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个股公告正文

古井贡B:2017年年度报告(英文版)

日期:2018-04-28附件下载

ANHUI GUJING DISTILLERY COMPANY LIMITED


           ANNUAL REPORT 2017




               April 2018
Gujing     Aged Original Spirits                                                       Annual Report 2017




                                       Part I Important Notes


         The Board of Directors (or the “Board”), the Supervisory Board as well as the
         Directors, Supervisors and senior management 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
         misrepresentations, misleading statements or material omissions in this Report.
         Liang Jinhui, the Company’s legal representative, Ye Changqing, the Company’s
         Chief Accountant, and Zhu Jiafeng, head of the Company’s financial department
         (equivalent to financial manager) hereby guarantee that the Financial Statements
         carried in this Report are factual, accurate and complete.
         All the Company’s Directors have 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 absolute promises of the Company to investors.
         Investors, among others, shall be sufficiently aware of the risk and shall differentiate
         between plans/forecasts and promises. Again, investors are kindly reminded to pay
         attention to possible investment risks.
         The Board has considered and approved the following dividend payout proposal for
         common shareholders for the Reporting Period: based on the Company’s total shares
         on December 31, 2017, a cash dividend of RMB10.00 (tax inclusive) per 10 shares
         should be distributed to all the common shareholders, with no share dividend
         converted either from retained earnings or from capital reserves.
         This Report has 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   Aged Original Spirits                                                       Annual Report 2017




                       Contents


                   Part I Important Notes, Contents and Definitions             2

                   Part II Company Profile and Key Financial Information        5

                   Part III Business Summary                                    9

                   Part IV Company Performance Discussion and Analysis          10

                   Part V Significant Events                                    32

                   Part VI Share Changes and Shareholder Information            44

                   Part VII Preferred Shares                                    50

                   Part VIII Directors, Supervisors, Senior Management and Staff 51

                   Part IX Corporate Governance                                 60

                   Part X Corporate Bonds                                       67

                   Part XI Financial Statements                                 68
                   Part XII Documents Available for Reference                   204




                                                  ~3~
Gujing         Aged Original Spirits                                                                   Annual Report 2017




                                                        Definitions




                        Term                                                        Definition

                                                 Anhui Gujing Distillery Company Limited inclusive of its consolidated
The “Company”, “ Gu Jing” or “we”
                                                 subsidiaries, except where the context otherwise requires

                                                 Anhui Gujing Distillery Company Limited exclusive of subsidiaries, except
Parent, Parent Company
                                                 where the context otherwise requires

Gujing Group                                     Anhui Gujing Group Co., Ltd.

Yellow Crane Tower                               Wuhan Pride Yellow Crane Tower Distillery Co., Ltd.

The “Reporting Period” or “Current Period”   The period from January 1, 2017 to December 31, 2017

RMB, RMB’0,000                                  In RMB yuan, in RMB ten thousand yuan




                                                          ~4~
Gujing           Aged Original Spirits                                                                        Annual Report 2017



                  Part II Company Profile and Key Financial Information

I Corporate Information

Stock name                               Gujing Distillery, Gujing Distillery B

Stock symbol                             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 address                            gjzqb@gujing.com.cn


II Contact Information

                                                           Board Secretary                          Securities Representative

Name                                            Ye Changqing                              Mei Jia

                                                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

Email address                                   gjzqb@gujing.com.cn                       gjzqb@gujing.com.cn


III Media for 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 CSRC for publication of this        http://www.cninfo.com.cn
Report

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

                                                                 ~5~
Gujing         Aged Original Spirits                                                                             Annual Report 2017

IV Company Registered Information and Alterations

Unified social credit code                                  913400001519400083

Alterations to main business scope of the
                                                            No alterations
Company since going public (if any)

Alterations to controlling shareholder (if any)             No alterations


V Other Information

The independent certified public accounting (or “CPA”) 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               Zhang Liping, Zhang Xianfa

The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:

□ Applicable √ Not applicable

The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period:

□ Applicable √ Not applicable


VI Key Financial Information

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

                                                                                                2017-over-2016
                                                     2017                      2016                                        2015
                                                                                                   change

Sales revenue (RMB)                               6,968,325,048.55           6,017,143,660.56               15.81%       5,253,411,479.40

Net      income       attributable      to
shareholders of the listed company                1,148,740,644.93            829,630,063.38                38.46%        715,578,369.68
(RMB)

Net      income       attributable      to
shareholders of the listed company
                                                  1,069,457,368.70            792,534,098.54                34.94%        682,760,794.86
before    nonrecurring      gains     and
losses (RMB)

Net cash flows from operating
                                                    930,914,712.78           1,183,231,808.06            -21.32%          790,109,535.01
activities (RMB)

Basic      earnings       per        share
                                                               2.28                      1.65               38.18%                    1.42
(RMB/share)



                                                                      ~6~
Gujing            Aged Original Spirits                                                                     Annual Report 2017


Diluted        earnings     per      share
                                                            2.28                  1.65                38.18%                     1.42
(RMB/share)

Weighted average return on equity
                                                         19.09%                15.88%                  3.21%                 15.91%
(%)

                                                                                         Change of December
                                             December 31, 2017     December 31, 2016        31, 2017 over       December 31, 2015
                                                                                         December 31, 2016

Total assets (RMB)                             10,152,862,119.05      8,736,205,153.86                16.22%       7,183,147,641.13

Equity attributable to shareholders
                                                6,459,078,378.38      5,595,121,383.96                15.44%       4,833,721,630.08
of the listed company (RMB)


VII Accounting Data Differences under Chinese Accounting Standards (CAS) and
International Financial Reporting Standards (IFRS) and Foreign Accounting Standards

1. Net Income and Equity Differences under CAS and IFRS

□ Applicable √ Not applicable

No such differences for the Reporting Period.


2. Net Income and Equity Differences under CAS and Foreign Accounting Standards

□ Applicable √ Not applicable

No such differences for the Reporting Period.


VIII Key Financial Information by Quarter

                                                                                                                         Unit: RMB

                                                    Q1                    Q2                     Q3                    Q4

Sales revenue                                   2,173,056,581.04      1,497,071,183.55       1,673,566,893.29      1,624,630,390.67

Net       income      attributable      to
                                                  407,764,742.43        141,125,149.22         248,593,418.78        351,257,334.50
shareholders of the listed company

Net       income      attributable      to
shareholders of the listed company
                                                  356,588,955.68        127,366,058.44         245,301,628.24        340,200,726.34
before       nonrecurring   gains     and
losses

Net cash flows from operating
                                                  648,773,393.57       -223,408,169.49         746,820,198.07       -241,270,709.37
activities

Indicate by tick mark whether any of the financial data in the table above or their summations differs materially from what have been
disclosed in the Company’s quarterly or semi-annual reports.
□ Yes √ No

                                                                   ~7~
Gujing         Aged Original Spirits                                                                        Annual Report 2017

IX Nonrecurring Gains and Losses

√ Applicable □ Not applicable
                                                                                                                            Unit: RMB

                      Item                             2017                 2016                  2015                   Note

Gains and losses on disposal of non-current
assets (inclusive of offset allowance for asset     -10,659,063.45         -6,319,619.72           -990,695.19
impairments)

Government subsidies charged to current
profit and loss (exclusive of government
subsidies given in the Company’s ordinary           34,257,968.39         25,336,275.56        19,931,320.03
course of business at fixed quotas or amounts
as per government’s uniform standards )

Gains and losses on changes in fair value of
trading financial assets and liabilities &
investment income from disposal of trading
financial    assets    and    liabilities   and      54,544,637.44         16,263,956.97          7,842,274.38
available-for-sale financial assets (exclusive
of effective portion of hedges that arise in the
Company’s ordinary course of business)

Reversed portion of impairment allowance
for accounts receivable which are tested                491,989.18                   0.00                  0.00
individually for impairment

Non-operating revenue and expense other
                                                     27,140,455.30         14,343,655.95        16,973,709.12
than above

Less: Income tax effects                             25,366,619.70         12,229,198.63        10,939,033.52

        Non-controlling interests effects (net
                                                      1,126,090.93            299,105.29                   0.00
of tax)

Total                                                79,283,276.23         37,095,964.84        32,817,574.82              --

Explanation of why the Company classifies an item as a nonrecurring gain/loss according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Nonrecurring Gains and
Losses, or reclassifies any nonrecurring gain/loss item listed in the said explanatory announcement as a recurring gain/loss:
□ Applicable √ Not applicable
No such cases for the Reporting Period.




                                                               ~8~
Gujing        Aged Original Spirits                                                                        Annual Report 2017




                                        Part III Business Summary

I Main Business Scope of the Company in Reporting Period

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

No.
The Company primarily produces and markets distilled spirits.
As one of China’s traditional top eight liquor brands, the Company is the first distilled spirit listed company with both A and B
stocks. It is located in Bozhou City, Anhui Province in China, the hometown of historic figures Cao Cao and Hua Tuo, as well as one
of the world’s top 10 liquor-producing areas. No changes have occurred to the main business of the Company in the Reporting Period.
As the main product of the Company, the Gujing spirit originated as a “JiuYunChun Spirit”, together with its making secrets, being
presented as a hometown specialty by Cao Cao, a famous warlord in China’s history, to Emperor Han Xiandi (name: Liu Xie) in A.D.
196, and was continually presented to the royal house since then. With crystalline liquid, rich aroma, a fine flavor and a lingering
aftertaste, the Gujing spirit has helped the Company win four national distilled spirit golden awards, a golden award at the 13th SIAL
Paris, the title of China’s “Geographical Indication Product”, the recognition as a “Key Cultural Relics Site under the State
Protection”, the recognition with a “National Intangible Cultural Heritage Protection Project”, a Quality Award from the Anhui
provincial government, a title of “National Quality Benchmark”, among other honors.
In recent years, China’s top liquor companies have basically finished adjusting their teams, strategies, products, etc., and are
experiencing a continuous, strong recovery relying on their superior brand influence and product quality. The big picture for the
liquor industry has taken shape. Regional small and medium liquor producers are in face of a reshuffle, while regionally famous
liquor brands are busy dealing with competition from both larger and smaller fellow companies. As such, the liquor industry has
entered a new normal.


II Significant Changes in Major Assets

1. Significant Changes in Major Assets

Not applicable.


2. Major Assets Overseas

□ Applicable √ Not applicable


III Core Competitiveness Analysis

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




                                                              ~9~
Gujing           Aged Original Spirits                                                                        Annual Report 2017




                 Part IV Company Performance Discussion and Analysis

I Overview

In 2017, upholding the values of “Be Honest, Offer Quality Spirits, Be Stronger and Be Helpful to the Society”, the Company
effectively implemented its “Distilled Spirits 5.0” strategy and “Five-Star Operational Capability” strategy to improve its corporate
governance. As a result, its various operating objectives have been successfully fulfilled and its operational capability is improving.

For 2017, the Company recorded sales revenue of RMB6.968 billion, up 15.81% compared to 2016; pretax income of RMB1.612

billion, a 40.10% year-over-year increase; net income attributable to the Parent Company of RMB1.149 billion, rising 38.46% from

the year earlier; earnings per share of RMB2.28, 38.18% higher than 2016; and net operating cash flows of RMB931 million, going

down 21.32% on a year-over-year basis.
1. Put forward market construction steadily and improved brand influence continuously
(1) Focused on the development of main distilled spirits business and the operation of "dual brands", and plotted nationalized layout.
Continued to consolidate the advantages of Anhui market; continuously expanded Henan market, focused on the market potential of
the area; plotted strategic node market layout.
(2) Focused on consumption market, continuously deepened "Three-Connection Project", put priority on consumption cultivating,
ensured benign market development; continuously optimized sales organization structure, implemented decentralization to activate
development vitality, defined distinct responsibility and rights, conducted delayering, executed flat management, raised market
reaction rate.
(3) Further optimized the product system. Launched aged original spirits exploit pool, traditional 7 & 8 Chinese aged original spirits,
Gujing Distillery 1979/1963, 37℃ Bo JU (minus) etc.
(4) Continuously improved brand influence. Focused on various national media such as CCTV, established the brand resonance circle
of Hubei, Henan and Anhui. Continued to cooperate with CCTV Spring Festival Evening Gala, made an appointment at the World
Expo, and participated in international brand activities. The brand "Yellow Crane Tower" is awarded "China Famous Brand". The
brand value of Gujing Distillery reaches RMB 63.85 billion.
2. Adopted innovation management tool and method to improve scientific and technological innovation level
(1) Explored internal marketization, generated endogenous power. Brought forth new ideas in purchase, logistics and production
mode. Optimized organization structure and talent allocation, boosted the work shift among talented people at every level; focused on
"developing the enterprise via masters and experts", strengthened the cooperation with universities, research institutes and
professional training organizations, and built a multi-layer, multi-channel, multi-system and multi-mode employee studying and
training platform.
(2) Increased scientific and technological innovation, achieved striking scientific research achievements. The National Distilled
Spirits Health Research Institute, being the first professional Distilled Spirits health research institution in China, was established.
The whole life cycle quality control system was put into operation and thus a whole life cycle quality tracing chain is formed. 1
scientific research achievement was identified by China National Light Industry Council. 2 local standards of Anhui Province were
approved and released successfully. The place of origin of Gujing Spirits is Bozhou, one of the World's Top Ten Spirits Producing
Areas named by China Alcoholic Drinks Association. The Company won the title of "2017 National Intellectual Property
Demonstration Enterprise".
3. With the users as the center, enhanced informatization construction and application


                                                              ~ 10 ~
Gujing        Aged Original Spirits                                                                          Annual Report 2017

The Company has completed the informationalized basic architecture of the call center +CRM system, operation network, online
Gujing and business process management (BPM), built the unified guidance platform, connected online and offline system, guided
one-stop experiential consumption; built personalized experience center and experience service platform, and provided the users with
experience and service of one-stop application and consumption.
4. Strengthening the Party's leadership of ideology and deeply carrying out the institutionalization and normalization of “Two learn
one to do learning education”
(1) The Company has established the work aim of "establishing, revitalizing and stabilizing the enterprise through Party building",
the work policy of "undertaking Party building by centering around operation and promoting the development by undertaking Party
building" and the Party building strategy of "integration of Party governance", intensified the decision making about "three important
matters and one large matter", insisted on the principle of the Party assuming the responsibility for cadres' affairs, strengthened the
Party's management and supervision of cadres, stuck to the employment standard of "good character, good ability, diligence and
honesty", continuously deepened the reform of cadres selection and appointment system and carried forward the normalization of
strict management of cadres.
(2) The Company has steadily carried out the Party's mass line education practice activity, the educational activities themed with
“three-strict and three-honest”, the learning and education activities themed with "Two learn one to do learning education", the
educational activities themed with "stressing politics, emphasizing rules and setting an example" and thus greatly improved the work
style and mental outlook of all Party members and management personnel.
5. Pressure and weaknesses in the Company during the Reporting Period
(1) Pressure of the obviously intensified concentration ratio of the industry, increased development speed of leading distilled spirits
enterprises, aggravated competition situation, more significant differentiation.
(2) Insufficient brand pull-power and resources-driven pressure-fed growth.
(3) Insufficient endogenous power and poor talent structure of the enterprise.


II Analysis of Main Business

1. Summary

See relevant contents of “I Overview” in “Management Discussion and Analysis”, herein.


2. Revenue and Cost

(1) Breakdown of Sales Revenue

                                                                                                                           Unit: RMB

                                           2017                                          2016

                                               Percentage of total                           Percentage of total        Change
                           Sales revenue                                 Sales revenue
                                                sales revenue (%)                            sales revenue (%)

Total                      6,968,325,048.55                   100%       6,017,143,660.56                  100%                15.81%

By operating division

Manufacturing              6,968,325,048.55                100.00%       6,017,143,660.56               100.00%                15.81%

By product category


                                                              ~ 11 ~
Gujing           Aged Original Spirits                                                                        Annual Report 2017


Distilled spirits           6,822,053,599.85                  97.90%     5,876,233,721.58                   97.66%              16.10%

Hotel services                   84,238,705.54                1.21%           83,773,044.79                 1.39%                0.56%

Other                            62,032,743.16                0.89%           57,136,894.19                 0.95%                8.57%

By operating segment

North China                   330,003,884.22                  4.74%          345,881,952.52                 5.75%               -4.59%

Central China               6,270,100,660.83                  89.98%     5,285,863,801.21                   87.84%              18.62%

South China                   363,895,263.98                  5.22%          383,674,353.55                 6.38%               -5.16%

Overseas                          4,325,239.52                0.06%            1,723,553.28                 0.03%            150.95%


(2) Operating Division, Product Category or Operating Segment Contributing over 10% of Sales Revenue
or Income

√ Applicable □ Not applicable
                                                                                                                           Unit: RMB

                                                                                                                       YoY change in
                                                               Gross margin      YoY change in       YoY change in
                       Sales revenue       Cost of sales                                                               gross margin
                                                                percentage        sales revenue       cost of sales
                                                                                                                        percentage

By operating division

Manufacturing         6,968,325,048.55 1,642,588,056.43                76.43%            15.81%                7.81%             1.75%

By product category

Distilled spirits     6,822,053,599.85 1,585,856,065.56                76.75%            16.10%                9.26%             1.45%

Hotel services           84,238,705.54      35,725,602.03              57.59%                0.56%             0.56%             0.00%

Other                    62,032,743.16      21,006,388.84              66.14%                8.57%           -42.60%            30.18%

By operating segment

North China             330,003,884.22     127,739,068.90              61.29%             -4.59%               0.30%            -1.89%

Central China         6,270,100,660.83 1,379,229,267.57                78.00%            18.62%                9.07%             1.93%

South China             363,895,263.98     134,692,490.55              62.99%             -5.16%               2.61%            -2.80%

Overseas                  4,325,239.52           927,229.41            78.56%           150.95%              117.43%             3.31%

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

  Operating division              Item                 Unit                   2017                   2016              Change

Distilled spirits       Unit sales               Ton                             84,034.04             81,634.15                2.94%
brewage                 Output                   Ton                             81,512.19             83,766.51              -2.69%

                                                               ~ 12 ~
Gujing            Aged Original Spirits                                                                                   Annual Report 2017


                         Inventory               Ton                                    10,072.26                12,594.11              -20.02%

Reason for any over 30% YoY movements in the data above:
□ Applicable √ Not applicable


(4) Execution Progress of Major Signed Sales Contracts in Reporting Period

□ Applicable √ Not applicable


(5) Breakdown of Cost of Sales

By operating division
                                                                                                                                       Unit: RMB

                                                              2017                                       2016

    Operating                                                        Percentage of                              Percentage of
                              Item                                                                                                   Change
       division                               Cost of sales     total cost of sales      Cost of sales     total cost of sales
                                                                         (%)                                        (%)

Food
                      Direct materials    1,206,208,660.68                   73.43% 1,079,095,302.80                   70.83%             11.78%
manufacturing

Food
                      Direct labor cost       168,690,378.21                 10.27%      164,611,344.55                10.80%                2.48%
manufacturing

Food                  Manufacturing
                                              128,448,515.45                   7.82%     127,651,145.25                   8.38%              0.62%
manufacturing         expenses

Food
                      Fuels                    82,508,511.22                   5.02%      80,108,080.65                   5.26%              3.00%
manufacturing

By product category
                                                                                                                                       Unit: RMB

                                              2017                                              2016
 Operating division                                Percentage of total                               Percentage of total            Change
                              Cost of sales                                     Cost of sales
                                                     cost of sales (%)                                 cost of sales (%)

Distilled spirits             1,585,856,065.56                   96.50%         1,451,465,873.25                    95.27%                   9.26%

Hotel services                   35,725,602.03                       2.20%           35,526,066.93                    2.33%                  0.56%

Other                            21,006,388.84                       1.30%           36,593,839.33                    2.40%              -42.60%


(6) Change in Scope of Consolidated Financial Statements for Reporting Period

√ Yes □ No
The Company newly established subsuaiaries Anhui RunAnXinKe Testing Technology Co., Ltd, Suizhou Junhe Commercial and
Trading Co., Ltd, and Hubei Hechuyuan Commercial and Trading Co., Ltd; The Company liquidated its subsidiary Bozhou Gujing
Distillery Marketing Co., Ltd in the current year.


                                                                     ~ 13 ~
Gujing         Aged Original Spirits                                                                         Annual Report 2017

    (7) Major Change in Business Scope or Product or Service Range in Reporting Period

□ Applicable √ Not applicable


(8) Main Customers and Suppliers

Main customers:

Total sales to top five customers (RMB)                                                                               1,279,318,920.38

Total sales to top five customers as a percentage of the total
                                                                                                                                18.36%
sales for the Reporting Period (%)

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                                                  717,839,066.07                                       10.30%

2           Distributor B                                                  224,804,814.64                                         3.23%

3           Distributor C                                                  160,664,446.50                                         2.31%

4           Distributor D                                                   92,747,944.62                                         1.33%

5           Distributor E                                                   83,262,648.55                                         1.19%

Total                               --                                   1,279,318,920.38                                       18.36%


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

Total purchases from top five suppliers (RMB)                                                                          506,177,199.79

Total purchases from top five suppliers as a percentage of the
                                                                                                                               33.36%
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                                                  234,449,457.90                                       15.45%

2             Supplier B                                                   93,364,050.14                                        6.15%

3             Supplier C                                                   89,157,945.21                                        5.88%

4             Supplier D                                                   56,118,568.95                                        3.70%

                                                                ~ 14 ~
Gujing          Aged Original Spirits                                                                        Annual Report 2017


5            Supplier E                                                     33,087,177.59                                      2.18%

Total                               --                                     506,177,199.79                                     33.36%


Other information about the main suppliers
□ Applicable √ Not applicable


3. Expense

                                                                                                                            Unit: RMB

                                     2017                   2016                Change                 Reason for material change

Selling expenses                  2,170,081,383.54      1,980,127,377.89                9.59%

Administrative expenses            603,552,959.10         556,513,607.99                8.45%

Finance costs                       -25,927,285.82        -30,253,967.33             14.30%


4. Research and Development Expense

√ 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: The National Distilled Spirits Health Research Institute, being the first professionaldistilled spirits health
research institution in China, was established. The whole life cycle quality control system was put into operation and thus a whole
life cycle quality tracing chain was formed. 1 scientific research achievement was identified by China National Light Industry
Council. 2 local standards of Anhui Province were approved and released successfully. The place of origin of Gujing Spirits is
Bozhou, one of the World's Top Ten Spirits Producing Areas named by China Alcoholic Drinks Association. The Company won the
title of "2017 National Intellectual Property Demonstration Enterprise".
Information about R&D input

                                                2017                             2016                             Change

Number of R&D personnel                                        620                               586                           5.80%
R&D personnel as a percentage
                                                             7.76%                            10.14%                          -2.38%
in the total employees
R&D input (RMB)                                      220,278,527.92                 189,540,000.00                            16.22%
R&D input as a percentage in
                                                             3.16%                            3.15%                            0.01%
operating revenues
Capitalized R&D input (RMB)                                    0.00                             0.00                           0.00%
Capitalized R&D input as a
percentage in the total R&D                                  0.00%                            0.00%                            0.00%
input
Reasons for any significant YoY change in the percentage of the R&D input in the operating revenues
□ Applicable √ Not applicable
Reason for any sharp variation in the percentage of the capitalized R&D input and rationale
□ Applicable √ Not applicable




                                                              ~ 15 ~
Gujing            Aged Original Spirits                                                                    Annual Report 2017

5. Cash Flows

                                                                                                                         Unit: RMB

                  Item                           2017                            2016                           Change

Subtotal of cash generated by
                                                  7,472,916,271.43                7,393,896,952.67                          1.07%
operating activities
Subtotal     of    cash   used    in
                                                  6,542,001,558.65                6,210,665,144.61                          5.33%
operating activities

Net cash flows from operating
                                                    930,914,712.78                1,183,231,808.06                         -21.32%
activities

Subtotal of cash generated by
                                                  5,637,814,765.40                3,411,470,839.90                         65.26%
investing activities
Subtotal     of    cash   used    in
                                                  5,770,329,877.85                4,952,490,817.51                         16.51%
investing activities

Net cash flows from investing
                                                    -132,515,112.45              -1,541,019,977.61                         91.40%
activities

Subtotal of cash generated by
                                                                  0.00                  1,000,000.00                      -100.00%
financing activities
Subtotal     of    cash   used    in
                                                    302,160,000.00                  155,736,537.45                         94.02%
financing activities

Net cash flows from financing
                                                   -302,160,000.00                 -154,736,537.45                         -95.27%
activities

Net increase in cash and cash
                                                    496,239,600.33                 -512,524,707.00                        196.82%
equivalents

Explanation of why the data above varied significantly
√ Applicable □ Not applicable
(1) Net cash flows from investing activities in the Reporting Period was RMB-132,515,112.45, up by 91.40% as compared with last
year, mainly due to the increase of financial products due.
(2) Net cash flows from financing activities in the Reporting Period was RMB-302,160,000.00, down by 95.27% as compared with
last year, mainly due to the increase of dividend distribution.
Reason for any big difference between the net operating cash flow and the net profit for the Reporting Period
□ Applicable √ Not applicable


III Non-Core Business Analysis

□ Applicable √ Not applicable


IV Analysis of Assets and Liabilities

1. Material Change in Asset Composition

                                                                                                                         Unit: RMB

                                                                  ~ 16 ~
Gujing          Aged Original Spirits                                                                                   Annual Report 2017


                             December 31, 2017                   December 31, 2016
                                                                                                  Change in
                                           Percentage of                        Percentage of
                                                                                                  percentage       Reason for material change
                             Value          total assets         Value           total assets
                                                                                                     (%)
                                                (%)                                  (%)

Monetary funds          1,484,088,626.40         14.62%      532,909,026.07            6.10%          8.52%

Accounts
                           22,466,143.06          0.22%       12,287,262.88            0.14%          0.08%
receivable

Inventories             2,064,130,297.51         20.33% 1,786,433,036.50              20.45%         -0.12%

Investment
                            5,343,777.33          0.05%        8,402,944.74            0.10%         -0.05%
property

Fixed assets            1,792,254,178.56         17.65% 1,865,691,585.06              21.36%         -3.71%

Construction       in
                           54,496,798.56          0.54%       71,771,324.26            0.82%         -0.28%
progress


2. Assets and Liabilities Measured at Fair Value

√ Applicable □ Not applicable
                                                                                                                                      Unit: RMB

                                         Gains/losses on
                                                           Cumulative fair Provisions for
                                           fair value                                             Purchased in       Sold in the
                           Opening                         value changes impairment for                                               Closing
        Item                             changes in the                                           the Reporting      Reporting
                           balance                           charged to        the 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          429,190.68       -113,260.71                 0.00               0.00     1,715,322.51     5,714,103.00      99,800.76
loss     for    the
Reporting Period
(excluding
derivative
financial assets)

2.
Available-for-sale 404,029,552.27                     0.00 23,168,465.99                   0.00 227,763,351.49 188,750,268.72 517,086,347.91
financial assets

Subtotal           of
                        404,458,742.95      -113,260.71 23,168,465.99                      0.00 229,478,674.00 194,464,371.72 517,186,148.67
financial assets

Total      of   the 404,458,742.95          -113,260.71 23,168,465.99                      0.00 229,478,674.00 194,464,371.72 517,186,148.67


                                                                   ~ 17 ~
Gujing         Aged Original Spirits                                                                         Annual Report 2017

above

Financial
                              0.00            0.00             0.00            0.00               0.00             0.00           0.00
liabilities

Material change in the measurement attributes of the main assets in the Reporting Period:

□ Yes √ No


3. Restricted Asset Rights as of End of Reporting Period


                    Item                             Closing book value (RMB)                                 Reason

                                                                                            Structured deposits which cannot be taken
bank deposit                                                            450,000,000.00
                                                                                            in advance will expire in 3 months.

                                                                                            Drawing a note as a pledge of bank deposit
Monetary funds                                                            10,000,000.00
                                                                                            receipt

Bill receivable                                                            3,000,000.00 Bill pledge

                   Total                                                463,000,000.00




                                                            ~ 18 ~
Gujing          Aged Original Spirits                                                                    Annual Report 2017


V Investments Made

1. Total Investment Amount
√ Applicable □ Not applicable

     Total investment amount of Reporting Period (RMB)                    Total investment amount of last year (RMB)                                     Change

                                                2,413,963,351.49                                            1,032,262,513.42                                                      133.85%


2. Material Equity Investments Made in Reporting Period

□ Applicable √ Not applicable


3. Material Non-Equity Investments Ongoing in Reporting Period

□ Applicable √ Not applicable


4. Financial Investments

(1) Securities Investments

√ Applicable □ Not applicable
                                                                                                                                                                               Unit: RMB
                                                                                   Gain/los
                                                                                   s on fair Cumulative
                   Code of                    Initial                                                                                  Gain/loss in
   Variety of                  Name of                   Accounting                  value    fair value Purchased in    Sold in the                                              Source of
                                                                       Opening                                                             the      Closing book
                   securitie                investment   measureme                 changes     changes   the Reporting   Reporting                               Accounting title
   securities                  securities                             book value                                                        Reporting      value                        funds
                                                          nt model                   in the  charged to      Period        Period
                       s                       cost                                                                                      Period
                                                                                   Reportin     equity
                                                                                   g Period



                                                                                          ~ 19 ~
Gujing        Aged Original Spirits                                                             Annual Report 2017
                                                                                                                                                         Available-for-sa
Domestic/overse                        70,317,243.9 Fair value   73,172,089.9    33,771,733.8                                             106,943,823.                      Self-owne
                  000001 PAYH                                                                           0.00          0.00         0.00                  le financial
as stock                                          8 method                 0               0                                                       70                       d funds
                                                                                                                                                         asset

                                                                                                                                                         Available-for-sa
Domestic/overse                        44,385,674.2 Fair value   51,177,224.0                    27,763,351.4 17,075,291.0                71,313,507.0                      Self-owne
                  601988 ZGYH                                                    9,113,956.55                                334,266.03                  le financial
as stock                                          0 method                 0                               9             7                           0                      d funds
                                                                                                                                                         asset

                                                                                                                                                         Available-for-sa
Domestic/overse                        91,133,996.8 Fair value   130,191,424.    -39,057,427.                  138,873,090. 47,739,094.                                     Self-owne
                  600373 ZWCM                                                                           0.00                                      0.00 le financial
as stock                                          0 method                00              20                            87          07                                      d funds
                                                                                                                                                         asset

                          Guangfa
                           Nest Low
                           Risk No.                                                                                                                      Available-for-sa
                                       150,000,000. Fair value   149,488,814.                                  32,801,886.7 2,801,886.7 127,154,958.                        Self-owne
Funds                      1E                                                    7,666,143.71           0.00                                             le financial
                                                 00 method                37                                             8           8             08                       d funds
                           Security                                                                                                                      asset
                           Investmen
                           t Funds

                          CITIC
                          Wings
                                                                                                                                                         Available-for-sa
                          Dapu No. 1 200,000,000. Fair value                     11,674,059.1 200,000,000.                                211,674,059.                      Self-owne
Funds                                                                    0.00                                         0.00         0.00                  le financial
                          Asset                  00 method                                 3              00                                       13                       d funds
                                                                                                                                                         asset
                          Manageme
                          nt Plan

                                       555,836,914.              404,029,552.    23,168,465.9 227,763,351. 188,750,268. 50,875,246. 517,086,347.
Total                                                    --                                                                                                      --             --
                                                 98                       27               9              49            72          88             91

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

                                                                                ~ 20 ~
Gujing         Aged Original Spirits                                                                        Annual Report 2017
Disclosure date of the announcement
about the general meeting’s consent N/A
for the securities investment (if any)


(2) Investments in Derivative Financial Instruments

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

                                                                                                                                                                             Proportion
                                                                                                                                                                             of closing
                                                                                                                                                                                             Actual
                                                                                                                   Purchased in                                              investment
              Relationship                                        Initial                             Opening                     Sold in the   Impairment       Closing                   gain/loss in
                                  Related          Type of                                                             the                                                   amount in
  Operator       with the                                       investment Starting date Ending date investment                   Reporting     provision (if investment                       the
                              transaction         derivative                                                        Reporting                                                   the
                Company                                          amount                               amount                        Period         any)          amount                    Reporting
                                                                                                                     Period                                                  Company’s
                                                                                                                                                                                             Period
                                                                                                                                                                             closing net
                                                                                                                                                                               assets

Reverse
                                             Reverse
repurchase
              Naught         No              repurchase of              0.00 01/18/2017 01/09/2018          0.00       218,620       213,620              0.00       5,000        0.77%         343.09
of national
                                             national debt
debt

Total                                                                   0.00     --          --             0.00       218,620       213,620              0.00       5,000        0.77%         343.09

Capital source for derivative investment                       Company’s own funds

Lawsuits involved (if applicable)                              Not applicable

Disclosure date of board announcement approving
                                                               08/30/2013
derivative investment (if any)

Disclosure     date     of       shareholders’      meeting
                                                               Not applicable
announcement approving derivative investment (if

                                                                                              ~ 21 ~
Gujing          Aged Original Spirits                                                                              Annual Report 2017
any)

Analysis of risks and control measures associated with
derivative investments held in the Reporting Period
                                                                The Company had controlled the relevant risks strictly according to the Derivatives Investment Management System.
(including but not limited to market risk, liquidity risk,
credit risk, operational risk, legal risk, etc.)

Changes in market prices or fair value of derivative
investments during the Reporting Period (fair value
                                                                Naught
analysis should include measurement method and
related assumptions and parameters)

Significant changes in accounting policies and specific
accounting      principles    adopted      for     derivative
                                                                Naught
investments in the Reporting Period compared to
previous reporting period

                                                                Based on the sustainable development of the main business and the sufficient free idle money, the Company increased the profits through
                                                                investing in the reasonable financial derivative instruments, which was in favor of improving the service efficiency of the idle funds. In
                                                                order to reduce the investment risks of the financial derivative instruments, the Company had set up corresponding supervision
Opinion of independent directors on derivative mechanism for the financial derivative instrument business and formulated reasonable accounting policy as well as specific principles of
investments and risk control                                    financial accounting. The derivative Investment business developed separately took national debts as mortgage object, which was met
                                                                with the cautious and steady risks management principle and the interest of the Company and shareholders. Therefore, agreed the
                                                                Company to develop the derivative Investment business of reverse repurchase of national debt not more than the limit of RMB0.3
                                                                billion.


5. Use of Funds Raised

√ Applicable □ Not applicable




                                                                                                  ~ 22 ~
Gujing         Aged Original Spirits                                                                                    Annual Report 2017
(1) Overview of the Use of Raised Funds

√ Applicable □ Not applicable
                                                                                                                                                                                                     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

                                                                                                                                                                                     Supplying
2011              Private offering         122,749.95                  620.98        109,369.10                  0.00              0.00             0.00%              4,704.04 working capital                       0.00
                                                                                                                                                                                      permanently

       Total              --               122,749.95                  620.98        109,369.10                  0.00              0.00             0.00%              4,704.04             --                        0.00

                                                                                       Overview of the use of raised funds

The project of raised funds of the Company had been completed, and the surplus raised funds have been supplied to working capital of the Company permanently. (for details, see the
Announcement on the Completion of the Raised Funds Project of the Company and Usage of Surplus Raised Funds to Supply Working Capital Permanently disclosed on www.cninfo.com.cn on
October 28, 2017)


(2) Projects Invested with Raised Funds as Promised

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

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

                                                                                                     ~ 23 ~
Gujing           Aged Original Spirits                                                    Annual Report 2017
                 capital                      partially                                               (%) (3)=    expected      Period                 feasibility or
                                           changed)                                                    (2)/(1)      usable                                   not
                                                                                                                   condition

Commitment investment projects

                                                                                                                                Couldn’t be
Technological Transform on the
Brewage of High-quality Base No                            13,500    12,194.42     0.00   12,247.90      100.44%   04/30/2014   individually N/A        No
Wine
                                                                                                                                  measured

                                                                                                                                Couldn’t be
Construction of Base Wine
Blending & Filling Centre and No                           68,600    65,921.06   454.39   61,596.84       93.44%   04/30/2014   individually N/A        No
Ancillary Facilities
                                                                                                                                  measured

                                                                                                                                Couldn’t be
Construction        of      Marketing
                                         No                27,500      27,500    166.59    18,499.3       67.27%   04/30/2014   individually N/A        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 N/A        No
                                                                                                                                  measured

Subtotal of promised investment
                                                 --       126,600   122,615.48   620.98   109,369.1      --           --                           --         --
projects

Investments of over-raised capital

N/A

Total                                            --       126,600   122,615.48   620.98   109,369.1      --           --                           --         --

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



                                                                                 ~ 24 ~
Gujing         Aged Original Spirits                                                                          Annual Report 2017
Explanation      on      significant
                                       Naught
changes in feasibility of projects

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
                                       January 6, 2012.

Idle raised capital for temporarily
                                       Not applicable
supplementing working capital

                                       Applicable
Outstanding     raised   funds    in 1. The Company strictly carried out the purchase system and the project bidding way, which better controlled the project construction and purchase cost and
project    implementation        and under the premise of guaranteeing the project quality with the principles of practicing strict economy, the Company further strengthened the project expenses
reasons                                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
                                       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

                                                                                              ~ 25 ~
Gujing          Aged Original Spirits                                                                       Annual Report 2017
                                    gradually becoming more and more mature and at the same time, the Company would no more execute the center project of Hefei Logistics for reducing the
                                    fixed operating cost of the Company, which caused the capital surplus of the project.

Usage and whereabouts of unused
                                    Supplying working capital permanently
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.


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 profit

                                                                                           ~ 26 ~
Gujing          Aged Original Spirits                                                                  Annual Report 2017
                                                                                                                                                                        Unit: RMB

                 Relationship         Main
 Company                             business
                   with the                          Registered capital    Total assets            Net assets          Sales revenue           Operating income     Net income
      name                            scope
                   Company

                                Wholesales
                                of       distilled
                                spirit,
Bozhou
                                construction
Gujing Sales Subsidiary                                    84,864,497.89    2,140,703,978.72       137,636,029.17           6,107,301,015.37       533,807,314.25    385,552,253.52
                                materials,
Co., Ltd
                                feeds         and
                                assistant
                                materials

Anhui                           Manufacture
Longrui                         and sale of
                Subsidiary                                 86,660,268.98      270,560,984.78       205,838,756.22            185,282,209.22         23,345,864.92     20,194,802.65
Glass Co.,                      glass
Ltd                             products

Wuhan
Tianlong
                                Production
Yellow
                                and sales of
Crane Tower Subsidiary                                   400,000,000.00       720,328,676.42       479,895,292.81            689,103,629.96        107,179,064.59     81,445,925.49
                                distilled
Wine
                                spirit
Industry Co.,
Ltd

Shanghai                        Hotel
Gujing                          management
                Subsidiary                                 54,000,000.00      208,645,223.85         78,269,013.39            76,853,167.81          8,538,909.33      5,255,738.45
Jinhao Hotel                    and house
Management                      lease


                                                                                          ~ 27 ~
Gujing        Aged Original Spirits                                                                         Annual Report 2017
Co., Ltd.

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

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

                                                                                                                      Optimizing the internal business structure and enhancing the endogenous
Anhui RunAnXinKe Testing Technology Co., Ltd.                    Invest and set up
                                                                                                                      power
                                                                                                                      Strengthening the development of the Company’s main business distilled
Suizhou Junhe Commercial and Trading Co., Ltd                    Invest and set up                                    spirit, speeding the national layout of products market, and improving the
                                                                                                                      Company’s brand influence and business scale.
                                                                                                                      Strengthening the development of the Company’s main business distilled
Hubei Hechuyuan Commercial and Trading Co., Ltd                  Invest and set up                                    spirit, speeding the national layout of products market, and improving the
                                                                                                                      Company’s brand influence and business scale.

Bozhou Gujing Distillery Marketing Co., Ltd                      Cancellation of the liquidation



VIII Structured Bodies Controlled by the Company

□ Applicable √ Not applicable


IX Outlook for the Future Development of the Company

1. Development strategy of the Company
(1) Firmly boost "Strategy 5.0, Five-Star Operation” Strategy
Comprehensively fulfill Strategy 5.0 and have the "User-Centered" thought fully and deeply implemented in the Company. Solidly create the "Five-Star Operation", enhance competitive force,
improve quality and efficiency, optimize services and promote healthy and efficient operation of the enterprise.
(2) Firmly boost reform and innovation strategy


                                                                                             ~ 28 ~
Gujing       Aged Original Spirits                                                                    Annual Report 2017
Deeply boost marketing innovation, technological innovation and mechanism innovation and generate endogenous power of the enterprise.
(3) Firmly create "Talent Highland" strategy
Intensify talent recruitment and attraction and establish flexible talent attraction and wisdom experience borrowing mechanism. Innovate talent training mode and promote independent
cultivation & development and absorption & attraction simultaneously.
(4) Firmly boost the strategy of integration of Party governance
Comprehensively strengthen Party discipline, continuously strengthen"four-consciousness", and strengthen political leadership. Need to take firm political stand, strengthen political orientation,
practicallystrengthen"four-consciousness". Thoroughly study and implement the spirit of the 19th National Congress of the Communist Party of China and Xi Jinping Thought on Socialism
with Chinese Characteristics for a New Era, and guide all the Party members to enhance their thought and action consciousness to maintain the core.
2. Operating revenue plan of the Company in 2018

For 2018, the Company expects to reach sales revenue of RMB7.965 billion (a 14.31% year-over-year increase) and pretax income of RMB1.939 billion (a 20.30% rise from 2017).
3. Operating risk of the Company
(1) The adverse effect of the systematic risk in macro-economic environment on the development of the industry and the Company.
(2) Impact of industrial policy adjustment and change on the sustainable development of the Company.
(3) Impact of the change of consumption behaviors and habits on the consumption crowds and trend replacement of distilled spirits.
4. Operating measures
(1) Marketing
Build Anhui market and accelerate Henan's market construction. Intensify strategic node market promotion, establish the commanding point of the brand and radiate across the country.
Accelerate the upward movement of the product structure and take efforts to develop secondary high-end and high-end products. Continue to follow a strategy of “setting a higher market
positioning and meanwhile maintaining a higher quality, from the international market to the domestic market, and focusing on both international and domestic market”.
(2) Product management
Continuously boost intelligent and green brewing process, implement quality upgrading action plan, enhance information, scientific and systematic management of product quality, lay a solid
foundation for quality management. Make full use of the platform of National Distilled Spirits Health Research Institute and continuously strengthen the research on heath factors in distilled
spirits. Continue to deeply boost product, technology and operation standardization and lay a solid foundation for the Company to implement automation and intellectualization.
(3) Management innovation
Focus on the users, accelerate the implementation of Strategy 5.0, achieve business process evolution, introduce the "User-Centered" thought in the design and construction of Strategy 5.0, and
continuously promote the transformation of business model of the enterprise. Deeply drive internal marketization and independent legal person system. Facilitate budget management
informatization. Build data standardization, strengthen statistical analysis and application and comprehensively deepen the budget management system.

                                                                                            ~ 29 ~
Gujing       Aged Original Spirits                                                                          Annual Report 2017
(4) Human resource
Build the development channel and improve the incentive mechanism. Advocate a "united, tense, serious and lively" office atmosphere, establish a sound multi-level talent cultivation system,
and further improve the various talent assessment system and incentive and constraint mechanism. Establish talent "craftsman pool" and "elite pool",get through the "Management Channel"
and "Technology Channel", and build the "Innovation Platform" and "Entrepreneurship Platform".
(5) Corporate cultural construction
Thoroughly study and implement the spirit of the 19th National Congress of the Communist Party of China and Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era,
and guide all the Party members to enhance their thought and action consciousness to maintain the core. Focus on the general keynote of "establishing, revitalizing and stabilizing the enterprise
through Party building", tighten the politics string, build the organization wall, main a strict standard in probity and ensure co-frequency resonance of Party governance. Continuously
strengthen "four-consciousness", and strengthen political leadership. Deepen the implementation of Gujing’s core values and consolidate Gujing new thought guidance.
In 2018, under the guidance of the spirit of the 19th National Congress of the Communist Party of China, the Board of Directors of the Company stay true to the original intention, keep firmly
in mind the mission goal, vigorously promote contribution culture and NieGuangrong's spirit; Focus on "Strategy 5.0, Five-Star Operation” Strategy, take the user as the center, take process
reengineering as the key, strengthen the marketing first policy, bring forth new ideas in system and mechanism, promote development power, build the Gujing invincible army that integrates
Party governance, and strive to realize the various operating indexes.




                                                                                           ~ 30 ~
Gujing        Aged Original Spirits                                     Annual Report 2017



X Visits Paid to the Company for Purposes of Research, Communication, Interview, etc.


1. In this Reporting Period

□ Applicable √ Not applicable




                                         ~ 31 ~
Gujing           Aged Original Spirits                                                                        Annual Report 2017




                                             Part V Significant Events

I Profit Distribution and Converting Capital Reserve into Share Capital for Common
Shareholders
Formulation, execution or adjustments of profit distribution policy, especially cash dividend policy, for common shareholders in this
Reporting Period
√ Applicable □ Not applicable
The 2016 Annual Meeting of Shareholders held on June 20, 2017 considered and approved the Company’s Interest Distribution
Scheme in 2016 that based on the total shares 503,600,000 of the Company on December 31, 2016, cash dividend was distributed at
RMB 6.00 per 10 shares(including tax), and the total distributed cash dividend was RMB302,160,000.00 (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. 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;
2. 2016 profits distribution plan of the Company: distributed the cash of RMB6.00 (tax included) for every 10 shares without any
converting capital reserve into share capital;
3. 2017 profits distribution proposal of the Company: distributed the cash of RMB10.00 (tax included) for every 10 shares without
converting capital reserve into share capital
                                                                                                                            Unit: RMB

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

                                                                   ~ 32 ~
Gujing         Aged Original Spirits                                                                           Annual Report 2017

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

2017                          503,600,000.00      1,148,740,644.93                 43.84%                    0.00                  0.00%

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%

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 Proposal for Profit Distribution and Converting Capital Reserve into Share Capital for this
Reporting Period

√ Applicable □ Not applicable

Bonus shares for every 10 shares (share)                                                                                                   0

Dividend for every 10 shares (RMB) (tax included)                                                                                    10.00

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)                                                                                 503,600,000.00

Distributable profits (RMB)                                                                                             4,103,151,843.38

Percentage of cash dividends in the total distributed                                                                               100%
profits

                                                            Cash dividend policy

The minimum proportion of cash dividend from profit distribution this time should be 40% 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
RMB10.00 (tax included) for each 10 shares with the total amount of RMB503,600,000.00 and the retained unallocated profits of
RMB3,599,551,843.38 would all transfer to the next year.


III Fulfillment of commitments

1. Commitments that the Company, the Company’s Shareholders, Actual Controller, Acquirers, Directors,
Supervisors, Executive Officers as well as Other Related Parties Fulfilled and Fai1ed to Fulfill on Time
during the Reporting Period

                                                                 ~ 33 ~
Gujing        Aged Original Spirits                                                                                    Annual Report 2017

√ Applicable □ Not applicable

                                          Commitment
             Commitment                                         Type              Content               Time            Term         Performance
                                                party

                                                                            Realize the tax
                                                                            inclusive
                                                                            income            of
                                                                            RMB805
                                                                            million           in
                                                                            2017 and the
                                          Anhui Gujing                                                                              Complete the
                                                          Commitment        net            profit
Commitments in acquisition report or Distillery                                                                                     commitment
                                                          on       operating margin           of April 29, 2016 Y2017-Y2021
report on changes in equity               Company                                                                                   on    operating
                                                          result            Wuhan          Pride
                                          Limited                                                                                   result in 2017
                                                                            Yellow Crane
                                                                            Tower
                                                                            Distillery Co.,
                                                                            Ltd.      of     the
                                                                            year not less
                                                                            than 11.00%

Whether     the     commitment     was
                                          Yes
performed on time or not

When the commitment failed to be
fulfilled on time, the specific reason
                                          N/A
and the following work plan should be
given

In accordance with the equity transfer agreement signed by the Company with Wuhan Pride Investment Group Co., Ltd., and the
natural person Yan Hongye on the acquisition of Wuhan Pride Yellow Crane Tower Distillery Co., Ltd. (hereinafter referred to as
“Yellow Crane Tower”), the Company made a commitment on the sales revenue (tax inclusive) of Yellow Crane Tower as follows:
                                                                                                             Unit: RMB’0,000

                     Time                               Y2017             Y2018                     Y2019            Y2020               Y2021

 Promised sales revenue (tax inclusive)             80,500.00         100,625.00             130,812.50           170,056.25       204,067.50

At the same time, within five years after the settlement day (excluding the year in which the settlement day of the targeted equity is
located), the annual net profit margin of Yellow Crane Tower (the actual net profit/sales revenue of Yellow Crane Tower in that year)
is no less than 11.00%. . If the audited net profit margin of Yellow Crane Tower is less than 11.00%, the Company shall compensate
for the difference in accordance with the agreement; if the net profit margin of Yellow Crane Tower is less than 11.00% for two
consecutive years, then The transferor has the right to repurchase all of the shares held by the Company in the Yellow Crane Tower,
and the repurchase price is RMB816 million.
The performance of the commitment on operating result of Yellow Crane Tower for 2017 in its separate financial statement was as
follows:
                                                                                                            Unit: RMB’0,000

             Item                 Actual amount             Promised amount                          Difference                Completion rate



                                                                ~ 34 ~
Gujing          Aged Original Spirits                                                                               Annual Report 2017


 Sales        revenue     (tax
                                   80,625.12             80,500.00                     125.12                        100.16%
 inclusive)

 Net profit                        8,144.95              7,568.38                      576.57                        107.62%

 Net profit margin                 11.82%                11.00%                        0.82%                         107.45%


2. Where there had been an Earnings Forecast for an Asset or Project and this Reporting Period was still
within the Forecast Period, Explain why the Forecast has been Reached for this 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 this Reporting Period.


V Explanations Given by the Board of Directors, the Supervisory Board and the Independent
Directors (if any) regarding the “Modified Auditor’s Report” Issued by the CPAs Firm for
this Reporting Period

□ Applicable √ Not applicable


VI YoY changes in accounting policies, estimations and methods

√ Applicable □ Not applicable
In 2017, the Ministry of Finance issued the Accounting Standards for Business Enterprises No. 42 - Non-current Assets and Disposal
Groups Held for Sale and Termination of Operations, the revised Accounting Standards for Business Enterprises No. 16 -
Government Subsidies, and the Notice on Revision and Issuance of Format of General Financial Statements of Enterprise (CaiKuai
[2017] No. 30). The Company has adopted the above-mentioned standards and notice to parepare the Financial Statements of 2017,
and the influences on financial statements of the Company are presented as follows:

    No.                           Contents and reasons                                Name of the statement’s items and amounts

              The Company would calculate the government subsidies
                                                                          The    non-operating        income   in   2017     decreased   RMB
              related to routine operating activities in 2017 into the
     1                                                                    32,720,116.60, and those reclassified into other income was
              item of other income. The comparative financial
                                                                          RMB32,720,116.60.
              statement in 2016 was not rearranged.

                                                                          1.    In    2017,     the    non-operating        income   decreased
                                                                          RMB425,934.44, and the non-operating expenses decreased
              The Company would calculate the profits or losses from
                                                                          RMB171,171.17, and those reclassified into assets disposal
               assets disposal in 2017 into the item of assets disposal
     2                                                                    income was RMB254,763.27.
               income. The comparative financial statement in 2016
                                                                          2.    The     non-operating      income      in    2016    decreased
               has been adjusted accordingly.
                                                                          RMB345,705.61, and those reclassified into assets diaposal
                                                                          income was RMB345,705.61.

                                                              ~ 35 ~
Gujing         Aged Original Spirits                                                                    Annual Report 2017

VII Retroactive Restatement due to Correction of Material Accounting Errors in this
Reporting Period

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


VIII YoY Changes in the Scope of the Consolidated Financial Statements

√ Applicable □ Not applicable
The Company newly established subsuaiaries Anhui RunAnXinKe Testing Technology Co., Ltd, Suizhou Junhe Commercial and
Trading Co., Ltd, and Hubei Hechuyuan Commercial and Trading Co., Ltd; and liquidated its subsidiary Bozhou Gujing Distillery
Marketing Co., Ltd in the current year.


IX Engagement and Disengagement of CPAs Firm

Current CPAs firm

Name of the domestic CPAs firm                        Ruihua CPAs (LLP)

The Company’s payment for the domestic CPAs firm
                                                      160
(RMB’0,000)

Consecutive years of the audit service provided by
                                                      5
the domestic CPAs firm

Names of the certified public accountants from the
                                                      Zhang Liping, 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 2017, 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 Restructuring

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


XII Significant Litigations and Arbitrations

□ Applicable √ Not applicable


                                                             ~ 36 ~
Gujing        Aged Original Spirits                                                 Annual Report 2017


No such cases in this Reporting Period.


XIII Punishments and Rectifications

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


XIV Credit Conditions of the Company as well as its Controlling Shareholder and Actual
Controller

□ Applicable √ Not applicable


XV Implementation of any Equity Incentive Plan, Employee Stock Ownership Plan or other
Incentive Measures for Employees

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


XVI Significant Related-party Transactions

1. Related-party Transactions Relevant to Routine Operation

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


2. Related Transactions Regarding Purchase or Sales of Assets or Equity Interests

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


3. Related Transactions Regarding Joint Investments in Third Parties

□ 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 Transactions

□ Applicable √ Not applicable


                                                  ~ 37 ~
Gujing        Aged Original Spirits                                                               Annual Report 2017

No such cases in the Reporting Period.


XVII Significant Contracts and Execution

1. Entrustment, Contracting and Leasing

(1) Entrustment

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


(2) Contracting

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


(3) Leasing

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


2. Significant Guarantees

□ Applicable √ Not applicable

No such cases in the Reporting Period.


3. Entrusted Cash Management

(1) Entrusted Cash Management


√ Applicable □ Not applicable
Overviews of entrusted cash management during the Reporting Period
                                                                                                           Unit: RMB'0,000

                                                                                                      Overdue unrecovered
      Specific type               Capital resources    Amount incurred           Undue Balance
                                                                                                            amount

Trust financial products Self-owned funds                             124,100            119,100.00                         0

Broker financial
                          Self-owned funds                             38,000             38,000.00                         0
products

Others                    Self-owned funds                           49,748.87            49,572.52                         0

Bank financial products Self-owned funds                              155,000             12,000.00                         0

                        Total                                    366,848.87              218,672.52                         0

                                                         ~ 38 ~
Gujing           Aged Original Spirits                                                                                    Annual Report 2017

Particulars of entrusted cash management with single significant amount or low security, bad liquidity, and no capital preservation
                                                                                                                                      Unit: RMB'0,000

                                                                                                                                        Wheth Overv
                                                                                                                                          er    iew of
                                                                                                    Amou Actual
                                                                                                                       Amou             there    the
                                                                                                    nt of recove
                                                                                                                         nt     Wheth     is     item
                                                                       Metho                        actual ry of
                                                                                 Annua Estima                          withdr er go wealth and
                                                                        d of                        profits profits
 Name     Type       Type             Resou                                      l yield     te                         awn throug manag         the
                             Financ            Initial Ended Use of payme                             or          or
 of the of the      of the            rce of                                      for      profit                      impair     h     ement relate
                               e               date   Date    fund          nt                      losses losses
trustee trustee product               funds                                      refere     (if                        ment stator entrust        d
                                                                       determ                         in          in
                                                                                  nce      any)                        provis proced ment index
                                                                       ination                      Report Report
                                                                                                                       ion (if ures      plan    for
                                                                                                     ing      ing
                                                                                                                       any)               in    inquiri
                                                                                                    Period Period
                                                                                                                                        future ng (if
                                                                                                                                        or not any)

                                                             Nation
                                                             al
                                                             debt,
                                                             financi
                                                             al
                                                             bond,
                                                             short-t
                                                             erm
                                                             financi
                                                             al
Nest
         Limite                                              bond, 5.0%
Invest
         d                                                   mediu of
ment                                  Self-o
         Liabilit                                            m         base                                  Realiz
Manag               Funds    12,000 wned                                         7.00%              280.19                      Yes     Yes
         y                                                   term      earnin                                ed
ement                                 funds
         Compa                                               note,     gs
Co.,
         ny                                                  and       ratio
Ltd
                                                             credit
                                                             debt
                                                             with
                                                             AA
                                                             credit
                                                             rating
                                                             or
                                                             above,
                                                             and
                                                             etc.

CITIC Limite                          Self-o                 Purcha 1.2%
                    Funds    20,000                                              8.00%                     0 N/A                Yes     Yes
Wings d                               wned                   sing      of


                                                                    ~ 39 ~
Gujing        Aged Original Spirits                                                                      Annual Report 2017

Asset Liabilit                    funds                new        produc
Manag y                                                shares ts’ net
ement Compa                                            offline value
Comp ny                                                ,          and
any                                                    produc 20%
Limite                                                 ts with of
d                                                      fixed      excess
                                                       earnin earnin
                                                       gs,        gs
                                                       revers
                                                       e
                                                       repurc
                                                       hase
                                                       of
                                                       nation
                                                       al
                                                       debt,
                                                       and
                                                       etc.

Total                    32,000     --    --      --        --         --   --        280.19    --             --     --      --

Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment for
entrusted asset management
□ Applicable √ Not applicable


(2) Entrusted Loans

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


4. Other Significant Contracts

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


XVIII Social Responsibilities

1. Social Responsibilities Taken

The Company disclosed Social Responsibilities Report of Enterprises for 2017 on April 28, 2018. (for details,
seehttp://www.cninfo.com.cn)




                                                                 ~ 40 ~
Gujing        Aged Original Spirits                                                                         Annual Report 2017

2. Targeted Measures Taken to Help People Lift themselves out of Poverty

(1) Plan for Targeted Measures

In accordance with the "organizations are responsible for villages and individuals are responsible for families” poverty alleviation
work arrangement of BozhouMunicipal Party Committee, the Company has established targeted support towards 176 poor families in
Bali village, Yanglou village and Wuma village, Wuma town, Qiaocheng District, Bozhou. The Company performs poverty
alleviation responsibility, sends relevant personnel to the poverty villages regularly or irregularly for investigation, organizes and
holds forum regularly, gathers advices from the villagers and comes up with specific solutions to the practical difficulties and
problems in the poor villages and poor families.


(2) Outline of Targeted Measures in the Reporting Period

① Providing poverty alleviation employment post. In accordance with the actual production situation of the Company, the Company
provides employment posts with relaxed conditions for children of poor families in three targeted poor administrative villages in
Wuma town. At present, 6 children of poor families have been employed by Gujing group and realized their aspirations for stable
economic income.
② Establishing financial poverty alleviation mechanism. To earnestly implement the financial poverty alleviation policy, the
Company discussed about relevant poverty alleviation policies and distributed a poverty alleviation fund of RMB 2,500/family/year
and RMB 30,000/family/year to 1,000 poor families and rural collective economic organizations respectively in 1,000 poor villages
designated by the municipal government in the "Bank + Enterprise + Poor Family" financial poverty alleviation separate-loan and
unified-repayment mode; moreover, the company also signed a three-year micro-credit poverty alleviation agreement with the third
party which provides another guaranteed income to the poor villages and families.
③ Helping the poor families sell "native products". First, the Company advised the employees to buy anti-season grapes from the
poor families. After the purchasing & selling information is sent out, the employees dedicated their love one after another to buying
the products actively which expressed their supports for poverty alleviation and showed their love. Via the activity, total 1,529 boxes
of grapes were purchased and the sales reached RMB 38,225. Second, the Company advised the employees to buy caring native
products. In order to promote the sales of the hand-made green "native products" in poor families in Sanyi town and Lumiao town,
the Company advised the employees to buy sweet potato noodles, dry red pepper, lotus root, sweet potato starch, potato and other
native products via the Company's WeChat platform so that the "native products" sales problem in poor families was solved.
④Conveying true care and love. In June, the Company held the "Conveying True Care and Love" poverty alleviation condolence
activity in Liuyuan Village Primary School, Mengcheng County. The Company sent extracurricular books, student desks & chairs,
school bags, air conditioners and other gifts to Liuyuan Village Primary School, Mengcheng County. This activity thoroughly
implements the "Targeted Poverty Alleviation" idea put forward by the Company and further cares for the growth of poor children
and passes on social love.


(3) Results of Targeted Measures

Connecting bali village, Wuma town to help 27 poor households, achieving all out of poverty.


(4) Subsequent Targeted Measure Plans

① Earnestly enforcing relevant provisions of the Municipal Party Committee and municipal government, and stick to the leading role,
set an example for the subordinates, fulfill poverty alleviation duty and lead all persons in charge of poverty alleviation in the

                                                             ~ 41 ~
Gujing         Aged Original Spirits                                                                              Annual Report 2017

Company to comprehensively complete the poverty alleviation mission according to the "organizations are responsible for villages
and individuals are responsible for families" commitment.
② Fulfilling the targeted poverty alleviation and residency poverty alleviation duty. All persons in charge of poverty alleviation shall
continue to make efforts, visit poor families once a month at least; hold 4 "Two Committees" memberforums in administrative
villages each year at least, and understand and address the needs.
③ Establishing poverty alleviation incentive mechanism. In order to bring the poor families out of poverty, the Company must
highlight thought, ability and industry support, comprehensively stimulate the endogenous power of poor families in poor villages,
establish self-reliance awareness, and increase the confidence for overcoming poverty striving for relatively comfortable life.
④ Carrying out employment poverty alleviation. The Company actively works with the primary residency secretaries of three
administrative villages to attract ambitious underprivileged youngsters to the Company and thus expand the income channel of poor
families.
⑤ Continue to improve the financial poverty alleviation mechanism, faithfully implement the poverty alleviation credit agreement,
stick to distributing poverty alleviation fund to poor villages and poor families every quarter.


3. Particulars Relevant to Environmental Protection

Is the Company or any of its subsidiaries a heavily polluting business identified by the environmental protection authorities of China?
Yes

                Name of                                                               Pollutant
  Name of
                 major                    Quantity of Distribution Discharge         discharge
company or                     Way of                                                                  Total      Permitted    Excess
                pollutant                  discharge of discharge concentratio        standard
 subsidiary                   discharge                                                              discharge    discharge   discharge
               and typical                   outlet       outlet          n          implemente
  company
                pollutant                                                                d

Anbui
                                                       Main
Gujing                       Directly
              COD                              1       discharge              60.2           ≤100      154.93        155.05 N/A
Distillery                   discharge
                                                       outlet
Co., Ltd.

Anbui
                                                       Main
Gujing                       Directly
              NH3-N                            1       discharge              5.89            ≤10        15.15        15.53 N/A
Distillery                   discharge
                                                       outlet
Co., Ltd.

Construction and operation of pollution prevention and management
Existing pollution facilities are running well and meet the discharge standard. The wastewater discharge meets the direct discharge
requirements in Table 2 of GB27631-2011 Discharge standard of Water Pollutants for Fermentation Alcohol and Distilled Spirits
Industry and the gas emission meets coal-fired boiler standard requirements in Table 1 of GB13271-2014 Emission Standard of Air
Pollutants for Boiler.
Environmental impact assessment of construction project and other administrative license situation in respect of environmental
protection
(1) The Gujing No. 9 Semi-Open Spirit Storehouse Renovation Project has carried out environmental impact assessment and
prepared the environmental impact assessment report, which has been approved by Bozhou Environmental Protection Bureau on
May 21, 2017. Please refer to BHB [2017] No. 62 document for details. The project is currently under construction;
(2) The Gujing No. 10 Open Spirit Storehouse and Spirit Recycling Workshop Renovation Project has carried out environmental

                                                                ~ 42 ~
Gujing          Aged Original Spirits                                                                   Annual Report 2017

impact assessment and prepared the environmental impact assessment report, which has been approved by Bozhou Environmental
Protection Bureau on September 8, 2017. Please refer to BHB [2017] No. 139 document for details. The project is currently under
construction;
Emergency plan for sudden environment affairs
The Company has formulated the Emergency Plan of Anhui Gujing Distillery Company Limited for Sudden Environmental Pollution
Accident, which has been filed with municipal environmental protection bureau. Emergency plan drill has been carried out according
to relevant requirements.
Environmental self-monitoring scheme
The Company has formulated the Self-Monitoring Scheme of Key Pollution Source Enterprises under the National Monitoring and
published it on the website of Bozhou Environmental Protection Bureau.
Other environment information that should be disclosed

Anhui Longrui Glass Products Co., Ltd., a subsidiary of Anhui Gujing Distillery Company Limited (hereinafter referred to as the

Company), shares a set of treatment system for industrial and sanitary wastewater with the Company. The wastewater will be

discharged after processed by the sewage treatment station of the Company, which meets GB27631-2011 Discharge Standard of

Water Pollutants for Fermentation Alcohol and Distilled Spirits Industry. While the exhaust gas from glass furnaces will be

discharged through dust extraction, desulfurization and denitration, which meets GB9078-1996 Discharge Standard of Air Pollutants

for Industrial Furnaces.
Other related environment protection information
No


XIX Other Significant Events

□ Applicable √ Not applicable

No such cases in the Reporting Period.


XX Significant Events of Subsidiaries

□ Applicable √ Not applicable




                                                           ~ 43 ~
Gujing            Aged Original Spirits                                                                         Annual Report 2017




                   Part VI Share Changes and Shareholder Information

I Share Changes

1. Share Changes

                                                                                                                                 Unit: share

                                           Before                         Increase/decrease (+/-)                         After

                                                                                 Increase
                                                  Percentage   New      Bonus     from                                           Percentage
                                     Number                                                  Other       Subtotal   Number
                                                     (%)       issues   shares    capital                                           (%)
                                                                                 reserve

1. Restricted shares                      1,200       0.00%                                   -1,200       -1,200            0       0.00%

1.1 Shares held by other
                                          1,200       0.00%                                   -1,200       -1,200            0       0.00%
domestic investors

Among which: Shares held
                                          1,200       0.00%                                   -1,200       -1,200            0       0.00%
by domestic juridical persons

2. Non-restricted shares            503,598,800    100.00%                                     1,200        1,200 503,600,000      100.00%

2.1 RMB common shares               383,598,800     76.17%                                     1,200        1,200 383,600,000       76.17%

2.2      Domestically      listed
                                    120,000,000     23.83%                                           0          0 120,000,000       23.83%
shares for foreign investors

3. 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.
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

                                                                  ~ 44 ~
Gujing            Aged Original Spirits                                                                                         Annual Report 2017

                                                                                                                                                  Unit: share

        Name of             Opening             Unlocked in             Increased in        Closing restricted        Reason for
                                                                                                                                            Date of unlocking
    shareholder          restricted shares Reporting Period Reporting Period                     shares            lock-up/unlocking

                                                                                                                   Leaving of senior
Zhai Liangdong                        1,200                1,200                        0                      0                            02/23/2017
                                                                                                                   executive

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


II Issuance and Listing of Securities

1. Securities (Excluding Preference Shares) Issued in this 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 Employee-held Shares

□ Applicable √ Not applicable


III Shareholders and Actual Controller

1. Total Number of Shareholders and their Shareholdings

                                                                                                                                                  Unit: share

                                                                                                                                   Total number
                                                                                                                                   of preference
                                                                                                                                   shareholders
                                  Total number of
                                                                                                                                   with resumed
                                  common                                        Total        number       of
Total number of                                                                                                                    voting rights
                                  shareholders at the                           preference shareholders
common                                                                                                                             at the prior
                          25,431 prior      month-end                   21,943 with resumed voting                             0                              0
shareholders at                                                                                                                    month-end
                                  before            the                         rights at the period-end
the period-end                                                                                                                     before      the
                                  disclosure of this                            (if any) (see note 8)
                                                                                                                                   disclosure of
                                  Report
                                                                                                                                   this Report (if
                                                                                                                                   any) (see note
                                                                                                                                   8)

                                              5% or greater shareholders or the top 10 shareholders

        Name of           Nature of      Shareholding Total shares Increase/decrease Number                Number of               Pledged or frozen shares
   shareholder           shareholder       percentage     held at the       during this            of     non-restricted             Status          Number

                                                                    ~ 45 ~
Gujing       Aged Original Spirits                                                                 Annual Report 2017

                                     (%)      period-end Reporting Period restricted shares held
                                                                            shares
                                                                             held

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

                  Foreign
NORGES BANK                           2.92% 14,712,309                                14,712,309
                  corporation

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

CHINA
CONSTRUCTION
BANK-YINHUA
RICH THEME
                  Other               1.47%    7,423,899                               7,423,899
HYBRID
SECURITIES
INVESTMENT
FUND

UBS (LUX)
EQUITY FUND -
                  Foreign
CHINA                                 1.41%    7,096,361                               7,096,361
                  corporation
OPPORTUNITY
(USD)

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

CHINA INT'L
CAPITAL CORP
                  Foreign
HONG KONG                             1.25%    6,280,886                               6,280,886
                  corporation
SECURITIES
LTD

UBS (LUX)
EQUITY FUND - Foreign
                                      0.98%    4,949,038                               4,949,038
GREATER           corporation
CHINA (USD)

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

3W GREATER        Foreign             0.70%    3,529,479                               3,529,479

                                                       ~ 46 ~
Gujing            Aged Original Spirits                                                                          Annual Report 2017

CHINA FOCUS            corporation
FUND

Strategic investors or general
corporations becoming top-ten
                                         N/A
shareholders due to placing of new
shares (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
Related      or      acting-in-concert
                                         stipulated in the Administrative Measures on Information Disclosure of Changes in Shareholding
parties among the shareholders
                                         of Listed Companies. In addition, the relationship between other shareholders is unknown, and it
above
                                         is unknown whether it belongs to the acting-in-concert stipulated in the Administrative Measures
                                         on Information Disclosure of Changes in Shareholding of Listed Companies.

                                           Shareholdings of the top ten non-restricted shareholders

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

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

                                                                                                                Domestically
NORGES BANK                                                                                       14,712,309 listed foreign       14,712,309
                                                                                                                share

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

CHINA CONSTRUCTION
                                                                                                                RMB
BANK-YINHUA RICH THEME
                                                                                                      7,423,899 common             7,423,899
HYBRID SECURITIES
                                                                                                                share
INVESTMENT FUND

                                                                                                                Domestically
UBS (LUX) EQUITY FUND -
                                                                                                      7,096,361 listed foreign     7,096,361
CHINA OPPORTUNITY (USD)
                                                                                                                share

                                                                                                                RMB
CENTRAL HUIJIN ASSET
                                                                                                      6,543,600 common             6,543,600
MANAGEMENT CO., LTD.
                                                                                                                share

CHINA INT'L CAPITAL CORP                                                                                        Domestically
HONG KONG SECURITIES                                                                                  6,280,886 listed foreign     6,280,886
LTD                                                                                                             share

                                                                                                                Domestically
UBS (LUX) EQUITY FUND -
                                                                                                      4,949,038 listed foreign     4,949,038
GREATER CHINA (USD)
                                                                                                                share


                                                                 ~ 47 ~
Gujing           Aged Original Spirits                                                                           Annual Report 2017


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

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

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

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

Indicate by tick mark whether any of the top ten common shareholders or the top ten non-restricted common shareholders of the
Company conducted any promissory repo during this Reporting Period.
□ Yea √ No
No such cases in this Reporting Period.


2. Information about the Controlling Shareholder


Nature of the controlling shareholder: Controlled by the local government
Type of the controlling shareholder: Corporation

                                              Legal
       Name of controlling
                                     representative/person Date of establishment        Credibility code         Main business scope
             shareholder
                                             in charge

                                                                                                              Making beverage,
ANHUI GUJING GROUP
                                     Liang Jinhui            01/16/1995             91341600151947437P        construction materials and
COMPANY LIMITED
                                                                                                              plastic products, etc.

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 shares2.76%
shareholding during the
reporting period

Change of the controlling shareholder during this Reporting Period
□ Applicable √ Not applicable


                                                                   ~ 48 ~
Gujing        Aged Original Spirits                                                                       Annual Report 2017

No such cases in this Reporting Period.


3. Information about the Actual Controller

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

                                           Legal
                                                             Date of
   Name of actual controller         representative/per                         Credibility code         Main business scope
                                                          establishment
                                       son in charge

The People’s Government of
                                     N/A                                      N/A                  N/A
Bozhou

Shareholdings of the actual
controller   in    other    listed
                                     N/A
companies at home or abroad in
this Reporting Period

Change of the actual controller during this Reporting Period
□ Applicable √ Not applicable
No such cases in this Reporting Period.
Ownership and control relations between the actual controller and the Company



                                                    The People’s Government of Bozhou


                                                                          60%



                                                    Anhui Gujing Group Company Limited


                                                                          53.89%



                                                   Anhui Gujing Distillery Company Limited


Indicate by tick mark whether 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. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,
Reorganizer and Other Commitment Makers

□ Applicable √ Not applicable


                                                               ~ 49 ~
Gujing        Aged Original Spirits                                  Annual Report 2017




                                         Part VII Preferred Shares

□ Applicable √ Not applicable
No preferred shares in the Reporting Period.




                                                  ~ 50 ~
Gujing          Aged Original Spirits                                                                        Annual Report 2017




         Part VIII Directors, Supervisors, Senior Management and Staff

I Changes in Shareholdings of Directors, Supervisors and Executive Officers

                                                                                      Increase Decreas
                                                                           Opening     in this   e in this      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 06/19/202
            of the        Incumbent     Male   52
Jinhui                                              7        0
            Board

                                                    06/20/201 06/19/202
Li Peihui Director        Incumbent     Male   45
                                                    7        0

Zhou        Director,                               06/20/201 06/19/202
                          Incumbent     Male   44
Qingwu      GM                                      7        0

            Director,
            Executive                               06/20/201 06/19/202
Yan Lijun                 Incumbent     Male   45
            Deputy                                  7        0
            GM

            Director,
                                                    06/20/201 06/19/202
Xu Peng Deputy            Incumbent     Male   48
                                                    7        0
            GM

            Director,
            Deputy
            GM,
Ye          Secretary
                                                    06/20/201 06/19/202
Changqin of the           Incumbent     Male   44
                                                    7        0
g           Board,
            Chief
            Accountan
            t

Wang        Independe                               06/20/201 06/19/202
                          Incumbent     Male   53
Gao         nt director                             7        0

Song        Independe                               06/20/201 06/19/202
                          Incumbent     Male   56
Shuyu       nt director                             7        0

            Independe                               06/20/201 06/19/202
Du Jie                    Incumbent     Male   48
            nt director                             7        0

Wang        Chairman Incumbent          Male   53 06/20/201 06/19/202

                                                            ~ 51 ~
Gujing          Aged Original Spirits                                                                 Annual Report 2017

Feng        of the                                        7        0
            Supervisor
            y
            Committee

Yang                                                      06/20/201 06/19/202
            Supervisor Incumbent           Male      51
Xiaofan                                                   7        0

Fu                                                        06/20/201 06/19/202
            Supervisor Incumbent           Male      49
Qiangxin                                                  7        0

            Employee                                      06/20/201 06/19/202
Zhang Bo                 Incumbent         Male      53
            supervisor                                    7        0

Wang        Employee                                      06/20/201 06/19/202
                         Incumbent         Male      48
Zibin       supervisor                                    7        0

Zhang       Deputy                                        06/20/201 06/19/202
                         Incumbent         Male      50
Lihong      GM                                            7        0

Zhu
            GM                                            06/20/201 06/19/202
Xianghon                 Incumbent         Male      44
            assistant                                     7        0
g

Gao         GM                                            06/20/201 06/19/202
                         Incumbent         Male      48
Jiakun      assistant                                     7        0

    Total        --               --         --      --       --        --


II Changes in Directors, Supervisors and Executive Officers

√Applicable □Not applicable

        Name             Office title         Type                     Date                        Reason

                      Chairman of the
Liang Jinhui                             Appointed            06/20/2017        Regular election
                      Board

Li Peihui             Director           Appointed            06/20/2017        Regular election

Zhou Qingwu           Director, GM       Appointed            06/20/2017        Regular election

                      Director,
Yan Lijun             Executive          Appointed            06/20/2017        Regular election
                      Deputy GM

                      Director, Deputy
Xu Peng                                  Appointed            06/20/2017        Regular election
                      GM

                      Director, Deputy
                      GM, Secretary of
Ye Changqing                             Appointed            06/20/2017        Regular election
                      the Board, Chief
                      Accountant

Wang Gao              Independent        Appointed            06/20/2017        Regular election


                                                                   ~ 52 ~
Gujing         Aged Original Spirits                                                                      Annual Report 2017

                   director

                   Independent
Song Shuyu                             Appointed       06/20/2017             Regular election
                   director

                   Independent
Du Jie                                 Appointed       06/20/2017             Regular election
                   director

                   Chairman of the
Wang Feng          Supervisory         Appointed       06/20/2017             Regular election
                   Committee

Yang Xiaofan       Supervisor          Appointed       06/20/2017             Regular election

Fu Qiangxin        Supervisor          Appointed       06/20/2017             Regular election

                   Employee
Zhang Bo                               Appointed       06/20/2017             Regular election
                   supervisor

                   Employee
Wang Zibin                             Appointed       06/20/2017             Regular election
                   supervisor

Zhang Lihong       Deputy GM           Appointed       06/20/2017             Regular election

Zhu Xianghong      GM assistant        Appointed       06/20/2017             Regular election

Gao Jiakun         GM assistant        Appointed       06/20/2017             Regular election

                   Independent
Wang Ruihua                            Leave office    06/19/2017             Regular election
                   director


III Brief Biographies

Professional backgrounds, main working experience and current responsibilities in the Company of the incumbent directors,
supervisors and executive officers
1. Mr. Liang Jinhui, male, born in October 1966, is Political Engineer and a deputy to the 13th National People’s Congress who has
educational experience of graduate student, incumbent president of the Company and president and Secretary of CPC of Gujing
Group. He ever took the post of MD, GM, Deputy GM, GM of Bozhou Gujing Sales Co., Ltd., Supervisor of Third Supervisory
Committee, Director of the 4th, 5th and 6th Board of Directors and Chairman of the 7th Board of Directors of the Company.
2. Mr. Li Peihui, male, born in July 1973, is a holder of master degree. He is a senior accountant, CPA and member of national
leading accounting talents. At present, he acts as the Company’s Vice Secretary of CPC and president of Gujing Group. He had ever
served as deputy GM and GM of Financial Department, 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; executive vice president and CFO of Gujing Group; and director of the 7 th Board of Directors.
3. Mr. Zhou Qingwu, male, born in February 1974, is a senior accountant and national chief sommelier with 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., Deputy GM and deputy executive
GM of the Company and Director of the 5th , 6th and 7th Board of Directors of the Company.
4. Mr. Yan Lijun, male, June 1973, is a holder of master degree with Senior Taster. Now he is Director, Executive Deputy GM of the
Company, member of CPC Committee of Gujing Group, Chairman of the Board and GM of Bozhou Gujing Sales Co., Ltd. He once
worked as a salesman of Sale Company, District Manager, Director of Market Research, Vice Manager of Planning Department,


                                                            ~ 53 ~
Gujing        Aged Original Spirits                                                                        Annual Report 2017

Director of Hefei Strategic Operations Center, Vice GM and director of the 7th Board of Directors of the Company.
5. Mr. Xu Peng, male, born in September 1970, has educational experience of undergraduate college. He is incumbent Director and
Deputy GM of the Company, member of CPC Committee of Gujing Group, 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, Chairman of the Supervisory Committee of the Company and Chairman of the 7th Board of Directors.
6. Mr. Ye Changqing, male, born in October 1974, is a member of national leading accounting talents (back up) with master degree
and International Certified Internal Auditor. He is the incumbent Director, Deputy GM, Chief Accountant and Secretary of Board of
Directors of the Company. He 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 4th Supervisory Committee of the Company;
Director and Secretary of the 5th, 6th, and 7th Board of Directors, and Chief Accountant of the Company.
7. Wang Gao, Male, born in April 1965, Doctor of Sociology,Professor of Marketing and vice dean in China Europe International
Business School., Academic Director of Chief Marketing Officer (CMO) Project, Co-Director of Chinese Enterprise Globalization
Research Center and independent director of GOME Holdings Co., Ltd.. He once worked as Associate Professor, Deputy Dean of
Department of Marketing in School of Economics and Management, Tsinghua University, deputy director of China's Retail Research
Center Academic Director of Harvard - central Europe - Tsinghai 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).
8. Song Shuyu, male, born in November 1962, is Senior Engineer and Master of Chinese Wine with educational experience of
graduate student. Now, he is Deputy President and 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.
9. Mr. Du Jie, male, born in December 1970 is a senior accountant with postgraduate degree, CPA and CTA. Now he is a advisory
service leading partner of Huapu Tianjian Certified Public Accountants (LLP), internal control advisory expert specially hired by
Anhui Provincial Department of Finance, managing accounting advisory expert specially hired by Beijing Municipal Bureau of
Finance, expert talent in Beijing CPA, master tutor specially hired by Business School of Anhui University, independent director of
Shaanxi Bicon Pharmaceutical Company Limited, Beijing NAV Technology Co., Ltd. and Tianjin Lishen Battery Joint-stock Co., Ltd.
He once acted as senior manager in Business Risk Service Division of Deloitte & Touche and advisory expert in business internal
control specially hired by the Ministry of Finance.
10. Mr. Wang Feng, male, born in October 1965, 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 and Secretary of the Second Board of Directors of the Company, Vice General Manager
and General Manager of the Company, Director and Chairman of the 3rd and 4th Board of Directors of the Company, Director of the
5th, 6th, and 7th Board of Directors, and Chairman of the 7th Supervisory Committee of the Company.
11. Mr. Yang Xiaofan, male, born in April 1967, is a holder of master degree. At present, he is Supervisor of the Company and Vice
President and member of CPC Committee of Gujing Group. He once acted as Vice President and General Manager of Anhui Gujing
Real Estates Group Co., Ltd., Assistant to President of Gujing Group; Director of the 5 th, 6th and 7th Board of Directors of the
Company and Supervisor of the 7th Supervisory Committee.
12. Mr. Fu Qiangxin, male, born in October 1969, is a senior accountant with bachelor degree. Now he serves as Supervisor of the
Company and GM of Anhui Huixin Finance Investment Group Co., Ltd. He ever took posts of accountant of Bozhou Gujing Hotel,

                                                             ~ 54 ~
Gujing         Aged Original Spirits                                                                    Annual Report 2017

Manager of Finance of Bozhou Gujing Integrated Services Company and Bozhou Gujing Import and Export Trade Company, clerk of
Planning and Finance Department, Chief Inspector of Internal Audit Center and Director of Financial Management Center of Gujng
Group and Supervisor of the 7th Supervisory Committee of the Company.
13. Mr. Zhang Bo, male, born in July 1965, is an economist with bachelor degree. Now, he serves as 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. and Supervisor of the 7th Supervisory Committee of the Company.
14. Mr. Wang Zibin, was born in August 1970 with college degree, CIA and CPA. Now he is Employee Supervisor of the Company,
Deputy Secretary of Commission for Discipline and Inspection and Director of Audit and Supervisory Centre of Gujing Group. He
once served as GM of Auditing Department of Gujing Group, vice director of Hefei marketing centre of Bozhou Gujing Sales
Company and Supervisor of the 7th Supervisory Committee of the Company.
15. Mr. Zhang Lihong, male, born in October 1968, is an economist with bachelor degree. He is incumbent Deputy GM of the
Company and member of CPC Committee and deputy secretary of Commission for Discipline and Inspection of Gujing Group. 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., Director of HR Department and Administrative Service Center
of the Company.
16. Mr. Zhu Xianghong, male, born in September 1974, is a senior Wine Taster with bachelor degree. 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.
17. Mr. Gao Jiakun, male, born in November 1970, is a holder of bachelor degree. He is 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., Director of Finished Products Filling Centre and Production
Management Centre of the Company.
Post-holding in shareholder units
√Applicable □Not applicable
                                                                                                               Allowance from
                                                                          Starting date of   Ending date of
     Name                       Shareholding entity             Post                                           the shareholding
                                                                               tenure           tenure
                                                                                                                entity (yes/no)
                                                           Chairman of
                                                           the Board of
                                                           Directors,
Liang Jinhui      Anhui Gujing Group Co., Ltd.                            05/01/2014                          Yes
                                                           Chairman of
                                                           Party
                                                           Committee

                                                           Deputy
                                                           Chairman of
Li Peihui         Anhui Gujing Group Co., Ltd.             Party          10/31/2017                          Yes
                                                           Committee,,
                                                           President

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

                                                          ~ 55 ~
Gujing           Aged Original Spirits                                                                   Annual Report 2017

                                                              Committee,
                                                              Chairman of
                                                              Discipline
                                                              Inspection
                                                              Committee

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

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

                                                              Deputy
                                                              Chairman of
                                                              Discipline
                                                              Inspection
Wang Zibin         Anhui Gujing Group Co., Ltd.               Committee,    04/27/2015                           Yes
                                                              Director of
                                                              Auditing &
                                                              Supervision
                                                              Center

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 disciplined by CSRC, other relevant
shareholder
                   departments and the Stock Exchange.
units

Posts held concurrently in other entities
√Applicable □Not applicable
                                                                             Starting date of   Ending date of     Allowance from
        Name                       Other entity                      Post
                                                                                  tenure           tenure         the entity (yes/no)
                   Anhui Huixin Finance Investment Group
Fu Qiangxin                                                   GM            11/27/2017                            Yes
                   Co., Ltd.

Notes to
post-holding in Anhui Huixin Finance Investment Group Co., Ltd. is a wholly-owned subsidiary of Anhui Gujing Group Co., Ltd.
other entities

Punishments imposed in the recent three years by the securities regulators on the incumbent directors, supervisors and executive
officers as well as those who left in this Reporting Period
□ Applicable √ Not applicable


IV Remuneration of Directors, Supervisors and Executive Officers

Decision-making procedure, determination basis and actual remuneration payment of directors, supervisors and executive officers
(I) Decision-making procedure of remuneration for Directors, Supervisors and Executive Officers
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.
                                                              ~ 56 ~
Gujing         Aged Original Spirits                                                                       Annual Report 2017

(II) Determination basis of remuneration for Directors, Supervisors and Executive Officers
The remuneration is determined based on the annual performance of the Company and the appraisal result and determined in
accordance with the spirits in the Implementation Opinion on Deepening the System Reform of Remuneration of Chargers in
Provincial Enterprises (WF[2015]No.28) issued by the CPC Anhui Provincial Committee and the People’s Government of Anhui as
well as the Implementing Scheme of Deepening the System Reform of Remuneration of Chargers in Municipal Enterprises
(Discussion Paper) issued by the Municipal Party Committee of Bozhou.
(III) Actual Payment of remuneration for Directors, Supervisors and Executive Officers
Payment of the remuneration of Directors, Supervisors and Executive Officers is with certain amount in advance monthly and
distributed annually according to check.
Remuneration of Directors, Supervisors and Executive Officers of the Company during the Reporting Period is listed as follows:
                                                                                                                   Unit: RMB'0,000

                                                                                                                  Remuneration
                                                                                                   Total
                                                                                                                   from related
                                                                                               remuneration
      Name             Office title           Gender           Age         Incumbent/former                        parties of the
                                                                                                  from the
                                                                                                                       Company
                                                                                                 Company
                                                                                                                       (yes/no)

                   Chairman of the
Liang Jinhui                           Male                             52 Incumbent                             Yes
                   Board

Li Peihui          Director            Male                             45 Incumbent                             Yes

Zhou Qingwu        Director, GM        Male                             44 Incumbent                       51.78 No

                   Director,
Yan Lijun          Executive Deputy Male                                45 Incumbent                    159.11 No
                   GM

                   Director, Deputy
Xu Peng                                Male                             48 Incumbent                       86.72 No
                   GM

                   Director, Deputy
                   GM, Secretary of
Ye Changqing                           Male                             44 Incumbent                       85.29 No
                   the Board, Chief
                   Accountant

                   Independent
Wang Gao                               Male                             53 Incumbent                         7.5 No
                   director

                   Independent
Song Shuyu                             Male                             56 Incumbent                         7.5 No
                   director

                   Independent
Du Jie                                 Male                             48 Incumbent                             No
                   director

                   Chairman of the
Wang Feng          Supervisory         Male                             53 Incumbent                             Yes
                   Committee

Yang Xiaofan       Supervisor          Male                             51 Incumbent                             Yes

Fu Qiangxin        Supervisor          Male                             49 Incumbent                             Yes

                                                            ~ 57 ~
Gujing           Aged Original Spirits                                                                     Annual Report 2017


                     Employee
Zhang Bo                                    Male                          53 Incumbent                             Yes
                     supervisor

                     Employee
Wang Zibin                                  Male                          48 Incumbent                             Yes
                     supervisor

Zhang Lihong         Deputy GM              Male                          50 Incumbent                     85.96 No

Zhu Xianghong        GM assistant           Male                          44 Incumbent                    139.59 No

Gao Jiakun           GM assistant           Male                          48 Incumbent                     69.82 No

                     Independent
Wang Ruihua                                 Male                          56 Leaving office                  7.5 No
                     director

         Total                  --                 --              --                 --                  700.77         --

Equity incentives for directors, supervisors and executive officers in this Reporting Period
□ Applicable √ Not applicable


V Employees

1. Number, Functions and Educational Backgrounds of Employees


Number of in-service employees of the Parent Company                                                                          5,451

Number of in-service employees of main subsidiaries                                                                           2,540

Total number of in-service employees                                                                                          7,991

Total number of employees with remuneration in this Reporting
                                                                                                                              7,991
Period

Number of retirees to whom the Parent Company or its main
                                                                                                                                914
subsidiaries need to pay retirement pension

                                                              Functions

                                 Function                                                  Number of employees

Production                                                                                                                    5,194

Sales                                                                                                                         1,500

Technical                                                                                                                       330

Financial                                                                                                                       187

Administrative                                                                                                                  780

Total                                                                                                                         7,991

                                                              Education

                                 Category                                                       Number

High school or below                                                                                                          4,727

Junior college                                                                                                                1,482



                                                              ~ 58 ~
Gujing        Aged Original Spirits                                                                      Annual Report 2017


Bachelor                                                                                                                    1,722

Master or above                                                                                                                60

Total                                                                                                                       7,991


2. Employee 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. Labor Outsourcing

□ Applicable √ Not applicable




                                                           ~ 59 ~
Gujing         Aged Original Spirits                                                                         Annual Report 2017




                                       Part IX Corporate Governance

I Basic Situation 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.
Any significant incompliance with the regulatory documents issued by the CSRC governing the governance of listed companies
□ Yes √ No
There is no difference between the corporate governance and the Company Law and relevant rules of CSRC.


II Independence of Businesses, Personnel, Asset, Organizations and Finance which are
Separate from the Controlling Shareholder

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 as well as 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




                                                             ~ 60 ~
Gujing           Aged Original Spirits                                                                                   Annual Report 2017

IV Annual and Special Meetings of Shareholders Convened during this Reporting Period

1. Meetings of Shareholders Convened during this Reporting Period


                                                                                                                                   Index to the
                                                           Investor
      Meeting                     Type                                          Convened date          Disclosure date              disclosed
                                                   participation ratio
                                                                                                                                   information

                                                                                                                              Announcement on
                                                                                                                                  Resolutions of
The 2016 Annual                                                                                                                   2016 Annual
Meeting of              Annual                                   63.60% 06/20/2017                  06/21/2017                     Meeting of
Shareholders                                                                                                                      Shareholders
                                                                                                                                  disclosed on
                                                                                                                             www.cninfo.com.cn


2. Special Meetings of Shareholders Convened at the Request of Preference Shareholders with Resumed
Voting Rights

□ Applicable √ Not applicable


V Performance of Independent Directors in this Reporting Period

1. Attendance of Independent Directors in Board Meetings and Meetings of Shareholders


                          Attendance of independent directors in board meetings and meetings of shareholders

                       Due presence
                                                              Presence by         Presence
                           in this        Presence on                                                             Absent for two Presence for
                                                            telecommunica         through a       Absence for
   Independent           Reporting        site for board                                                           consecutive        meetings of
                                                             tion for board       proxy for      board meetings
      director           Period for         meetings                                                              times for board shareholders
                                                               meetings         board meetings      (times)
                      board meetings         (times)                                                                   meetings         (times)
                                                                (times)            (times)
                          (times)

Wang Ruihua                           2                 0                   2                                     No                                1

Wang Gao                              6                 0                   6                                     No                                0

Song Shuyu                            6                 1                   5                                     No                                1

Du Jie                                4                 1                   3                                     No                                1

Note to non-attendance in person for two consecutive times


2. Objections Raised by Independent Directors on Issues of the Company

Whether independent directors propose objection on relevant events or not
□ Yes √ No
No such cases in this Reporting Period.
                                                                      ~ 61 ~
Gujing         Aged Original Spirits                                                                       Annual Report 2017

3. Other Details about the Performance of Duties by 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 Duties by Specialized Committees under the Board during this 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 2017.
(2) Upon discussion with Ruihua Certified Public Accountants for the 2017 annual audit, it determined the schedule for the financial
report and internal control audit for 2017.
(3) It communicated in advance with the CPAs firm and independent directors before the CPAs firm came to the Company and
started the 2017 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 2017 annual financial statements again and made the
final resolution.
3. Duty performance of the Nomination Committee
In the reporting period, in strict compliance with the Specific Implementation Rules of the Nomination Committee, the Nomination
Committee vigorously worked on various tasks, which ensured that the senior management staffs of the Company were hired in
compliance with laws and regulations.
(1) In the Reporting Period, the senior management staff hired by the Company satisfied the requirements of the Company Law and
other relevant laws and regulations. They were qualified as senior management staff. They were not in such a case where the
Company Law should forbid them from being senior management staff. Nor they were forbidden by CSRC from entering the
securities market.
(2) In the Reporting Period, the senior management staff of the Company were nominated and hired in line with the Company Law
and the Company’s Articles of Association. The hired personnel have never been punished by CSRC, other relevant authorities or
stock exchanges.
4. Duty performance of Remuneration and Appraisal Committee
(1) The Remuneration and Appraisal Committee affiliated to the Board of Directors, according to relevant regulations of

                                                              ~ 62 ~
Gujing          Aged Original Spirits                                                                      Annual Report 2017

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 Duties by the Supervisory Committee

Did the Supervisory Committee find any risks to the Company during its supervision in this Reporting Period?
□ Yes √ No
The Supervisory Committee raised no objections in this Reporting Period.


VIII Appraisal and Incentive for Executive Officers

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 Executive Officers, 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. Serious Internal Control Defects Found in this Reporting Period

□ Yes √ No


2. Internal Control Self-evaluation Report


Disclosure date of the Self-appraisal
                                                     04/28/2018
Report on Internal Control

Disclosure index of the Self-appraisal See www.cninfo.com.cn for the 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
                                                                                                                            98.43%
Company's total assets of the consolidated
financial statements

The proportion         of   operation revenue
                                                                                                                            97.69%
included in evaluation scope           entities in

                                                                     ~ 63 ~
Gujing         Aged Original Spirits                                                                        Annual Report 2017

the Company's operation revenue of the
consolidated financial statements

                                               Defect identification standards

                       Type                           Financial-report related                    Non-financial-report related

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

                                         Critical defect:
                                                                                       Critical defect: The defect with direct
                                         (1) Wrong reporting ≥0.5% of total operating property loss amounting to over RMB10
                                         revenue;                                      million, has great negative impact on the
                                         (2) Wrong reporting ≥5% of total profit;          company and is disclosed in public in the
                                         (3) Wrong reporting ≥0.5% of total assets;        form of announcement.
Quantitative criteria
                                         (4) Wrong reporting ≥0.5% of total owner’s Major defect: The defect with direct
                                         equity.                                            property loss amounting to RMB1
                                         Major defect:                                      million to RMB10 million (included), or

                                         (1) Wrong reporting ≥0.2% but <0.5% of is penalized by governmental authority
                                         total operating revenue;                 of the country but has not resulted in


                                                            ~ 64 ~
Gujing         Aged Original Spirits                                                                         Annual Report 2017

                                                 (2) Wrong reporting ≥2% but <5% of total negative impact on the company.
                                                 profit;                                       Minor defect: The defect with direct
                                                 (3) Wrong reporting ≥0.2% but <0.5% of property loss no more than RMB1
                                                 total assets;                                 million (included), or is penalized by
                                                 (4) Wrong reporting ≥0.2% but <0.5% of governmental         authority    of     the
                                                 total owner’s equity.                        provincial-level or below but has not

                                                 Minor defect:                                 resulted in negative impact on the
                                                                                               company.
                                                 (1) Wrong reporting < 0.2% of total
                                                 operating revenue;
                                                 (2) Wrong reporting<2% of total profit;
                                                 (3) Wrong reporting<0.2% of total assets;
                                                 (4) Wrong reporting<0.2% of total owner’s
                                                 equity.

Number of serious financial-report-related
                                                                                                                                    0
defects
Number                 of              serious
                                                                                                                                    0
non-financial-report-related defects
Number                of           important
                                                                                                                                    0
financial-report-related defects
Number                of           important
                                                                                                                                    0
non-financial-report-related defects


X Auditor’s Report on Internal Control

√Applicable □Not applicable

                                       Opinion paragraph in the auditor’s 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, 2017.

Particulars about Audit Report on
                                        Disclosed
Internal Control

Disclosure date of the Audit Report
                                        04/28/2018
on Internal Control

Disclosure index of the Audit
                                        See www.cninfo.com.cn for Audit Report of Internal Control
Report on Internal Control

Type of Audit Report on Internal
                                        Standard unqualified opinion
Control

Whether there is significant defect
                                        No
in non-financial report

Whether an Audit Report on Internal Control was issued by the CPAs firm with non-standard opinion or not?
□ Yes √ No


                                                                  ~ 65 ~
Gujing         Aged Original Spirits                                                                   Annual Report 2017

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




                                                          ~ 66 ~
Gujing        Aged Original Spirits                                                                     Annual Report 2017



                                          Part X Corporate Bonds

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




                                                           ~ 67 ~
Gujing         Aged Original Spirits                                                                        Annual Report 2017



                                           Part XI Financial Report

I Auditor’s Report

Type of auditor’s opinion                                         Standard unqualified opinion

Date of signing the auditor’s report                              04/26/2018

Name of the auditor                                                Ruihua Certified Public Accountants (LLP)

No. of the auditor’s report                                       Ruihua Audit Report

Name of CPA                                                        Zhang Liping and Zhang Xianfa


                                              Text of the Auditor’s Report

To the Shareholders of Anhui Gujing Distillery Co., Ltd.,
I. Audit Opinion
We have audited the accompanying financial statements of Anhui Gujing Distillery Co., Ltd. (hereafter, the Company), which include
the Consolidated and Separate Statements of Financial Position as of 31 December 2017, the Consolidated and Separate Statements
of Comprehensive Income, the Consolidated and Separate Statements of Cash Flows, and the Consolidated and Separate Statements
of Changes in Shareholders' equity for the year then ended, and the notes to the financial statements.
In our opinion, the Financial Statements of the Company have been prepared in accordance with the Enterprise Accounting Standards
of China and present fairly, in all material respects, the consolidated and separate financial position of Anhui Gujing Distillery Co.,
Ltd. as at 31 December 2017 and its consolidated and separate results of operations and consolidated and separate cash flows for the
year then ended.
II. The basis for Forming the Audit Opinion
We conducted our audit in accordance with the Chinese Certified Public Accountants' Auditing Standards (hereafter, the Standards).
Section VI of this Report further illustrate our responsibilities in accordance with the Standards. In accordance with the Chinese
Certified Public Accountants Ethical Requirements, we are independent of the Company and fulfill our ethical responsibilities. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide an adequate basis for our audit opinion.
III. Key Audit Items
Key audit items are the items which we believe, based on our professional judgment, to be significant in the audit of financial
statements for the current period. Audit response to these items has been designed and implemented in the context of auditing the
financial statements as a whole for the purpose of expressing an audit opinion on the financial statements, and we do not express an
opinion on each of these items individually. We believe that the following items are the key audit items which warrant disclosure in
the audit report.
Revenue recognition
1.1 Description
The revenue of distilled spirit amounted to CNY 6.822 billion for the year 2017, accounting for 97.90% of the total operating revenue,
increasing 16.10% than last year. As revenue is one of the key performance indicators of the Company, and there is inherent risk of
material misstatement in the revenue recognition, we identify revenue recognition as a key audit item.
1.2 Audit response


                                                              ~ 68 ~
Gujing         Aged Original Spirits                                                                          Annual Report 2017

In response to this key audit item, we have implemented the following audit procedures:
1.2.1 We obtained an understanding and evaluated the design of internal control from the sales order authorization to the booking of
revenue, examined the effectiveness of the implementation of the key control points. We also examined the general control over the
information system of the Company and automatic control related to sales cycle.
1.2.2 We selected samples to test sales contracts, interviewed with the management, analyzed the timing when significant risks and
rewards related to the recognition of revenue transferred, in order to evaluate the rationality of revenue recognition policies.
1.2.3 We performed analytical review procedure on operating revenue, including analyzing the changes of the main dealer customers,
and the changes of revenue and gross profit margin between the current period and previous periods as well as other companies in the
same industry, in order to evaluate the rationality of revenue recognition.
1.2.4 We selected samples to trace to the source documents for the recognized revenue in order to verify the occurrence of operating
revenue. Meanwhile, we selected certain original documents to examine the book record in order to verify the completeness of
operating revenue.
1.2.5 We sent confirmations to major customers of the Company, conducted field visits to customers with large sales volume, visited
their business premises and warehouses, selected samples to examine their original documents of sales to the end customers, and
assessed the authenticity of their terminal sales in order to verify the occurrence of operating revenue.
1.2.6 We performed cutoff test on revenue to evaluate whether operating revenue had been recorded in the correct fiscal period.
The existence, valuation and allocation of inventory
 Description
The inventory of the Company amounted to CNY 2.064 billion as of 31 December 2017, accounting for 20.33% of the total asset, of
which the self-made semi-finished products and the finished products amounted to CNY 1.705 billion approximately, accounting for
82.62% of the total inventory at the year end. As inventory is the most important asset for liquor companies, and the balance of
inventory at the year end was relatively high and accounted for a large proportion of the total assets, we identify the existence,
valuation and allocation of inventory as a key audit item.
 Audit response
In response to this key audit item, we have implemented the following audit procedures:
1.2.1 We obtained an understanding and evaluated the design of internal control related to cost accounting, inventory stock in and
stock out, and stocktaking, examined the effectiveness of the implementation of the key control points. We also examined the general
control over the information system of the Company and automatic control related to inventory cycle.
1.2.2 We obtained an understanding of the accounting policy related with inventory, and evaluated whether it was in consistent with
the applicable accounting standards and the policy in the previous years.
1.2.3 We performed analytical review procedures: a) we calculated inventory turnover rate and compared it with previous period and
other companies in the same industry; b) we compared the inventory ending balance and the composition of inventory between
different months and different accounting periods to determine the overall rationality of the year-end balance and its compositions.
1.2.4 We performed stocktaking observation procedure, selected samples to examine the quantities and conditions of the inventories.
1.2.5 We selected samples to examine the cost calculation table and related documents, tested the pricing of inventory, and evaluated
the accuracy of the ending balance of inventory.
1.2.6 We obtained the inventory aging list at the end of the year, analyzed the aged inventory by considering the market condition of
the product, evaluated the rationality of the provision for inventory impairment; We obtained the calculation table of the inventory
impairment, reviewed the inventory impairment testing process, selected samples to examine whether the procedures are performed
in accordance with relative accounting policies of the Company, reviewed the current-period change of the provision of inventory
impairment in the previous period, and verified whether the provision of inventory impairment is sufficient.



                                                               ~ 69 ~
Gujing         Aged Original Spirits                                                                          Annual Report 2017

IV. Other Information
The management of the Company is responsible for other information. Other information includes information included in the
Company’s 2017 annual report; however, other information does not include the financial statements or our audit report.
The audit opinion expressed by us on the financial statements does not apply to other information. We do not express assurance
opinion in any form on the other information.
In parallel to our audit of the financial statements, our responsibilities include reading other information and assessing if the
information included in other information is significantly inconsistent with the financial statements or information obtained during
the audit and if there is possible material misstatement in other information.
Where we identify material misstatement in other information based on our works, we shall report such fact. Based on our work, we
have no such matter to be reported.
V. Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management of the Company (hereafter, the management) is responsible for preparing and presenting the financial statements in
accordance with Enterprise Accounting Standards of China and for the purpose of fair presentation and designing, implementing and
maintaining internal control necessary to the preparation of financial statements that are free from material misstatements, whether
due to fraud or error.
During the preparation of the financial statements, the management is responsible for assessing the Company’s going-concern
capability; disclosing, where applicable, matters in relation to the going-concern status; and applying the going-concern assumption
for preparation of the financial statements, unless the management plans to liquidate the Company, discontinue operation of the
Company or has no other practical alternative.
Those charged with governance are responsible for monitoring the Company’s financial reporting process.
VI. Auditors’ Responsibility for the Financial Statements
Our objective is to obtain reasonable assurance as to whether the financial statements are free from material misstatements, whether
due to fraud or error; and issue an audit report which includes an audit opinion. Reasonable assurance is a high-level assurance;
however, a high-level assurance does not guarantee a material misstatement is always detected by an audit performed in accordance
with the Standards. A misstatement can result from either frauds or errors. Misstatements are material if individually or in aggregate
the misstatements may influence the economic decision of the users of the financial statements by using the financial statements.
During the performance of our audit in accordance with the Standards, we involve professional judgments and maintain professional
skepticism; also, we perform the following procedures:
A. We identify and assess risks of material misstatements resulted from fraud or error; design and implement audit procedures to
mitigate those risks, and obtain sufficient and appropriate audit evidence as a basis for forming the audit opinion. As fraud may
involve collusion, forgery, willful omission, false statement or override over internal controls, the risk of not detecting material
misstatements resulted from fraud if higher than the risk of not detecting material misstatements resulted from the error.
B. We obtain an understanding of internal controls relevant to the audit and design audit procedures accordingly.
C. We assess the appropriateness of accounting policies adopted by the management and the reasonableness of accounting estimates
adopted by and related disclosure presented by the management.
D. We conclude on the appropriateness of the management’s going-concern assumption; we also conclude on the existence of
significant uncertainty in relation to matters or events which may trigger significant doubt on the Company’s going-concern status.
Where we conclude that significant uncertainty exists, we disclose in our audit report, in accordance with the Standards, a paragraph
that the users of the financial statements shall pay attention to the relevant disclosure in the financial statements. Where disclosure is
insufficient, we express a qualify opinion. Our conclusion is formed on the basis of information available up to the date our audit
report; however, future matters and events may still affect the Company’s going-concern status.
E. We evaluate the overall presentation, structure, and contents (including disclosure) of the financial statements; we also evaluate the

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Gujing         Aged Original Spirits                                                                      Annual Report 2017

fairness of transactions and balances presented by in the financial statements.
F. We obtain sufficient and appropriate audit evidence regarding the Company’s financial information of the entities or business
activities to express an opinion on the financial statements. We are responsible for the guidance, supervision, and execution of the
group audit. We take full responsibility for the audit opinion.
We communicate with those charged with governance on the planned audit scope, timing arrangement, and significant audit findings;
we also communicate with those charged with governance internal control weakness, which warrants attention, identified during our
audit.
We also provide a statement to those charged with governance regarding the fact that we comply with the requirements of
professional ethics relating to independence, and also communicate with them about all relationships and other matters that may be
reasonably deemed to affect our independence,as well as, where applicable, the relevant precautions.
Through the matters we communicate with those charged with governance, we identify matters that are significant in the audit of the
financial statements for the current period, which therefore become the key audit items. We disclose these items in the audit report,
unless public disclosure of such items is prohibited by laws and regulations; in exceptional circumstances, where the benefit arising
from public disclosure of certain matters is outweighed by the negative consequence brought by such disclosure in consideration of
public interest, we do not disclosure such items in the audit report.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in
the audit of the financial statements of the Current Period and are therefore the key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.




     Ruihua Certified Public Accountants (LLP)                                                 CPA:




     Beijing China                                                                              CPA:




                                                                                               April 26, 2018




                                                                  ~ 71 ~
Gujing           Aged Original Spirits                                                        Annual Report 2017

II Financial Statements

Currency unit for the statements in the notes to the financial statements: RMB


1. Consolidated Balance Sheet

Prepared by Anhui Gujing Distillery Company Limited
                                                         December 31, 2017
                                                                                                             Unit: RMB

                    Item                              December 31, 2017                 December 31, 2016

Current assets:

  Monetary assets                                                    1,484,088,626.40                 532,909,026.07

  Settlement reserve

  Interbank loans granted

  Financial assets at fair value through
                                                                            99,800.76                       429,190.68
profit or loss

  Derivative financial assets

  Notes receivable                                                     720,611,126.78                 534,386,586.59

  Accounts receivable                                                   22,466,143.06                  12,287,262.88

  Prepayments                                                           41,729,637.34                  74,784,221.59

  Premiums receivable

  Reinsurance receivables

  Receivable        reinsurance   contract
reserve

  Interest receivable                                                   13,883,178.08                   2,843,178.08

  Dividends receivable

  Other receivables                                                     15,390,106.14                  10,765,397.03

  Financial assets purchased under
resale agreements

  Inventories                                                        2,064,130,297.51               1,786,433,036.50

  Assets classified as held for sale

  Current portion of non-current assets

  Other current assets                                               1,772,310,946.58               1,750,278,829.24

Total current assets                                                 6,134,709,862.65               4,705,116,728.66

Non-current assets:

  Loans and advances to customers

  Available-for-sale financial assets                                 517,086,347.91                  404,029,552.27


                                                             ~ 72 ~
Gujing         Aged Original Spirits                                 Annual Report 2017


  Held-to-maturity investments

  Long-term receivables

  Long-term equity investments

  Investment property                                 5,343,777.33             8,402,944.74

  Property, plant and equipment                  1,792,254,178.56          1,865,691,585.06

  Construction in progress                         54,496,798.56              71,771,324.26

  Construction materials

  Proceeds from disposal of property,
plant and equipment

  Productive living assets

  Oil and gas assets

  Intangible assets                               691,381,442.67             700,684,529.08

  R&D expense

  Goodwill                                        478,283,495.29             478,283,495.29

  Long-term prepaid expense                        69,238,523.78              93,588,397.35

  Deferred income tax assets                       92,157,477.74             107,654,597.15

  Other non-current assets                        317,910,214.56             300,982,000.00

Total non-current assets                         4,018,152,256.40          4,031,088,425.20

Total assets                                    10,152,862,119.05          8,736,205,153.86

Current liabilities:

  Short-term borrowings

  Borrowings from central bank

  Customer deposits and deposits from
banks and other financial institutions

  Interbank loans obtained

  Financial liabilities at fair value
through profit or loss

  Derivative financial liabilities

  Notes payable                                   200,750,000.00              11,298,583.00

  Accounts payable                                435,615,039.83             340,972,366.21

  Advances from customers                         503,083,108.13             623,990,614.91

  Financial      assets      sold    under
repurchase agreements
  Handling charges and commissions
payable

  Payroll payable                                 372,374,014.37             288,027,136.09


                                             ~ 73 ~
Gujing         Aged Original Spirits                                   Annual Report 2017


  Taxes payable                                      420,984,845.45            486,959,651.85

  Interest payable

  Dividends payable

  Other payables                                    1,032,543,553.34           641,472,271.53

  Reinsurance payables

  Insurance contract reserve

  Payables     for   acting      trading   of
securities
  Payables for acting underwriting of
securities
  Liabilities directly associated with
assets classified as held for sale
  Current      portion      of   non-current
liabilities

  Other current liabilities                          182,846,942.10            241,487,812.54

Total current liabilities                           3,148,197,503.22         2,634,208,436.13

Non-current liabilities:

  Long-term borrowings

  Bonds payable

     Including: Preferred shares

         Perpetual bonds

  Long-term payables

  Long-term payroll payable

  Specific payables

  Provisions

  Deferred income                                     43,706,503.22             43,978,795.45

  Deferred income tax liabilities                    119,779,105.90            117,287,002.52

  Other non-current liabilities

Total non-current liabilities                        163,485,609.12            161,265,797.97

Total liabilities                                   3,311,683,112.34         2,795,474,234.10

Owners’ equity:

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

  Other equity instruments

     Including: Preferred shares

         Perpetual bonds

  Capital reserves                                  1,295,405,592.25         1,295,405,592.25

                                                ~ 74 ~
Gujing           Aged Original Spirits                                                              Annual Report 2017


  Less: Treasury shares

  Other comprehensive income                                       53,520,827.44                              36,144,477.95

  Specific reserve

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

  General reserve

  Retained earnings                                             4,349,649,698.42                           3,503,069,053.49

Total equity attributable to owners of
                                                                6,459,078,378.38                           5,595,121,383.96
Parent Company

Non-controlling interests                                         382,100,628.33                            345,609,535.80

Total owners’ equity                                           6,841,179,006.71                           5,940,730,919.76

Total liabilities and owners’ equity                          10,152,862,119.05                           8,736,205,153.86

Legal representative: Liang Jinhui                                        The Company’s chief accountant: Ye Changqing


Head of the Company’s financial department: Zhu Jiafeng


2. Parent Company Balance Sheet

                                                                                                                  Unit: RMB

                    Item                            December 31, 2017                        December 31, 2016

Current assets:

  Monetary assets                                               1,276,262,109.02                            225,792,686.26

  Financial assets at fair value through
                                                                        99,800.76                                429,190.68
profit or loss

  Derivative financial assets

  Notes receivable                                                674,521,654.40                            449,016,169.03

  Accounts receivable                                               8,509,918.03                               6,377,346.00

  Prepayments                                                       8,534,600.82                              11,815,064.19

  Interest receivable

  Dividends receivable

  Other receivables                                               130,357,778.75                            105,514,906.34

  Inventories                                                   1,818,358,884.18                           1,549,397,565.11

  Assets classified as held for sale

  Current portion of non-current assets

  Other current assets                                          1,554,870,774.98                           1,750,000,000.00

Total current assets                                            5,471,515,520.94                           4,098,342,927.61

Non-current assets:


                                                           ~ 75 ~
Gujing         Aged Original Spirits                            Annual Report 2017


  Available-for-sale financial assets         516,530,547.91            403,547,952.27

  Held-to-maturity investments

  Long-term receivables

  Long-term equity investments               1,155,089,408.32         1,155,089,408.32

  Investment property                          26,409,050.95             30,846,736.84

  Property, plant and equipment              1,303,119,011.66         1,375,089,823.91

  Construction in progress                     44,673,219.38             68,022,146.66

  Construction materials

  Proceeds from disposal of property,
plant and equipment

  Productive living assets

  Oil and gas assets

  Intangible assets                           185,868,178.71            186,370,081.28

  R&D expense

  Goodwill

  Long-term prepaid expense                    58,563,409.89             92,695,064.02

  Deferred income tax assets                   37,996,747.93             36,366,330.90

  Other non-current assets                     12,474,026.00                982,000.00

Total non-current assets                     3,340,723,600.75         3,349,009,544.20

Total assets                                 8,812,239,121.69         7,447,352,471.81

Current liabilities:

  Short-term borrowings

  Financial liabilities at fair value
through profit or loss

  Derivative financial liabilities

  Notes payable                                          0.00                28,583.00

  Accounts payable                            347,757,180.53            307,649,868.02

  Advances from customers                    1,680,678,175.37         1,003,521,896.65

  Payroll payable                             110,435,403.45             90,742,908.53

  Taxes payable                               262,884,211.13            320,037,309.94

  Interest payable

  Dividends payable

  Other payables                              173,250,790.29            282,570,379.80

  Liabilities directly associated with
assets classified as held for sale


                                         ~ 76 ~
Gujing         Aged Original Spirits                                  Annual Report 2017

  Current      portion      of   non-current
liabilities

  Other current liabilities                          18,296,415.85             37,589,367.67

Total current liabilities                          2,593,302,176.62         2,042,140,313.61

Non-current liabilities:

  Long-term borrowings

  Bonds payable

     Including: Preferred shares

         Perpetual bonds

  Long-term payables

  Long-term payroll payable

  Specific payables

  Provisions

  Deferred income                                    39,976,048.28             42,745,851.74

  Deferred income tax liabilities                    19,792,209.68             15,385,289.84

  Other non-current liabilities

Total non-current liabilities                        59,768,257.96             58,131,141.58

Total liabilities                                  2,653,070,434.58         2,100,271,455.19

Owners’ equity:

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

  Other equity instruments

     Including: Preferred shares

         Perpetual bonds

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

  Less: Treasury shares

  Other comprehensive income                         53,454,736.38             37,315,555.64

  Specific reserve

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

  Retained earnings                                4,103,151,843.38         3,307,203,353.63

Total owners’ equity                              6,159,168,687.11         5,347,081,016.62

Total liabilities and owners’ equity              8,812,239,121.69         7,447,352,471.81


3. Consolidated Income Statement

                                                                                   Unit: RMB


                                               ~ 77 ~
Gujing         Aged Original Spirits                                    Annual Report 2017


                     Item                     2017                      2016

1. Operating revenue                                 6,968,325,048.55          6,017,143,660.56

  Including: Sales revenue                           6,968,325,048.55          6,017,143,660.56

     Interest revenue

     Premium revenue

     Handling charge and commission
revenue

2. Cost of operating revenue                         5,560,167,242.54          4,997,581,551.14

  Including: Cost of sales                           1,642,588,056.43          1,523,585,779.51

     Interest expense

     Handling charge and commission
expense

     Surrenders

     Net claims paid

     Net amount provided as insurance
contract reserve

     Expenditure on policy dividends

     Reinsurance premium expense

     Taxes and surtaxes                              1,136,317,983.99           955,988,399.10

     Selling expense                                 2,170,081,383.54          1,980,127,377.89

     Administrative expense                           603,552,959.10            556,513,607.99

     Finance costs                                     -25,927,285.82            -30,253,967.33

     Asset impairment losses                           33,554,145.30             11,620,353.98

Add: Gains on changes in fair value (“-”
                                                          -113,260.71                 -5,598.43
for losses)

  Investment income (“-” for loss)                  153,433,358.26             97,837,461.25

     Including: Share of profit or loss of
joint ventures and associates

  Foreign exchange gains (“-” for losses)

  Asset disposal income (“-” for loss)                  254,763.27                345,705.61

  Other income                                         32,720,116.60

3. Operating income (“-” for loss)                 1,594,452,783.43          1,117,739,677.85

  Add: Non-operating income                            30,141,298.15             41,569,240.85

  Less: Non-operating expense                          12,376,817.78              8,554,634.67

4. Pretax income (“-” for loss)                    1,612,217,263.80          1,150,754,284.03

  Less: Income tax expense                            426,985,526.34            300,436,186.51


                                              ~ 78 ~
Gujing           Aged Original Spirits                                        Annual Report 2017


5. Net income (“-” for net loss)                         1,185,231,737.46           850,318,097.52

  5.1 Net income from continuing
                                                           1,185,231,737.46           850,318,097.52
operations (“-” for net loss)

  5.2 Net income from discontinued
operations (“-” for net loss)

  Attributable to owners of Parent
                                                           1,148,740,644.93           829,630,063.38
Company
  Attributable         to        non-controlling
                                                             36,491,092.53             20,688,034.14
interests
6. Other comprehensive income, net of
                                                             17,376,349.49            -18,337,408.56
tax
  Attributable to owners of Parent
                                                             17,376,349.49            -18,337,408.56
Company
      6.1     Items    that      will    not     be
reclassified to profit or loss
         6.1.1 Changes in net liabilities or
assets caused by re-measurements on
defined benefit pension schemes
         6.1.2        Share         of         other
comprehensive income of investees that
will not be reclassified to profit or loss
under equity method
      6.2 Items that may subsequently be
                                                             17,376,349.49            -18,337,408.56
reclassified to profit or loss
         6.2.1        Share         of         other
comprehensive income of investees that
will be reclassified to profit or loss under
equity method
         6.2.2 Gains/Losses on changes in
fair value of available-for-sale financial                   17,376,349.49            -18,337,408.56
assets
         6.2.3 Gains/Losses arising from
reclassification       of        held-to-maturity
investments to available-for-sale financial
assets
         6.2.4 Effective gains/losses on
cash flow hedges
         6.2.5 Differences arising from
translation                 of            foreign
currency-denominated                     financial
statements

         6.2.6 Other


                                                       ~ 79 ~
Gujing           Aged Original Spirits                                                               Annual Report 2017

   Attributable         to    non-controlling
interests

7. Total comprehensive income                                     1,202,608,086.95                           831,980,688.96

   Attributable to owners of Parent
                                                                  1,166,116,994.42                            811,292,654.82
Company
   Attributable         to    non-controlling
                                                                     36,491,092.53                             20,688,034.14
interests

8. Earnings per share

   8.1 Basic earnings per share                                               2.28                                         1.65

   8.2 Diluted earnings per share                                             2.28                                         1.65


Legal representative: Liang Jinhui                                         The Company’s chief accountant: Ye Changqing


Head of the Company’s financial department: Zhu Jiafeng


4. Parent Company Income Statement

                                                                                                                   Unit: RMB

                     Item                                  2017                                      2016

1. Sales revenue                                                  3,789,547,842.84                          3,308,399,250.03

   Less: Cost of sales                                            1,481,030,950.69                          1,436,794,457.51

        Taxes and surtaxes                                         974,280,790.69                            857,620,971.74

        Selling expense                                            172,260,238.41                            271,599,513.92

        Administrative expense                                     423,030,438.54                            390,774,681.63

        Finance costs                                               -15,108,236.44                            -12,139,559.51

        Asset impairment losses                                     31,237,595.99                              13,749,391.73

   Add: Gains on changes in fair value
                                                                       -113,260.71                                 -5,598.43
(“-” for losses)

        Investment income (“-” for loss)                         578,847,735.30                            507,037,614.00

          Including: Share of profit or loss
of joint ventures and associates
        Asset disposal income (“-” for
                                                                        23,533.98                                          0.00
loss)

        Other income                                                20,408,700.71                                          0.00

2. Operating income (“-” for loss)                              1,321,982,774.24                           857,031,808.58

   Add: Non-operating income                                        17,009,324.56                              35,019,767.09

   Less: Non-operating expense                                       9,222,061.73                               6,151,343.05

3. Pretax income (“-” for loss)                                 1,329,770,037.07                           885,900,232.62


                                                           ~ 80 ~
Gujing          Aged Original Spirits                                           Annual Report 2017


  Less: Income tax expense                                    231,661,547.32            115,388,301.28

4. Net income (“-” for net loss)                           1,098,108,489.75           770,511,931.34

  4.1 Net income from continuing
                                                             1,098,108,489.75           770,511,931.34
operations (“-” for net loss)

  4.2 Net income from discontinued
operations (“-” for net loss)

5. Other comprehensive income, net of
                                                               16,139,180.74            -17,166,330.87
tax
  5.1 Items that will not be reclassified
to profit or loss
       5.1.1 Changes in net liabilities or
assets caused by re-measurements on
defined benefit pension schemes
       5.1.2        Share               of      other
comprehensive income of investees that
will not be reclassified into profit or
loss under equity method
  5.2 Items that may subsequently be
                                                               16,139,180.74            -17,166,330.87
reclassified to profit or loss
       5.2.1        Share               of      other
comprehensive income of investees that
will be reclassified into profit or loss
under equity method
       5.2.2 Gains/Losses on changes in
fair value of available-for-sale financial                     16,139,180.74            -17,166,330.87
assets
       5.2.3 Gains/Losses arising from
reclassification          of         held-to-maturity
investments          to             available-for-sale
financial assets
       5.2.4 Effective gains/losses on
cash flow hedges
       5.2.5 Differences arising from
translation                    of             foreign
currency-denominated                         financial
statements

       5.2.6 Other

6. Total comprehensive income                                1,114,247,670.49           753,345,600.47

7. Earnings per share

      7.1 Basic earnings per share                                       2.18                        1.53

      7.2 Diluted earnings per share                                     2.18                        1.53


                                                         ~ 81 ~
Gujing           Aged Original Spirits                                      Annual Report 2017

5. Consolidated Cash Flow Statement

                                                                                         Unit: RMB

                        Item                      2017                      2016

1. Cash generated by or used in
operating activities:
  Proceeds from sale of commodities
                                                         7,041,950,513.29          7,031,888,740.85
and rendering of services
  Net increase in customer deposits and
deposits from banks and other financial
institutions
  Net increase in loans from central
bank
  Net increase in loans from other
financial institutions
  Premiums         received      on   original
insurance contracts

  Net proceeds from reinsurance

  Net        increase     in    deposits    and
investments of policy holders
  Net      increase      in    proceeds    from
disposal of financial assets at fair value
through profit or loss
  Interest,      handling       charges     and
commissions received
  Net increase in interbank loans
obtained
  Net      increase      in    proceeds    from
repurchase transactions

  Tax rebates received                                     20,901,711.56             16,218,721.25

  Cash generated by other operating
                                                          410,064,046.58            345,789,490.57
activities
Subtotal of cash generated by operating
                                                         7,472,916,271.43          7,393,896,952.67
activities

  Payments for goods and services                         685,079,409.14           1,761,253,852.47

  Net increase in loans and advances to
customers
  Net increase in deposits in central
bank and in interbank loans granted
  Payments for claims on original
insurance contracts

  Interest,      handling       charges     and

                                                  ~ 82 ~
Gujing          Aged Original Spirits                                      Annual Report 2017

commissions paid

  Policy dividends paid

  Cash paid to and for employees                       1,379,482,541.55          1,130,548,519.54

  Taxes paid                                           2,588,903,933.28          2,041,224,545.61

  Cash       used      in     other    operating
                                                       1,888,535,674.68          1,277,638,226.99
activities
Subtotal of cash used in operating
                                                       6,542,001,558.65          6,210,665,144.61
activities

Net cash flows from operating activities                930,914,712.78           1,183,231,808.06

2. Cash generated by or used in
investing activities:

  Proceeds from disinvestments                         5,542,089,013.38          3,325,502,933.15

  Investment income received                             87,735,460.11              78,724,727.77

  Net    proceeds           from   disposal   of
property,      plant         and      equipment,
                                                            2,275,291.91             4,761,778.98
intangible assets and other long-lived
assets
  Net    proceeds           from   disposal   of
subsidiaries or other business units
  Cash generated by other investing
                                                            5,715,000.00             2,481,400.00
activities
Subtotal of cash generated by investing
                                                       5,637,814,765.40          3,411,470,839.90
activities
  Payments for acquisition of property,
plant and equipment, intangible assets                  200,093,340.76             172,716,601.62
and other long-lived assets

  Payments for investments                             5,570,236,537.09          3,973,944,183.44

  Net increase in pledged loans granted

  Net payments for acquisition of
                                                                                   805,830,032.45
subsidiaries and other business units
  Cash       used      in     other    investing
activities
Subtotal of cash used in investing
                                                       5,770,329,877.85          4,952,490,817.51
activities

Net cash flows from investing activities                -132,515,112.45          -1,541,019,977.61

3. Cash generated by or used in
financing activities:

  Capital contributions received

     Including: Capital contributions by
non-controlling interests to subsidiaries


                                                   ~ 83 ~
Gujing          Aged Original Spirits                                         Annual Report 2017


  Increase in borrowings                                               0.00             1,000,000.00

  Net proceeds from issuance of bonds

  Cash generated by other financing
activities
Subtotal of cash generated by financing
                                                                       0.00             1,000,000.00
activities

  Repayment of borrowings                                              0.00             1,000,000.00

  Payments for interest and dividends                       302,160,000.00             50,360,000.00

       Including:     Dividends        paid   by
subsidiaries to non-controlling interests
  Cash       used     in     other     financing
                                                                       0.00           104,376,537.45
activities
Subtotal of cash used in financing
                                                            302,160,000.00            155,736,537.45
activities

Net cash flows from financing activities                   -302,160,000.00           -154,736,537.45

4. Effect of foreign exchange rate
changes on cash and cash equivalents
5. Net increase in cash and cash
                                                            496,239,600.33           -512,524,707.00
equivalents
Add:     Cash       and    cash      equivalents,
                                                            527,849,026.07           1,040,373,733.07
beginning of the period
6. Cash and cash equivalents, end of the
                                                           1,024,088,626.40           527,849,026.07
period


6. Parent Company Cash Flow Statement

                                                                                           Unit: RMB

                      Item                          2017                      2016

1. Cash generated by or used in
operating activities:
  Proceeds from sale of commodities
                                                           4,173,273,698.71          4,048,263,462.34
and rendering of services

  Tax rebates received                                       13,013,817.25             15,009,167.60

  Cash generated by other operating
                                                             34,644,114.33             44,493,823.06
activities
Subtotal of cash generated by operating
                                                           4,220,931,630.29          4,107,766,453.00
activities

  Payments for goods and services                           899,290,002.74           1,629,164,465.68

  Cash paid to and for employees                            509,129,615.74            491,016,401.44

  Taxes paid                                               1,745,217,861.34          1,345,928,486.58


                                                    ~ 84 ~
Gujing          Aged Original Spirits                                      Annual Report 2017

  Cash       used      in     other    operating
                                                        711,716,384.50              89,125,570.51
activities
Subtotal of cash used in operating
                                                       3,865,353,864.32          3,555,234,924.21
activities

Net cash flows from operating activities                355,577,765.97             552,531,528.79

2. Cash generated by or used in
investing activities:

  Proceeds from disinvestments                         5,331,270,532.13          3,271,955,614.05

  Investment income received                            523,008,318.40             492,653,360.82

  Net    proceeds           from   disposal   of
property,      plant         and      equipment,
                                                             501,088.26              3,995,766.04
intangible assets and other long-lived
assets
  Net    proceeds           from   disposal   of
subsidiaries or other business units
  Cash generated by other investing
                                                            1,826,000.00             1,167,400.00
activities
Subtotal of cash generated by investing
                                                       5,856,605,938.79          3,769,772,140.91
activities
  Payments for acquisition of property,
plant and equipment, intangible assets                  141,317,744.91             157,553,414.54
and other long-lived assets

  Payments for investments                             5,168,236,537.09          3,621,248,401.74

  Net payments for acquisition of
                                                                    0.00           816,000,000.00
subsidiaries and other business units
  Cash       used      in     other    investing
activities
Subtotal of cash used in investing
                                                       5,309,554,282.00          4,594,801,816.28
activities

Net cash flows from investing activities                547,051,656.79            -825,029,675.37

3. Cash generated by or used in
financing activities:

  Capital contributions received

  Increase in borrowings

  Net proceeds from issuance of bonds

  Cash generated by other financing
activities
Subtotal of cash generated by financing
activities

  Repayment of borrowings

  Payments for interest and dividends                   302,160,000.00              50,360,000.00

                                                   ~ 85 ~
Gujing          Aged Original Spirits                                    Annual Report 2017

  Cash       used     in    other     financing
activities
Sub-total of cash used in financing
                                                        302,160,000.00            50,360,000.00
activities

Net cash flows from financing activities               -302,160,000.00           -50,360,000.00

4. Effect of foreign exchange rate
changes on cash and cash equivalents
5. Net increase in cash and cash
                                                        600,469,422.76          -322,858,146.58
equivalents
Add:     Cash       and    cash     equivalents,
                                                        225,792,686.26           548,650,832.84
beginning of the period
6. Cash and cash equivalents, end of the
                                                        826,262,109.02           225,792,686.26
period




                                                   ~ 86 ~
Gujing             Aged Original Spirits                                                                        Annual Report 2017



7. Consolidated Statements of Changes in Owners’ Equity

2017
                                                                                                                                                                                               Unit: RMB

                                                                                                               2017

                                                                         Equity attributable to owners of Parent Company
         Item                               Other equity instruments                                                                                                        Non-controlling   Total owners’
                                                                                           Less:       Other
                                                                                                                    Specific      Surplus       General      Retained
                            Share capital Preferred Perpetual           Capital reserves Treasury comprehensive                                                                interests         equity
                                                                Other                                               reserve       reserves      reserve       earnings
                                            shares    bonds                                shares     income

1. Balances as of
                           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
end of prior year
Add:     Adjustments
for           changed
accounting policies
     Adjustments for
corrections           of
previous errors
     Adjustments for
business       mergers
under same control
     Other
adjustments
2. Balances as of
beginning       of   the 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
year
3.            Increase/
                                                                                                    17,376,349.49                                          846,580,644.93    36,491,092.53    900,448,086.95
decrease      in     the

                                                                                                    ~ 87 ~
Gujing                  Aged Original Spirits               Annual Report 2017

period         (“-”     for
decrease)
  3.1                   Total
comprehensive                                   17,376,349.49                    1,148,740,644.93   36,491,092.53 1,202,608,086.95
income
  3.2              Capital
increased                 and
reduced by owners
       3.2.1 Common
shares increased by
shareholders
       3.2.2 Capital
increased by
holders of other
equity instruments
       3.2.3
Share-based
payments included
in owners’ equity

       3.2.4 Other

 3.3                    Profit
                                                                                 -302,160,000.00                  -302,160,000.00
distribution
       3.3.1
Appropriation              to
surplus reserves
       3.3.2
Appropriation              to
general reserve


                                                ~ 88 ~
Gujing          Aged Original Spirits            Annual Report 2017

     3.3.3
Appropriation        to
                                                                      -302,160,000.00   -302,160,000.00
owners              (or
shareholders)

     3.3.4 Other

  3.4
Carry-forwards
within        owners’
equity
     3.4.1 Increase
in capital (or share
capital) from capital
reserves
     3.4.2 Increase
in capital (or share
capital)         from
surplus reserves
     3.4.3    Surplus
reserves     used   to
make up losses

     3.4.4 Other

3.5 Specific reserve

     3.5.1
Withdrawn for the
period
     3.5.2       Used
during the period

3.6 Other

                                        ~ 89 ~
Gujing           Aged Original Spirits                                                                              Annual Report 2017

4. Balances as of
                          503,600,000.00                               1,295,405,592.25             53,520,827.44              256,902,260.27             4,349,649,698.42 382,100,628.33 6,841,179,006.71
end of the period

2016
                                                                                                                                                                                                   Unit: RMB

                                                                                                               2016

                                                                       Equity attributable to owners of Parent Company
         Item                              Other equity instruments                                                                                                          Non-controlling    Total owners’
                                                                                          Less:        Other
                                                                                                                    Specific      Surplus       General      Retained
                          Share capital Preferred Perpetual           Capital reserves Treasury comprehensive                                                                   interests           equity
                                                              Other                                                 reserve       reserves      reserve       earnings
                                           shares    bonds                                shares      income

1. Balances as of
                         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
end of prior year
Add: Adjustments
for          changed
accounting
policies
     Adjustments for
corrections         of
previous errors
     Adjustments for
business      mergers
under same control
     Other
adjustments
2. Balances as of
beginning of 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
year

3.           Increase/                                                     467,099.06              -18,337,408.56                                          779,270,063.38 345,609,535.80 1,107,009,289.68


                                                                                                   ~ 90 ~
Gujing               Aged Original Spirits                    Annual Report 2017

decrease       in      the
period      (“-”     for
decrease)
  3.1                Total
comprehensive                                -18,337,408.56                        829,630,063.38   20,688,034.14   831,980,688.96
income
  3.2           Capital
increased              and
reduced by owners
       3.2.1
Common shares
increased by
shareholders
       3.2.2 Capital
increased by
holders of other
equity instruments
       3.2.3
Share-based
payments included
in owners’ equity

       3.2.4 Other

 3.3                 Profit
                                                                                   -50,360,000.00                   -50,360,000.00
distribution
       3.3.1
Appropriation           to
surplus reserves

       3.3.2


                                             ~ 91 ~
Gujing           Aged Original Spirits            Annual Report 2017

Appropriation        to
general reserve
      3.3.3
Appropriation        to
                                                                       -50,360,000.00   -50,360,000.00
owners              (or
shareholders)

      3.3.4 Other

  3.4
Carry-forwards
within        owners’
equity
      3.4.1 Increase
in capital (or share
capital)         from
capital reserves
      3.4.2 Increase
in capital (or share
capital)         from
surplus reserves
      3.4.3 Surplus
reserves used to
make up losses

      3.4.4 Other

3.5           Specific
reserve
      3.5.1
Withdrawn for the
period


                                         ~ 92 ~
Gujing            Aged Original Spirits                                                                          Annual Report 2017

       3.5.2      Used
during the period

3.6 Other                                                                   467,099.06                                                                               324,921,501.66   325,388,600.72

4. Balances as of
                           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
end of the period


8. Parent Company Statements of Changes in Owners’ Equity

2017
                                                                                                                                                                                        Unit: RMB

                                                                                                                  2017

                                                         Other equity instruments                        Less:              Other
               Item                                                                                                                      Specific      Surplus         Retained       Total owners’
                                      Share capital   Preferred Perpetual            Capital reserves   Treasury     comprehensive
                                                                             Other                                                       reserve       reserves        earnings          equity
                                                       shares     bonds                                  shares            income

1. Balances as of end of
                                     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
prior year
Add:       Adjustments         for
changed               accounting
policies
     Adjustments               for
corrections of previous
errors

     Other adjustments

2.      Balances         as    of
                                     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
beginning of the year
3. Increase/ decrease in
                                                                                                                         16,139,180.74                               795,948,489.75   812,087,670.49
the      period       (“-”   for


                                                                                               ~ 93 ~
Gujing           Aged Original Spirits            Annual Report 2017

decrease)
     3.1                   Total
                                                       16,139,180.74   1,098,108,489.75 1,114,247,670.49
comprehensive income
     3.2 Capital increased
and reduced by owners
       3.2.1 Common shares
increased by shareholders
       3.2.2 Capital
increased by holders of
other equity instruments
       3.2.3 Share-based
payments included in
owners’ equity

       3.2.4 Other

     3.3 Profit distribution                                           -302,160,000.00 -302,160,000.00

       3.3.1    Appropriation
to surplus reserves
       3.3.2    Appropriation
to          owners           (or                                       -302,160,000.00 -302,160,000.00
shareholders)

       3.3.3 Other

     3.4       Carry-forwards
within owners’ equity
       3.4.1    Increase       in
capital (or share capital)
from capital     reserves
       3.4.2    Increase       in
capital (or share capital)

                                         ~ 94 ~
Gujing           Aged Original Spirits                                                                         Annual Report 2017

from surplus reserves
       3.4.3            Surplus
reserves used to make up
losses

       3.4.4 Other

3.5 Specific reserve

       3.5.1 Withdrawn for
the period
       3.5.2 Used during the
period

3.6 Other

4. Balances as of end of
                                   503,600,000.00                                  1,247,162,107.35                 53,454,736.38              251,800,000.00 4,103,151,843.38 6,159,168,687.11
the period

2016
                                                                                                                                                                                   Unit: RMB

                                                                                                                2016

                                                       Other equity instruments                        Less:           Other
               Item                                                                                                                 Specific      Surplus         Retained      Total owners’
                                    Share capital   Preferred Perpetual            Capital reserves   Treasury    comprehensive
                                                                           Other                                                    reserve       reserves        earnings          equity
                                                     shares     bonds                                  shares          income

1. Balances as of 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
prior year
Add:       Adjustments       for
changed               accounting
policies
  Adjustments                for
corrections      of     previous
errors

                                                                                             ~ 95 ~
Gujing            Aged Original Spirits                                  Annual Report 2017


     Other adjustments

2.         Balances    as      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
beginning of the year
3. Increase/ decrease in the
                                                                            -17,166,330.87                    720,151,931.34    702,985,600.47
period (“-” for decrease)
     3.1 Total comprehensive
                                                                            -17,166,330.87                    770,511,931.34    753,345,600.47
income
     3.2 Capital increased
and reduced by owners
       3.2.1 Common shares
increased by shareholders
       3.2.2 Capital
increased by holders of
other equity instruments
       3.2.3 Share-based
payments included in
owners’ equity

       3.2.4 Other

     3.3 Profit distribution                                                                                   -50,360,000.00   -50,360,000.00

       3.3.1     Appropriation
to surplus reserves
       3.3.2     Appropriation
to            owners           (or                                                                             -50,360,000.00   -50,360,000.00
shareholders)

       3.3.3 Other

     3.4        Carry-forwards
within owners’ equity


                                                                ~ 96 ~
Gujing          Aged Original Spirits                               Annual Report 2017

     3.4.1     Increase    in
capital (or share capital)
from capital    reserves
     3.4.2     Increase    in
capital (or share capital)
from surplus reserves
     3.4.3 Surplus reserves
used to make up losses

     3.4.4 Other

3.5 Specific reserve

     3.5.1 Withdrawn for
the period
     3.5.2 Used during the
period

3.6 Other

4. Balances as of end of
                                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
the period




                                                           ~ 97 ~
Gujing    Aged Original Spirits                                           Annual Report 2017


                                  Anhui Gujing Distillery Co., Ltd.
                             Notes to the Financial Statements
                          for the Year Ended 31 December 2017
            (All amounts are expressed, unless otherwise stated, in 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 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 registered on 30 May 1996 by Administration for Industry and Commerce of
Anhui province.
The Company 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 on 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 was 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 has discussed and approved the proposal of the shareholdings reform,
and the reform was implemented in June 2006. After the Company’s shareholdings
reform implemented, all shares of the Company became floating shares, which included
147,000,000 shares with restricted condition on disposal, representing 62.55% of total

                                               ~ 98 ~
Gujing    Aged Original Spirits                                           Annual Report 2017


share capital, and 88,000,000 shares without restricted condition on disposal, representing
37.45% of total share capital.
On 27 June 2007, the Company issued the by Anhui Gujing Distillery Co., Ltd.>, the 11,750,000 restricted outstanding shares with the
restricted condition on disposal became non-restricted in the stock market, and the
conversion date is on 29 June 2007. Hence, outstanding shares with the restrict condition
on disposal are 135,250,000 shares, representing 57.55% of total share capital, the share
without restricting condition on disposal are 99,750,000 shares, representing 42.45% of
total share capital.
On 17 July 2008, the Company issued the by Anhui Gujing Distillery Co., Ltd.>, the 11,750,000 restricted outstanding shares with the
restricted condition on disposal became non-restricted in the stock market, and the
conversion date is on 18 July 2008. Hence, outstanding shares with the restricted
condition on disposal were 123,500,000 shares, representing 52.55% of total share
capital, the share without restricting condition on disposal are 111,500,000 shares,
representing 47.45% of total share capital.
On 24 July 2009, the Company issued the Anhui Gujing Distillery Co., Ltd.>, the 123,500,000 restricted outstanding shares with
the restricted condition on disposal became non-restricted in the stock market, and the
conversion date was on 29 July 2009. Hence, all shares of the Company became
outstanding shares without restricted condition on disposal.
According to the approval by China Securities Regulatory Commission (the authorization
file No. zhengjianxuke[2011]943), on 15 July 2011, the Company privately issued
16,800,000 shares of ordinary share (A shares) to specific investors, the par value was
CNY 1 per share, and the offering price was CNY 75 per share, the funds raised amounted
to CNY 1,260 million. After deducting the sundry issuing charges amounting to CNY
32,500,549.73, the actual funds raised amounted to CNY 1,227,499,450.27. The position
of the above raised funds has been verified by Reanda Certified Public Accountants Co.,
Ltd. with a Capital Verification Report (REANDA YAN ZI[2011]No.1065). After the
non-public issuance, the share capital of the Company increased to CNY 251.80 million.
According to the resolution of 2011 annual general meeting of stockholders, the company
converted 10 shares for each10 shares from capital reserves based on the 251.80 million
shares on 31 December 2011, the total number of converted shares was 251.80 million,
and the transfer was implemented in 2012. After the conversion, the registered capital
increased to CNY 503.60 million.
                                          ~ 99 ~
Gujing     Aged Original Spirits                                          Annual Report 2017


As of 31 December 2017, the accumulated number of issued capital was 503.60 million
shares. See Note 6.28 for details.
The company registered in Gujing town, Bozhou city, Anhui province.
The approved business scope of the Company: grain procurement (operation by license),
production of distilled spirits, brewing equipment, packaging materials, glass bottles,
alcohol,     grease (limited to the by-products from alcohol production), high-tech
development, biotechnology development, deep processing of agricultural and sideline
products, sales of self-produced products.
The parent company of the Company and ultimate parent company is Anhui Gujing Group
Co., Ltd. incorporated in China.
The financial statement is approved by the resolution of the board of directors on 26 April
2018. According to the articles of association, the financial statements will be submitted to
the shareholders meeting for consideration.
The consolidation scope includes 24 subsidiaries in total in 2017, and please see Note 8
“Interest in other entities” for details. The consolidation scope was increased by 3
subsidiaries than prior year and please see Note 7 “Changes of the scope of consolidated
financial statements” for details.


Note 2 Basis for preparation of the financial statements
The Financial Statements of the Company are prepared on the basis of going concern and
with reference to the actual occurrence of transactions and events; in accordance with the
Enterprise Accounting Standard - Basic Standard (issued by the Ministry of Finance Order
No.33, revised by the Ministry of Finance Order No.76), the 42 specific accounting
standards, the Enterprise Accounting Standards Application Guidance, the Enterprise
Accounting Standards Interpretation and other relevant provisions issued and revised on
15 February 2006 and subsequently by the Ministry of Finance (hereafter, collectively the
CAS); and in accordance with the Preparation Directive for Company Information
Disclosure of Publicly Listed Companies 15 - General Financial Report Directive revised in
2014 by China Securities Regulatory Commission.
In accordance with relevant provisions the CAS, the Group adopts the accrual basis for
daily book-keeping. Elements of the Financial Statements, except for certain financial
instruments and investment properties, are measured using the historical convention.
Held-for-sale non-current assets are measured at the lower of fair value less predictable
costs and the original book value at the recognition date. Allowance is recognized for any
                                         ~ 100 ~
Gujing     Aged Original Spirits                                            Annual Report 2017


asset that is impaired in accordance with relevant regulatory provisions.


Note 3 Declaration of compliance with the CAS
The Company's Financial Statements has been prepared in accordance with the CAS and
present truly and completely the financial position of the Company as at 31 December 2017
and its operation results, cash flows and relevant information for the year then ended. And,
the Financial Statements of the Company has been prepared, in all material respects, in
accordance with the disclosure provisions relevant to financial statements and the
accompanying notes provided by the Preparation Directive for Company Information
Disclosure of Publicly Listed Companies 15 - General Financial Report Directive revised in
2014 by China Securities Regulatory Commission.


Note 4 Significant 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.

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4.4 Accounting for business combinations under common control and under
different control
A business combination is a transaction or event that brings together two or more separate
entities into one reporting entity. Business combinations are classified into business
combinations involving enterprises under common control and business combinations not
involving enterprises under common control.
4.4.1 Business combination involving entities under common control
A business combination involving enterprises under common control is a business
combination in which all of the combining enterprises are ultimately controlled by the same
party or parties both before and after the combination, and that control is not transitory.
For a business combination involving enterprises under common control, the party that, on
the combination date, obtains control of another enterprise participating in the combination
is the absorbing party, while that other enterprise participating in the combination is a party
being absorbed. Combination date is the date on which the absorbing party effectively
obtains control of the party being absorbed.
The assets and liabilities obtained are measured at the carrying amounts as recorded by
the enterprise being combined at the combination date. The difference between the
carrying amount of the net assets obtained and the carrying amount of consideration paid
for the combination (or the total face value of shares issued) is adjusted to the capital
premium (or share premium) in the capital reserve. If the balance of the capital premium (or
share premium) is insufficient, any excess is adjusted to retained earnings.
The cost of a combination incurred by the absorbing party includes any costs directly
attributable to the combination shall be recognized as an expense through profit or loss for
the current period when incurred.
4.4.2 Business combination involving entities not under common control
A business combination involving enterprises not under common control is a business
combination in which all of the combining enterprises are not ultimately controlled by the
same party or parties both before and after the business combination.
For a business combination not involving enterprises under common control, the party that,
on the acquisition date, obtains control of another enterprise participating in the
combination is the acquirer, while that other enterprise participating in the combination is
the acquiree. Acquisition date is the date on which the acquirer effectively obtains control of
the acquiree.

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For a business combination not involving enterprise under common control, the combined
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 the acquisition,
additional information can prove the existence of related information at the 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
conformity 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 temporary deductible 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 the profit of the current period.
Apart from above, the differences shall be taken into profit or loss of the current period if the
recognition of deferred income tax assets is related to the combination.
For a business combination not involving enterprise under common control, which achieved
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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 belongs
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
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includes the Company and all of the subsidiaries. The 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 of 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 appropriate; no adjustment is made to the opening balance and comparative
figures in the consolidated financial statements.
Where a subsidiary was acquired during the reporting period, through a business
combination involving enterprises under common control, the financial statements of the
subsidiary are included in the consolidated financial statements. The results of operations
and cash flow are included in the consolidated balance sheet and the consolidated income
statement, respectively, based on their carrying amounts, from the date that common
control was established, and the opening balances and the comparative figures of the
consolidated financial statements are restated.
When the accounting period or accounting policies of a subsidiary are different from those
of the Company, the Company makes necessary adjustments to the financial statements of
the subsidiary based on the Company’s own accounting period or accounting policies.
Where a subsidiary was acquired during the reporting period through a business
combination not under common control, the financial statements were reconciled 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.


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Minority interest and the portion of 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 (i.e., in addition to the former subsidiary, which is remeasured at the net
defined benefit plan or changes in net assets and liabilities resulting from, the rest
subsidiaries 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 result from multiple transactions (agreements), the
assessment 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 occurrence of one agreement is dependent on the
result of at least another one agreement; and/or 4) any one single agreement is not

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recognized 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
multiple agreements satisfy the conditions of being viewed as a single transaction, each
agreement shall be treated and accounted for as a transaction which results in loss of
control; differences between the consideration for disposals prior to loss of control and the
net assets proportionate to the shares disposed prior to loss of control are recognized as
other comprehensive income in the consolidated financial statements and transferred to
profit or loss at the time of loss of control.
4.6 Joint arrangement and accounting for joint operations
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 on 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, and obligations 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

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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 foreign monetary currency and non-monetary foreign currency
At the balance sheet date, foreign currency monetary items are translated using the spot
exchange rate at the balance sheet date. All the exchange differences thus resulted are
taken to profit or loss, except for ① those relating to foreign currency borrowings
specifically for construction and acquisition of qualifying assets, which are capitalized in
accordance with the principle of capitalization of borrowing costs, ②hedging accounting,
the exchange difference related to hedging instruments for the purpose of net oversea
operating investment is recorded in the comprehensive income till the date of disposal and
recognized in profit or loss of the period; exchange difference from changes of other
account balance of foreign currency monetary items, ③available-for-trade is recorded into
profit or loss except for amortized cost.
Non-monetary foreign currency items measured at historical cost shall still be translated at
the spot exchange rate prevailing on the transaction date, and the amount denominated in
the functional currency is not changed. Non-monetary foreign currency items measured at
fair value are translated at the spot exchange rate prevailing at the date when the fair
values are determined. The exchange difference thus resulted are recognized in profit or
loss for the current period or as capital reserve.
4.9 Financial instruments
The company recognizes the financial assets or liabilities when involved in financial
instruments’ agreements. The financial assets or liabilities are measured at fair value when
initially recognized. For financial instruments whose value is measured at fair value, the

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related trading fees of whom are recorded into gains or loss; For other financial instruments,
the related fees are recognized as part of initial value.
4.9.1 Recognition 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 recognized 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 through 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 the short term;
B. the financial asset is a part of a portfolio of identifiable financial instruments that are

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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.
A financial asset is designated on initial recognition as at fair value through profit or loss
only when it meets one of the following conditions:
A. the designation eliminates or significantly reduces the inconsistency in the measurement
or recognition of relevant gains or losses that would otherwise arise from measuring the
financial instruments on different bases.
B. a Group of financial instruments is managed, and its performance is evaluated on a fair
value basis and is reported to the enterprise’s key management personnel. 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 a positive intention and ability to hold to
maturity. Such kind of financial assets is 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.
The 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 by 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 a fixed, determinable
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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 as investment gains.
4.9.3 Impairment of financial assets
The Group assesses at the balance sheet date the carrying amount of every financial asset
except for the financial assets that measured by the fair value. If there is objective evidence
indicating a financial asset may be impaired, a provision is provided for the impairment.
4.9.3.1 Impairment on held-to-maturity investment, loans, and receivables
The financial assets measured by cost or amortized cost write down their carrying value by
the estimated present value of future cash flow. The difference is recorded as an
impairment loss. If there is objective evidence to indicate the recovery of the value of
financial assets after impairment, and it is related to the 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

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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 the capital reserve shall be removed and
recognized in profit or loss. The amount of the cumulative loss that is removed shall be the
difference between the acquisition cost with a deduction of a 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&ensp