1.53                        1.39


5. Consolidated cash flow statement

                                                                                                Unit: RMB

                       Item                              2016                      2015

I. Cash flows from operating activities:

  Cash       received         from    sale     of
                                                                7,031,888,740.85          6,316,130,596.88
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


                                                         ~ 71 ~
Gujing Distillery          Original Chinese Spirits                           Annual Report 2016


  Tax refunds received                                      16,218,721.25              13,999,000.00

  Other cash received relating to
                                                           345,789,490.57             175,581,055.15
operating activities

Subtotal of cash inflows from operating
                                                          7,393,896,952.67           6,505,710,652.03
activities

  Cash paid for goods and services                        1,761,253,852.47           1,758,283,730.78

  Net increase of customer lendings
and advances

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

  Cash for paying claims of the original
insurance contracts

  Cash for paying interest, handling
charges and commissions

  Cash for paying policy dividends

  Cash paid to and for employees                          1,130,548,519.54           1,000,365,212.81

  Various taxes paid                                      2,041,224,545.61           1,872,063,119.51

  Other cash payment relating to
                                                          1,277,638,226.99           1,084,889,053.92
operating activities

Subtotal     of    cash    outflows       from
                                                          6,210,665,144.61           5,715,601,117.02
operating activities

Net cash flows from operating activities                  1,183,231,808.06            790,109,535.01

II. Cash flows from investing activities:

  Cash received from withdrawal of
                                                          3,325,502,933.15           2,205,995,542.82
investments

  Cash       received     from   return    on
                                                            78,724,727.77              63,870,974.91
investments

  Net cash received from disposal of
fixed assets, intangible assets and other                      4,761,778.98                87,371.84
long-term assets

  Net cash received from disposal of
subsidiaries or other business units

     Other cash received relating to
                                                               2,481,400.00             9,384,300.00
investing activities

Subtotal of cash inflows from investing
                                                          3,411,470,839.90           2,279,338,189.57
activities

  Cash paid to acquire fixed assets,                       172,716,601.62             237,769,057.80

                                                      ~ 72 ~
Gujing Distillery             Original Chinese Spirits                           Annual Report 2016

intangible assets and other long-term
assets

   Cash paid for investment                                  3,973,944,183.44           2,372,945,376.50

   Net increase of pledged loans

   Net cash paid to acquire subsidiaries
                                                              805,830,032.45                          0.00
and other business units

   Other cash payments relating to
investing activities

Subtotal        of     cash   outflows     from
                                                             4,952,490,817.51           2,610,714,434.30
investing activities

Net cash flows from investing activities                    -1,541,019,977.61            -331,376,244.73

III.     Cash        Flows    from     Financing
Activities:

       Cash      received       from      capital
contributions

       Including:       Cash received from
minority shareholder investments by
subsidiaries

       Cash received from borrowings                              1,000,000.00                        0.00

       Cash received from issuance of
bonds

       Other cash received relating to
financing activities

Subtotal of cash inflows from financing
                                                                  1,000,000.00                        0.00
activities

       Repayment of borrowings                                    1,000,000.00                        0.00

       Cash paid for interest expenses and
                                                               50,360,000.00             100,720,000.00
distribution of dividends or profit

        Including:       dividends or profit
paid      by     subsidiaries    to     minority
shareholders

        Other cash payments relating to
                                                              104,376,537.45                          0.00
financing activities

Sub-total       of     cash    outflows    from
                                                              155,736,537.45             100,720,000.00
financing activities

Net cash flows from financing activities                     -154,736,537.45             -100,720,000.00

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


                                                         ~ 73 ~
Gujing Distillery          Original Chinese Spirits                             Annual Report 2016


V. Net increase in cash and cash
                                                             -512,524,707.00            358,013,290.28
equivalents

     Add:      Opening balance of cash
                                                             1,040,373,733.07           682,360,442.79
and cash equivalents

VI. Closing balance of cash and cash
                                                              527,849,026.07           1,040,373,733.07
equivalents


6. Cash flow statement of the Company

                                                                                             Unit: RMB

                    Item                              2016                      2015

I. Cash flows from operating activities:

  Cash       received      from    sale      of
                                                             4,048,263,462.34          3,095,958,832.08
commodities and rendering of service

  Tax refunds received                                         15,009,167.60             13,999,000.00

  Other cash received relating to
                                                               44,493,823.06             83,789,843.81
operating activities

Subtotal of cash inflows from operating
                                                             4,107,766,453.00          3,193,747,675.89
activities

  Cash paid for goods and services                           1,629,164,465.68          1,750,534,302.48

  Cash paid to and for employees                              491,016,401.44            439,242,793.90

  Various taxes paid                                         1,345,928,486.58          1,069,706,330.70

  Other cash payment relating to
                                                               89,125,570.51             58,446,169.89
operating activities

Subtotal     of    cash    outflows        from
                                                             3,555,234,924.21          3,317,929,596.97
operating activities

Net cash flows from operating activities                      552,531,528.79            -124,181,921.08

II. Cash flows from investing activities:

  Cash received from retraction of
                                                             3,271,955,614.05          2,152,485,489.19
investments

  Cash       received     from    return    on
                                                              492,653,360.82            569,743,711.19
investments

  Net cash received from disposal of
fixed assets, intangible assets and other                       3,995,766.04
long-term assets

  Net cash received from disposal of
subsidiaries or other business units

  Other cash received relating to                               1,167,400.00               9,384,300.00

                                                      ~ 74 ~
Gujing Distillery             Original Chinese Spirits                          Annual Report 2016

investing activities

Subtotal of cash inflows from investing
                                                             3,769,772,140.91          2,731,613,500.38
activities

   Cash paid to acquire fixed assets,
intangible assets and other long-term                         157,553,414.54            219,472,454.26
assets

   Cash paid for investment                                  3,621,248,401.74          2,323,189,828.98

   Net cash paid to acquire subsidiaries
                                                              816,000,000.00                         0.00
and other business units

   Other cash payments relating to
investing activities

Subtotal        of     cash   outflows     from
                                                             4,594,801,816.28          2,542,662,283.24
investing activities

Net cash flows from investing activities                     -825,029,675.37            188,951,217.14

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
                                                               50,360,000.00            100,720,000.00
distribution of dividends or profit

        Other cash payments relating to
financing activities

Sub-total       of     cash    outflows    from
                                                               50,360,000.00            100,720,000.00
financing activities

Net cash flows from financing activities                       -50,360,000.00           -100,720,000.00

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

V. Net increase in cash and cash
                                                             -322,858,146.58             -35,950,703.94
equivalents

        Add:     Opening balance of cash                      548,650,832.84            584,601,536.78

                                                         ~ 75 ~
Gujing Distillery      Original Chinese Spirits                         Annual Report 2016

and cash equivalents

VI. Closing balance of cash and cash
                                                       225,792,686.26           548,650,832.84
equivalents




                                                  ~ 76 ~
Gujing Distillery            Original Chinese Spirits                                                            Annual Report 2016



7. Consolidated statement of changes in owners’ equity

2016
                                                                                                                                                                                             Unit: RMB

                                                                                                                 2016

                                                                           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
                            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
of 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            54,481,886.51              256,902,260.27              2,723,798,990.11               4,833,721,630.08
beginning of the year

III.            Increase/
decrease        in   the                                                      467,099.06            -18,337,408.56                                           779,270,063.38 345,609,535.80 1,107,009,289.68
period (“-” means

                                                                                                    ~ 77 ~
Gujing Distillery          Original Chinese Spirits                Annual Report 2016

decrease)

  (I)              Total
comprehensive                                         -18,337,408.56                    829,630,063.38 20,688,034.14   831,980,688.96
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
                                                                                        -50,360,000.00                 -50,360,000.00
distribution

        1.
Appropriations        to
surplus reserves

        2.
Appropriations        to


                                                      ~ 78 ~
Gujing Distillery           Original Chinese Spirits            Annual Report 2016

general              risk
provisions

     3.
Appropriations         to
                                                                                     -50,360,000.00   -50,360,000.00
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


                                                       ~ 79 ~
Gujing Distillery         Original Chinese Spirits                                                            Annual Report 2016

period

(VI) Other                                                                   467,099.06                                                                                   324,921,501.66      325,388,600.72

IV. Closing balance      503,600,000.00                              1,295,405,592.25             36,144,477.95            256,902,260.27              3,503,069,053.49 345,609,535.80 5,940,730,919.76

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)



                                                                                               ~ 80 ~
Gujing Distillery         Original Chinese Spirits             Annual Report 2016

  (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’
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

                                                     ~ 81 ~
Gujing Distillery           Original Chinese Spirits                                                          Annual Report 2016

       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


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

2016
                                                                                                                                                                                    Unit: RMB

                                                                                                                 2016

                                                       Other equity instruments                          Less:           Other
              Item                                                                                                                  Specific                                      Total owners’
                                   Share capital                                    Capital reserve     treasury    comprehensive              Surplus reserve Retained profit
                                                   Preferred Perpetual     Other                                                    reserve                                           equity
                                                                                                         stock          incomes

                                                                                              ~ 82 ~
Gujing Distillery           Original Chinese Spirits                                   Annual Report 2016

                                                   shares   bonds

I. Balance at the end of
                                  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
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        54,481,886.51   251,800,000.00 2,587,051,422.29 4,644,095,416.15
beginning of the year

III. Increase/ decrease in
the period (“-” means                                                                    -17,166,330.87                   720,151,931.34   702,985,600.47
decrease)

      (I) Total comprehensive
                                                                                           -17,166,330.87                   770,511,931.34   753,345,600.47
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

                                                                              ~ 83 ~
Gujing Distillery         Original Chinese Spirits            Annual Report 2016

       4. Other

  (III) Profit distribution                                                        -50,360,000.00   -50,360,000.00

       1. Appropriations to
surplus reserves

       2. Appropriations to
                                                                                   -50,360,000.00   -50,360,000.00
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

(V) Specific reserve

       1. Withdrawn for the
period

       2. Used in the period

(VI) Other


                                                     ~ 84 ~
Gujing Distillery           Original Chinese Spirits                                                           Annual Report 2016

IV. Closing balance               503,600,000.00                                   1,247,162,107.35                 37,315,555.64              251,800,000.00 3,307,203,353.63 5,347,081,016.62

2015
                                                                                                                                                                                   Unit: RMB

                                                                                                                 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

                                                                                              ~ 85 ~
Gujing Distillery         Original Chinese Spirits            Annual Report 2016

       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)

       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

                                                     ~ 86 ~
Gujing Distillery       Original Chinese Spirits                       Annual Report 2016

     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




                                                              ~ 87 ~
Gujing Distillery          Original Chinese Spirits                                                                     Annual Report 2016


                                               Anhui Gujing Distillery Co., Ltd.
                                              Notes to the Financial Statements
                                                For the Year Ended 31 December 2016
                                (All amounts are expressed, unless otherwise stated, in Renminbi (CNY).)



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.


                                                                     ~ 88 ~
Gujing Distillery          Original Chinese Spirits                                                                    Annual Report 2016


On 24 July 2009, the Company issued the ,   the

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

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

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

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

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

32,500,549.73, the actual funds raised net amounting to CNY 1,227,499,450.27. The above funds have been reviewed by Reanda Certified Public

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

increased to CNY 251.8 million.

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

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

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

Up to 31 December 2016, the accumulated total amount of issued capital was 503.6 million shares, see Note 6.27.

The company registered in Gujing town, Bozhou city, Anhui province.

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 26 April, 2017. According to the articles of association, the financial

statements will be submitted to the shareholders meeting for consideration.

The combination scope includes total 21 subsidiaries in 2016, please see Note 8 “Interest in other entities” for details. The combination scope

increase 10 subsidiary than prior year and please see Note 7 “Changes of scope of consolidated 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.




                                                                      ~ 89 ~
Gujing Distillery            Original Chinese Spirits                                                                     Annual Report 2016


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

2016. 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: Signaficant accounting policies 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

the company and subsidiaries, and provisions of the relevant accounting standard for business enterprises, please see Note 4.23 “Revenue” for

details. The description of significant account judgment and estimates made by management please see Note 4.28 “Significant accounting

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.

                                                                         ~ 90 ~
Gujing Distillery           Original Chinese Spirits                                                                            Annual Report 2016


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

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

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

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

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

4.4.2 Business combination involving entities not under common control

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

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

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

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

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

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

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

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

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

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

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

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

consideration need to be adjusted, goodwill can be adjusted.

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

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

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


                                                                         ~ 91 ~
Gujing Distillery          Original Chinese Spirits                                                                       Annual Report 2016


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

according to “The notice of the Ministry of Finance on the issuance of Accounting Standards Interpretation No. 5” (CaiKuai [2012] No. 19) and

Article 51 of “Accounting Standards for Business Enterprises No.33 - Consolidated Financial Statements” on the “package deal” criterion (see Note

4.5.2), to judge the multiple exchange transactions whether they are the "package deal". If it belong to the “package deal” in reference to the

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

“package deal” to distinguish the individual financial statements and the consolidated financial statements related to the accounting treatment:

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

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

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

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

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

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

In the combination financial statements, the equity interest in the acquiree previously held before the acquisition date re-assessed at the fair value

at the acquisition date, with any difference between its fair value and its carrying amount is recorded as investment income. The previously-held

equity interest in the acquiree involved in other comprehensive income and other comprehensive income associated with the purchase of the

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

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

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

4.5 Preparation of the consolidated financial statements

4.5.1 The scope of consolidation

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

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

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

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


                                                                       ~ 92 ~
Gujing Distillery          Original Chinese Spirits                                                                          Annual Report 2016


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

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

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

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

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

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

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

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

reconciliated on the basis of the fair value of identifiable net assets at the date of acquisition. Intra-Group balances and transactions, and any

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

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

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

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

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

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

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

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

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

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

when control is lost. Other comprehensive income related to the former subsidiary's equity investment, using the foundation and the acquiree

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

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

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

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

                                                                      ~ 93 ~
Gujing Distillery            Original Chinese Spirits                                                                            Annual Report 2016


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.

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

                                                                          ~ 94 ~
Gujing Distillery            Original Chinese Spirits                                                                      Annual Report 2016


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

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

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

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

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

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

4.9 Financial instruments

4.9.1 Determination of financial assets and liabilities’ fair value

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

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

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

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

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

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

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

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

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

4.9.2 Classification, recognition and measurement of financial assets

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

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

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

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

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:

                                                                        ~ 95 ~
Gujing Distillery           Original Chinese Spirits                                                                          Annual Report 2016


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

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

                                                                         ~ 96 ~
Gujing Distillery           Original Chinese Spirits                                                                       Annual Report 2016


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.

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

                                                                      ~ 97 ~
Gujing Distillery            Original Chinese Spirits                                                                            Annual Report 2016


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

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

                                                                         ~ 98 ~
Gujing Distillery             Original Chinese Spirits                                                                         Annual Report 2016


liability at fair value though profit or loss, and the treated as a standalone derivative if (a) the economic characteristics and risks of the embedded

derivative are not closely related to the economic characteristics and risks of the host contract; and (b) a separate instrument with the same terms

as the embedded derivative would meet the definition of a derivative. If the Company is unable to measure the embedded derivative separately

either at acquisition or at a subsequent balance sheet date, it designates the entire hybrid instrument as a financial asset or financial liability at fair

value through profit or loss.

4.9.8 Offsetting financial assets and financial liabilities

When the Company has a legal right that is currently enforceable to set off the recognized financial assets and financial liabilities, and intends either

to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously, a financial asset and a financial liability shall

be offset and the net amount is presented in the balance sheet. Except for the above circumstances, financial assets and financial liabilities shall be

presented separately in the balance sheet and shall not be offset.

4.9.9 Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. The

consideration received from issuing equity instruments, net of transaction costs, are added to shareholders’ equity. All types of distribution

(excluding stock dividends) made by the Company to holders of equity instruments are deducted from shareholders’ equity. The 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

                                                                         ~ 99 ~
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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

a. Impairment allowance measured by age analysis

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

Less than 1 year (inclusive, same applies to the

following)

Including: 1 to 6 months                                                                            1.00                                                1.00

             7 to 12 months                                                                         5.00                                                5.00

1 to 2 years                                                                                       10.00                                               10.00

2 to 3 years                                                                                       50.00                                               50.00

Over 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


                                                                      ~ 100 ~
Gujing Distillery           Original Chinese Spirits                                                                          Annual Report 2016


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.

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


                                                                       ~ 101 ~
Gujing Distillery            Original Chinese Spirits                                                                      Annual Report 2016


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

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


                                                                         ~ 102 ~
Gujing Distillery           Original Chinese Spirits                                                                     Annual Report 2016


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.

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


                                                                     ~ 103 ~
Gujing Distillery           Original Chinese Spirits                                                                           Annual Report 2016


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.

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.

                                                                       ~ 104 ~
Gujing Distillery           Original Chinese Spirits                                                                       Annual Report 2016


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

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

                                                                      ~ 105 ~
Gujing Distillery           Original Chinese Spirits                                                                    Annual Report 2016


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.

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
                                                                    ~ 106 ~
Gujing Distillery           Original Chinese Spirits                                                                        Annual Report 2016


recognition of the classification, useful life and estimated residual rate are as follows:

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

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

 Machineries                                                                  5.00-10.00                       3.00-5.00                    9.50-19.40

 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

Impairm