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个股公告正文

古井贡B:2018年半年度报告(英文版)

日期:2018-08-28附件下载

    ANHUI GUJING DISTILLERY COMPANY LIMITED
    
    INTERIM REPORT 2018
    
    August 2018
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    Part I Important Notes, Table of Contents and Definitions
    
    The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,
    
    supervisors and senior management of Anhui Gujing Distillery Company Limited (hereinafter
    
    referred to as the “Company”) hereby guarantee the factuality, accuracy and completeness of
    
    the contents of this Report and its summary, and shall be jointly and severally liable for any
    
    misrepresentations, misleading statements or material omissions therein.
    
    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
    
    and its summary.
    
    Any plans for the future and other forward-looking statements mentioned in this Report and
    
    its summary shall NOT be considered as absolute promises of the Company to investors.
    
    Therefore, investors are reminded to exercise caution when making investment decisions.
    
    The Company has no interim dividend plan, either in the form of cash or stock.
    
    This Report and its summary have been prepared in both Chinese and English. Should there
    
    be any discrepancies or misunderstandings between the two versions, the Chinese versions
    
    shall prevail.
    
    ~ 2 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    Contents
    
    Part I Important Notes, Table of Contents and Definitions 2
    
    Part II Corporate Information and Key Financial Information 5
    
    Part III Business Summary 8
    
    Part IV Operating Performance Discussion and Analysis 9
    
    Part V Significant Events 21
    
    Part VI Share Changes and Shareholder Information 28
    
    Part VII Preferred Shares 32
    
    Part VIII Directors, Supervisors and Senior Management 33
    
    Part IX Corporate Bonds 34
    
    Part X Financial Report 35
    
    Part XI Documents Available for Reference 158
    
    ~ 3 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    Definitions
    
                    Term                                      Definition
    The “Company”,“GuJing”or“we”           Anhui Gujing Distillery Company Limited and its consolidated subsidiaries,
                                       exceptwherethecontextotherwiserequires
    Gujing Group                          AnhuiGujingGroupCo.,Ltd.
    YellowCraneTower                     YellowCraneTowerDistilleryCo.,Ltd.
    The “ReportingPeriod”or“CurrentPeriod”      Theperiodfrom1January2018to30June2018
    RMB, RMB’0,000                      Expressed in the Chinese currency of Renminbi, expressed in ten thousand
                                       Renminbi
    
    
    ~ 4 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    Part II Corporate Information and Key Financial InformationI Corporate Information
    
    Stock name                  Gujing   Distillery,   GujingStockcode             000596,200596
                              Distillery-B
    Stock exchangeforstocklisting     ShenzhenStockExchange
    Company namein Chinese          安徽古井贡酒股份有限公司
    Abbr. (ifany)                     古井
    Company nameinEnglish(ifany)   ANHUIGUJINGDISTILLERYCOMPANYLIMITED
    Abbr. (ifany)                 GUJING
    Legal representative             LiangJinhui
    
    
    II Contact Information
    
                                           BoardSecretary                SecuritiesRepresentative
    Name                          YeChangqing                    MeiJia
    Address                        Gujing  Town,  Bozhou  City,  Anhui Gujing  Town,  Bozhou  City,  Anhui
                                  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 Other Information
    
    1. Contact Information of the Company
    
    Indicate by tick mark whether any change occurred to the registered address, office address and their zip codes, website address and
    
    email address of the Company in the Reporting Period.
    
    □ Applicable √ Not applicable
    
    No change occurred to the said information in the Reporting Period, which can be found in the 2017 Annual Report.
    
    2. Media for Information Disclosure and Place where this Report is Kept
    
    Indicate by tick mark whether any change occurred to the information disclosure media and the place for keeping the Company’s
    
    periodic reports in the Reporting Period.
    
    ~ 5 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    □ Applicable √ Not applicable
    
    The newspapers designated by the Company for information disclosure, the website designated by the CSRC for disclosing the
    
    Company’s periodic reports and the place for keeping such reports did not change in the Reporting Period. The said information can
    
    be found in the 2017 Annual Report.
    
    IV Key Financial Information
    
    Indicate by tick mark whether there is any retrospectively restated datum in the table below.
    
    □ Yes √ No
    
                                        H12018             H12017             Change(%)
    Operating revenue(RMB)                   4,783,083,895.33        3,670,127,764.59                30.32%
    Net  profit  attributable  to  the  listed         892,422,337.64         548,889,891.65                62.59%
    company’s shareholders(RMB)
    Net  profit  attributable  to  the  listed
    company’s shareholdersbeforeexceptional         872,348,474.12         483,955,014.12                80.25%
    items (RMB)
    Net cash generated from/used in operating         668,946,891.61         425,365,224.08                57.26%
    activities (RMB)
    Basic earningspershare(RMB/share)                    1.77                1.09                62.39%
    Diluted earningspershare(RMB/share)                  1.77                1.09                62.39%
    Weightedaveragereturnonnetassets(%)               13.94%               9.86%                 4.08%
                                      30June2018         31December2017          Change(%)
    Totalassets(RMB)                       11,210,703,795.70       10,152,862,119.05                10.42%
    Net  assets  attributable  to  the  listed        6,802,798,440.44        6,459,078,378.38                 5.32%
    company’s shareholders(RMB)
    
    
    V Accounting Data Differences under Chinese Accounting Standards (CAS) and
    
    International Financial Reporting Standards (IFRS) and Foreign Accounting Standards
    
    1. Net Profit and Net Asset Differences under CAS and IFRS
    
    □ Applicable √ Not applicable
    
    No such differences for the Reporting Period.
    
    2. Net Profit and Net Asset Differences under CAS and Foreign Accounting Standards
    
    □ Applicable √ Not applicable
    
    No such differences for the Reporting Period.
    
    ~ 6 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    XI Exceptional Gains and Losses
    
    √ Applicable □ Not applicable
    
    Unit: RMB
    
                         Item                         ReportingPeriod               Note
    Gain or loss on disposal of non-current assets (inclusive of           -3,419,972.96
    impairment allowancewrite-offs)
    Government subsidies charged to current profit or loss (exclusive
    of government subsidies given in the Company’sordinary course            4,708,036.05
    of business at fixed quotas or amounts as per government’s
    uniform standards)
    Gain or loss on fair-value changes in trading financial assets and
    liabilities & investment income from disposal of trading financial
    assets and liabilities and available-for-sale financial assets           12,507,302.31
    (exclusive of effective portion of hedges that arise in the
    Company’s ordinarycourseofbusiness)
    Non-operating incomeandexpenseotherthanabove                     13,674,195.49
    Less: Incometaxeffects                                        6,827,920.31
        Non-controlling interestseffects(netoftax)                        567,777.06
                        Total                                20,073,863.52           --
    
    
    Explanation of why the Company classifies a gain/loss item as exceptional according to the definition in the Explanatory
    
    Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss
    
    Items, or reclassifies any exceptional item listed in the said explanatory announcement as recurrent:
    
    □ Applicable √ Not applicable
    
    No such cases for the Reporting Period.
    
    ~ 7 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    Part III Business Summary
    
    I Core 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 liquor and spirits.
    
    As one of China’s traditional top eight liquor brands, the Company is the first listed liquor and spirits 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.
    
    II Material Changes in Major Assets
    
    1. Material Changes in Major Assets
    
    □ Applicable √ Not applicable
    
    2. Major Assets Overseas
    
    □ Applicable √ Not applicable
    
    III Core Competitiveness Analysis
    
    Is the Company subject to any disclosure requirements for special industries?
    
    No.
    
    No material changes occurred to the Company’s core competitiveness in the Reporting Period.
    
    ~ 8 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    Part IV Operating Performance Discussion and Analysis
    
    I Overview
    
    In the first half of 2018, China’s economy was generally stable and further restructuring was seen. As for the liquor and spirits
    
    industry, concentration was increasing.
    
    Under the common efforts of the Board and all the staff, for the six months from January to June 2018, the Company recorded
    
    operating revenue of RMB4,783 million, up 30.32% compared to the same period of last year; and a net profit attributable to the
    
    Company as the parent of RMB892 million, representing a year-on-year growth of 62.59%. As such, the operating goals that the
    
    Company had set for the first half of 2018 at the beginning of the year were all accomplished. To achieve that, the Company took the
    
    following main measures in the Reporting Period: ① continuously strengthening branding with more investments to carry forward
    
    the brand revitalization programme; ② promoting digital marketing to carry on with the “5.0” strategy; ③ reinforcing quality control,
    
    which has resulted in higher-quality liquor and spirits; ④ stimulating endogenous driving force through better management; ⑤
    
    strengthening safety and environmental protection management to ensure smooth operations; ⑥ enhancing system and risk
    
    assessment to optimize business processes; and ⑦ improving corporate culture by promoting party committee-management
    
    integration.
    
    II Analysis of Core Businesses
    
    See “I Overview” above.
    
    Year-on-year changes in key financial data:
    
    Unit: RMB
    
                           H1 2018            H12017           Change(%)      Mainreasonforchange
    Operating revenue                                                         Moreupmarketproducts
                           4,783,083,895.33      3,670,127,764.59            30.32% weresold
    Cost ofsales              1,042,675,468.24       913,179,198.91            14.18%
    Selling expense             1,597,300,315.17      1,249,688,761.13            27.82%
    Administrative expense         280,500,337.72       263,421,695.43             6.48%
    Finance costs               -20,284,906.55       -17,264,642.65            -17.49%
    Income taxexpense           320,789,915.24       203,016,533.12            58.01% Riseingrossprofit
    Net   cash   generated                                                     Rise   in   payments
    from/used  in operating       668,946,891.61       425,365,224.08            57.26% collectedfromcustomers
    activities
    Net   cash   generated                                                     Decline in cash proceeds
    from/used  in investing       -266,649,560.60        32,576,174.29           -918.54% fromdisinvestment
    activities
    Net   cash   generated       -503,600,000.00       -302,160,000.00            -66.67% Rise   in    dividend
    
    
    ~ 9 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    from/used  in financing                                                     distributed
    activities
    Net increase in cash and                                                     Decline  in  net  cash
    cash equivalents             -101,302,668.99       155,781,398.37           -165.03% generated from investing
                                                                          andfinancingactivities
                          30June2018       31December2017       Change(%)      Mainreasonforchange
                                                                          Declineinnetincreasein
    Monetary assets             967,785,957.41      1,484,088,626.40            -34.79% paid  cash  and  cash
                                                                          equivalents
                                                                          Noteswereadoptedmore
    Notes receivable            1,898,811,744.49       720,611,126.78           163.50% ofteninsettlementof
                                                                          sales
    Prepayments                 82,209,009.71        41,729,637.34            97.00% Rise    in    prepaid
                                                                          advertisingfee
    Available-for-sale             267,197,036.68       517,086,347.91            -48.33% Rise in financial assets
    financial assets                                                            sold
    Advances from              803,222,097.92       503,083,108.13            59.66% Riseinsalesrevenue
    customers
    Other currentliabilities         804,829,022.62       182,846,942.10            340.17% Riseinunrecognized
                                                                          expense
    Other comprehensive                                                        Disposal          of
    income                     8,418,551.86        53,520,827.44            -84.27% available-for-sale
                                                                          financialassets
    
    
    Material changes to the profit structure or sources of the Company in the Reporting Period:
    
    □ Applicable √ Not applicable
    
    No such changes in the Reporting Period.
    
    Breakdown of core businesses:
    
    Unit: RMB
    
                   Operating                  Grossprofit    YoYchangein   YoYchangein   YoYchangein
                    revenue      Costofsales      margin    operatingrevenue costofsales(%)   grossprofit
                                                           (%)                    margin(%)
    By industry
    Manufacturing    4,783,083,895.33 1,042,675,468.24        78.20%        30.32%        14.18%        3.08%
    Byproductcategory
    Liquor andspirits  4,707,210,564.91 1,010,894,998.63        78.52%        30.99%        15.28%        2.92%
    Hotel services      41,620,289.12   18,192,924.18        56.29%        2.03%        4.45%        -1.01%
    Other            34,253,041.30   13,587,545.43        60.33%        -4.03%       -27.95%        13.17%
    Byoperatingsegment
    
    
    ~ 10 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    Domestic       4,776,503,422.80 1,040,361,772.83        78.22%        30.17%        13.96%        3.10%
    Overseas          6,580,472.53    2,313,695.41        64.84%       759.68%       715.97%        1.88%
    
    
    III Analysis of Non-Core Businesses
    
    □ Applicable √ Not applicable
    
    IV Analysis of Assets and Liabilities
    
    1. Material Changes in Asset Composition
    
    Unit: RMB
    
                       30 June2018              30June2017        Changein
                    Value     As%oftotal     Value     As%oftotal percentage  Reasonformaterialchange
                                assets                   assets      (%)
    Monetary assets   967,785,957.41       8.63%  688,690,424.44       7.17%    1.46%
    Accounts        19,492,576.07       0.17%   14,701,820.59       0.15%    0.02%
    receivable
    Inventories     2,140,586,455.59      19.09% 1,846,271,997.98      19.23%   -0.14%
    Investment        5,055,069.67       0.05%   8,160,298.60       0.09%   -0.04%
    property
    Fixed assets    1,717,043,900.68      15.32% 1,785,781,644.39      18.60%   -3.28%
    Construction  in   76,076,053.22       0.68%   77,471,004.70       0.81%   -0.13%
    progress
    
    
    2. Assets and Liabilities at Fair Value
    
    √ Applicable □ Not applicable
    
    Unit: RMB
    
                            Gain/loss on   Cumulative   Impairment
                  Beginning    fair-value    fair-value   allowancefor  Purchasedin    Soldin
         Item       amount     changesin     changes     Reporting    Reporting    Reporting   Endingamount
                             Reporting    chargedto     Period       Period       Period
                              Period       equity
    Financial assets
    1.     Financial
    assets  at  fair
    value   through    99,800.76   396,379.39        0.00        0.00  1,539,796.23   978,316.65  1,057,659.73
    profit  or  loss
    (exclusive    of
    derivatives)
    
    
    ~ 11 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    2. Derivative           0.00        0.00        0.00        0.00        0.00        0.00        0.00
    financial assets
    3.
    Available-for-sale 517,086,347.91        0.00 -41,442,155.53        0.00        0.00 208,447,155.70 267,197,036.68
    financial assets
    Subtotal     of 517,186,148.67   396,379.39 -41,442,155.53        0.00  1,539,796.23 209,425,472.35 268,254,696.41
    financial assets
    Total   of   the 517,186,148.67   396,379.39 -41,442,155.53        0.00  1,539,796.23 209,425,472.35 268,254,696.41
    above
    Financial              0.00        0.00        0.00        0.00        0.00        0.00        0.00
    liabilities
    
    
    Material changes in the measurement attributes of the major assets in the Reporting Period:
    
    □ Yes √ No
    
    3. Restricted Asset Rights as of End of the Reporting Period
    
    Unit: RMB
    
                Item             Endingcarryingvalue                     Reasons
    Other monetaryfunds                    45,000,000.00 Drawingthebillforpledgeofbankdeposits
    Notes receivable                       99,930,600.00 Endorsementforpledge
                Total                  144,930,600.00
    
    
    ~ 12 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    V Investments Made
    
    1. Total Investments Made
    
    □ Applicable √ Not applicable
    
    2. Significant Equity Investments Made in the Reporting Period
    
    □ Applicable √ Not applicable
    
    3. Significant Non-Equity Investments Ongoing in the Reporting Period
    
    □ Applicable √ Not applicable
    
    4. Financial Investments
    
    (1) Securities Investments
    
    √ Applicable □ Not applicable
    
    Unit: RMB
    
                                                            Gain/los
                Code of            Initial                      sonfair  Cumulative  Purchase           Gain/lossin
       Varietyof   securitie  Nameof   investment  AmcecaosuurnetminegBeginning  chvaanlugeesfcahiravnagleusedinthe  SRoelpdoirntitnhgethe      Ending   Accountingtitle Sourceof
       securities      s    securities     cost     ntmodel  carryingvalue  inthe   chargedto  RgePpeorriotidnPeriod    RePpeorirotidngcarryingvalue              funds
                                                            Reportin   equity
                                                            gPeriod
    Domestic/overse  000001 PAYH    70,317,243.98 Fairvalue  106,943,823.7       -25,087,573.6       81,856,250.02 11,586,297.2       0.00Available-for-sa Self-owne
    as stock                                method            0                8                         3           lefinancialasset dfunds
    Domestic/overse  601988 ZGYH    44,385,674.20 Fairvalue  71,313,507.00       -6,466,716.00              0.00      0.00 64,846,791.00 Available-for-sa Self-owne
    
    
    ~ 13 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    as stock                                method                                                                   lefinancialasset dfunds
                       GFNSTYR
                       1stE      150,000,000.0 Fairvalue  127,154,958.0                        126,590,905.6                    Available-for-sa Self-owne
    Funds               Securities           0 method            8         -564,052.40                8 8,841,868.22       0.00lefinancialasset dfunds
                       Investment
                       Funds
                       ZXYSDP
                       1stAssets   200,000,000.0 Fairvalue  211,674,059.1                                  10,883,000.0 202,350,245.6 Available-for-sa Self-owne
    Funds                Manage          0 method            3       -9,323,813.45              0.00        0         8 lefinancialasset dfunds
                        ment
                        Plan
    Other endingholdingsecurities                    --                                                                        --        --
    investments
    Total                        464,702,918.1    --    517,086,347.9       -41,442,155.5       208,447,155.7 31,311,165.4 267,197,036.6     --        --
                                        8                  1                3                0        5         8
    Disclosure date of the announcement
    about  the board’s consent for the Naught
    securities investment
    Disclosure date of the announcement
    about the general meeting’sconsent for Naught
    the securitiesinvestment(ifany)
    
    
    (2) Investments in Derivative Financial Instruments
    
    √ Applicable □ Not applicable
    
    Unit: RMB’0,000
    
    ~ 14 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
        Proportion
        of closing   Actual
             Relationship                       Initial                      Beginning Purchasedin Soldinthe  Impairment   Ending   investment gain/lossin
     Operator    withthe   Connected    Typeof   investment Startingdate Endingdate  investment     the     Reporting  provision(if investment  amountin    the
              Company   transaction   derivative    amount                      amount   Reporting    Period      any)     amount      the    Reporting
                                                                                Period                               Company’s   Period
        ending net
        assets
    Reverse                      Reverse
    repurchase  Naught    No       repurchaseof       0.00                        5,000     12,000     17,000        0        0     0.00%    21.44
    of national                    nationaldebt
    debt
    Total                                        0.00    --        --         5,000     12,000     17,000        0        0     0.00%    21.44
    Capital sourceforderivativeinvestment           Company’sownfunds
    Lawsuits involved(ifapplicable)                N/A
    Disclosure date of board announcement approving 30August2013
    derivative investment(ifany)
    Disclosure dateofshareholders’meetingannouncement N/A
    approving derivativeinvestment(ifany)
    Analysis of risks and control measures associated with
    derivative investments held in the Reporting Period TheCompanyhadcontrolledtherelevantrisksstrictlyaccordingtotheDerivativesInvestmentManagementSystem.
    (including but not limited to market risk, liquidity risk,
    credit risk,operationalrisk,legalrisk,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 assumptionsandparameters)
    
    
    ~ 15 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    Significant changes in accounting policies and specific
    accounting   principles  adopted  for  derivative Naught
    investments in the Reporting Period compared to
    previous reportingperiod
                                          Basedon the sustainable development of the main business and the sufficient free idle money, the Company increased the profits
                                          throughinvestingin thereasonablefinancialderivativeinstruments, whichwasin favorofimproving the serviceefficiency of the idle
                                          funds;inordertoreducetheinvestmentrisksofthefinancialderivativeinstruments,theCompanyhadsetupcorrespondingsupervision
    Opinion  of  independent  directors  on  derivative mechanismforthefinancialderivativeinstrumentbusinessandformulatedreasonableaccountingpolicyas wellasspecificprinciplesof
    investments andriskcontrol                   financial accounting; the derivative Investment business developed separately took national debts as mortgage object, which was met
                                          withthe cautious and steady risks management principle and the interest of the Company and shareholders. Therefore, agreed the
                                          Companyto develop the derivative Investment business of reverse repurchase of national debt not more than the limit of RMB0.3
                                          billion.
    
    
    VI Sale of Major Assets and Equity Interests
    
    1. Sale of Major Assets
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    2. Sale of Major Equity Interests
    
    □ Applicable √ Not applicable
    
    VII Main Controlled and Joint Stock Companies
    
    √ Applicable □ Not applicable
    
    Main subsidiaries and joint stock companies with an over 10% influence on the Company’s net profits
    
    ~ 16 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    Unit: RMB
    
     Company   Relationship    Main
       name      withthe     business     Registeredcapital        Totalassets         Netassets       Operatingrevenues     Operatingprofit       Netprofit
                Company     scope
                         Wholesales
                         of  distilled
    Bozhou                spirit,
    Gujing Sales Subsidiary    construction         84,864,497.89      3,210,400,453.96     511,474,706.76      4,253,242,535.90     502,639,601.02     373,876,477.59
    Co., Ltd               materials,
                         feeds  and
                         assistant
                         materials
    Anhui                 Manufacture
    Longrui    Subsidiary    andsaleof          86,660,268.98       272,051,488.82     227,087,845.41       113,642,525.23      25,405,466.53      21,249,089.19
    GlassCo.,              glass
    Ltd                  products
    Yellow                Production
    CraneTower            andsalesof
    Wine      Subsidiary    distilled           400,000,000.00       801,720,368.65     529,953,868.24       429,495,365.21      66,529,234.06      50,054,993.63
    IndustryCo.,            spirit
    Ltd
    Shanghai               Hotel
    Gujing                management
    Jinhao HotelSubsidiary    andhouse          54,000,000.00       205,362,160.86      81,853,741.49        37,879,862.42       6,957,747.80       3,584,728.10
    Management            lease
    Co., Ltd.
    
    
    ~ 17 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    Subsidiaries obtained or disposed in the Reporting Period:
    
    □ Applicable √ Not applicable
    
    ~ 18 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    VIII Structured Bodies Controlled by the Company
    
    □ Applicable √ Not applicable
    
    IX Performance Forecast for January-September 2018
    
    Warning of possible loss or considerable YoY change in the accumulative net profit made during the period-beginning to the end of
    
    the next reporting period, as well as the reasons:
    
    □ Applicable √ Not applicable
    
    X Risks Facing the Company and Countermeasures
    
    1. 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.
    
    2. Countermeasures
    
    (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.
    
    (4) Human resources
    
    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".
    
    ~ 19 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    (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.
    
    ~ 20 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    Part V Significant Events
    
    I Annual and Extraordinary General Meeting Convened during the Reporting Period
    
    1. General Meeting Convened during the Reporting Period
    
         Meeting          Type         Investor       Conveneddate    Disclosuredate     Indextodisclosed
                                 participation ratio                                  information
                                                                           For    details,    see
                                                                           Announcement   about
                                                                           Resolutions  of  2017
                                                                           Annual General Meeting
      The 2017Annual   AnnualGeneral                                           oftheCompanydisclosed
       GeneralMeeting      Meeting            58.79%22May2018     23May2018     on   China   Securities
                                                                           Journal,      Shanghai
                                                                           SecuritiesNews,TaKung
                                                                           Pao    (HK),    and
                                                                           http://www.cninfo.com.cn
                                                                           on23May2018.
    
    
    2. Extraordinary General Meeting Convened at Request of Preference Shareholders with Resumed Voting
    
    Rights
    
    □ Applicable √ Not applicable
    
    II Interim Dividend Plan for the Reporting Period
    
    □ Applicable √ Not applicable
    
    The Company has no interim dividend plan.
    
    III Commitments of the Company’s Actual Controller, Shareholders, Connected Parties and
    
    Acquirer, as well as the Company and Other Commitment Makers, Fulfilled in the Reporting
    
    Period or still Ongoing at Period-End
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    ~ 21 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    IV Engagement and Disengagement of CPAs Firm
    
    Has the Interim financial report been audited?
    
    □Yes √ No
    
    This Interim Report is unaudited.
    
    V Explanations Given by Board of Directors and Supervisory Committee Regarding
    
    “Modified Auditor’s Report” Issued by CPAs Firm for the Reporting Period
    
    □ Applicable √ Not applicable
    
    VI Explanations Given by Board of Directors Regarding “Modified Auditor’s Report” Issued
    
    for Last Year
    
    □ Applicable √ Not applicable
    
    VII Bankruptcy and Restructuring
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    VIII Legal Matters
    
    Significant lawsuits or arbitrations:
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    Other legal matters:
    
    □ Applicable √ Not applicable
    
    IX Punishments and Rectifications
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    ~ 22 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    X Credit Conditions of the Company as well as its Controlling Shareholder and Actual
    
    Controller
    
    □ Applicable √ Not applicable
    
    XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures for
    
    Employees
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    XII Significant Connected Transactions
    
    1. Connected Transactions Relevant to Routine Operations
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    2. Connected Transactions Regarding Purchase or Sales of Assets or Equity Interests
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    3. Connected Transactions Regarding Joint Investments in Third Parties
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    4. Credits and Liabilities with Connected Parties
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    5. Other Significant Connected Transactions
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    ~ 23 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    XIII. Particulars about the Non-operating Occupation of Funds by the Controlling
    
    Shareholder and Other Connected Parties of the Company
    
    □ Applicable √ Not applicable
    
    The Company was not involved in the non-operating occupation of funds by the controlling shareholder and other connected parties
    
    during the Reporting Period.
    
    XIV. 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. Other Significant Contracts
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    XV. Social Responsibilities
    
    Indicate by tick mark whether the Company or any of its subsidiaries is a heavily polluting business identified by the environmental
    
    ~ 24 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    protection authorities of China
    
    Yes
    
     Name of    Nameof                                        Pollutant
    company or    major     Wayof  Quantityof Distribution  Discharge   discharge    Total   Permitted   Excess
     subsidiary  pollutantand  discharge  discharge ofdischarge concentration   standard   discharge discharge  discharge
     company    typical              outlet     outlet             implemented
               pollutant
                                        Gujing
    Anbui                                plant
    Gujing    COD       Directly          3 Zhangji     75.81mg/L   ≤100mg/L 106.06t  155.05t   Naught
    Distillery             discharge           plant
    Co., Ltd.                              Headquarter
                                        plant
                                        Gujing
    Anbui                                plant
    Gujing    NH3-N     Directly          3 Zhangji      6.38mg/L    ≤10mg/L  8.93t    15.53t   Naught
    Distillery             discharge           plant
    Co., Ltd.                              Headquarter
                                        plant
                                        Gujing
    Anbui                                plant
    Gujing    Smoke      Organized         3 Zhangji      37mg/m3  ≤80mg/m3   18t    Naught   Naught
    Distillery             discharge           plant
    Co., Ltd.                              Headquarter
                                        plant
                                        Gujing
    Anbui                                plant
    Gujing    SulfurDioxide Organized         3 Zhangji     250mg/m3 ≤400mg/m3  121.8t   Naught   Naught
    Distillery             discharge           plant
    Co., Ltd.                              Headquarter
                                        plant
                                        Gujing
    Anbui                                plant
    Gujing    Nitrogen    Organized         3 Zhangji     273mg/m3 ≤400mg/m3  132.8t   Naught   Naught
    Distillery   oxide       discharge           plant
    Co., Ltd.                              Headquarter
                                        plant
    Anhui               Organized          No.1
    Longrui   Smoke      discharge          3 furnace      43mg/m3 ≤200mg/m3   6.6t    Naught   Naught
    Glass Co.,                             No.2
    
    
    ~ 25 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
            Ltd                                  furnace
                                No.3
                                furnace
                                No.1
            Anhui                                furnace
            Longrui    SulfurDioxide Organized         3 No.2       182mg/m3 ≤850mg/m3  27.9t   Naught   Naught
            Glass Co.,            discharge           furnace
            Ltd                                  No.3
                                furnace
                                No.1
            Anhui                                furnace
            Longrui    Nitrogen    Organized         3 No.2       335mg/m3 ≤700mg/m3  51.1t   Naught   Naught
            Glass Co.,  oxide       discharge           furnace
            Ltd                                  No.3
                                furnace
    
    
    Construction and operation of pollution prevention and management
    
    Rain and sewage distribution measures have been carried out, sewage treatment stations has been built and COD, NH3-N online
    
    monitors has been installed in the production areas of the Company. All detected data will be uploaded to the Pollution Sources Key
    
    Monitoring Information Platform of Anhui Province and accepts social supervision. The existing pollution-control facilities of the
    
    Company perform well and discharge according to relevant discharge standard. Wastewater discharge can meet requirements of
    
    GB27631-2011Discharge Standard of Water Pollutants for Fermentation Alcohol and Distilled Spirits Industry, and flue gas emission
    
    can meet requirements 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 21 May 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
    
    impact assessment and prepared the environmental impact assessment report, which has been approved by Bozhou Environmental
    
    Protection Bureau on 8 September 2017. Please refer to BHB [2017] No. 139 document for details. The project is currently under
    
    construction;
    
    3. Environmental impact assessment work of Anhui Longrui Glass Co., Ltd VOC treatment project has been carried out.
    
    Environmental impact assessment reports has been compiled and approved by Bozhou Environmental Protection Bureau on 28,
    
    March 2018 (see Bozhou Environment Impact Report [2018] No. 16 for reference). This project is now 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.
    
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    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    Other environment information that should be disclosed
    
    Longrui Glass Co., Ltd, as subsidiary of the Company, shares sewage treatment system with the Company to dispose household and
    
    industrial waste water. Waste water will be treated by sewage treatment station of the Company before being discharged according to
    
    relevant discharge standard and the discharge process can meet requirements of GB27631-2011Discharge Standard of Water
    
    Pollutants for Fermentation Alcohol and Distilled Spirits Industry. Glass furnaces flue gas of Longrui Glass Co., Ltd will be dusted,
    
    desulfurized and denitrated according to relevant standard before being discharged and the discharge process can meet requirements
    
    of GB9078-1996 Emission Standard of Air Pollutants for Industrial Kiln and Furnace.
    
    Other related environment protection information
    
    No
    
    2. Targeted Measures Taken to Help People Lift Themselves Out of Poverty
    
    (1) Summary of Precision Poverty Alleviation for the Reporting Period
    
    In accordance with the requirements of the State, Anhui Provincial Party Committee and Government, and Bozhou Municipal Party
    
    Committee and Government on precision poverty alleviation, the Company has established targeted support towards 176poor
    
    families in Bali village, Wuma town, Qiaocheng District, Bozhou. The Company has established a complete and formal long-term
    
    mechanism for poverty alleviation targeted at those families. A supporting policy of one file for one family, one card for one family,
    
    and one policy for one family has been implemented based on the principle of “organizations are responsible for villages and cadres
    
    are responsible for families”, and files have been created based on family members, major labor force, farmland and income structure
    
    of poor families in each poor village. Since the implementation of poverty alleviation work, Bali Village in Wuma Town has all
    
    achieved poverty alleviation and has a fixed income.
    
    (2) Subsequent Plan for Precision Poverty Alleviation
    
    First, the Company will continue to engage in poverty alleviation and strengthen its efforts in targeted support towards poor families;
    
    second, the Company will continue to implement the supporting policy of the Provincial Party Committee and Government and the
    
    Municipal Party Committee and Government, soundly advancing the poverty alleviation work in line with the relevant requirements
    
    to carry out the social responsibility.
    
    XVI. Other Significant Events
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    XVII. Significant Events of Subsidiaries
    
    □ Applicable √ Not applicable
    
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    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    Part VI Share Changes and Shareholder Information
    
    I. Share Changes
    
    Unit: share
    
                            Before                 Increase/decrease(+/-)                  After
                        Number  Percentage  New    Bonus  Bonusissue  Other  Subtotal  Number  Percentage
                                  (%)    issues   shares   fromprofit                         (%)
    I. Restrictedshares             0   0.00%                                             0   0.00%
    II. Non-restrictedshares   503,600,000  100.00%                                      503,600,000  100.00%
    1 RMBordinaryshares   383,600,000   76.17%                                      383,600,000   76.17%
    2   Domestically  listed 120,000,000   23.83%                                      120,000,000   23.83%
    foreign shares
    III. Totalshares        503,600,000  100.00%                                      503,600,000  100.00%
    
    
    Reasons for the share changes
    
    □ Applicable √ Not applicable
    
    Approval of share changes
    
    □ Applicable √ Not applicable
    
    Transfer of share ownership
    
    □ Applicable √ Not applicable
    
    Effects of share changes on the basic EPS, diluted EPS, net assets per share attributable to ordinary 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
    
    II. Issuance and Listing of Securities
    
    □ Applicable √ Not applicable
    
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    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    III. Total Number of Shareholders and Their Shareholdings
    
    Unit: share
    
    Totalnumberofordinary                           Totalnumberofpreferenceshareholders
    shareholders attheperiod-end                   18,171 withresumedvotingrightsatthe                      0
                                                period-end(ifany)(seeNote8)
                         5%orgreaterordinaryshareholdersorthetop10ordinaryshareholders
                                                           Number           Pledgedorfrozenshares
        Nameof      Natureof   Shareholding Totalshares Increase/decrease   of    Numberof
       shareholder    shareholder   percentage  heldatthe    duringthe   restricted non-restricted  Status    Number
                                (%)    period-end ReportingPeriod  shares   sharesheld
                                                             held
    ANHUI GUJING
    GROUP        State-owned       53.89% 271,404,022                     271,404,022 Pledge    114,000,000
    COMPANY     legalperson
    LIMITED
    NORGES BANK Foreign   legal     2.89% 14,554,480                      14,554,480
                 person
    GAOLING      Foreign   legal     2.47% 12,446,408                      12,446,408
    FUND,L.P.      person
    AGRICULTURAL
    BANK OF
    CHINA- EFUND
    CONSUMPTION Other            1.49%  7,485,278                      7,485,278
    SECTOR STOCK
    SECURITIES
    INVESTMENT
    FUND
    CHINAINT'L
    CAPITALCORP  Foreign   legal
    HONG KONG   person           1.46%  7,372,976                      7,372,976
    SECURITIES
    LTD
    UBS (LUX)
    EQUITYFUND- Foreign   legal
    CHINA        person           1.41%  7,096,361                      7,096,361
    OPPORTUNITY
    (USD)
    CENTRAL      State-owned
    HUIJINASSET  legalperson        1.30%  6,543,600                      6,543,600
    MANAGEMENT
    
    
    ~ 29 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    CO., LTD.
    GREENWOODS  Foreign   legal
    CHINAALPHA  person           0.98%  4,939,963                      4,939,963
    MASTER FUND
    UBS (LUX)
    EQUITYFUND- Foreign   legal     0.90%  4,541,338                      4,541,338
    GREATER      person
    CHINA(USD)
    3W GREATER   Foreign   legal
    CHINAFOCUS  person           0.70%  3,529,479                      3,529,479
    FUND
    Strategic  investor  or  general
    corporation becoming a top ten N/A
    shareholder due to placing of new
    shares (ifany)(note3)
                             Amongthe shareholders above, the Company’scontrolling shareholder—Anhui Gujing Group
    Explanation    on    connectedCompanyLimited—isnotaconnectedpartyofothershareholders;noraretheypartiesactingin
    relationship or/andpersonsactingin concert as defined in the Administrative Measures on Information Disclosure of Changes in
    concert amongtheabove-mentioned ShareholdingofListedCompanies.Asforthe othershareholders,the Companydoes not know
    shareholders                whethertheyareconnectedpartiesorwhethertheybelongtopartiesactinginconcertasdefined
                             intheAdministrativeMeasuresonInformationDisclosureofChangesinShareholdingofListed
                             Companies.
                           Shareholdingsofthetoptennon-restrictedordinaryshareholders
                                                                            Type ofshares
         Name ofshareholder        Numberofnon-restrictedsharesheldattheperiod-end
                                                                          Type       Number
    ANHUI    GUJING    GROUP                                  271,404,022 RMB  ordinary  271,404,022
    COMPANYLIMITED                                                   share
                                                                      Domestically
    NORGES BANK                                               14,554,480 listed   foreign   14,554,480
                                                                      share
                                                                      Domestically
    GAOLINGFUND,L.P.                                           12,446,408 listed   foreign   12,446,408
                                                                      share
    AGRICULTURALBANKOF
    CHINA- EFUND                                                      RMB  ordinary
    CONSUMPTION SECTOR                                         7,485,278 share           7,485,278
    STOCKSECURITIES
    INVESTMENT FUND
    CHINAINT'LCAPITALCORP                                      7,372,976 Domestically      7,372,976
    HONG KONGSECURITIESLTD                                           listed   foreign
    
    
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                                                                      share
    UBS (LUX)EQUITYFUND-                                              Domestically
    CHINAOPPORTUNITY(USD)                                      7,096,361 listed   foreign   7,096,361
                                                                      share
    CENTRALHUIJINASSET                                         6,543,600 RMB  ordinary   6,543,600
    MANAGEMENTCO.,LTD.                                               share
    GREENWOODSCHINAALPHA                                            Domestically
    MASTERFUND                                                4,939,963 listed   foreign   4,939,963
                                                                      share
    UBS (LUX)EQUITYFUND-                                              Domestically
    GREATERCHINA(USD)                                          4,541,338 listed   foreign   4,541,338
                                                                      share
    3WGREATERCHINAFOCUS                                             Domestically
    FUND                                                       3,529,479 listed   foreign   3,529,479
                                                                      share
    Connected  or  acting-in-concert Among the shareholders above, the Company’scontrolling shareholder—Anhui Gujing Group
    parties  among  the  top  ten CompanyLimited—isnotaconnectedpartyofothershareholders;noraretheypartiesactingin
    non-restrictedly  tradable  share concert as defined in the Administrative Measures on Information Disclosure of Changes in
    holders and between the top ten ShareholdingofListedCompanies.Asforthe other shareholders,the Companydoes not know
    non-restrictedly  tradable  share whethertheyareconnectedpartiesorwhethertheybelongtopartiesactinginconcertasdefined
    holders andthetoptenshareholders intheAdministrativeMeasuresonInformationDisclosureofChangesinShareholdingofListed
                             Companies.
    Top  ten  ordinary  shareholders
    conducting   securities   marginN/A
    trading (ifany)(seeNote4)
    
    
    Did any top 10 common shareholders or the top 10 common shareholders not subject to trading moratorium of the Company carry
    
    out an agreed buy-back in the Reporting Period?
    
    □ Yes √ No
    
    The top 10 common shareholders or the top 10 common shareholders not subject to trading moratorium of the Company had not
    
    carried out any agreed buy-back in the Reporting Period.
    
    IV. Change of the Controlling Shareholder or the Actual Controller
    
    Change of the controlling shareholder in the Reporting Period
    
    □ Applicable √ Not applicable
    
    There was no any change of the controlling shareholder of the Company in the Reporting Period.
    
    Change of the actual controller in the Reporting Period
    
    □ Applicable √ Not applicable
    
    There was no any change of the actual controller of the Company in the Reporting Period.
    
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    Part VII Preferred Shares
    
    □ Applicable √ Not applicable
    
    No preferred shares in the Reporting Period.
    
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    Part VIII Directors, Supervisors and Senior Management
    
    I Changes in Shareholdings of Directors, Supervisors and Senior Management
    
    □ Applicable √ Not applicable
    
    There were no changes in shareholdings of directors, supervisors, and senior management in the Reporting Period. For details, see
    
    Annual Report of 2017.
    
    II Changes in Directors, Supervisors and Executive Officers
    
    □ Applicable √ Not applicable
    
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    Part IX 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
    
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    Part X Financial Report
    
    I. Auditor’s Report
    
    Whether the interim report has been audited?
    
    □Yes √ No
    
    The interim report of the Company has not been audited.
    
    II. Financial Statements
    
    The unit of the financial statements attached: RMB
    
    1. Consolidated Balance Sheet
    
    Prepared by Anhui Gujing Distillery Company Limited
    
    30 June 2018
    
    Unit: RMB
    
                Item                       30June2018                    31December2017
    Current assets:
      Monetaryassets                                   967,785,957.41                   1,484,088,626.40
      Settlementreserve
      Interbankloansgranted
      Financialassets at fair value through                      1,057,659.73                        99,800.76
    profit orloss
      Derivativefinancialassets
      Notesreceivable                                 1,898,811,744.49                    720,611,126.78
      Accountsreceivable                                 19,492,576.07                     22,466,143.06
      Prepayments                                      82,209,009.71                     41,729,637.34
      Premiumsreceivable
      Reinsurancereceivables
      Receivable  reinsurance   contract
    reserve
      Interestreceivable                                  19,403,178.08                     13,883,178.08
      Dividendsreceivable
      Otherreceivables                                   12,882,228.59                     15,390,106.14
    
    
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      Financial assets  purchased  under
    resale agreements
      Inventories                                     2,140,586,455.59                   2,064,130,297.51
      Assetsclassifiedasheldforsale
      Currentportionofnon-currentassets
      Othercurrentassets                               2,167,041,053.66                   1,772,310,946.58
    Total currentassets                                 7,309,269,863.33                   6,134,709,862.65
    Non-current assets:
      Loansandadvancestocustomers
      Available-for-salefinancialassets                       267,197,036.68                    517,086,347.91
      Held-to-maturityinvestments
      Long-termreceivables
      Long-termequityinvestments
      Investmentproperty                                  5,055,069.67                      5,343,777.33
      Fixedassets                                    1,717,043,900.68                   1,792,254,178.56
      Constructioninprogress                              76,076,053.22                     54,496,798.56
      Engineeringmaterials
      Proceedsfromdisposaloffixedassets
      Productivelivingassets
      Oilandgasassets
      Intangibleassets                                  747,362,393.05                    691,381,442.67
      R&Dexpense
      Goodwill                                       478,283,495.29                    478,283,495.29
      Long-termprepaidexpense                            74,201,576.33                     69,238,523.78
      Deferredincometaxassets                            223,740,381.46                     92,157,477.74
      Othernon-currentassets                             312,474,025.99                    317,910,214.56
    Totalnon-currentassets                              3,901,433,932.37                   4,018,152,256.40
    Total assets                                     11,210,703,795.70                  10,152,862,119.05
    Current liabilities:
      Short-termborrowings
      Borrowingsfromcentralbank
      Customerdeposits and deposits from
    banks andotherfinancialinstitutions
      Interbankloansobtained
      Financial liabilities at  fair  value
    
    
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    through profitorloss
      Derivativefinancialliabilities
      Notespayable                                    188,073,094.09                    200,750,000.00
      Accountspayable                                  292,602,067.69                    435,615,039.83
      Advancesfromcustomers                            803,222,097.92                    503,083,108.13
      Financialassetssoldunderrepurchase
    agreements
      Handling charges and commissions
    payable
      Payrollpayable                                   249,960,170.72                    372,374,014.37
      Taxespayable                                    413,938,710.44                    420,984,845.45
      Interestpayable
      Dividendspayable
      Otherpayables                                  1,103,986,706.45                   1,032,543,553.34
      Reinsurancepayables
      Insurancecontractreserve
      Payables  for  acting  trading  of
    securities
      Payables  for   underwriting   of
    securities
      Liabilities directly associated with
    assets classifiedasheldforsale
      Current  portion  of  non-current
    liabilities
      Othercurrentliabilities                              804,829,022.62                    182,846,942.10
    Total currentliabilities                               3,856,611,869.93                   3,148,197,503.22
    Non-current liabilities:
      Long-termborrowings
      Bondspayable
       Including: Preferredshares
         Perpetualbonds
      Long-termpayables
      Long-termpayrollpayable
      Specificpayables
      Provisions
      Deferredincome                                   41,140,119.46                     43,706,503.22
      Deferredincometaxliabilities                         105,037,408.26                    119,779,105.90
    
    
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      Othernon-currentliabilities
    Total non-currentliabilities                             146,177,527.72                    163,485,609.12
    Total liabilities                                    4,002,789,397.65                   3,311,683,112.34
    Owners’ equity:
      Sharecapital                                     503,600,000.00                    503,600,000.00
      Otherequityinstruments
       Including: Preferredshares
         Perpetualbonds
      Capitalreserves                                  1,295,405,592.25                   1,295,405,592.25
      Less:Treasuryshares
      Othercomprehensiveincome                            8,418,551.86                     53,520,827.44
      Specificreserve
      Surplusreserves                                   256,902,260.27                    256,902,260.27
      Generalreserve
      Retainedprofits                                  4,738,472,036.06                   4,349,649,698.42
    Total equityattributabletoownersofthe                   6,802,798,440.44                   6,459,078,378.38
    Company astheparent
    Non-controlling interests                               405,115,957.61                    382,100,628.33
    Total owners’equity                                7,207,914,398.05                   6,841,179,006.71
    Total liabilitiesandowners’equity                      11,210,703,795.70                  10,152,862,119.05
    
    
    Legal representative: Liang Jinhui The Company’s chief accountant: Ye Changqing
    
    Head of the Company’s financial department: Zhu Jiafeng
    
    2. Balance Sheet of the Company as the Parent
    
    Unit: RMB
    
                Item                       30June2018                    31December2017
    Current assets:
      Monetaryassets                                   772,284,862.52                   1,276,262,109.02
      Financialassets at fair value through                      1,057,659.73                        99,800.76
    profit orloss
      Derivativefinancialassets
      Notesreceivable                                 1,707,225,175.49                    674,521,654.40
      Accountsreceivable                                  7,614,296.08                      8,509,918.03
      Prepayments                                      24,857,999.07                      8,534,600.82
    
    
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      Interestreceivable
      Dividendsreceivable
      Otherreceivables                                  103,848,091.62                    130,357,778.75
      Inventories                                     1,888,382,381.02                   1,818,358,884.18
      Assetsclassifiedasheldforsale
      Currentportionofnon-currentassets
      Othercurrentassets                               1,525,688,078.30                   1,554,870,774.98
    Total currentassets                                 6,030,958,543.83                   5,471,515,520.94
    Non-current assets:
      Available-for-salefinancialassets                       266,691,636.68                    516,530,547.91
      Held-to-maturityinvestments
      Long-termreceivables
      Long-termequityinvestments                        1,155,089,408.32                   1,155,089,408.32
      Investmentproperty                                 25,599,187.91                     26,409,050.95
      Fixedassets                                    1,248,446,627.92                   1,303,119,011.66
      Constructioninprogress                              62,902,724.31                     44,673,219.38
      Engineeringmaterials
      Proceedsfromdisposaloffixedassets
      Productivelivingassets
      Oilandgasassets
      Intangibleassets                                  191,482,188.30                    185,868,178.71
      R&Dexpense
      Goodwill
      Long-termprepaidexpense                            52,071,942.48                     58,563,409.89
      Deferredincometaxassets                             45,869,242.45                     37,996,747.93
      Othernon-currentassets                              12,474,026.00                     12,474,026.00
    Totalnon-currentassets                              3,060,626,984.37                   3,340,723,600.75
    Total assets                                      9,091,585,528.20                   8,812,239,121.69
    Current liabilities:
      Short-termborrowings
      Financial liabilities at  fair  value
    through profitorloss
      Derivativefinancialliabilities
      Notespayable                                     46,282,864.09                            0.00
    
    
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      Accountspayable                                  198,568,181.33                    347,757,180.53
      Advancesfromcustomers                           2,231,969,430.14                   1,680,678,175.37
      Payrollpayable                                    89,036,488.26                    110,435,403.45
      Taxespayable                                    130,156,087.08                    262,884,211.13
      Interestpayable
      Dividendspayable
      Otherpayables                                   229,014,721.93                    173,250,790.29
      Liabilities directly associated with
    assets classifiedasheldforsale
      Current  portion  of  non-current
    liabilities
      Othercurrentliabilities                               69,116,753.96                     18,296,415.85
    Total currentliabilities                               2,994,144,526.79                   2,593,302,176.62
    Non-current liabilities:
      Long-termborrowings
      Bondspayable
       Including: Preferredshares
         Perpetualbonds
      Long-termpayables
      Long-termpayrollpayable
      Specificpayables
      Provisions
      Deferredincome                                   37,612,568.27                     39,976,048.28
      Deferredincometaxliabilities                           6,095,966.89                     19,792,209.68
      Othernon-currentliabilities
    Total non-currentliabilities                              43,708,535.16                     59,768,257.96
    Total liabilities                                    3,037,853,061.95                   2,653,070,434.58
    Owners’ equity:
      Sharecapital                                     503,600,000.00                    503,600,000.00
      Otherequityinstruments
       Including: Preferredshares
         Perpetualbonds
      Capitalreserves                                  1,247,162,107.35                   1,247,162,107.35
      Less:Treasuryshares
      Othercomprehensiveincome                            8,390,260.80                     53,454,736.38
    
    
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      Specificreserve
      Surplusreserves                                   251,800,000.00                    251,800,000.00
      Retainedprofits                                  4,042,780,098.10                   4,103,151,843.38
    Total owners’equity                                6,053,732,466.25                   6,159,168,687.11
    Total liabilitiesandowners’equity                       9,091,585,528.20                   8,812,239,121.69
    
    
    3. Consolidated Income Statement
    
    Unit: RMB
    
                 Item                        H12018                        H12017
    1. Revenue                                       4,783,083,895.33                   3,670,127,764.59
      Including:Operatingrevenue                         4,783,083,895.33                   3,670,127,764.59
       Interest income
       Premium income
       Handling  charge and commission
    income
    2. Operatingcostsandexpenses                         3,630,830,299.47                   3,012,871,713.47
      Including:Costofsales                             1,042,675,468.24                    913,179,198.91
       Interest expense
       Handling  charge and commission
    expense
       Surrenders
       Net claimspaid
       Net amount provided as insurance
    contract reserve
       Expenditure onpolicydividends
       Reinsurance premiumexpense
       Taxes andsurtaxes                                729,467,173.53                    606,131,354.51
       Selling expense                                1,597,300,315.17                   1,249,688,761.13
       Administrative expense                            280,500,337.72                    263,421,695.43
       Finance costs                                   -20,284,906.55                    -17,264,642.65
       Asset impairmentloss                               1,171,911.36                     -2,284,653.86
    Add: Gain on changes in fair value (“-”                      236,707.77                      -119,656.35
    for loss)
      Investmentincome(“-”forloss)                         68,775,019.95                     81,017,484.47
       Including: Share of profit or loss of
    joint venturesandassociates
    
    
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      Foreignexchangegain(“-”forloss)
      Assetdisposalincome(“-”forloss)                         154,437.81                       487,886.67
      Otherincome                                      4,487,036.05                     23,716,926.49
    3. Operatingprofit(“-”forloss)                         1,225,906,797.44                    762,358,692.40
      Add:Non-operatingincome                            14,758,797.76                     14,961,789.67
      Less:Non-operatingexpense                            4,438,013.04                      2,189,022.01
    4. Profitbeforetaxation(“-”forloss)                      1,236,227,582.16                    775,131,460.06
      Less:Incometaxexpense                             320,789,915.24                    203,016,533.12
    5. Netprofit(“-”fornetloss)                            915,437,666.92                    572,114,926.94
      5.1  Net  profit  from  continuing                   915,437,666.92                    572,114,926.94
    operations (“-”fornetloss)
      5.2 Net  profit  from  discontinued
    operations (“-”fornetloss)
      Netprofit attributable to owners of the                   892,422,337.64                    548,889,891.65
    Company astheparent
      Net    profit    attributable    to                    23,015,329.28                     23,225,035.29
    non-controlling interests
    6. Other comprehensive income, net of                    -45,102,275.58                    -19,896,472.08
    tax
      Attributableto owners of the Company                    -45,102,275.58                    -19,896,472.08
    as theparent
       6.1 Itemsthatwillnotbereclassified
    to profitorloss
         6.1.1 Changes in net liabilities or
    assets  caused by remeasurements on
    defined benefitpensionschemes
         6.1.2    Share    of    other
    comprehensive income of investees that
    will not be reclassified to profit or loss
    under equitymethod
       6.2 Items that may subsequently be                    -45,102,275.58                    -19,896,472.08
    reclassified toprofitorloss
         6.2.1    Share    of    other
    comprehensive income of investees that
    will be reclassified to profit or loss under
    equity method
         6.2.2 Gain/Losson changesin fair                    -45,102,275.58                    -19,896,472.08
    value ofavailable-for-salefinancialassets
         6.2.3  Gain/Loss  arising  from
    reclassification   of   held-to-maturity
    
    
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    investments to available-for-sale financial
    assets
         6.2.4 Effective gain/loss on cash
    flow hedges
         6.2.5  Differences arising from
    translation        of       foreign
    currency-denominated        financial
    statements
         6.2.6Other
      Attributabletonon-controllinginterests
    7. Totalcomprehensiveincome                           870,335,391.34                    552,218,454.86
      Attributableto owners of the Company                   847,320,062.06                    528,993,419.57
    as theparent
      Attributabletonon-controllinginterests                    23,015,329.28                     23,225,035.29
    8. Earningspershare
      8.1Basicearningspershare                                   1.77                           1.09
      8.2Dilutedearningspershare                                 1.77                           1.09
    
    
    Legal representative: Liang Jinhui The Company’s chief accountant: Ye Changqing
    
    Head of the Company’s financial department: Zhu Jiafeng
    
    4. Income Statement of the Company as the Parent
    
    Unit: RMB
    
                Item                         H12018                         H12017
    1. Operatingrevenue                                2,373,509,719.96                   2,032,050,832.48
      Less:Costofsales                                 962,446,727.32                    808,157,556.90
       Taxes andsurtaxes                               612,880,006.38                    521,153,270.11
       Selling expense                                  90,185,702.99                    119,601,430.10
       Administrative expense                            190,821,389.57                    180,104,417.79
       Finance costs                                   -17,205,534.12                     -8,358,356.49
       Asset impairmentloss                               1,440,847.72                     -1,943,865.48
      Add: Gain on changes in fair value                       236,707.77                       -119,656.35
    (“-” forloss)
       Investment income(“-”forloss)                       61,302,268.33                     74,940,152.97
         Including: Share of profit or loss
    of jointventuresandassociates
       Asset disposalincome(“-”forloss)                            0.00                       117,524.82
    
    
    ~ 43 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
       Other income                                    2,363,480.01                     20,551,597.62
    2. Operatingprofit(“-”forloss)                          596,843,036.21                    508,825,998.61
      Add:Non-operatingincome                            12,278,301.09                      2,446,478.83
      Less:Non-operatingexpense                            3,316,344.52                       798,234.93
    3. Profitbeforetaxation(“-”forloss)                       605,804,992.78                    510,474,242.51
      Less:Incometaxexpense                             162,576,738.06                    136,935,504.91
    4. Netprofit(“-”fornetloss)                            443,228,254.72                    373,538,737.60
      4.1  Net  profit  from  continuing                    443,228,254.72                    373,538,737.60
    operations (“-”fornetloss)
      4.2 Net profit from discontinued
    operations (“-”fornetloss)
    5. Other comprehensive income, net of                    -45,064,475.58                    -19,923,772.08
    tax
      5.1Items that will not be reclassified
    to profitorloss
       5.1.1 Changes in net liabilities or
    assets caused by remeasurements on
    defined benefitpensionschemes
       5.1.2 Shareofothercomprehensive
    income of investees that will not be
    reclassified into profit or loss under
    equity method
      5.2 Items that may subsequently be                    -45,064,475.58                    -19,923,772.08
    reclassifiedtoprofitorloss
       5.2.1 Shareofothercomprehensive
    income  of  investees  that  will  be
    reclassified into profit or loss under
    equity method
       5.2.2 Gain/Loss on changes in fair
    value  of  available-for-sale  financial                    -45,064,475.58                    -19,923,772.08
    assets
       5.2.3  Gain/Loss  arising  from
    reclassification   of  held-to-maturity
    investments   to   available-for-sale
    financial assets
       5.2.4 Effective gain/loss on cash
    flowhedges
       5.2.5  Differences  arising  from
    translation       of       foreign
    currency-denominated      financial
    statements
    
    
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       5.2.6 Other
    6. Totalcomprehensiveincome                           398,163,779.14                    353,614,965.52
    7. Earningspershare
       7.1Basicearningspershare                                  0.88                            0.74
       7.2Dilutedearningspershare                                0.88                            0.74
    
    
    5. Consolidated Cash Flow Statement
    
    Unit: RMB
    
                Item                         H12018                         H12017
    1. Cashflowsfromoperatingactivities:
      Proceeds from sale of commodities                   4,168,785,414.04                   3,555,497,838.84
    and renderingofservices
      Netincreasein customerdeposits 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
      Netproceedsfromreinsurance
      Net  increase  in  deposits  and
    investments ofpolicyholders
      Net  increase  in  proceeds  from
    disposal of financial assets at fair value
    through profitorloss
      Interest,  handling  charges  and
    commissions received
      Net increase  in  interbank  loans
    obtained
      Net  increase  in  proceeds  from
    repurchase transactions
      Taxrebates                                        1,526,552.28                     14,260,319.10
      Cashgenerated from other operating                    578,221,173.31                    163,681,861.39
    activities
    Subtotal  of  cash  generated  from                   4,748,533,139.63                   3,733,440,019.33
    operating activities
      Payments  for  commodities  and                    805,659,265.35                    519,208,246.66
    services
    
    
    ~ 45 ~
    
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      Netincrease in loans and advances to
    customers
      Net increase in deposits in central
    bank andininterbankloansgranted
      Payments for claims on  original
    insurance contracts
      Interest,  handling  charges  and
    commissions paid
      Policydividendspaid
      Cashpaidtoandforemployees                         777,363,928.00                    664,176,293.14
      Taxespaid                                     1,875,377,764.19                   1,695,407,866.03
      Cashusedinotheroperatingactivities                    621,185,290.48                    429,282,389.42
    Subtotal of cash used in operating                   4,079,586,248.02                   3,308,074,795.25
    activities
    Net  cash  generated  from/used  in                    668,946,891.61                    425,365,224.08
    operating activities
    2. Cashflowsfrominvestingactivities:
      Proceedsfromdisinvestments                         1,050,984,415.12                   2,122,314,171.98
      Investmentincome                                  64,643,822.92                     79,384,831.47
      Net proceeds from disposal of fixed
    assets,  intangible  assets  and  other                       170,207.20                       412,563.04
    long-lived assets
      Net  proceeds  from  disposal  of
    subsidiaries orotherbusinessunits
      Cash generated from other investing                            0.00                      1,646,000.00
    activities
    Subtotal  of  cash  generated  from                   1,115,798,445.24                   2,203,757,566.49
    investing activities
      Payments for acquisition of fixed
    assets,  intangible  assets  and  other                    160,906,209.61                     74,306,031.33
    long-lived assets
      Paymentsforinvestments                           1,221,541,796.23                   2,096,875,360.87
      Netincreaseinpledgedloansgranted
      Net payments for  acquisition  of
    subsidiaries andotherbusinessunits
      Cashusedinotherinvestingactivities
    Subtotal of cash used in investing                   1,382,448,005.84                   2,171,181,392.20
    activities
    Net  cash  generated  from/used  in                    -266,649,560.60                     32,576,174.29
    investing activities
    
    
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    3. Cashflowsfromfinancingactivities:
      Capitalcontributionsreceived
       Including: Capital contributions by
    non-controlling intereststosubsidiaries
      Increaseinborrowingsobtained
      Netproceedsfromissuanceofbonds
      Cashgenerated from other financing
    activities
    Subtotal  of  cash  generated  from
    financing activities
      Repaymentofborrowings
      Paymentsforinterestanddividends                      503,600,000.00                    302,160,000.00
       Including:  Dividends  paid  by
    subsidiaries tonon-controllinginterests
      Cashusedinotherfinancingactivities
    Subtotal of cash used in financing                    503,600,000.00                    302,160,000.00
    activities
    Net  cash  generated  from/used  in                    -503,600,000.00                    -302,160,000.00
    financing activities
    4.  Effect of foreign exchange rate
    changes oncashandcashequivalents
    5.  Net increase in cash and cash                    -101,302,668.99                    155,781,398.37
    equivalents
    Add:  Cash  and  cash  equivalents,                   1,024,088,626.40                    527,849,026.07
    beginning oftheperiod
    6. Cashandcashequivalents,endofthe                    922,785,957.41                    683,630,424.44
    period
    
    
    6. Cash Flow Statement of the Company as the Parent
    
    Unit: RMB
    
                Item                         H12018                         H12017
    1. Cashflowsfromoperatingactivities:
      Proceeds from sale of commodities                   1,823,943,040.35                   2,364,605,355.19
    and renderingofservices
      Taxrebates                                             0.00                     13,013,817.25
      Cashgenerated from other operating                    637,265,577.14                     79,147,317.52
    activities
    Subtotal  of  cash  generated  from                   2,461,208,617.49                   2,456,766,489.96
    operating activities
    
    
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    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
      Payments  for  commodities  and                    621,024,637.00                    451,629,264.08
    services
      Cashpaidtoandforemployees                         299,547,110.96                    280,790,376.47
      Taxespaid                                     1,185,933,500.57                   1,125,948,368.08
      Cashusedinotheroperatingactivities                    122,550,902.77                    114,239,605.20
    Subtotal of cash used in operating                   2,229,056,151.30                   1,972,607,613.83
    activities
    Net  cash  generated  from/used  in                    232,152,466.19                    484,158,876.13
    operating activities
    2. Cashflowsfrominvestingactivities:
      Proceedsfromdisinvestments                          860,984,415.12                   2,069,314,171.98
      Investmentincome                                  62,684,376.34                     78,831,554.77
      Net proceeds from disposal of fixed
    assets,  intangible  assets  and  other
    long-lived assets
      Net  proceeds  from  disposal  of
    subsidiaries orotherbusinessunits
      Cash generated from other investing                            0.00                      1,646,000.00
    activities
    Subtotal  of  cash  generated  from                    923,668,791.46                   2,149,791,726.75
    investing activities
      Payments for acquisition of fixed
    assets,  intangible  assets  and  other                     84,656,707.92                     59,402,496.47
    long-lived assets
      Paymentsforinvestments                            621,541,796.23                   1,969,875,360.87
      Net payments for  acquisition  of
    subsidiaries andotherbusinessunits
      Cashusedinotherinvestingactivities
    Subtotal of cash used in investing                    706,198,504.15                   2,029,277,857.34
    activities
    Net  cash  generated  from/used  in                    217,470,287.31                    120,513,869.41
    investing activities
    3. Cashflowsfromfinancingactivities:
      Capitalcontributionsreceived
      Increaseinborrowingsobtained
      Netproceedsfromissuanceofbonds
      Cashgenerated from other financing
    activities
    Subtotal  of  cash  generated  from
    financing activities
    
    
    ~ 48 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
      Repaymentofborrowings
      Paymentsforinterestanddividends                      503,600,000.00                    302,160,000.00
      Cashusedinotherfinancingactivities
    Sub-total of cash used in financing                    503,600,000.00                    302,160,000.00
    activities
    Net  cash  generated  from/used  in                    -503,600,000.00                    -302,160,000.00
    financing activities
    4.  Effect of foreign exchange rate
    changes oncashandcashequivalents
    5.  Net increase in cash and cash                    -53,977,246.50                    302,512,745.54
    equivalents
    Add:  Cash  and  cash  equivalents,                    826,262,109.02                    225,792,686.26
    beginning oftheperiod
    6. Cashandcashequivalents,endofthe                    772,284,862.52                    528,305,431.80
    period
    
    
    ~ 49 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    7. Consolidated Statements of Changes in Owners’ Equity
    
    H1 2018
    
    Unit: RMB
    
                                                                       H1 2018
                                           Equity attributabletoownersoftheCompanyastheparent
         Item                Otherequityinstruments              Less:     Other                                      Non-controlling  Totalowners’
                  Sharecapital Preferred Perpetual     Capitalreserves Treasury comprehensive Specific   Surplus   General Retainedprofits    interests       equity
                             shares   bonds  Other             shares    income   reserve   reserves   reserve
    1. 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 ofprioryear
    Add: Adjustments
    for     changed
    accounting
    policies
      Adjustmentsfor
    corrections    of
    previous errors
      Adjustmentsfor
    business
    combinations
    involving
    enterprises  under
    commoncontrol
      Other
    adjustments
    2. 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
    beginning of the
    
    
    ~ 50 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    year
    3.      Increase/
    decrease  in  the                                               -45,102,275.58                        388,822,337.64  23,015,329.28  366,735,391.34
    period  (“-”  for
    decrease)
      3.1     Total
    comprehensive                                                  -45,102,275.58                        892,422,337.64  23,015,329.28  870,335,391.34
    income
      3.2    Capital
    increased    and
    reduced byowners
       3.2.1
    Ordinaryshares
    increased by
    shareholders
       3.2.2 Capital
    increased by
    holders ofother
    equityinstruments
       3.2.3
    Share-based
    paymentsincluded
    in owners’equity
       3.2.4 Other
     3.3      Profit                                                                                -503,600,000.00            -503,600,000.00
    distribution
       3.3.1
    Appropriation  to
    
    
    ~ 51 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    surplus reserves
       3.3.2
    Appropriation  to
    generalreserve
       3.3.3
    Appropriation  to                                                                                 -503,600,000.00            -503,600,000.00
    owners      (or
    shareholders)
       3.3.4 Other
      3.4
    Carryforwards
    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
    makeuplosses
       3.4.4 Other
      3.5   Specific
    reserve
       3.5.1
    
    
    ~ 52 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    Withdrawn for the
    period
       3.5.2   Used
    during theperiod
      3.6Other
    4. Balances as of 503,600,000.00                  1,295,405,592.25        8,418,551.86      256,902,260.27      4,738,472,036.06 405,115,957.617,207,914,398.05
    end oftheperiod
    
    
    H1 2017
    
    Unit: RMB
    
                                                                       H1 2017
                                           Equity attributabletoownersoftheCompanyastheparent
         Item                Otherequityinstruments              Less:     Other                                      Non-controlling  Totalowners’
                  Share capital Preferred Perpetual     Capitalreserves Treasury comprehensive Specific   Surplus   General Retainedprofits    interests       equity
                             shares   bonds  Other             shares    income   reserve   reserves   reserve
    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 ofprioryear
    Add: Adjustments
    for     changed
    accounting
    policies
      Adjustments for
    corrections    of
    previous errors
      Adjustments for
    business
    combinations
    
    
    ~ 53 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    involving
    enterprises  under
    commoncontrol
      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/
    decrease  in  the                                                17,376,349.49                        846,580,644.93  36,491,092.53  900,448,086.95
    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 byowners
       3.2.1
    Ordinaryshares
    increasedby
    shareholders
       3.2.2 Capital
    increasedby
    holders ofother
    equityinstruments
       3.2.3
    Share-based
    paymentsincluded
    
    
    ~ 54 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    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
    generalreserve
       3.3.3
    Appropriation  to                                                                                -302,160,000.00            -302,160,000.00
    owners      (or
    shareholders)
       3.3.4 Other
      3.4
    Carryforwards
    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
    
    
    ~ 55 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    reserves  used  to
    make uplosses
       3.4.4 Other
      3.5   Specific
    reserve
       3.5.1
    Withdrawn for the
    period
       3.5.2   Used
    during theperiod
      3.6Other
    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 oftheperiod
    
    
    8. Statements of Changes in Owners’ Equity of the Company as the Parent
    
    H1 2018
    
    Unit: RMB
    
                                                                          H12018
           Item                      Otherequityinstruments                   Less:      Other     Specific    Surplus                Totalowners’
                       Share capital  Preferred  Perpetual         Capitalreserves   Treasury  comprehensive                    Retainedprofits
                                   shares   bonds    Other                 shares      income     reserve     reserves                   equity
    1. 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
    prior year
    Add:  Adjustments  for
    changed     accounting
    
    
    ~ 56 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    policies
      Adjustments     for
    corrections  of  previous
    errors
      Otheradjustments
    2.   Balances   as   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
    beginning oftheyear
    3. Increase/ decrease in
    the  period  (“-”  for                                                        -45,064,475.58                     -60,371,745.28 -105,436,220.86
    decrease)
      3.1          Total                                                        -45,064,475.58                     443,228,254.72  398,163,779.14
    comprehensiveincome
      3.2 Capital increased
    and reducedbyowners
       3.2.1 Ordinaryshares
    increased byshareholders
       3.2.2 Capital
    increased byholdersof
    other equityinstruments
       3.2.3 Share-based
    payments includedin
    owners’ equity
       3.2.4 Other
      3.3Profitdistribution                                                                                        -503,600,000.00 -503,600,000.00
       3.3.1  Appropriation
    to surplusreserves
       3.3.2  Appropriation                                                                                       -503,600,000.00 -503,600,000.00
    to     owners     (or
    
    
    ~ 57 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    shareholders)
       3.3.3 Other
      3.4    Carryforwards
    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 surplusreserves
       3.4.3      Surplus
    reserves used to make up
    losses
       3.4.4 Other
      3.5Specificreserve
       3.5.1 Withdrawn for
    the period
       3.5.2 Usedduringthe
    period
      3.6Other
    4. Balances as of end of 503,600,000.00                        1,247,162,107.35           8,390,260.80         251,800,000.00 4,042,780,098.10 6,053,732,466.25
    the period
    
    
    H1 2017
    
    Unit: RMB
    
                                                                          H12017
           Item
                       Sharecapital     Otherequityinstruments    Capitalreserves    Less:      Other     Specific     Surplus    Retainedprofits  Totalowners’
    
    
    ~ 58 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
                                 Preferred  Perpetual   Other                Treasury  comprehensive  reserve     reserves                   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
      Otheradjustments
    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 oftheyear
    3. Increase/ decrease in
    the  period  (“-”  for                                                        16,139,180.74                      795,948,489.75  812,087,670.49
    decrease)
      3.1          Total                                                        16,139,180.74                    1,098,108,489.75 1,114,247,670.49
    comprehensiveincome
      3.2 Capital increased
    and reducedbyowners
       3.2.1 Ordinaryshares
    increased byshareholders
       3.2.2 Capital
    increased byholdersof
    other equityinstruments
       3.2.3 Share-based
    payments includedin
    owners’ equity
    
    
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       3.2.4 Other
      3.3Profitdistribution                                                                                        -302,160,000.00 -302,160,000.00
       3.3.1  Appropriation
    to surplusreserves
       3.3.2  Appropriation
    to     owners     (or                                                                                       -302,160,000.00 -302,160,000.00
    shareholders)
       3.3.3 Other
      3.4    Carryforwards
    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 surplusreserves
       3.4.3      Surplus
    reserves used to make up
    losses
       3.4.4 Other
      3.5Specificreserve
       3.5.1 Withdrawn for
    the period
       3.5.2 Usedduringthe
    period
      3.6Other
    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
    
    
    ~ 60 ~
    
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    the period
    
    
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    Anhui Gujing Distillery Company Limited
    
    Notes to Financial Statements for H1 2018
    
    (Currency Unit Is RMB Unless Otherwise Stated)
    
    I. Company Profile
    
    Authorized by document WGZGZ (1996) No.053 of Anhui Administrative Bureau of State-owned Property,
    
    Anhui Gujing Distillery Company Limited (“the Company”) was established as a limited liability company with
    
    net assets of RMB377,167,700 and state-owned shares of 155,000,000 shares and considered Anhui Gujing
    
    Company as the only promoter. The registration place was Bozhou Anhui China. The Company was established
    
    on 5 March 1996 by document of WZM (1996) No.42 of Anhui People’s Government. The Company set up
    
    plenary session on 28 May 1996 and registered in Anhui on 30 May 1996 with business license of 14897271-1.
    
    The Company has issued 60,000,000 domestic listed foreign shares (“B” shares) in June 1996 and 20,000,000
    
    ordinary shares (“A shares) on September 1996, ordinary shares are listed in national and par value is RMB1.00
    
    per share. Those A shares and B shares are listed in Shenzhen Stock exchange.
    
    Headquarter of the Company is located in Gujing Bozhou Anhui. The Company and its subsidiaries (the Company)
    
    specialize in producing and selling white spirit.
    
    Registered capitals of the Company were RMB235,000,000 with stocks of 235,000,000, of which 155,000,000
    
    shares were issued in China, B shares of 60,000,000 shares and A shares of 20,000,000 shares. The book value of
    
    the stocks of the Company was of RMB1 per share.
    
    On 29 May 2006, a shareholder meeting was held to discuss and approval a program of equity division of A share,
    
    the program was implement in June 2006. After implementation, all shares are outstanding share, which include
    
    147,000,000 shares with restrict condition on disposal, represent 62.55% of total equity, and 88,000,000 shares
    
    without restrict condition on disposal, represent 37.45% of total equity.
    
    The Company issued 
    
    on 27 June 2007, 11,750,000 outstanding shares with restrict condition on disposal are listed in stock market on 29
    
    June 2007. Up to that day, outstanding shares with restrict condition on disposal are 135,250,000, representing
    
    57.55% of total equity, the share without restrict condition are 99,750,000, representing 42.45% of total equity.
    
    The Company issued 
    
    on 17 July 2008, 11,750,000 outstanding shares with restrict condition on disposal are listed in stock market on 18
    
    July 2008. Up to that day, outstanding shares with restrict condition on disposal are 123,500,000, representing
    
    52.55% of total equity, the share without restrict condition are 111,500,000, representing 47.45% of total equity.
    
    The Company issued 
    
    on 24 July 2009, 123,500,000 outstanding shares with restrict condition on disposal are listed in stock market on
    
    29 July 2009. Up to that day, the Company’s all shares are all tradable.
    
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    Approved by the CSRC Document Zheng-Jian-Xu-Ke [2011] No. 943, the Company privately offered 16,800,000
    
    ordinary shares (A-shares) to special investors on 15 July 2011, with a par value of RMB1 and the price of
    
    RMB75.00 per share, raising RMB1,260,000,000.00 in total, the net amount of raised funds stood at
    
    RMB1,227,499,450.27 after deducting RMB32,500,549.73 of various issuance expenses. Certified Public
    
    Accountants verified the raised capital upon its arrival and issued the Capital Verification Report Reanda-Yan-Zi
    
    [2011] No. 1065. After private issuance, the share capital of the Company increased to RMB251.8 million.
    
    Pursuant to the Resolution of The 2011 Annual General Meeting, the Company that considered 251,800,000 shares
    
    as base number on 31 December 2011 transferred capital reserve into share capital at a rate of “10 shares for per 10
    
    shares” accounting for 251,800,000 shares and implemented in the year of 2012. Upon the transference, the
    
    registered capitals increased to RMB503,600,000.
    
    In April 2016, the company entered a strategic cooperation agreement with Wuhan Tianlong Yellow Crane Tower
    
    Co., Ltd., creating a new age for cooperation related to Chinese famous spirit. As the only Chinese famous spirit
    
    in Hubei Province, it features unique mellow taste, elegant appearance and tempting smell. Moreover, Yellow
    
    Crane Tower White Spirit won the Golden Prize respectively in 1984 and 1989 National White Spirit Appraisal
    
    Competition as one of the business card representing Hubei Province’s economy. At present, the company has
    
    established three major bases in Wuhan, Xianning and Suizhou, of which, Xianning Base has integrated
    
    modernism, ecologism and high technology as a new spirit-making base, known as “the most beautiful chateau in
    
    China”. In 2016, Yellow Crane Tower Spirit won “2015 Top 10 Star Product in Hubei Province”.
    
    By 30 June 2018, the Company issued 503,600,000 shares.
    
    The company is registered at Gujing Town, Bozhou City, Anhui Province.
    
    The approved business of the Company including procurement of grain (operating with business license),
    
    manufacture of distilled spirits, wine distilling facilities, packaging material, bottles, alcohol, grease (limited to
    
    byproducts from wine manufacture), and research and development of high-tech, biotechnology development,
    
    agricultural and sideline products deep processing, as well as sale of self-manufacturing products.
    
    The Company as the parent and the final company as the parent is Anhui Gujing Company Co., Ltd in China.
    
    Financial statement of the Company will be released on 27 August 2018 by the Board of Directors.
    
    On 30 June 2018, there were 23 subsidiaries included in the consolidation scope. Please refer to Note VIII “Rights
    
    and Interests in other Entities” for details.
    
    II. Basis for the Preparation of Financial Statements
    
    1. Basis for the Preparation
    
    With the going-concern assumption as the basis and based on transactions and other events that actually occurred,
    
    the Company prepared financial statements in accordance with the ASBE-Basic Standard (No. 33 issued decreed
    
    by Ministry of Finance and No. 76 revised decreed by Ministry of Finance), the 41 specific standards of
    
    Accounting Standards for Business Enterprises issued by Ministry of Finance of the PRC on 15 February 2006 and
    
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    revised thereafter, Application Guidance of Accounting Standard for Business Enterprises, Interpretation of
    
    Accounting Standards for Business Enterprises and other regulations(hereinafter referred to as “the Accounting
    
    Standards for Business Enterprises”, “China Accounting Standards” or “CAS”), Rules for Preparation Convention
    
    of Disclosure of Public Offering Companies No.15 – General Regulations for Financial Reporting (revised in 2014)
    
    by China Securities Regulatory Commission.
    
    In line with relevant rules of ASBE, financial accounting of the Company is based on accrual system. Except
    
    financial instruments and instrument real estate, the financial statement is calculated on the basis of history costs.
    
    Available-for-sale non-current assets are calculated by the lower one of fair value deducting estimated costs and
    
    original costs meeting the standard of available-for-sale. If assets confront impairment, it shall be withdrawn
    
    provision for impairment in line with relevant stipulations.
    
    2. Continuous Operation
    
    The management of the Company executed the assessment on the continuation ability and had not discovered any
    
    event or situation caused significant suspicion on the continuation ability. Thus, the financial statements compiled
    
    based on the hypothesis of the continuation.
    
    III. Declaration of Compliance with the Enterprise Accounting Standards
    
    The financial statements of the Company have been prepared in accordance with the Enterprise Accounting
    
    Standards to present truly and completely the financial position of the Company on June 30, 2018, operating
    
    results, cash flow from January to June in 2018 and other relevant information. The financial statement of the
    
    Company met the relevant disclosure requirements of financial statement and notes of “Compiling stipulations of
    
    public information disclosure No.15---general rules of financial statement” (revised in 2014).
    
    IV. Main Accounting Policies and Accounting Estimates
    
    The company and various subsidiaries are mainly specialized in manufacturing and selling white spirit. According
    
    to the actual production & operation and related ASBE provisions, this company and various subsidiaries have
    
    formulated some specific accounting policies and estimations related to various transactions and matters including
    
    revenue recognition. Please refer to Note IV. 23 “Revenues” for details. For any description of major accounting
    
    judgment and estimations made by the company’s management, please refer to Note IV. 28 “Major Accounting
    
    Judgment and Estimations” for details.
    
    1. Accounting Year
    
    Accounting year is divided to annual term and medium term. Accounting medium refers to reporting period
    
    shorter than a complete accounting period. The Company employs a period of calendar days from January 1st to
    
    December 31st each year as accounting year.
    
    2. Operating Cycle
    
    Normal operating cycle refers to the period from the Company purchases the assets for processing to realize the
    
    cash or cash equivalents. The Company regards 12 months as an operating cycle and regards which as the
    
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    partition criterion of the mobility of the assets and liabilities.
    
    3. Bookkeeping Base Currency
    
    Renminbi is the dominant currency used in the economic circumstances where the Company and its domestic
    
    subsidiaries are involved. Therefore, the Company and its domestic subsidiaries use Renminbi as their
    
    bookkeeping base currency. And the Company adopted Renminbi as the bookkeeping base currency when
    
    preparing the financial statements for the reporting period.
    
    4. Accounting Treatment Methods for Business Combinations Under the Same Control and those not Under
    
    the Same Control
    
    The term “business combinations” refers to a transaction or event bringing together two or more separate
    
    enterprises into one reporting entity. Business combinations are classified into the business combinations under
    
    the same control and the business combinations not under the same control.
    
    (1) Accounting treatment of the business combination that is under the same 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 business
    
    combination, and that control is not transitory. 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 share premium in the capital reserve. If the balance of share
    
    premium is insufficient, any excess is adjusted to retained earnings. Other direct expenses occur when the
    
    Company conducting business combinations is recognized in current profit and loss. The combination date is the
    
    date on which one combining enterprise effectively obtains control of the other combining enterprises.
    
    Those assets and liabilities obtained by the Company during the business combination should be recognized in the
    
    carrying value of the equity of the merged party on the merger date. The difference between the carrying amount
    
    of the net assets obtained and carrying amount of the merger consideration (or total par value of issued shares)
    
    paid shall be adjusted to capital reserve. If the capital reserve is not sufficient to absorb the difference, any excess
    
    shall be adjusted against retained earnings.
    
    Direct costs of a business combination shall be reckoned into current gains and losses.
    
    (2) Accounting treatment of the business combination that is not under the same control
    
    A business combination involving entities not under common control is a business combination in which all of the
    
    combining entities are not ultimately controlled by the same party or parties both before and after the business
    
    combination. In business combination not under the same control, acquirer refers to party obtaining control of
    
    other combining corporations in the date of acquisition and acquiree refers to corporation participating in
    
    combination. Date of acquire refers to the date the acquirer actually obtaining control of the acquiree.
    
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    As for combination not under the same control, costs of combination includes assets that acquirers occur in the
    
    date of combination in order to obtain control of acqirees, loans, fair value of issued equity securities,
    
    intermediary costs such as audit, legal services and evaluation consultation, and other administrative fees occurred
    
    in the reporting period. As for trading costs that acquirers as combination consideration issue equity securities or
    
    debt securities, it shall be reckoned into initial accounts of equity securities or debt securities. As for business
    
    combination realized by several exchanges and trades, in the combined financial statement of the Company, the
    
    Company shall recalculate the stock right obtained by acquirees before the date of acquisition in line with fair
    
    value of the stock right in the date of acquisition. When the Company acts as the combination party, the cost of a
    
    business combination paid by the acquirer is the aggregate of the fair value at the acquisition date of assets given
    
    (including share equity of the acquiree held before the combination date), liabilities incurred or assumed, and
    
    equity securities issued by the acquirer. Any excess of the cost of a business combination over the acquirer’s
    
    interest in the fair value of the acquiree’s identifiable net assets is recognized as goodwill, while any excess of the
    
    acquirer’s interest in the fair value of the acquiree’s identifiable net assets over the cost of a business combination
    
    is recognized in profit or loss. The cost of equity securities or liability securities as on combination consideration
    
    offering is recognized in initial recording capital on equity securities or liability securities. Other direct expenses
    
    occur when the Company conducting business combinations is recognized in current profit and loss. The
    
    difference between the fair value and the carrying amount of the assets given is recognized in profit or loss. The
    
    Company, at the acquisition date, recognized the acquiree’s identifiable asset, liabilities and contingent liabilities
    
    at their fair value at that date. The acquisition date is the date on which the acquirer effectively obtains control of
    
    the acquiree.
    
    As for deductible temporary difference of acquirers obtained by acquirers which can’t be confirmed due to failure
    
    of meeting the confirmation requirements of deferred income tax assets, if there is newly information proving the
    
    existence of relevant situation in the date of acquisition in a year after the acquisition date and financial benefits of
    
    deductible temporary difference of acquirers in the date of acquisition are estimated to be realized, deferred
    
    income tax assets shall be confirmed. At the same time, goodwill shall be decreased. If goodwill is insufficient,
    
    the difference shall be reckoned into current gains and losses; except the above circumstance, reliable deferred
    
    income tax assets relevant to the Company shall be reckoned into current gains and losses.
    
    For a business combination not involving enterprise under common control, which achieved in stages that
    
    involves multiple exchange transactions, according to “The notice of the Ministry of Finance on the issuance of
    
    Accounting Standards Interpretation No. 5” (CaiKuai [2012] No. 19) and Article 51 of Accounting Standards for
    
    Enterprises No. 33 – Consolidated Financial Statements on the “package deal” criterion (see Note IV. 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 Note IV. 13 “long-term
    
    investment” accounting treatment, if it does not belong to the “package deal” to distinguish the individual
    
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    financial statements and the consolidated financial statements related to the accounting treatment:
    
    In the individual financial statements, the sum of the book value and new investment cost of the Company holds
    
    in the acquiree before the acquiring date shall be considered as initial cost of the investment. Other related
    
    comprehensive gains in relation to the equity interests that the Company holds in the acquiree before the acquiring
    
    date shall be treated on the same basis as the acquiree directly disposes the related assets or liabilities when
    
    disposing the investment (that is, except for the corresponding share in the changes in the net liabilities or assets
    
    with a defined benefit plan measured at the equity method arising from the acquiree’s re-measurement, the others
    
    shall be transferred into current investment gains).
    
    In the Company’s consolidated financial statements, as for the equity interests that the Company holds in the
    
    acquiree before the acquiring date, they shall be re-measured according to their fair values at the acquiring date;
    
    the positive difference between their fair values and carrying amounts shall be recorded into the investment gains
    
    for the period including the acquiring date. Other related comprehensive gains in relation to the equity interests
    
    that the Company holds in the acquiree before the acquiring date shall be treated on the same basis as the acquiree
    
    directly disposes the related assets or liabilities when disposing the investment (that is, except for the
    
    corresponding share in the changes in the net liabilities or assets with a defined benefit plan measured at the
    
    equity method arising from the acquiree’s re-measurement, the others shall be transferred into current investment
    
    gains on the acquiring date).
    
    5. Methods for Preparing Consolidated Financial Statements
    
    (1) Principle for determining the consolidation scope
    
    The consolidation scope for financial statements is determined on the basis of control. The term “control” is the
    
    power of the Company upon an investee, with which it can take part in relevant activities of the investee to obtain
    
    variable returns and is able to influence the amount of returns. The consolidated financial statements comprise the
    
    financial statements of the Company and its subsidiaries. A subsidiary is an enterprise or entity controlled by the
    
    Company.
    
    The Company would reassess it if the involved relevant factors of above control definitions changed, which was
    
    caused by changes of relevant facts and situations.
    
    (2) Methods for preparing the consolidated financial statements
    
    The Company begins to include subsidiaries into consolidation scope from the date obtaining net assets of
    
    subsidiaries and actual control of production and operation and terminates to include subsidiaries into
    
    consolidation scope from the date losing actual control of subsidiaries. As for the disposal of subsidiaries,
    
    operating results and cash flow are included in consolidated income statement and consolidated statement of cash
    
    flow before the date of the disposal; as for current disposal of subsidiaries, opening balance of the consolidated
    
    balance sheet shall not be adjusted. As for subsidiaries increased in the combination not under the same control,
    
    operating results and cash flow after the date of the acquisition are included in consolidated income statement and
    
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    consolidated statement of cash flow, in addition, opening balance of the consolidated balance sheet shall not be
    
    adjusted. As for subsidiaries increased in the combination under the same control and combined parties under
    
    acquisition, operating results and cash flow from the beginning of combination to the date of combination are
    
    included in consolidated income statement and consolidated statement of cash flow, in addition, opening balance
    
    of the consolidated balance sheet shall be adjusted.
    
    Where a subsidiary was acquired during the reporting period, through a business combination involving entities
    
    under common control, the financial statements of the subsidiary are included in the consolidated financial
    
    statements as if the combination had occurred at the date that common control was established. Therefore the
    
    opening balances and the comparative figures of the consolidated financial statements are restated. In the
    
    preparation of the consolidated financial statements, the subsidiary’s assets, liabilities and results of operations are
    
    included in the consolidated balance sheet based on their carrying amounts; while results of operations are
    
    included in the consolidated income statement, from the date that common control was established.
    
    All the significant inter-company balances, trading and unrealized profits shall be offset when preparing the
    
    consolidated financial statement.
    
    If current loss shoulder by minority shareholders of a subsidy over the proportion enjoyed by minority
    
    shareholders in a subsidy at owners’ equity at period-begin, its balance still offset minority shareholders’ equity.
    
    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. Intra-Company balances and transactions, and any unrealized profit or
    
    loss arising from intra-Company transactions, are eliminated in preparing the consolidated financial statements.
    
    Unrealized losses resulting from intra-Company transactions are eliminated in the same way as unrealized gains
    
    but only to the extent that there is no evidence of impairment.
    
    When losing control right of subsidiaries because of the disposal of stock right investment or other reasons, the
    
    Company shall recalculate residual stock right in accordance to the fair value in the date of losing control right. As
    
    for remaining equity investment after disposal, the Company will re-account it according to the fair value at the
    
    date the control was lost. Any profit or loss occurred shall be recorded into the investment income during the
    
    period of losing control right. Then follow-up measurement of remaining equity shall be arranged in line with “No.
    
    2—Long-term Equity Investment” or “No. 22—Affirmation and Calculation of Financial Instrument”. More
    
    details please refer to Note IV, 13 “Long-term Equity Investment” or Note IV, 9 “Financial Instrument”.
    
    The company through multiple transactions step deals with disposal of the subsidiary's equity investment until the
    
    loss of control; need to distinguish between equity until the disposal of a subsidiary's loss of control over whether
    
    the transaction is package deal. Terms of the transaction disposition of equity investment in a subsidiary, subject to
    
    the following conditions and the economic impact of one or more of cases, usually indicates that several
    
    transactions should be accounted for as a package deal: ① these transactions are considered simultaneously, or in
    
    the case of mutual influence made, ② these transactions as a whole in order to achieve a complete business results;
    
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    ③ the occurrence of a transaction depends on occurs at least one other transaction ; ④ a transaction look alone is
    
    not economical, but when considered together with other transaction is economical. If they do not belong to the
    
    package deal, each of them separately, as the case of a transaction in accordance with “without losing control over
    
    the disposal of a subsidiary part of long-term equity investments” (see Note IV. 13. (2) ④)) and “due to the
    
    disposal of certain equity investments or other reasons lost control of a subsidiary of the original” (see previous
    
    paragraph) principles applicable accounting treatment. Until the disposal of the equity investment loss of control
    
    of a subsidiary of the transactions belonging to the package deal, the transaction will be used as a disposal of a
    
    subsidiary and the loss of control of the transaction. However, before losing control of the price of each disposal
    
    entitled to share in the net assets of the subsidiary's investment corresponding to the difference between the
    
    disposals, recognized in the consolidated financial statements as other comprehensive income, loss of control over
    
    the transferred together with the loss of control or loss in the period.
    
    6. Classification of Joint Arrangements and Accounting Treatment of Joint Operations
    
    A joint arrangement refers to an arrangement jointly controlled by two participants or above. The Company
    
    classifies joint arrangements into joint operations and joint ventures according to its rights and duties in the joint
    
    arrangements. A joint operation refers to a joint arrangement where the Company enjoys assets and has to bear
    
    liabilities related to the arrangement. A joint venture refers to a joint arrangement where the Company is only
    
    entitled to the net assets of the arrangement.
    
    The Company’s investments in joint ventures are measured at the equity method according to the accounting
    
    policies mentioned in Note IV. 13 (2) ② “Long-term equity investments measured at the equity method”.
    
    For a joint operation, the Company, as a joint operator, recognizes the assets and liabilities that it holds and bears
    
    in the joint operation, and recognizes the jointly-held assets and jointly-borne liabilities according to the
    
    Company’s stake in the joint operation; recognizes the income from sale of the Company’s share in the output of
    
    the joint operation; recognizes the income from sale of the joint operation’s outputs according to the Company’s
    
    stake in it; and recognizes the expense solely incurred to the Company and the expense incurred to the joint
    
    operation according to the Company’s stake in it.
    
    When the Company, as a joint operator, transfers or sells assets (the assets not constituting business, the same
    
    below) to the joint operation, or purchases assets from the joint operation, before the assets are sold to a third party,
    
    the Company only recognizes the share of the other joint operators in the gains and losses arising from the sale.
    
    Where impairment occurs to the assets as prescribed in     
    Enterprises—Asset Impairment>, the Company shall fully recognizes the loss for a transfer or sale of assets to a
    
    joint operation; and shall recognize the loss according to its stake in the joint operation for a purchase of assets
    
    from the joint operation.
    
    7. Recognition Standard for Cash and Cash Equivalents
    
    Cash and cash equivalents of the Company include cash on hand, ready usable deposits and investments having
    
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    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.
    
    8. Foreign Currency Businesses and Translation of Foreign Currency Financial Statements
    
    (1) Accounting treatments for translation of foreign currency transactions
    
    The foreign currency transactions are recorded, on initial recognition in the functional currency, by applying [the
    
    spot exchange rate on the date of the transaction / an exchange rate that approximates the actual spot exchange
    
    rate on the date of transaction]. The exchange of foreign currency and transactions related to the foreign exchange
    
    are translated at the spot exchange rate.
    
    (2) Accounting treatments for translation of foreign currency monetary items and non-monetary items
    
    At the balance sheet date, foreign currency monetary items are translated using the spot exchange rate at the
    
    balance sheet date. All the exchange differences thus resulted are taken to profit or loss, except for ① those
    
    relating to foreign currency borrowings specifically for construction and acquisition of qualifying assets, which
    
    are capitalized in accordance with the principle of capitalization of borrowing costs, ② hedging accounting, the
    
    exchange difference related to hedging instruments for the purpose of net oversea operating investment is
    
    recorded in the comprehensive income till the date of disposal and recognized in profit or loss of the period;
    
    exchange difference from changes of other account balance of foreign currency monetary items,
    
    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.
    
    9. Financial Instruments
    
    The Company recognizes a financial asset or liability when it becomes a party of the relevant financial instrument
    
    contract. Financial assets and liabilities are measured at fair value in initial recognition. As for the financial assets
    
    and liabilities measured at fair value of which changes are recorded into current gains and losses, the relevant
    
    dealing expenses are directly recorded into gains and losses; and the dealing expenses on other kinds of financial
    
    assets and liabilities are included in the amounts initially recognized.
    
    (1) Determination of the fair value of main financial assets and financial liabilities
    
    Fair value refers to the price that a market participant shall receive for selling an asset or shall pay for transferring
    
    a liability in an orderly transaction on the measurement date. As for the financial assets or financial liabilities for
    
    which there is an active market, the quoted prices in the active market shall be used to determine the fair values
    
    thereof. The quoted prices in the active market refers to the prices available from stock exchange, broker’s
    
    ~ 70 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    agencies, guilds, pricing organization and etc., which represent the actual trading price under equal transaction.
    
    Where there is no active market for a financial instrument, the enterprise concerned shall adopt value appraisal
    
    techniques, including the prices adopted by the parties, who are familiar with the condition, in the latest market
    
    transaction upon their own free will, the current fair value obtained by referring to other financial instruments of
    
    the same essential nature, the cash flow capitalization method and the option pricing model, etc., to determine its
    
    fair value.
    
    (2) Classification, recognition and measurement of financial assets
    
    The purchase and sale of financial assets under the normal ways shall be recognized and stopped to be recognized
    
    respectively at the price of transaction date. Financial assets shall be classified into the following four categories
    
    when they are initially recognized: (a) the financial assets which are measured at their fair values and the variation
    
    of which is recorded into the profits and losses of the current period, (b) the investments which will be held to
    
    their maturity; (c) loans and the account receivables; and (d) financial assets available for sale.
    
    ① The financial assets which are measured at their fair values and the variation of which is recorded into the
    
    profits and losses of the current period
    
    Including transactional financial assets and the financial assets which are designated to be measured at their fair
    
    value when they are initially recognized and of which the variation is recorded into the profits and losses of the
    
    current period;
    
    The financial assets meeting any of the following requirements shall be classified as transactional financial assets:
    
    A. The purpose to acquire the said financial assets is mainly for selling them in the near future; B. Forming a part
    
    of the identifiable combination of financial instruments which are managed in a centralized way and for which
    
    there are objective evidences proving that the enterprise may manage the combination by way of short-term profit
    
    making in the near future; C. Being a derivative instrument, excluding the designated derivative instruments
    
    which are effective hedging instruments, or derivative instruments to financial guarantee contracts, and the
    
    derivative instruments which are connected with the equity instrument investments for which there is no quoted
    
    price in the active market, whose fair value cannot be reliably measured, and which shall be settled by delivering
    
    the said equity instruments.
    
    The financial assets meeting any of the following requirements shall be designated as financial assets which are
    
    measured at their fair values and the variation of which is recorded into the profits and losses of the current period
    
    for initial recognition: A. the designation can eliminate or significantly reduce the difference of relevant gains and
    
    losses between recognition and measurement causing from different bases for measurement of financial assets; B.
    
    The official written documents for risk management and investment strategies of the enterprise have clearly stated
    
    that it shall, manage, evaluate and report to important management personnel based on the fair value, about the
    
    financial assets Company or the Company of financial assets & liabilities which the financial assets are belong to.
    
    For the financial assets which are measured at their fair values and the variation of which is recorded into the
    
    ~ 71 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    profits and losses of the current period shall continue to be measured by fair value, gains and losses of change in
    
    fair value, dividends and interest related with these financial assets should be recorded into gains and losses of
    
    current period.
    
    ② Held-to-maturity investment
    
    The term "held-to-maturity investment" refers to a non-derivative financial asset with a fixed date of maturity, a
    
    fixed or determinable amount of repo price and which the enterprise holds for a definite purpose or the enterprise
    
    is able to hold until its maturity.
    
    For the held-to-maturity investment adopting actual interest rate method, which is measured at the
    
    post-amortization costs, the profits and losses that arise when such financial assets or financial liabilities are
    
    terminated from recognition, or are impaired or amortized, shall be recorded into the profits and losses of the
    
    current period.
    
    The actual interest rate method refers to the method by which the post-amortization costs and the interest incomes
    
    of different installments or interest expenses are calculated in light of the actual interest rates of the financial
    
    assets or financial liabilities (including a set of financial assets or financial liabilities). The actual interest rate
    
    refers to the interest rate adopted to cash the future cash flow of a financial asset or financial liability within the
    
    predicted term of existence or within a shorter applicable term into the current carrying amount of the financial
    
    asset or financial liability.
    
    When the actual interest rate is determined, the future cash flow shall be predicted on the basis of taking into
    
    account all the contractual provisions concerning the financial asset or financial liability (the future credit losses
    
    shall not be taken into account).and also the various fee charges, trading expenses, premiums or reduced values,
    
    etc., which are paid or collected by the parties to a financial asset or financial liability contract and which form a
    
    part of the actual interest rate.
    
    ③ Loans and the accounts receivables
    
    Loans and the accounts receivables refer to non-derivative financial assets, which there is no quotation in the
    
    active market, with fixed recovery cost or recognizable. Financial assets that are defined as loans and the accounts
    
    receivables by the Company including notes receivables, accounts receivables, interest receivable, dividends
    
    receivable and other receivables etc..
    
    Loans and the accounts receivables are made follow-up measurement on the basis of post-amortization costs
    
    employing the effective interest method. Gains or loss arising from the termination recognition, impairment
    
    occurs or amortization shall be recorded into the profits and losses of the current period.
    
    ④ Assets available for sales
    
    Assets available for sales including non-derivative financial asset that has been assigned as assets available for
    
    sales on the initial recognition and financial assets excluded those measured at fair value and of which the
    
    ~ 72 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    variation into profits and losses of the current period, they are some financial assets, loans and accounts
    
    receivables, held-to-maturity investment.
    
    The cost at the period-end of the available-for-sale liabilities instruments should be confirmed according to its
    
    amortized cost method, that is the initially recognized amount which deduct the principal that had been repaid, to
    
    plus or minus the accumulative amortization amount formed by the amortization between the difference of the
    
    initially recognized amount and the amount on the due date that adopted the actual interest rate method, and at the
    
    same time deduct the amount after the impairment loss happened. The cost at the period-end of the
    
    available-for-sale liabilities instruments is its initial cost.
    
    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 be carried forward when the said
    
    financial assets stopped recognition, then it shall be recorded into the profits and losses of the current period. But,
    
    the equity instrument investment which neither have quotation in the active market nor its fair value could not be
    
    reliable measured, as well as the derivative financial assets that concern with the equity instruments and should be
    
    settled through handing over to its equity instruments, should take the follow-up measurement according to the
    
    cost.
    
    Interest receive during the holding of assets available for sales and cash dividends with distribution announcement
    
    by invested companies, it shall be recorded into the profits and losses of the current period.
    
    (3) Impairment of financial assets
    
    The Company 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.
    
    The Company carries out a separate impairment test for every financial asset which is individually significant. As
    
    for a financial asset which is individually insignificant, an impairment test is carried out separately or in the
    
    financial asset Company with similar credit risk. Where the financial asset (individually significant or
    
    insignificant) is found not impaired after the separate impairment test, it is included in the financial asset
    
    Company with similar credit risk and tested again on the Company basis. Where the impairment loss is recognized
    
    for an individual financial asset, it is not included in the financial asset Company with similar credit risk for an
    
    impairment test.
    
    ① Impairment on held-to maturity investment, loans and receivables
    
    The financial assets measured by cost or amortized cost write down their carrying value by the estimated present
    
    value of future cash flow. The difference is recorded as impairment loss. If there is objective evidence to indicate
    
    the recovery of value of financial assets after impairment, and it is related with subsequent event after recognition
    
    of loss, the impairment loss recorded originally can be reversed. The carrying value of financial assets after
    
    ~ 73 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    impairment loss reversed shall not exceed the amortized cost of the financial assets without provisions of
    
    impairment loss on the reserving date.
    
    ② Impairment of available-for-sale financial assets
    
    When it judged that the decrease of fair value of the available-for-sale equity instrument investment is serious and
    
    not temporarily after comprehensive considering relevant factors, it reflected that the available-for-sale equity
    
    instrument investment occurred impairment. Of which, the “serious decline” refers to the accumulative decline
    
    range of the fair value over 20%; while the “non-temporary decline” refers to the consecutive decline time of the
    
    fair value over 12 months.
    
    Where an available-for-sale financial asset is impaired, the accumulative losses arising from the decrease of the
    
    fair value of the capital reserve which is directly included are transferred out and recorded in the profits and losses
    
    for the current period. The accumulative losses transferred out are the balance obtained from the initially obtained
    
    cost of the said financial asset after deducting the principals as taken back, the amortized amount, the current fair
    
    value and the impairment loss originally recorded in the profits and losses.
    
    Where the impairment loss has been recognized for an available-for-sale financial asset, if, within the accounting
    
    periods thereafter, there is any objective evidence proving that the value of the said financial asset has been
    
    restored and the restoration is objectively related to the events that occur after the impairment loss was recognized,
    
    the originally recognized impairment loss is reversed. The impairment losses on the available-for-sale equity
    
    instrument investments are reversed and recognized as other comprehensive incomes, and the impairment losses
    
    on the available-for-sale liability instruments are reversed and recorded in the profits and losses for the current
    
    period.
    
    The impairment loss incurred to an equity instrument investment for which there is no quoted price in the active
    
    market and whose fair value cannot be reliably measured, or incurred to a derivative financial asset which is
    
    connected with the said equity instrument investment and which must be settled by delivering the said equity
    
    investment, is not reversed.
    
    (4) Recognition and measurement of financial asset transfers
    
    Where a financial asset satisfies any of the following requirements, the recognition of it is terminated: ① The
    
    contractual rights for collecting the cash flow of the said financial asset are terminated; ② The said financial asset
    
    has been transferred and nearly all of the risks and rewards related to the ownership of the financial asset to the
    
    transferee; or ③ The said financial asset has been transferred. And the Company has ceased its control on the said
    
    financial asset though it neither transfers nor retains nearly all of the risks and rewards related to the ownership of
    
    the financial asset.
    
    Where the Company neither transfers nor retains nearly all of the risks and rewards related to the ownership of a
    
    financial asset, and it does not cease its control on the said financial asset, it recognizes the relevant financial asset
    
    ~ 74 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    and liability accordingly according to the extent of its continuous involvement in the transferred financial asset.
    
    The term "continuous involvement in the transferred financial asset" refers to the risk level that the enterprise
    
    faces resulting from the change of the value of the financial asset.
    
    If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the difference between
    
    the amounts of the following 2 items is recorded in the profits and losses of the current period: (1) The book value
    
    of the transferred financial asset; and (2) The sum of consideration received from the transfer, and the
    
    accumulative amount of the changes of the fair value originally recorded in other comprehensive incomes.
    
    If the transfer of partial financial asset satisfies the conditions to stop the recognition, the book value of the
    
    transferred financial asset is apportioned between the portion whose recognition has been stopped and the portion
    
    whose recognition has not been stopped according to their respective relative fair value, and the difference
    
    between the amounts of the following 2 items is included into the profits and losses of the current period: (1) The
    
    summation of the consideration received from the transfer and the portion of the accumulative amount of changes
    
    in the fair value originally recorded in other comprehensive incomes which corresponds to the portion whose
    
    recognition has been stopped; and (2) The amortized carrying amounts of the aforesaid amounts.
    
    In respect of the assets using recourse to sell or using endorsement to transfer, the Company needs to determine
    
    whether almost all of the risks and rewards of the financial asset ownership are transferred. If almost all of the
    
    risks and rewards of the financial asset ownership had been transferred to the transferee, derecognize the financial
    
    assets. For almost all of the risks and rewards of the financial asset ownership retained, do not end to recognize
    
    the financial assets. For which neither transfer or retain almost all of the risks and rewards of the financial asset
    
    ownership, continuously judge whether the Company retain the control of the assets, and conduct accounting
    
    treatment according to the principle of mentioned in the previous paragraphs.
    
    (5) Classification and measurement of financial liabilities
    
    In the initial recognition, financial liabilities are divided into the financial liabilities measured at fair values and
    
    whose changes are recorded in current gains and losses and other financial liabilities. Financial liabilities are
    
    initially recognized at their fair values. As for a financial liability measured at fair value and whose changes are
    
    recorded in current gains and losses, the relevant trading expense is directly recorded in the profits and losses for
    
    the current period. As for other financial liabilities, the relevant trading expenses are recorded in the initially
    
    recognized amounts.
    
    ① Financial liabilities measured at fair values and whose changes are recorded in current gains and losses
    
    Such financial liabilities are divided into transactional financial liabilities and financial liabilities designated to be
    
    measured at fair values and whose changes are recorded in current gains and losses in the initial recognition under
    
    the same conditions where such financial assets are divided into transactional financial assets and financial assets
    
    designated to be measured at fair values and whose changes are recorded in current gains and losses in the initial
    
    recognition.
    
    ~ 75 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    Financial liabilities measured at fair values and whose changes are recorded in current gains and losses are
    
    subsequently measured at their fair values. Gains or losses arising from the fair value changes, as well as the
    
    dividend and interest expenses in relation to the said financial liabilities, are recorded in the profits and losses for
    
    the current period.
    
    ② Other financial liabilities
    
    As for a derivative financial liability connected to an equity instrument for which there is not quoted price in an
    
    active market and whose fair value cannot be reliably measured and which must be settled by delivering the equity
    
    instrument, it is subsequently measured on the basis of costs. Other financial liabilities are subsequently measured
    
    according to the amortized cost using the actual interest rate method. Gains or losses arising from de-recognition
    
    or amortization of the said financial liabilities is recorded in the profits and losses for the current period.
    
    ③ Financial guarantee contract and loan commitment
    
    For the financial guarantee contracts which are not designated as a financial liability measured at its fair value and
    
    the variation thereof is recorded into the profits and losses of the current period, or the loan commitment which is
    
    not designated as a financial liability measured at its fair value and the variation thereof is recorded into the gains
    
    and losses that will be loaned lower than the market interest rate, which shall be initially recognized by fair value,
    
    and the subsequent measurement shall be made after they are initially recognized according to the higher one of
    
    the following: a. the amount as determined according to the Accounting Standards for Enterprises No. 13 –
    
    Contingencies; b. the surplus after accumulative amortization as determined according to the principles of the
    
    Accounting Standards for Enterprises No. 14 - Revenues is subtracted from the initially recognized amount.
    
    (6) De-recognition of financial liabilities
    
    Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the
    
    financial liability be terminated in all or partly. Where the Company (debtor) enters into an agreement with a
    
    creditor so as to substitute the existing financial liabilities by way of any new financial liability, and if the
    
    contractual stipulations regarding the new financial liability is substantially different from that regarding the
    
    existing financial liability, it terminates the recognition of the existing financial liability, and at the same time
    
    recognizes the new financial liability.
    
    Where the recognition of a financial liability is totally or partially terminated, the enterprise concerned shall
    
    include into the profits and losses of the current period for the gap between the book value which has been
    
    terminated from recognition and the considerations it has paid (including the non-cash assets it has transferred out
    
    and the new financial liabilities it has assumed)
    
    (7) Derivatives and embedded derivatives
    
    Derivative financial instruments include derivatives are initially measured at fair value at the date when the
    
    derivative contracts are entered into and are substantially re-measured at fair value. The resulting gain and loss is
    
    ~ 76 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    recognized in profit or loss.
    
    An embedded derivative is separated from the hybrid instrument, where the hybrid instrument is not designated as
    
    a financial asset or financial liability at fair value though profit or loss, and the treated as a standalone derivative if
    
    (a) the economic characteristics and risks of the embedded derivative are not closely related to the economic
    
    characteristics and risks of the host contract; and (b) a separate instrument with the same terms as the embedded
    
    derivative would meet the definition of a derivative. If the Company is unable to measure the embedded derivative
    
    separately either at acquisition or at a subsequent balance sheet date, it designates the entire hybrid instrument as a
    
    financial asset or financial liability at fair value through profit or loss.
    
    (8) Offsetting financial assets and financial liabilities
    
    When the Company has a legal right that is currently enforceable to set off the recognized financial assets and
    
    financial liabilities, and intends either to settle on a net basis, or to realize the financial asset and settle the
    
    financial liability simultaneously, a financial asset and a financial liability shall be offset and the net amount is
    
    presented in the balance sheet. Except for the above circumstances, financial assets and financial liabilities shall
    
    be presented separately in the balance sheet and shall not be offset.
    
    (9) Equity instruments
    
    An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting
    
    all of its liabilities. The Company issues (including refinancing), re-purchases, sells or written-offs the equity
    
    instrument as the disposing of the changes of the equity. The Company not recognized the changes of the fair
    
    value of the equity instrument. The transaction expenses related to the equity transaction would be deducted from
    
    the equity.
    
    All types of distribution (excluding stock dividends) made by the Company to holders of equity instruments are
    
    deducted from shareholders’ equity. The Company does not recognize any changes in the fair value of equity
    
    instruments.
    
    10. Receivables
    
    The receivables by the Company include account receivables, and other receivables.
    
    (1) Criteria for recognition of bad debts:
    
    The Company carries out an inspection on the balance sheet date. Where there is any objective evidence proving
    
    that the receivables have been impaired, an impairment provision shall be made:
    
    1) A serious financial difficulty occurs to the issuer or debtor;
    
    2) The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the payment of
    
    interests or the principal, etc.;
    
    3) The debtor will probably become bankrupt or carry out other financial reorganizations;
    
    4) Other objective evidences showing the impairment of the receivables.
    
    ~ 77 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    (2) Method for bad debts provision
    
    ① Provisions of bad debts in account receivables that is individually significant.
    
    The Company recognized the accounts receivables which amounted to more than 2 million as the account
    
    receivables that is individual significant.
    
    For an account receivable that is individually significant, the asset is individually assessed for impairment, the
    
    impairment loss is recognized at the difference between the present value of future cash flow less the carrying
    
    amount, and provision is made accordingly.
    
    ② Provisions of bad debts in account receivables that individually insignificant item with similar credit risk
    
    characteristics that have significant risk:
    
    A. Evidence of credit risk characteristics
    
    Whether the financial asset is individually significant or not individually significant, it is included in a group of
    
    financial assets with similar credit risk characteristics and collectively assessed for impairment. Such credit risk
    
    reflects the repayment of all due amount under the contract, and is related to the estimation of future cash flow
    
    expected to be derived from the assets.
    
    Evidence of portfolios:
    
                        Item                                         Basis
    
    
    Age portfolios Age
    
    Connected party portfolios Companies within the combination scope of the Company
    
    B. Provision by credit risk characteristics
    
    During the Company impairment test, the amount of bad debts provisions is determined by the assessed result
    
    from the experience of historical loss and current economic status and the existing loss in the estimated account
    
    receivables according to the set of account receivables and credit risk characteristic.
    
    Provision for different portfolios:
    
                 Item                                        Provision
    
    
    Age portfolios Age analysis method
    
    Don’t withdraw the bad debts provision unless the related-party lost the repaying
    
    Connected party portfolios
    
    capability
    
    a. Portfolio by age analysis
    
                   Category               Proportionforaccountsreceivable(%)  Proportionforotherreceivable(%)
    Within 1year(including1year,similarlyhereinafter)
    Including: [within6months]                                        1.00                       1.00
    
    
    ~ 78 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
                   Category               Proportionforaccountsreceivable(%)  Proportionforotherreceivable(%)
         [7 to12months]                                           5.00                       5.00
    1 to2years                                                  10.00                       10.00
    2 to3years                                                  50.00                       50.00
    Over 3years                                                 100.00                      100.00
    
    
    ③Accounts receivable with insignificant amount but being individually withdrawn bad debts provision
    
    When making individual impairment test on accounts receivable with insignificant amount but high credit risk, the
    
    impairment loss shall be recognized based on the difference of the book values higher than the present value of
    
    future cash flows, then withdraw the bad debts provision. For example, accounts receivable of related parties;
    
    accounts receivable involving dispute or litigation, arbitration; accounts receivable having clear signs to indicate
    
    that debtor probably cannot implement obligations of payment.
    
    (3) Reversal of provision for bad debt
    
    If there is any provident demonstrating recovery of the value of the accounts receivable and objectively
    
    correlating to the issues after the confirmation of the losses, the original confirmed losses would be reversed and
    
    recorded into current gains and losses. However, the reserved book value shall not exceed the amortized costs of
    
    the accounts receivable under non-withdrawing impairment circumstance.
    
    11. Inventory
    
    (1) Category of inventory
    
    Inventory mainly includes raw materials, packing materials, self-made semi-manufactured products, goods in
    
    process and finished goods, etc.
    
    (2) Pricing method for outgoing inventories
    
    Inventory is priced by actual costs when it is obtained. Inventory costs include procurement costs, processing
    
    costs and other costs. Weighted average method is used to price inventory when it is received and delivered.
    
    (3) Recognition basis of net realizable value and withdrawal method of falling price provision for inventories
    
    Net realizable value in daily activity, it is referred to the estimated selling price minus the estimated selling
    
    expenses and related tax and fees in normal operating process. When confirming the net realizable value of
    
    inventories, the Company shall take the intention of inventories into consideration and influence of issues after
    
    balance sheet date.
    
    On the balance sheet date, the evaluation criteria should base on the lower value between costs and net realizable
    
    value. When net realizable value is lower than costs, falling price provision of inventories shall be made. Under
    
    normal circumstances, the Company withdraws the falling price provision in according to individual inventory
    
    ~ 79 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    items, but for large quantity and low-unit-price inventories, falling price provision of inventories shall be made
    
    based on the category of inventories; for those inventories that relating to the same product line that have similar
    
    purposes or end uses, are produced and marketed in the same geographical area, and cannot be practicably
    
    evaluated separately from other items in that product line, their falling price provision of inventories shall be
    
    consolidated.
    
    After withdrawing the depreciation reserves for inventories, if the factors, which cause any write-down of the
    
    inventories, have disappeared, the amount of write-down shall be recovered and reversed from the original
    
    amount of depreciation reserve for inventories. The reversed amount shall be included in the profits and losses of
    
    the current period.
    
    (4) Inventory system for inventories is perpetual inventory system
    
    (5) Amortization method of the low-value consumption goods and packing articles
    
    Low-value consumption goods: one-off amortization method; Packing articles: one-off amortization method
    
    12. Assets Held for Sale and Disposal Group
    
    The company classifies a non-current asset or disposal group as held for sale if its carrying amount will be
    
    recovered principally through a sale transaction rather than through continuing use. For this to be the case, the
    
    following conditions shall be met: a) the asset (or disposal group) must be available for immediate sale in its
    
    present condition subject to terms that are usual and customary for sales of such assets or disposal groups; b) the
    
    company has made the resolution on the disposal plan and must be committed to a plan to sell the asset (or
    
    disposal group); c) the sale is expected to be completed within one year from the date of classification. A disposal
    
    group is a group of assets to be disposed of, by sale or otherwise, together as a group in a single transaction, and
    
    liabilities directly associated with those assets that will be transferred in the transaction. The group shall include
    
    goodwill acquired in a business combination if the group is a cash-generating unit to which goodwill has been
    
    allocated in accordance with the requirements of Accounting Standard for Business Enterprises No. 8 –
    
    Impairment of assets.
    
    The company measure a non-current asset or disposal group classified as held for sale at the lower of its carrying
    
    amount and fair value less costs to sell on initial recognition and subsequent remeasuremnt on the balance sheet
    
    date. An impairment loss is recognised when the carrying amount is higher than the fair value less costs to sell,
    
    and allowance for impairment is recognised accordingly. For the disposal group, the recognised impairment loss
    
    on assets is offset against the carrying amount of the goodwill in the disposal group, and then reduced in
    
    proportion of the book value of the non-current assets applicable to "Accounting Standard for Business
    
    Enterprises No. 42 - Non-current Assets Held for Sale, Disposal Group and Discontinued Operations (hereinafter
    
    referred to as "held for sale accounting principle") measurement requirements. The company shall recognise a
    
    gain during the period for any subsequent increase in fair value less costs to sell of an asset, but not in excess of
    
    the cumulative impairment loss that has been recognised after the reclassification to non-current assets held for
    
    ~ 80 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    sale. The book value of assets in the disposal group is increased proportionately according to the proportion of the
    
    book value of each non-current asset except for goodwill. Impairment loss recognised before the reclassification
    
    to non-current assets held for sell shall not be recovered.
    
    Non-current asset or non-current asset in the disposal group classified as held for sale is not subject to
    
    depreciation or amortization. The interest and other expenses on liabilities held in the disposal group for sale are
    
    continuously recognised.
    
    Non-current assets or disposal group that no longer meet the conditions of non-current asset held for sell shall be
    
    removed from the category, and shall be measured at the lower of the following: (1) The carrying amount before
    
    classification as held for sale after adjustment of depreciation, amortization or impairment that should be
    
    recognised if it is not classified as non-current assets held for sell; (2) recoverable amount.
    
    13. Long-term Equity Investments
    
    The long-term equity investments of this part refer to the long-term equity investments that the Company has
    
    control, joint control or significant influence over the investees. The long-term equity investment that the
    
    Company does not have control, joint control or significant influence over the investees, should be recognized as
    
    available-for-sale financial assets or be measured by fair value with the changes should be included in the
    
    financial assets accounting of the current gains and losses, and please refer the details of the accounting policies to
    
    Notes IV. 9 “Financial instrument”.
    
    Joint control, refers to the control jointly owned according to the relevant agreement on an arrangement by the
    
    Company and the relevant activities of the arrangement should be decided only after the participants which share
    
    the control right make consensus. Significant influence refers to the power of the Company which could anticipate
    
    in the finance and the operation polices of the investees, but could not control or jointly control the formulation of
    
    the policies with the other parties.
    
    (1) Recognition of investment costs
    
    As for long-term equity investments acquired by enterprise merger, if the merger is under the same control, the
    
    share of the book value of the owner’s equity of the merged enterprise, on the date of merger, is regarded as the
    
    initial cost of the long-term equity investment. The difference between the initial cost of the long-term equity
    
    investment and the payment in cash, non-cash assets transferred as well as the book value of the debts borne by
    
    the merging party shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained
    
    earnings shall be adjusted. If the consideration of the merging enterprise is that it issues equity securities, it shall,
    
    on the date of merger, regard the share of the book value of the shareholder's equity of the merged enterprise on
    
    the consolidated financial statement of the ultimate control party as the initial cost of the long-term equity
    
    investment. The total face value of the stocks issued shall be regarded as the capital stock, while the difference
    
    between the initial cost of the long-term equity investment and total face value of the shares issued shall offset
    
    ~ 81 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted.
    
    The equities of the combined party which respectively acquired through multiple transaction under the same
    
    control that ultimately form into the combination of the enterprises under the same control, should be disposed
    
    according whether belongs to package deal; if belongs to package deal, each transaction would be executed
    
    accounting treatment by the Company as a transaction of acquiring the control right. If not belongs to package
    
    deal, it shall, on the date of merger, regard the enjoyed share of the book value of the shareholder's equity of the
    
    merged enterprise on the consolidated financial statement of the ultimate control party as the initial cost of the
    
    long-term equity investment, and as for the difference between the initial investment cost of the long-term equity
    
    investment and sum of the book value of the long-term equity investment before the combination and the book
    
    value of the consideration of the new payment that further required on the combination date, should adjust the
    
    capital reserve; if the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. The equity
    
    investment held before the combination date which adopted the equity method for accounting, or the other
    
    comprehensive income confirmed for the available-for-sale financial assets, should not have any accounting
    
    disposal for the moment.
    
    For the long-term investment required from the business combination under different control, the initial
    
    investment cost regarded as long-term equity investment on the purchasing date according to the combination cost,
    
    the combination costs shall be the sum of the fair values of the assets paid, the liabilities incurred or assumed and
    
    the equity securities issued by the Company. The equities of the acquirees which respectively acquired through
    
    multiple transaction that ultimately form into the combination of the enterprises under the different control, should
    
    be disposed according whether belongs to package deal; if belongs to package deal, each transaction would be
    
    executed accounting treatment by the Company as a transaction of acquiring the control right. If not belongs to
    
    package deal, the sum of the book value of the original held equity investment of the acquirees and the newly
    
    added investment cost should be regarded as the initial investment cost of the long-term equity investment that
    
    changed to be accounted by cost method. If the original held equity is calculated by cost method, the other
    
    relevant comprehensive income would not have any accounting disposal for the moment. If the original held
    
    equity investment is the financial assets available for sale, its difference between the fair value and the book value
    
    as well as the accumulative changes of the fair value that include in the other comprehensive income, should
    
    transfer into the current gains and losses.
    
    The commission fees for audit, law services, assessment and consultancy services and other relevant expenses
    
    occurred in the business combination by the combining party or the purchase party, shall be recorded into current
    
    profits and losses upon their occurrence; the transaction expense from the issuance of equity securities or bonds
    
    securities which are as consideration for combination by the combining party, should be recorded as the initial
    
    amount of equity securities and bonds securities.
    
    Besides the long-term equity investments formed by business combination, the other long-term equity investments
    
    ~ 82 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    shall be initially measured by cost, the cost is fixed in accordance with the ways of gaining, such as actual cash
    
    payment paid by the Company, the fair value of equity securities issued by the Company, the agreed value of the
    
    investment contract or agreement, the fair value or original carrying amount of exchanged assets from
    
    non-monetary assets exchange transaction, the fair value of the long-term equity investments, etc. The expenses,
    
    taxes and other necessary expenditures directly related with gaining the long-term equity investments shall also be
    
    recorded into investment cost. The long-term equity investment cost for those could execute significant influences
    
    on the investees because of appending the investment or could execute joint control but not form as control,
    
    should be as the sum of the fair value of the original held equity investment and the newly added investment cost
    
    recognized according to the No. 22 of Accounting Standards for Business Enterprises—Recognition and
    
    Measurement of Financial Instrument.
    
    (2) Subsequent measurement and recognition of gains or losses
    
    A long-term equity investment where the investing enterprise has joint control (except for which forms into
    
    common operators) or significant influence over the investors should be measured by equity method. Moreover,
    
    long-term equity investment adopting the cost method in the financial statements, and which the Company has
    
    control on invested entity.
    
    ① Long-term equity investment measured by adopting cost method
    
    The price of a long-term equity investment measured by adopting the cost method shall be included at its initial
    
    investment cost and append as well as withdraw the cost of investing and adjusting the long-term equity
    
    investment. The return on investment at current period shall be recognized in accordance with the cash dividend
    
    or profit announced to distribute by the invested entity, except the announced but not distributed cash dividend or
    
    profit included in the actual payment or consideration upon gaining the investment.
    
    ②Long-term equity investment measured by adopting equity method
    
    If the initial cost of a long-term equity investment is more than the Company’s attributable share of the fair value
    
    of the invested entity’s identifiable net assets for the investment, the initial cost of the long-term equity investment
    
    may not be adjusted. If the initial cost of a long-term equity investment is less than the Company’s attributable
    
    share of the fair value of the invested entity’s identifiable net assets for the investment, the difference shall be
    
    included in the current profits and losses and the cost of the long-term equity investment shall be adjusted
    
    simultaneously.
    
    When measured by adopting equity method, respectively recognize investment income and other comprehensive
    
    income according to the net gains and losses as well as the portion of other comprehensive income which should
    
    be enjoyed or be shared, and at the same time adjust the book value of the long-term equity investment;
    
    corresponding reduce the book value of the long-term equity investment according to profits which be declared to
    
    distribute by the investees or the portion of the calculation of cash dividends which should be enjoyed; for the
    
    other changes except for the net gains and losses, other comprehensive income and the owners’ equity except for
    
    ~ 83 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    the profits distribution of the investees, should adjust the book value of the long-term equity investment as well as
    
    include in the capital reserve. The investing enterprise shall, on the ground of the fair value of all identifiable
    
    assets of the invested entity when it obtains the investment, recognize the attributable share of the net profits and
    
    losses of the invested entity after it adjusts the net profits of the invested entity. If the accounting policies adopted
    
    by the investees is not accord with that of the Company, should be adjusted according to the accounting policies of
    
    the Company and the financial statement of the investees during the accounting period and according which to
    
    recognize the investment income as well as other comprehensive income. For the transaction happened between
    
    the Company and associated enterprises as well as joint ventures, if the assets launched or sold not form into
    
    business, the portion of the unrealized gains and losses of the internal transaction, which belongs to the Company
    
    according to the calculation of the enjoyed proportion, should recognize the investment gains and losses on the
    
    basis. But the losses of the unrealized internal transaction happened between the Company and the investees
    
    which belongs to the impairment losses of the transferred assets, should not be neutralized. The assets launched by
    
    the Company to the associated enterprises or the joint ventures if could form into business, the long-term equity
    
    investment without control right which acquired by the investors, should regard the fair value of the launched
    
    business as the initial investment cost the newly added long-term equity investment, and for the difference
    
    between the initial investment cost and the book value of the launched business, should be included into the
    
    current gains and losses with full amount. The assets sold by the Company to the associated enterprises or the
    
    joint ventures if could form into business, the difference between the acquired consideration and the book value of
    
    the business should be included in the current gains and losses with full amount. The assets purchased by the
    
    Company to the associated enterprises or the joint ventures if could form into business, should be accounting
    
    disposed according to the regulations of No. 20 of ASBE—Business Combination, and should be recognized gains
    
    or losses related to the transaction with full amount.
    
    The Company shall recognize the net losses of the invested enterprise until the book value of the long-term equity
    
    investment and other long-term rights and interests which substantially form the net investment made to the
    
    invested entity are reduced to zero. However, if the Company has the obligation to undertake extra losses, it shall
    
    be recognized as the estimated liabilities in accordance with the estimated duties and then recorded into
    
    investment losses at current period. If the invested entity realizes any net profits later, the Company shall, after the
    
    amount of its attributable share of profits offsets against its attributable share of the un-recognized losses, resume
    
    recognizing its attributable share of profits.
    
    For the long-term equity investment held by the Company before the first execution of the new accounting
    
    criterion of the associated enterprises and joint ventures, if there is debit difference of the equity investment
    
    related to the investment, should be included in the current gains and losses according to the amount of the
    
    straight-line amortization during the original remained period.
    
    ③ Acquiring shares of minority interest
    
    ~ 84 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    In the preparation for the financial statements, the balance existed between the long-term equity investment
    
    increased by acquiring shares of minority interest and the attributable net assets on the subsidiary calculated by
    
    the increased shares held since the purchase date (or combination date), the capital reserves shall be adjusted, if
    
    the capital reserves are not sufficient to offset, the retained profits shall be adjusted.
    
    ④ Disposal of long-term equity investment
    
    In the preparation of financial statements, the Company disposed part of the long-term equity investment on
    
    subsidiaries without losing its controlling right on them, the balance between the disposed price and attributable
    
    net assets of subsidiaries by disposing the long-term equity investment shall be recorded into owners’ equity;
    
    where the Company losses the controlling right by disposing part of long-term equity investment on such
    
    subsidiaries, it shall treated in accordance with the relevant accounting policies in Note IV. 5 (2) “Method on
    
    preparation of combined financial statements”.
    
    For other ways on disposal of long-term equity investment, the balance between the book value of the disposed
    
    equity and its actual payment gained shall be recorded into current profits and losses.
    
    For the long-term equity investment measured by adopting equity method, if the remained equity after disposal
    
    still adopts the equity method for measurement, the other comprehensive income originally recorded into owners’
    
    equity should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly disposed
    
    by the investees according to the corresponding proportion. The owners’ equity recognized owning to the changes
    
    of the other owners’ equity except for the net gains and losses, other comprehensive income and the profits
    
    distribution of the investees, should be transferred into the current gains and losses according to the proportion.
    
    For the long-term equity investment which adopts the cost method of measurement, if the remained equity still
    
    adopt the cost method, the other comprehensive income recognized owning to adopting the equity method for
    
    measurement or the recognition and measurement standards of financial instrument before acquiring the control of
    
    the investees, should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly
    
    disposed by the investees and should be carried forward into the current gains and losses according to the
    
    proportion; the changes of the other owners’ equity except for the net gains and losses, other comprehensive
    
    income and the profits distribution among the net assets of the investees which recognized by adopting the equity
    
    method for measurement, should be carried forward into the current gains and losses according to the proportion.
    
    For those the Company lost the control of the investees by disposing part of the equity investment as well as the
    
    remained equity after disposal could execute joint control or significant influences on the investees, should change
    
    to measure by equity method when compiling the individual financial statement and should adjust the
    
    measurement of the remained equity to equity method as adopted since the time acquired; if the remained equity
    
    after disposal could not execute joint control or significant influences on the investees, should change the
    
    accounting disposal according to the relevant regulations of the recognition and measurement standards of
    
    financial instrument, and its difference between the fair value and book value on the date lose the control right
    
    ~ 85 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    should be included in the current gains and losses. For the other comprehensive income recognized by adopting
    
    equity method for measurement or the recognition and measurement standards of financial instrument before the
    
    Company acquired the control of the investees, should execute the accounting disposal by adopting the same basis
    
    of the accounting disposal of the relevant assets or liabilities directly disposed by the investees when lose the
    
    control of them, while the changes of the other owners’ equity except for the net gains and losses, other
    
    comprehensive income and the profits distribution among the net assets of the investees which recognized by
    
    adopting the equity method for measurement, should be carried forward into the current gains and losses
    
    according to the proportion. Of which, for the disposed remained equity which adopted the equity method for
    
    measurement, the other comprehensive income and the other owners’ equity should be carried forward according
    
    to the proportion; for the disposed remained equity which changed to execute the accounting disposal according to
    
    the recognition and measurement standards of financial instrument, the other comprehensive income and the other
    
    owners’ equity should be carried forward in full amount.
    
    For those the Company lost the control of the investees by disposing part of the equity investment, the disposed
    
    remained equity should change to calculate according to the recognition and measurement standards of financial
    
    instrument, and difference between the fair value and book value on the date lose the control right should be
    
    included in the current gains and losses. For the other comprehensive income recognized from the original equity
    
    investment by adopting the equity method, should execute the accounting disposal by adopting the same basis of
    
    the accounting disposal of the relevant assets or liabilities directly disposed by the investees when terminate the
    
    equity method for measurement, while for the owners’ equity recognized owning to the changes of the other
    
    owner’s equity except for the net gains and losses, other comprehensive income and the profits distribution of the
    
    investees, should be transferred into the current investment income with full amount when terminate adopting the
    
    equity method.
    
    The Company respectively disposes the equity investment of the subsidiaries through multiple transactions until
    
    lose the control right, if the above transactions belongs to the package deal, should execute the accounting
    
    disposal by regarding each transaction as a deal of disposing the equity investment of the subsidiaries until lose
    
    the control right, while the difference between each expenses of the disposal and the book value of the long-term
    
    equity investment in accord with the disposed equity before losing the control right, should firstly be recognized
    
    as other comprehensive income then be transferred into the current gains and losses of losing the control right
    
    along until the time when lose it.
    
    14. Investment Property
    
    Investment property is held to earn rentals or for capital appreciation or for both. Investment property includes
    
    leased or ready to transfer after capital appreciation land use rights and leased buildings. Besides, for the idle
    
    constructions held by the Company for operation and lease, if the Board of Directors (or the similar institutions)
    
    made the written resolutions which affirmatively disclosed to use which for operation and lease with the intention
    
    ~ 86 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    would not change in the short term, should also be presented as the investment property.
    
    Investment property is initially measured at cost. Subsequent expenditures related to an investment real estate are
    
    likely to flow about the economic benefits of the asset and its cost can be measured reliably, is included in the cost
    
    of investment real estate. Other subsequent expenditures of gains or losses should be recorded in the current gains
    
    and losses when occurred.
    
    The Company uses the cost model for subsequent measurement of investment property, and in accordance with
    
    the depreciation or amortization of buildings or land use rights policy.
    
    Investment property impairment test method and impairment accrual method described in Note IV. 20 “Long-term
    
    assets impairment”.
    
    Occupied real estate for investment property or investment property is transferred to owner-occupied real estate or
    
    stock conversion as the recorded value after the conversion, according to the book value before the conversion.
    
    From the date of transference, investment properties shall be transferred into fixed assets or intangible assets when
    
    investment properties transfer into self-owned properties. From the date of transference, fixed assets or intangible
    
    assets shall be transferred into investment properties when the intention of self-owned properties changes to be
    
    earning rents. Upon transference, investment properties using cost modeling shall use its book value before
    
    transference as the entry value after transference; investment properties using fair value shall use its fair value in
    
    the date of transference as the entry value after transference.
    
    As for investment property disposed or perpetually out of use, and estimated without economic benefits from the
    
    disposal, confirmation shall be terminated. Disposal consideration of the investment property after sale,
    
    transference, discard or damage deducting its book value and relating taxes shall be recorded into current gains
    
    and losses.
    
    15. Fixed Assets
    
    (1) Recognized standard of fixed assets
    
    The term "fixed assets" refers to the tangible assets that simultaneously possess the features as follows: they are
    
    held for the sake of producing commodities, rendering labor service, renting or business management; and their
    
    useful life is in excess of one fiscal year.
    
    (2) Depreciation methods of fixed assets
    
    The initial measurement of a fixed asset shall be made at its cost after considering the effect of expected discard
    
    expenses. The Group shall withdraw the depreciation of fixed assets by adopting the straight-line method since the
    
    second month of its useful life. Useful life, expected net salvage value (refers to the expected amount that the
    
    Group may obtain from the current disposal of a fixed asset after deducting the expected disposal expenses at the
    
    expiration of its expected useful life) and annual depreciation rate of each fixed assets are as below:
    
    ~ 87 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
     Categoryoffixedassets  Method             Usefullife(Y)        Expected net salvage  Annualdeprecation(%)
                                                           value(%)
     Housingandbuilding     Averagemethodof             8.00-35.00            3.00-5.00           2.70-12.10
                            usefullife
     Machineryequipments     Averagemethodof             5.00-10.00            3.00-5.00           9.50-19.40
                            usefullife
                         Averagemethodof                 4.00               3.00              24.25
     Transportationvehicle        usefullife
     Office equipment and    Averagemethodof                 3.00               3.00              32.33
     others                   usefullife
    
    
    Expected net residual value of fixed assets is the balance of the Company currently obtained from the disposal of
    
    the asset less the estimated costs of disposal amount, assuming the asset is out of useful life and state the expected
    
    service life in the end.
    
    (3) Measurement and recognition of fixed assets impairment
    
    Impairment and provisions of fixed assets are disclosed on Note IV. 20 “Long-term assets impairment”.
    
    (4) Fixed Assets under finance leases
    
    A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership of an asset.
    
    Title may or may not eventually be transferred. Fixed assets that are held under finance leases shall be depreciated
    
    by applying the same policy as that for the fixed assets owned by the Company. If it can be reasonably determined
    
    that the ownership of the leased assets can be obtained at the end of the lease period, the leased assets are
    
    depreciated over their useful lives; otherwise, the leased assets are depreciated over the shorter of the lease terms
    
    and the useful lives of the leased assets.
    
    (5) Others
    
    A fixed asset is recognized only when the economic benefits associated with the asset will probably flow to the
    
    Company and the cost of the asset can be measured reliably. Subsequent expenditure incurred for a fixed asset that
    
    meet the recognition criteria shall be included in the cost of the fixed asset, and the carrying amount of the
    
    component of the fixed asset that is replaced shall be derecognized. Otherwise, such expenditure shall be
    
    recognized in profit or loss in the period in which they are incurred.
    
    The revenue from selling or transferring, or disposing a fixed asset is booked into profit and loss after deduction
    
    of carrying value and related tax.
    
    The Company conducts a review of useful life, expected net realizable value and depreciation methods of the
    
    fixed asset at least on an annual base. Any change is regarded as change in accounting estimates.
    
    16. Construction in Progress
    
    Construction in progress is measured at its actual cost. The actual costs include various construction expenditures
    
    ~ 88 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    during the construction period, borrowing costs capitalized before it is ready for intended use and other relevant
    
    costs. Construction in progress is transferred to a fixed asset when it is ready for intended use.
    
    Testing method for provision impairment of construction in progress and accrued method for provision
    
    impairment please refer to Note IV. 20 “Long-term assets impairment”.
    
    17. Borrowing Costs
    
    Borrowing costs include interest, amortization of discounts or premiums related to borrowings, ancillary costs
    
    incurred in connection with the arrangement of borrowings, and exchange differences arising from foreign
    
    currency borrowings. The borrowing costs that are directly attributable to the acquisition, construction or
    
    production of a qualifying asset are capitalized. The amounts of other borrowing costs incurred are recognized as
    
    an expense in the period in which they are incurred. Qualifying assets are asset (fixed assets, investment property
    
    and inventories, etc.) that necessarily take a substantial period of time for acquisition, construction or production
    
    to get ready for their intended use or sale.
    
    Where funds are borrowed for a specific-purpose, the amount of interest to be capitalized is the actual interest
    
    expense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed
    
    funds before being used on the asset or any investment income on the temporary investment of those funds. Where
    
    funds are borrowed for a general-purpose, the amount of interest to be capitalized on such borrowings is
    
    determined by applying a weighted average interest rate to the weighted average of the excess amounts of
    
    accumulated expenditure on the asset over and above the amounts of specific-purpose borrowings.
    
    During the capitalization period, exchange differences related to a specific-purpose borrowing denominating in
    
    foreign currency are all capitalized. Exchange differences in connection with general-purpose borrowings are
    
    recognized in profit or loss in the period in which they are incurred.
    
    Assets qualified for capitalization are the fixed assets, investment properties or inventories which need a long time
    
    of construction or production activities before ready for intended used or sale.
    
    Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or production
    
    of a qualifying asset is interrupted by activities other than those necessary to prepare the asset for its intended use
    
    or sale, when the interruption is for a continuous period of more than 3 months. Borrowing costs incurred during
    
    these periods recognized as an expense for the current period until the acquisition, construction or production is
    
    resumed.
    
    18. Intangible Assets
    
    (1) Intangible asset
    
    The term “intangible asset” refers to the identifiable non-monetary assets without physical shape, possessed or
    
    controlled by enterprises.
    
    The intangible assets are initially measured by its cost. Expenses related to intangible assets, if the economic
    
    ~ 89 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    benefits related to intangible assets are likely to flow into the enterprise and the cost of intangible assets can be
    
    measured reliably, shall be recorded as cost of intangible assets. The expenses other than this shall be booked in
    
    the profit or loss when they occur.
    
    Land use rights that are purchased by the Company are accounted for as intangible assets. Buildings, such as
    
    plants that are developed and constructed by the Company, and relevant land use rights and buildings, are
    
    accounted for as intangible assets and fixed assets, respectively. Payments for the land and buildings purchased
    
    are allocated between the land use rights and the buildings; if they cannot be reasonably allocated all of the land
    
    use rights and buildings should accounted for as fixed assets.
    
    When an intangible asset with a definite useful life is available for use, its original cost less net residual value and
    
    any accumulate impairment losses is amortized over its estimated useful life using the straight-line method. An
    
    intangible asset with an indefinite useful life is not amortized.
    
    For an intangible asset with a definite useful life, the Company reviews the useful life and amortization method at
    
    the end of the period, and makes adjustment when necessary. An additional review is also carried out for useful
    
    life of the intangible assets with indefinite useful life. If there is evidence showing the foreseeable limit period of
    
    economic benefits generated to the enterprise by the intangible assets, then estimate its useful life and amortize
    
    according to the policy of intangible assets with definite useful life.
    
    (2) Research and development cost
    
    Cost of research and development is distinguished into the research phase and the development phases.
    
    Cost of the research phase is recognized in the profit or loss in the period in which it is incurred.
    
    Unless the following conditions are satisfied, cost of the development phase is recognized in the profit or loss in
    
    the period in which it is incurred:
    
    ① it is technically feasible to complete the intangible asset so as to use it or sell it;
    
    ② it is clearly invented to complete the intangible asset in order to use it or sell it;
    
    ③ it is probable that the intangible asset is capable of generating future economic benefit, such as the market for
    
    the product produced by the intangible asset or the intangible asset itself, it is objectively evidential that the
    
    intangible asset is economically usable if it is going to be used internally;
    
    ④ there are sufficient technical, financial and other resources to complete the intangible asset and to use it or sell
    
    it;
    
    ⑤ the cost of the development of the intangible can be measured reliably.
    
    If the cost cannot be distinguished into the search phase and the development phase, it is recognized in the profit
    
    or loss for the period in which it is incurred.
    
    (3) Impairment of intangible assets
    
    Impairment and provisions of intangible assets are disclosed on Note IV. 20 “Long-term assets impairment”.
    
    ~ 90 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    19. Long-term Deferred Expenditure
    
    An item long-term deferred expenses is an expense which has been incurred and which has a beneficial period (a
    
    period during which an expense is expected to bring economic benefits to an entity) which is longer than one year
    
    and which includes at least part of the reporting period during which the expense was incurred and subsequent
    
    reporting periods. An item of long-term deferred expenses is recognized at the actual amount of the expense
    
    incurred and allocated in each month of the beneficial period using the straight line method.
    
    20. Long-term Assets Impairment
    
    Non-financial assets with non-current nature include fixed assets, construction in progress, intangible assets with
    
    definite useful lives, investment properties measured by cost methods and long-term equity investment on
    
    subsidiaries, jointly operations. The Company assesses whether there are any indicators of impairment for all
    
    non-financial assets at the balance sheet date, and impairment test is carried out and recoverable value is estimated
    
    if such an indicator exits. Goodwill and intangible assets with indefinite useful lives, as well as intangible assets
    
    not ready for use, are tested for impairment annually regardless of indicators of impairment.
    
    Impairment of loss is calculated and provisions taken by the difference if the recoverable value of the assets is
    
    lower than the book value. The recoverable value is the higher of estimated present value of the future expected
    
    cash flows from the asset and net fair value of the asset less disposed cost. The fair value of asset is determined by
    
    the sales agreement price within an arm’s length transaction. In case there is no sales agreement, but there is active
    
    market of assets, the fair value can be determined by the selling price. If there is neither sales agreement nor active
    
    market, the fair value of the asset can be estimated based on the best information obtained. Disposal expenses
    
    include expenses related to the legislation, taxes, transportations and the direct expense for the asset to be ready
    
    for sale. When calculating the present value of expected future cash flows from an asset or asset Group, the
    
    management shall estimate the expected future cash flows from the asset or asset Group and choose a suitable
    
    discount rate in order to calculate the present value of those cash flows.
    
    Provision for asset impairment is calculated and determined on the individual basis. If the recoverable of
    
    individual asset is hard to estimate, the recoverable amount can be determined by the asset Group where subject
    
    asset belongs. Asset Group is the smallest set of assets that can have cash flow in independently.
    
    The Company determines whether goodwill is impaired at least on an annual basis. This requires an estimation of
    
    the present value of the future expected cash flows from the asset Groups or sets of asset Groups to which the
    
    goodwill is allocated. Estimating the present value requires the Company to make an estimate of the expected
    
    future cash flows from the asset Groups or sets of asset Groups and also choose a suitable discount rate in order to
    
    calculate the present value of those cash flows. Once the loss from above asset impairment is recognized, the
    
    recoverable part cannot be reserved in the subsequent periods.
    
    21. Payroll
    
    ~ 91 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    The payroll of the Company mainly includes the short-term employee compensation, welfare after demission,
    
    demission welfare and other long-term employee benefits. Of which:
    
    Short-term compensation mainly including salary, bonus, allowances and subsidies, employee services and
    
    benefits, medical insurance premiums, birth insurance premium, industrial injury insurance premium, housing
    
    fund, labor union expenditure and personnel education fund, non-monetary benefits etc. The short-term
    
    compensation actually happened during the accounting period when the active staff offering the service for the
    
    Group should be recognized as liabilities and is included in the current gains and losses or relevant assets cost. Of
    
    which the non-monetary benefits should be measured according to the fair value.
    
    Welfare after demission mainly includes setting drawing plan. Of which setting the drawing plan mainly includes
    
    basic endowment insurance, unemployment insurance and annuity etc, and the corresponding payable and deposit
    
    amount should be included into the relevant assets cost or the current gains and losses when happen.
    
    If an enterprise cancels the labor relationship with any employee prior to the expiration of the relevant labor
    
    contract or brings forward any compensation proposal for the purpose of encouraging the employee to accept a
    
    layoff, and should recognize the payroll liabilities occurred from the demission welfare base on the earlier date
    
    between the time when the Group could not one-sided withdraw the demission welfare which offered by the plan
    
    or layoff proposal owning to relieve the labor relationship and the date the Group recognizes the cost related to the
    
    reorganization of the payment of the demission welfare and at the same time includes which into the current gains
    
    and losses. But if the demission welfare is estimated that could not totally pay after the end of the annual report
    
    within 12 months, should be disposed according to other long-term payroll payment.
    
    The inside employee retirement plan is treated by adopting the same principle with the above dismiss ion welfare.
    
    The group would recorded the salary and the social security insurance fees paid and so on from the employee’s
    
    service terminative date to normal retirement date into current profits and losses (dismiss ion welfare) under the
    
    condition that they meet the recognition conditions of estimated liabilities.
    
    The other long-term welfare that the Group offers to the staffs, if met with the setting drawing plan, should be
    
    accounting disposed according to the setting drawing plan, while the rest should be disposed according to the
    
    setting revenue plan.
    
    22. Estimated Liabilities
    
    Recognition of accrued liabilities:
    
    Obligation with contingency factor such as external hypothecate, lawsuit or arbitrage in dispute, guarantee on
    
    quality of product, cut-down plan, loss of contract, recombine obligation, obligation on abandon fixed asset, and
    
    meet the follow condition simultaneously would determined as liabilities: (1) This obligation is current obligation
    
    of the Company; and, (2) The performance of this obligation will probably cause economic benefits outflow of the
    
    Company; and, (3) The amount of this obligation can be reliably measured.
    
    ~ 92 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    On balance sheet date the Company performed relate obligation that consider risk, incertitude, time value of
    
    currency of contingency factor. According to the best estimate of the expenditure required to settle the present
    
    obligation for estimated liabilities measured.
    
    If the expenditure required to settle the liability is expected to be fully or partly compensated by a third party, to
    
    determine the amount of compensation will be received at the basic, separately recognized as an asset, and is
    
    recognized in the amount of compensation does not exceed the carrying value of estimated liabilities.
    
    23. Revenues
    
    (1) Commodity sales revenues
    
    No revenue from selling goods may be recognized unless the following conditions are met simultaneously: the
    
    significant risks and rewards of ownership of the goods have been transferred to the buyer by the enterprise; the
    
    enterprise retains neither continuous management right that usually keeps relation with the ownership nor
    
    effective control over the sold goods; the relevant amount of revenue can be measured in a reliable way; the
    
    relevant economic benefits may flow into the enterprise; and the relevant costs incurred or to be incurred can be
    
    measured in a reliable way.
    
    In the Company’s daily accounting practices, as for the domestic sales, when the products had shipped out of the
    
    library and had handed over to the buyers, and the major risk as well as the reward on the ownership of the
    
    products had transferred to them, without keeping any continued management right which commonly related to
    
    the ownership nor carrying out any effective control of the products which had been sold, and at the same time the
    
    amounts received could be calculated reliably, and the relevant economic interest may flow into the enterprise, as
    
    well as the relevant costs which had occurred or is going to occur could be calculated reliably, should recognize
    
    the implementation of the commodity sales revenues. As for the overseas sales, should recognize the
    
    implementation of the revenues when the goods had made shipment and gained the customs export declaration.
    
    (2) Revenues from providing labor services
    
    If an enterprise can reliably estimate the outcome of a transaction concerning the labor services it provides, it shall
    
    recognize the revenue from providing services employing the percentage-of-completion method on the balance
    
    sheet date. The percentage-of-completion is determined by the proportion of the costs incurred against the
    
    estimated total costs.
    
    The outcome of a transaction concerning the providing of labor services can be measured in a reliable way, means
    
    that the following conditions shall be met simultaneously: ① The amount of revenue can be measured in a reliable
    
    way; ② The relevant economic benefits are likely to flow into the enterprise; ③ The schedule of completion
    
    under the transaction can be confirmed in a reliable way; ④ The costs incurred or to be incurred in the transaction
    
    can be measured in a reliable way.
    
    If the Company can not measure the result of a transaction concerning the providing of labor services in a reliable
    
    way, it shall be conducted in accordance with the following circumstances, respectively: If the cost of labor
    
    ~ 93 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    services incurred is expected to be compensated, the compensation amount for the cost of labor services shall be
    
    recognized as the revenue from providing labor service, and the cost of labor service incurred shall be as the
    
    current cost; if the cost of labor services incurred is not expected to compensate, no revenue from the providing of
    
    labor services may be recognized.
    
    Where a contract or agreement signed between Group and other enterprises concerns selling goods and providing
    
    of labor services, if the part of sale of goods and the part of providing labor services can be distinguished from
    
    each other and can be measured respectively, the part of sale of goods and the part of providing labor services
    
    shall be treated respectively. If the part of selling goods and the part of providing labor services can not be
    
    distinguished from each other, or if the part of sale of goods and the part of providing labor services can be
    
    distinguished from each other but can not be measured respectively, both parts shall be conducted as selling
    
    goods.
    
    (3) Royalty revenue
    
    In accordance with relevant contract or agreement, the amount of royalty revenue should be recognized as revenue
    
    on accrual basis. In the Company’s daily accounting practices, it should be calculated and recognized according to
    
    the chargeable time and methods in accordance with the relevant contract or agreement.
    
    (4) Interest revenue
    
    In accordance with the time that others use the Group’s monetary capital and the actual rate.
    
    24. Government Subsidies
    
    Government grants are transfer of monetary assets and non-monetary assets from the government to the Company
    
    at no consideration, excluding the capital invested by the government as equity owner. Government grant can be
    
    classified as grant related to the assets and grants related to the income. The government grants which were
    
    acquired by the Company will be used to purchase or otherwise form become long-term assets will be defined as
    
    grant related to the assets; the others will be defined as grants related to the income. If the files have not clearly
    
    defined government grants objects, it will be divided in the following manner compartmentalize the grants into
    
    rant related to the assets and grants related to the income: (1) government documents defined specific projects
    
    targets, according to the relative proportion of the budgets of specific items included the expenditure of to form
    
    assets and the expenditure will be charged into expense to be divided, the division ratio required at each balance
    
    sheet date for review and make changes if necessary; (2) government documents to make a general presentation
    
    purposes only, does not specify a particular project, as grants related to the income.
    
    If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or
    
    receivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. If the fair
    
    value cannot be reliably determined, it is measured at a nominal amount. A government grant measured at a
    
    nominal amount is recognized immediately in profit or loss for the period.
    
    When received the government grants actually, recognized and measured them by the actual amount received.
    
    However, there is strong evidence that the end of fiscal support policies able to meet the conditions specified in
    
    ~ 94 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    the relevant funds are expected to be able to receive financial support, measured at the amount receivable.
    
    Government grants are measured according to the amount receivable shall also comply with the following
    
    conditions: (1) grants receivable of government departments issued a document entitled have been confirmed, or
    
    could reasonably estimated in accordance with the relevant provisions of its own official release of financial
    
    resources management approach, and the expected amount of a material uncertainty which does not exist; (2) it is
    
    based on the local financial sector to be officially released and financial support for the project and its financial
    
    fund management approach voluntarily disclosed in accordance with the provisions of “Regulations on Disclosure
    
    Government Information”, and the management approach should be (inclusive of any compliance business
    
    conditions may apply), and not specifically formulated for specific businesses;(3) related grants approval has been
    
    clearly committed the deadline, and is financed by the proceeds of a corresponding budget as a guarantee, so that
    
    will be received within the prescribed period with the a reasonable assurance; (4) according to the specific
    
    circumstances of the Company and the subsidy matter, should satisfy the other conditions (if any).
    
    A government grant related to an asset is recognised as deferred income, and evenly amortized to profit or loss
    
    over the useful life of the related assetin a reasonable and systematic manner. For a government grant related to
    
    income, if the grant is a compensation for related expenses or losses to be incurred in subsequent period, the grant
    
    is recognised as deferred income, and recognised in profit or loss over the periods in which the related costs are
    
    recognised. If the grant is a compensation for related expenses or losses already incurred, the grant is recognised
    
    immediately in profit or loss for the period.
    
    Government subsidies including both assets-related parts and income-related parts should be treated separately. If
    
    it is difficult to seperate, the government subsidiesas a whole will be classified as income-related government
    
    grants.
    
    The government grants related to the daily activities of the Company are included in other income or offset the
    
    related costs according to the essence of the economic business. The government grants unrelated to the daily
    
    activities are included in the non-operating income and expenses.
    
    For repayment of a government grant already recognized, if there is a related deferred income, the repayment is
    
    offset against the carrying amount of the deferred income, and any excess is recognized in profit or loss for the
    
    period. If there is no related deferred income, the repayment is recognized immediately in profit or loss for the
    
    period.
    
    25. Deferred Tax Assets and Deferred Tax Liabilities
    
    (1) Income tax for the current period
    
    At the balance sheet date, current income tax liabilities or assets for the current and prior periods are measured at
    
    the amount expected to be paid (or recovered) according to the requirements of tax laws. The calculation for
    
    income tax expenses in the current period is based on the taxable income according to the related tax laws after
    
    adjustment to the accounting profit of the reporting period.
    
    ~ 95 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    (2) Deferred income tax assets and liabilities
    
    For temporary differences between the carrying amount of certain assets or liabilities and their tax base, or
    
    between the nil carrying amount of those items that are not recognized as assets or liabilities and their tax base
    
    that can be determined according to tax laws, deferred tax assets and liabilities are recognized using the balance
    
    sheet liability method.
    
    For temporary differences associated with the initial recognition of goodwill and the initial recognition of an asset
    
    or liability arising from a transaction (not a business combination) that affects neither the accounting profit nor
    
    taxable profits (or deductible losses) at the time of transaction, no deferred tax asset or liability is recognized. For
    
    taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint
    
    ventures, no deferred income tax liability related is recognized except where the Company is able to control the
    
    timing of reversal of the temporary difference and it is probable that the temporary difference will not reverse in
    
    the foreseeable future. All deferred income tax liabilities arising from taxable temporary differences except the
    
    ones mentioned above are recognized.
    
    For temporary deductible differences associated with the initial recognition of an asset or liability arising from a
    
    transaction (not a business combination) that affects neither the accounting profit nor taxable profits (or deductible
    
    losses) at the time of transaction, no deferred tax asset is recognized. For taxable temporary deductible differences
    
    associated with investments in subsidiaries and associates, and interests in joint ventures, no deferred income tax
    
    asset related is recognized if it is impossible to reversal the temporary difference in the foreseeable future, or it is
    
    not probable to obtain taxable income which can be used for the deduction of the temporary difference in the
    
    future. Except mentioned above, the Company recognizes other deferred income tax assets that can deduct
    
    temporary differences to the extent that it is probable that taxable profits will be available against which the
    
    deductible temporary differences can be utilized.
    
    For the deductible losses and tax credit that can be carried forward, deferred tax assets for deductible temporary
    
    differences are recognized to the extent that it is probable that taxable profits will be available against which the
    
    deductible temporary differences can be utilized.
    
    At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates according to tax laws,
    
    which are expected to apply in the period in which the asset is realized or the liability is settled.
    
    At the balance sheet date, the Company reviews the carrying amount of deferred tax assets. If it is no longer
    
    probable that sufficient taxable profit will be available in future periods to allow the benefits of the deferred tax
    
    assets to be used, the Company reduces the carrying amount of deferred tax assets. The amount of such reduction
    
    is reversed when it becomes probable that sufficient taxable profit will be available.
    
    (3) Income tax expenses
    
    Income tax expenses consist of current income tax and deferred income tax.
    
    The expenses from income tax and deferred income tax, as well as the revenue, shall be recorded into profit or
    
    loss in current accounting period, except expense for income tax of the current period and deferred income tax
    
    ~ 96 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    that booked into other income or equity and adjusted carrying value of deferred income tax goodwill arose from
    
    business combination.
    
    (4) Income tax offset
    
    When we have the legal right, and have intended to, to make settlement with net amount or through the asset
    
    acquisition and liability fulfillment simultaneously, the Company shall present the net value from the offset
    
    between current income tax asset and current income tax liability in the financial statement.
    
    When the Company has the legal right to make a settlement with the current income tax asset and current income
    
    tax liability, and the deferred income tax asset and deferred income tax liability are related to the same taxable
    
    subject under the same tax payer, or related to different taxable subject, but the intension of net value settlement in
    
    regard of the current income tax asset and current income tax liability, the Company shall present net value after
    
    the offset of deferred income tax asset and deferred income tax liability.
    
    26. Leases
    
    A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership of an asset.
    
    Title may or may not eventually be transferred. An operating lease is a lease other than a finance lease.
    
    (1) The Company as Lessee under operating Lease
    
    Lease payments under an operating lease are recognized by a lessee on a straight-line basis over the lease term,
    
    and either included in the cost of the related asset or charged to profit or loss for the current period. The contingent
    
    rents shall be recorded in the profit or loss of the period in which they actually arise.
    
    (2) The Company as Leaser under operating Lease
    
    Lease income from operating leases shall be recognized by the leaser in profit or loss on a straight-line basis over
    
    the lease term. Initial direct cost of significance in amount shall be capitalized when incurred. If another basis is
    
    more systematic and rational, that basis may be used. Contingent rents are credited to profit or loss in the period in
    
    which they actually arise.
    
    (3) The Company as Lessee under financing Lease
    
    For an asset that is held under a finance lease, at the lease commencement, the leased asset is recorded at the
    
    lower of its fair value at the lease commencement and the present value of the minimum lease payments, and the
    
    minimum lease payment is recorded as the carrying amount of the long-term payables; the difference between the
    
    recorded amount of the leased asset and the recorded amount of the payable is accounted for as unrecognized
    
    finance charge, Initial direct costs incurred by the lessee during the process of negotiating and securing the lease
    
    agreement shall be added to the amount recognized for the leased asset. The net amount of minimum lease
    
    payment deducted by the unrecognized finance shall be separated into long-term liabilities and long-term liability
    
    within one year for presentation.
    
    Unrecognized finance charge shall be computed by the effective interest method during the lease term. Contingent
    
    rent shall be booked into profit or loss when actually incurred.
    
    ~ 97 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    (4) In the case of the lessor of a financing lease
    
    For an asset that is leased out under a finance lease, the aggregate of the minimum lease receipts at the inception
    
    of the lease and the initial direct costs is recorded as a finance lease receivable, and unguaranteed residual value is
    
    recorded at the same time; the difference between the aggregate of the minimum lease receipt, initial direct costs,
    
    and unguaranteed residual value, and the aggregate of their present values, is recognized as unearned finance
    
    income, which is amortized using the effective interest rate method over each period during the lease term.
    
    Finance lease receivable less unearned finance income shall be separated into long-term liabilities and long-term
    
    liability within one year for presentation.
    
    Unearned finance income shall be computed by the effective interest method during the lease term. Contingent
    
    rent shall be credited into profit or loss in which actually incurred.
    
    27. Changes in Main Accounting Policies and Estimates
    
    (1) Change of accounting policies
    
    There was no any change of accounting policies
    
    (2) Change of main accounting estimates
    
    There was no any change of main accounting estimates.
    
    28. Significant Account Judgment and Estimates
    
    The Company is required to make judgments, estimates and assumptions about the carrying amounts of items in
    
    the financial statements that cannot be measured accurately, due to the internal uncertainties of operation activities.
    
    These judgments, estimates and assumptions are based on historical experiences of the Company’s management
    
    as well as other factors that are considered to be relevant. These judgments, estimates and assumptions may affect
    
    value of the financial statements in revenue, expenses, assets and liabilities and the disclosure of contingency at
    
    the balance sheet date. However, the result derived from those uncertainties in estimates may lead significant
    
    adjustments to the carrying amounts of the assets or liabilities affected in the future.
    
    The Company has reviews the judgments, estimates and assumptions regularly on the basis of going concern.
    
    Where the changes in accounting estimates only affect the period when changes occurred, and they are recognized
    
    within the same period. Where the changes in accounting estimates affect both current period and future period,
    
    the changes are recognized within the period of change and future period.
    
    At balance sheet date, the followings are the significant areas where the Company needs to make judgment,
    
    estimates and assumptions over the value of items in the financial statements:
    
    (1) Classification of lease
    
    The Company classifies leases as operating lease and financing lease according to the rule stipulated in the
    
    Accounting Standard for Business Enterprises No. 21—Leasing. The management shall make analysis and
    
    judgment on whether the risks and rewards related to the title of leased assets has been transferred to the leaser, or
    
    whether the Company has substantially held the risks and rewards related to the ownership of leased assets.
    
    ~ 98 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    (2) Allowance for bad debt
    
    According to the relevant accounting policies of the Company in receivables, allowance method is used for bad
    
    debt’s calculation. The impairment of receivables is calculated based on the assessment of recoverable of
    
    receivables. Assurance of receivable impairment needs judgments and estimations from the management. The
    
    difference between actual results and original estimates shall have impact on the carrying amount of receivables
    
    and receivable bad debt provisions or the reverse during the change of estimation.
    
    (3) Impairment of inventories
    
    The Company measures inventories by the lower of cost and realizable net value according to the accounting
    
    policies in regard of inventories and provisions for decline in value of inventories are made if the cost is higher
    
    than their net realizable value and obsolete and slow-movement inventories. Inventories decline in value to net
    
    realizable value is the estimated selling price in the ordinary course of business. Net realizable value is determined
    
    on the basis of clear evidence obtained, and takes into consideration the purposes of holding inventories and effect
    
    of post balance sheet events. The difference between the actual result and the original estimates shall have impact
    
    on reverse of the carrying amount of the inventories and their decline in value or provisions during the period of
    
    change.
    
    (4) The fair value of financial instruments
    
    For a financial instrument which has no active market, the Company establishes fair value by using various
    
    valuation methods, including of discounted cash flow analysis model. The Company needs to estimate future cash
    
    flow, credit risk, volatility and relationship during the valuation and choose appropriate discount rate. Such
    
    assumptions have uncertainties and their changes shall have impact on the fair value of financial instruments.
    
    (5) Impairment of financial assets available-for-sale
    
    The Company determine the available-for-sale financial asset is impaired relies on judgments and assumptions of
    
    management, to determine whether impairment loss is recognized in the income statement. The process of making
    
    the judgments and assumptions, the Company is required to assess the extent and duration of the fair value of the
    
    investment below cost, as well as investment financial position and short-term business outlook, including
    
    industry conditions, technological change, the credit rating, default rates and counterparty risk.
    
    (6) Impairment of non-financial, non-current assets
    
    The Company assesses whether there are any indicators of impairment for all non-current assets other than
    
    financial assets at the balance sheet date. For an intangible asset that has indefinite useful life, impairment test is
    
    made in addition to the annual impairment test if there is any indication of impairment. For non-current assets
    
    other than financial assets, impairment test is made when there is any indication that its account balance cannot be
    
    recovered.
    
    Impairment exists when the recoverable amount of an asset is the higher of its fair value less cost of disposal and
    
    present value of the future cash flows expected to be derived from the asset.
    
    Net value between the difference of fair value and disposal cost is determined by reference of the price of similar
    
    ~ 99 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    product in a sale agreement in an arm’s length transaction or an observable market price less the additional cost
    
    directly attributable to the disposal of the asset.
    
    When estimating the present value of future cash flow, significant judgments are made over the asset’s production,
    
    selling price and relevant operating expenses, and discount rate used to calculate present value. All available
    
    materials that are considered to be relevant shall be used in the estimation of recoverable value. These materials
    
    include estimations of production, selling price and operating expenses based on reasonable and supportable
    
    assumptions.
    
    The Company makes an impairment test for goodwill at least at each year end. This requires an estimation of
    
    present value of future cash flow of the assets or assets group where goodwill has been allocated. The Company
    
    shall makes estimation on the future cash flow derived from assets or assets group and determine an appropriate
    
    discount rate for the present value of future cash flow when the estimation of present value of future cash flow is
    
    made.
    
    (7) Depreciation and amortization
    
    Investment property, fixed assets and intangible assets are depreciated and amortized using the straight-line
    
    method over their useful lives after taking into account residual value. The useful lives are regularly reviewed to
    
    determine the depreciation and amortization costs charged in each reporting period. The useful lives are
    
    determined based on historical experience of similar assets and the estimated technical changes. If there is an
    
    indication that there has been a change in the factor used to determine the depreciation or amortization, the rate of
    
    depreciation or amortization is revised.
    
    (8) Deferred tax assets
    
    The group shall recognize all unused tax losses as deferred tax assets to the extent that it is probable that future
    
    taxable profit will be available against which the unused tax losses and unused tax credits can be utilized. This
    
    requires the management of the Company make a lot of judgments over the estimation of time period, value and
    
    tax planning strategies when future taxable profit incurs so that the value of deferred tax assets can be determined.
    
    (9) Income tax
    
    There are some transactions where ultimate tax treatments and calculations have uncertainties in the Company’s
    
    everyday operation. If it is possible for any item to make expenditure before tax that needs to be approved from
    
    competent tax authorities. If there is any difference between finalized determination value and their initial
    
    estimations value, the difference shall have the impact on the income tax and deferred income tax of the current
    
    period during the final determination.
    
    (10) Accrued liabilities
    
    According with the terms of the contract, the existing knowledge and historical experience, product quality
    
    assurance and expected contract losses, delay in delivery of liquidated damages are estimated and recognized as
    
    accrued liabilities. In these matters has been the formation of a current obligation, and fulfilling the duty is likely
    
    to lead to the outflow of economic benefits of the Company, the Company or the best estimate of the current
    
    ~ 100 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    obligation expenditure required recognized as a accrued liabilities. Recognition and measurement of accrued
    
    liabilities is dependent on the judgment of management. In the processing of judgment the company needed to
    
    appraise the related risks, uncertainties and time value of money and other factors.
    
    V. Taxation
    
    1. Main Taxes and Tax Rate
    
             Categoryoftaxes                             Particularsaboutspecifictaxrate
                                   Incometaxwasinaccordancewith17%,11%,and6%oftaxratetocalculateoutputtax
     VAT                          andaccordingtothebalanceofthecurrentthedeductibilitydeducttheinputtaxto
                                   calculatevalueaddedtax.(ifthetaxobligationsisperformedafter1May2018,the
                                   outputtaxshallbecalculatedbythetaxrateof16%,10%,and6%)
                                   SalesofwineRMB1per1000mlorperkgtocalculatetheamountofconsumptiontax,
     Consumptiontax                  a flat rate, 20% of the annual turnover to calculate the amount of consumption tax at
                                   valorem.
     Urbanmaintenanceandconstructiontax   1,5,7%oftheactualtaxableturnoveramount.
     Educationexpensessurcharge          3%oftheactualtaxableturnoveramount.
     Localeducationsurcharge            2%oftheactualtaxableturnoveramount.
     Enterpriseincometax               Fordetails,seethetablebelow
    
    
    Table of income tax rate of different entities:
    
                  Name oftheentities                                 Incometaxrate
    
    
    Anhui Longrui Glass Co., Ltd 15%
    
    Anhui Ruisiweier Technology Co., Ltd 15%
    
    Bozhou Gujin Rubbish Recycling Co., Ltd 10%
    
    Wuhan Yashibo Technology Co., Ltd 10%
    
    Hubei Hechuanyuan Trade Co., Ltd 10%
    
    Anhui Gujing Distillery Company Limited and its other
    
    25%
    
    subsidiaries
    
    2. Tax Preference and Approval
    
    (1) On 5 December 2016, the company’s subsidiary Anhui Longrui Glass Co., Ltd. was attested to be qualified as
    
    a hi-tech enterprise and obtained Hi-tech Enterprise Certificate (NO.: GR201634001204) which shall be valid in 3
    
    years. Corresponding corporate income tax was also paid at the rate of 15% from January to June in 2018.
    
    (2) On 21 October 2016, the company’s subsidiary Anhui Swisse Will Science & Technology Co., Ltd. was
    
    attested to be qualified as a hi-tech enterprise and obtained Hi-tech Enterprise Certificate (NO.: GR201634000832)
    
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    which shall be valid in 3 years. Corresponding corporate income tax was also paid at the rate of 15% from January
    
    to June in 2018.
    
    (3) According to Notification for extending coverage of preferential income tax policies for small enterprises with
    
    low profits (Financial and taxation (2017) No. 43), published by Ministry of Finance of the People’s Republic of
    
    China and State Administration of Taxation, from 1 January 2017 to 31 December 2019, for small enterprises with
    
    low profits, of which the annual taxable income amount is under RMB0.5 million (including RMB0.5 million),
    
    the income tax deduction shall be 50% of the taxable income amount and the corporate income tax rate shall be
    
    reduced to 20%. For subsidiaries of the Company, BozhouGujing Recycling Co., Ltd, Wuhan Yashibo Technology
    
    Co., Ltd and Hubei Hechuyuan Commercial & Trading Co., Ltd, which satisfy conditions for small enterprises
    
    with low profits, the actual prevailing tax shall be reduced to 10% from January to June in 2018.
    
    VI. Notes on Major Items in Consolidated Financial Statements of the Company
    
    The following notes (including notes on major items in consolidated financial statements of the Company), unless
    
    otherwise noted, the opening period was 1 January 2018, the closing period was 30 June 2018.
    
    1. Monetary Funds
    
                    Item                        Endingbalance                 Beginningbalance
     Cashintreasury                                          364,726.59                    369,197.41
     Bankdeposit                                         921,933,834.69                1,440,617,397.53
     Othermonetaryfunds                                    45,487,396.13                  43,102,031.46
                   Total                                967,785,957.41                1,484,088,626.40
     Ofwhich:thetotalamountdepositedinoverseas                         0.00                         0.00
    
    
    Note: At the end of this period, the amount of RMB45,000,000.00 was restricted for pledge due to the opening of
    
    bank’s acceptance bill among the other monetary fund; there’s no limitation and restriction on the usage and
    
    remittance of funds deposited abroad due to pledge and mortgage etc.
    
    2. Financial Assets at Fair Value through Profit or Loss
    
                 Item                        Endingbalance                   Beginningbalance
     Tradingfinancialassets                                  1,057,659.73                       99,800.76
     Ofwhich:equitytoolinvestment                            1,057,659.73                       99,800.76
                 Total                                  1,057,659.73                       99,800.76
    
    
    3. Notes Receivable
    
    (1) Notes receivable listed by category
    
                 Item                        Endingbalance                   Beginningbalance
    
    
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                 Item                        Endingbalance                   Beginningbalance
     Bankacceptancebill                                 1,896,811,744.49                    720,611,126.78
     Tradeacceptancebill                                   2,000,000.00                           0.00
                 Total                               1,898,811,744.49                    720,611,126.78
    
    
    (2) Notes receivable pledged at the period-end
    
    Notes receivable pledged at the period-end was RMB99,930,600.
    
    (3) Notes receivable which had endorsed by the Company or had discounted and had not due on the balance sheet
    
    date at the period-end
    
                                   Amountofrecognitionterminationatthe   Amountofnotterminatedrecognitionat
                 Item
                                             period-end                     theperiod-end
     Bankacceptancebill                                 415,100,060.67                           0.00
                 Total                               415,100,060.67                           0.00
    
    
    4. Accounts Receivable
    
    (1) Accounts Receivable Classified by Category
    
                                                                   Ending balance
                                                     Carrying amount     Baddebtprovision
                         Category                                                       Carrying
                                                            Proport          Withdrawal
                                                     Amount       Amount                value
                                                            ion(%)         proportion(%)
    Accounts receivable with significant single amount for which bad debt
                                                        0.00   0.00    0.00          0.00    0.00
    provision separatelyaccrued
    Accounts receivablewithdrawalofbaddebtprovisionofbycredit risks 20,644,13      1,151,55              19,492,57
                                                            100.00                 5.58
    characteristics:                                           2.48         6.41                  6.07
    Accounts receivablewithinsignificantsingleamountforwhichbaddebt
                                                        0.00   0.00    0.00          0.00    0.00
    provision separatelyaccrued
                                                     20,644,13      1,151,55              19,492,57
                                                            100.00                 5.58
                           Total                          2.48         6.41                  6.07
    
    
    (Continued)
    
                                                                  Beginning balance
                         Category
                                                     Carrying amount     Baddebtprovision    Carrying
    
    
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                                                            Proport          Withdrawal     value
                                                     Amount       Amount
                                                            ion(%)         proportion(%)
    Accounts receivable with significant single amount for which bad debt
                                                        0.00   0.00    0.00          0.00    0.00
    provision separatelyaccrued
    Accounts receivablewithdrawalofbaddebtprovisionof bycredit risks 23,800,57      1,334,43              22,466,14
                                                            100.00                 5.61
    characteristics:                                           6.11         3.05                  3.06
    Accounts receivablewithinsignificantsingleamountforwhichbaddebt
                                                        0.00   0.00    0.00          0.00    0.00
    provision separatelyaccrued
                                                     23,800,57      1,334,43              22,466,14
                                                            100.00                 5.61
                          Total                           6.11         3.05                  3.06
    
    
    In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision:
    
                                                         Ending balance
                Aging                                                       Withdrawalproportion
                                     Accountreceivable        Baddebtprovision
                                                                                  (%)
    Within 1year                               19,477,898.54             273,272.84               1.40
    [Of which:within6months]                     17,515,552.21             175,155.52               1.00
         [7-12 months]                           1,962,346.33              98,117.32               5.00
    1 to2years                                   307,078.19             30,707.82              10.00
    2 to3years                                   23,160.00              11,580.00              50.00
    Over 3years                                  835,995.75             835,995.75              100.00
                Total                         20,644,132.48           1,151,556.41               5.58
    
    
    (2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
    
    The reversed amount of the bad debt provision during the Reporting Period was of RMB 182,876.64.
    
    (3) Particulars of the Actual Verification of Accounts Receivable during the Reporting Period
    
    There was no actual verification of accounts receivable during the Reporting Period
    
    (4) Top Five of the Ending Balance of the Accounts Receivable Collected According to the Arrears Party
    
    The total amount of top five of account receivable of ending balance collected by arrears party was
    
    RMB7,494,637.60, 36.30% of total closing balance of account receivable, the relevant ending balance of bad debt
    
    provision withdrawn was RMB149,888.77.
    
    5. Prepayment
    
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    (1) List by Aging Analysis
    
                                         Ending balance                   Beginningbalance
                Aging
                                    Amount         Proportion         Amount         Proportion
    Within 1year                        79,562,981.71            96.79      40,817,554.03            97.81
    1 to2years                          2,319,508.00            2.82         82,115.23            0.20
    2 to3years                            36,520.00            0.04        828,648.08            1.99
    Over 3years                          290,000.00            0.35         1,320.00            0.00
                Total                 82,209,009.71           100.00      41,729,637.34           100.00
    
    
    (2) Top Five of the Ending Balance of the Prepayment Collected According to the Prepayment Target
    
    The total amount of top five of account receivable of ending balance collected by arrears party was
    
    RMB42,062,242.90, 51.17% of total ending balance of account receivable.
    
    6. Interest Receivable
    
                Item                       Endingbalance                   Beginningbalance
     Interestofcertificateofdeposit                          19,403,178.08                    13,883,178.08
                Total                                19,403,178.08                    13,883,178.08
    
    
    7. Other Accounts Receivable
    
    (1) Other Accounts Receivable Disclosed by Category
    
                                                                    Endingbalance
                                                      Carryingamount    Baddebtprovision
                          Category                             Propor                     Carrying
                                                                           Withdrawal
                                                      Amount  tion  Amount               value
                                                                          proportion(%)
                                                              (%)
    Other accounts  receivablewith significant single amount for which bad 40,850,9      40,850,9
                                                              74.18               100.00    0.00
    debt provisionseparatelyaccrued                              49.35         49.35
    Other accounts receivable withdrawn bad debt provision according to 14,220,7      1,338,52              12,882,2
                                                              25.82                9.41
    credit riskscharacteristics                                   57.86         9.27                28.59
    Other accounts  receivable with insignificant single amount for which
                                                         0.00   0.00    0.00          0.00    0.00
    bad debtprovisionseparatelyaccrued
                                                      55,071,7       42,189,4              12,882,2
                           Total                              100.00                76.61
                                                        07.21         78.62                28.59
    
    
    ~ 105 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    (Continued)
    
                                                                   Beginningbalance
                                                      Carryingamount    Baddebtprovision
                          Category                             Propor                     Carrying
                                                                           Withdrawal
                                                      Amount  tion  Amount               value
                                                                          proportion(%)
                                                              (%)
    Other accounts  receivablewith significant single amount for which bad 40,850,9      40,850,9
                                                              71.04               100.00    0.00
    debt provisionseparatelyaccrued                              49.35         49.35
    Other accounts receivable withdrawn bad debt provision according to 16,651,3      1,261,29              15,390,1
                                                              28.96                7.57
    credit riskscharacteristics                                   96.91         0.77                06.14
    Other accounts  receivable with insignificant single amount for which
                                                         0.00   0.00    0.00          0.00    0.00
    bad debtprovisionseparatelyaccrued
                                                      57,502,3       42,112,2              15,390,1
                           Total                              100.00                73.24
                                                        46.26         40.12                06.14
    
    
    ①Other receivable with single significant amount and withdrawal bad debt provision separately at end of period
    
                                                      Endingbalance
    Other accountsreceivable(unit)   Otheraccounts      Baddebt   Withdrawalproportion
                                                                          Withdrawal reason
                              receivable        provision         (%)
                                29,010,449.35  29,010,449.35           100.00    Enterenterprisebankruptcy
    Hengxin SecuritiesCo.,Ltd.
                                                                                    liquidation
                                11,840,500.00  11,840,500.00           100.00     Enterenterprisebankruptcy
    Jianqiao SecuritiesCo.,Ltd.
                                                                                     liquidation
             Total                40,850,949.35  40,850,949.35           100.00           --
    
    
    ②In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision
    
                                                       Ending balance
              Aging
                               Otheraccountsreceivable      Baddebtprovision      Withdrawalproportion(%)
    Within 1year                           12,128,336.42              204,974.58                  1.69
    [Of which:within6months]                 10,036,055.96              100,360.56                  1.00
         [7-12 months]                       2,092,280.46              104,614.02                  5.00
    1 to2years                             1,054,178.94              105,417.89                 10.00
    
    
    ~ 106 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
                                                       Ending balance
              Aging
                               Otheraccountsreceivable      Baddebtprovision      Withdrawalproportion(%)
    2 to3years                               20,211.41              10,105.71                 50.00
    Over 3years                             1,018,031.09            1,018,031.09                 100.00
               Total                      14,220,757.86            1,338,529.27                  9.41
    
    
    (2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
    
    The withdrawn bad debt provision of Reporting Period was of RMB77,238.50.
    
    (3) Particulars of the Actual Verification of Other Accounts Receivable during the Reporting Period
    
    There was no actual verification of other accounts receivable during the Reporting Period
    
    (4) Other Account Receivable Classified by Account Nature
    
                Nature                    Endingcarryingamount            Beginningcarryingamount
    Securities investment                                   40,850,949.35                    40,850,949.35
    Margin &cashpledge                                   6,064,299.92                     4,593,198.69
    Business travelborrowingcharges                           2,228,900.64                     2,088,800.78
    Rent andutilitiesfee                                    2,330,083.24                     6,241,851.35
    Others                                              3,597,474.06                     3,727,546.09
                 Total                                 55,071,707.21                    57,502,346.26
    
    
    (5) Top 5 of the Ending Balance of the Other Accounts Receivable Collected According to the Arrears Party
    
                                                                                   Baddebt
      Nameofthe
                       Nature        Endingbalance       Aging         Proportion(%)       provision
        entity
                                                                                 Endingbalance
    No.1         Securitiesinvestment        2,901,0449.35    Over 3 years              52.68    29,010,449.35
    No.2         Securitiesinvestment        1,1840,500.00    Over 3 years              21.50    11,840,500.00
    No. 3        Cashdeposit               500,000.00  Within 6 months               0.91       5,000.00
    No. 4        Others                   415,000.00  Within 6 months               0.75       4,150.00
    No. 5        Prepaymentofoilfee          369,185.37  Within 6 months               0.67       3,691.85
    Total                 --            42,135,134.72       --                    76.51    40,863,791.20
    
    
    8. Inventory
    
    ~ 107 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
    (1) Category of Inventory
    
                                                               Ending balance
                      Item
                                              Carryingamount     Fallingpricereserves     Carryingvalue
     Rawmaterials&package                            113,213,102.26        16,779,560.13       96,433,542.13
     Homemadesemi-finishedproductsandgoodsinprocess      1,832,857,138.37              0.00     1,832,857,138.37
     Finishedproduct                                 227,219,100.50        15,923,325.41      211,295,775.09
                      Total                      2,173,289,341.13        32,702,885.54     2,140,586,455.59
    
    
    (Continued)
    
                                                              Beginning balance
                      Item
                                              Carryingamount    Fallingpricereserves     Carryingvalue
     Rawmaterials&package                           132,151,695.59       17,029,623.45       115,122,072.14
     Homemadesemi-finishedproductsandgoodsinprocess     1,705,396,599.74              0.00     1,705,396,599.74
     Finishedproduct                                 258,007,338.23       14,395,712.60       243,611,625.63
                      Total                      2,095,555,633.56       31,425,336.05     2,064,130,297.51
    
    
    (2) Falling Price Reserves of Inventory
    
                                          Increase                Decrease
          Item        Beginningbalance                                               Endingbalance
                                    Withdrawal    Others   Reverseorwrite-off   Others
    Raw materials&
                         17,029,623.45        0.00      0.00        250,063.32      0.00
    package                                                                         16,779,560.13
    Finished product          14,395,712.60   1,527,612.81      0.00             0.00      0.00    15,923,325.41
          Total           31,425,336.05   1,527,612.81      0.00        250,063.32      0.00    32,702,885.54
    
    
    (3) Withdrawal Provision Basis of the Falling Price of the Inventory and the Reasons of the Reserve or
    
    Write-off
    
                                                 Reaso
                     Specificbasisofwithdrawaloffalling   nsfor
          Item                                                      Reasonsforwrite-off
                         pricereservesofinventory      revers
                                                  al
     Rawmaterials&     The realizable net value was lower          Therawmaterialwithdrawnimpairmentdisposedin
    
    
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                                                 Reaso
                     Specificbasisofwithdrawaloffalling   nsfor
          Item                                                      Reasonsforwrite-off
                         pricereservesofinventory      revers
                                                  al
     package          thanthecost                                       ReportingPeriod
                    The  realizable net value was lower          Therawmaterialwithdrawnimpairmentdisposedin
     Finishedproduct
                    than thecost                                       ReportingPeriod
    
    
    9. Other Current Assets
    
                 Item                       Endingbalance                  Beginningbalance
    Financial products                                   2,100,110,858.42                  1,741,000,000.00
    Taxtobededucted                                    66,930,195.24                    31,310,946.58
                 Total                               2,167,041,053.66                  1,772,310,946.58
    
    
    10. Available-for-sale Financial Assets
    
    (1) List of Available-for-sale Financial Assets
    
                                        Endingbalance                    Beginningbalance
               Item                       Depreciation                       Depreciation
                             Carrying amount          Carryingvalue Carryingamount          Carryingvalue
                                           reserves                          reserves
    Available-for-sale equityinstruments  267,197,036.68      0.00267,197,036.68 517,086,347.91      0.00517,086,347.91
    Of which:measuredatfairvalue     267,197,036.68      0.00267,197,036.68 517,086,347.91      0.00517,086,347.91
         Measured bycost                 0.00      0.00        0.00         0.00      0.00        0.00
               Total            267,197,036.68      0.00267,197,036.68 517,086,347.91      0.00517,086,347.91
    
    
    (2) Available-for-sale Financial Assets at Fair Value at the Period-end
    
                                                  Available-for-sale   Available-for-sale
                       Category                                                       Total
                                                  equityinstruments   debtinstruments
     Cost of the equity instruments/amortized cost of the liabilities
                                                     255,972,300.88           0.00     255,972,300.88
     instruments
     Fairvalue                                         267,197,036.68           0.00     267,197,036.68
     Changed amount of the fair value accumulatively included in
                                                      11,224,735.80           0.00      11,224,735.80
     othercomprehensiveincome
     Withdrawnimpairmentamount                                   0.00           0.00             0.00
    
    
    11. Investment Property
    
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                        Item                    Housesandbuildings    Landuseright         Total
     I.Originalcarryingvalue
     1.Beginningbalance                                  8,680,555.75      2,644,592.00       11,325,147.75
     2.Increasedamountoftheperiod                                0.00            0.00              0.00
     3.Decreasedamountoftheperiod                           146,888.55            0.00         146,888.55
     (1)Disposal                                         146,888.55            0.00         146,888.55
     (2)Othertransfer                                          0.00            0.00              0.00
     4.Endingbalance                                    8,533,667.20      2,644,592.00       11,178,259.20
     II.Accumulativedepreciationandaccumulativeamortization
     1.Beginningbalance                                  5,393,723.68       587,646.74        5,981,370.42
     2.Increasedamountoftheperiod                           140,899.80        28,013.28         168,913.08
      Withdrawaloramortization                              140,899.80        28,013.28         168,913.08
     3.Decreasedamountoftheperiod                            27,093.97            0.00          27,093.97
     (1)Disposal                                          27,093.97            0.00          27,093.97
     (2)Othertransfer                                          0.00            0.00              0.00
     4.Endingbalance                                    5,507,529.51       615,660.02        6,123,189.53
     III.Depreciationreserves
     1.Beginningbalance                                        0.00            0.00              0.00
     2.Increasedamountoftheperiod                                0.00            0.00              0.00
     Withdrawing                                             0.00            0.00              0.00
     3.Decreasedamountoftheperiod                               0.00            0.00              0.00
     (1)Disposal                                              0.00            0.00              0.00
     (2)Othertransfer                                          0.00            0.00              0.00
     4.Endingbalance                                          0.00            0.00              0.00
     IV.Carryingvalue
     1.Endingcarryingvalue                                3,026,137.69      2,028,931.98        5,055,069.67
     2.Beginningcarryingvalue                              3,286,832.07      2,056,945.26        5,343,777.33
    
    
    12. Fixed Assets
    
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    (1) List of Fixed Assets
    
              Item            Housesand     Machinery      Transportation     Officeequipment      Total
                              buildings      equipment       equipment         andother
     I.Originalcarryingvalue
     1.Beginningbalance         1,994,106,003.8   885,870,116.23     63,990,533.99      119,237,780.37  3,063,204,43
                                      0                                                   4.39
     2. Increased amount of the                                                          32,015,986.6
     period                     2,700,436.19    8,303,581.15      1,351,123.42      19,660,845.87
                                                                                            3
     (1)Purchase                      0.00    3,769,485.95      1,351,123.42       1,799,553.67  6,920,163.04
     (2) Transfer of project under                                                          24,948,935.0
     construction                 2,553,547.64    4,534,095.20            0.00      17,861,292.20
                                                                                            4
     (3)Takingbackofrental
                               146,888.55          0.00            0.00             0.00   146,888.55
     housing
     3. Decreased amount of the                                                          68,766,915.2
     period                    23,309,796.95    26,063,847.16      3,950,265.71      15,443,005.41
                                                                                            3
     (1)DisposalorScrap          17,395,203.59    26,063,847.16      3,950,265.71      15,443,005.41  62,852,321.8
                                                                                            7
     (2)Otherdecrease             5,914,593.36          0.00            0.00             0.00  5,914,593.36
     4.Endingbalance           1,973,496,643.0   868,109,850.22      61,391,391.70     123,455,620.83  3,026,453,50
                                      4                                                   5.79
     II.Accumulativedepreciation
     1.Beginningbalance         673,130,286.33   441,060,956.92      50,053,304.86      90,358,146.27  1,254,602,69
                                                                                          4.38
     2. Increased amount of the                                                          96,547,862.9
     period                    35,933,032.13    46,846,937.31      2,726,849.95      11,041,043.53
                                                                                            2
     (1)Withdrawal              35,905,938.16    46,846,937.31      2,726,849.95      11,041,043.53  96,520,768.9
                                                                                            5
     (2)Takingbackofrental
                                27,093.97          0.00            0.00             0.00    27,093.97
     housing
     3. Decreased amount of the                                                          46,647,411.9
     period                    13,625,432.00    16,424,122.62      3,782,097.06      12,815,760.29
                                                                                            7
     (1)DisposalorScrap          13,625,432.00    16,424,122.62      3,782,097.06      12,815,760.29  46,647,411.9
    
    
    ~ 111 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
              Item            Housesand     Machinery      Transportation     Officeequipment      Total
                              buildings      equipment       equipment         andother
                                                                                            7
     4.Endingbalance           695,437,886.46   471,483,771.61      48,998,057.75      88,583,429.51  1,304,503,14
                                                                                          5.33
     III.Depreciationreserves
     1.Beginningbalance           7,061,980.08    8,691,493.68         7,047.07        587,040.62  16,347,561.4
                                                                                            5
     2. Increased amount of the
     period                          0.00          0.00            0.00             0.00        0.00
     (1)Withdrawal                    0.00          0.00            0.00             0.00        0.00
     3. Decreased amount of the                                                          11,441,101.6
     period                     3,665,687.29    7,775,414.38            0.00             0.00
                                                                                            7
     (1)DisposalorScrap           3,665,687.29    7,775,414.38            0.00             0.00  11,441,101.6
                                                                                            7
     4.Endingbalance             3,396,292.79      916,079.30         7,047.07        587,040.62  4,906,459.78
     IV.Carryingvalue
                            1,274,662,463.7                                             1,717,043,90
     1.Endingcarryingvalue                    395,709,999.31      12,386,286.88      34,285,150.70
                                      9                                                   0.68
                            1,313,913,737.3                                             1,792,254,17
     2.Beginningcarryingvalue                  436,117,665.63     13,930,182.06      28,292,593.48
                                      9                                                   8.56
    
    
    (2) List of Temporarily Idle Fixed Assets
    
                           Originalcarrying     Accumulative       Impairment
             Item                                                           Carryingvalue    Notes
                               value          depreciation         provision
     Housesandbuildings           10,740,209.84       7,238,483.71       3,396,292.79        105,433.34
     Machineryequipment           8,203,103.85       7,235,401.18        916,079.30         51,623.37
     Transportationequipment           58,119.66         49,329.00          7,047.07          1,743.59
     Officeequipmentandothers        900,605.02        286,559.74        587,040.62         27,004.66
             Total              19,902,038.37      14,809,773.63       4,906,459.78        185,804.96
    
    
    (3) Details of Fixed Assets Failed to Accomplish Certification of Property
    
                 Item                       Carryingvalue                      Reason
    
    
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    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
                 Item                       Carryingvalue                      Reason
    Houses andbuilding                                   797,896,268.71 Inprocess
                 Total                                797,896,268.71              --
    
    
    13. Construction in Progress
    
    (1) List of Construction in Progress
    
                                            Endingbalance                   Beginningbalance
                 Item                Carrying   Depreciation   Carrying   Carrying    Depreciation   Carrying
                                    amount      reserves      value     amount      reserves      value
     OperationnetworkofGujing                0.00         0.00      0.00   5,272,286.         0.00  5,272,286
                                                                       37                  .37
     Renovationprojectofpotentialsafety      3,486,657.              3,486,657  20,643,371              20,643,37
     concerns                                        0.00                           0.00
                                         81                  .81        .11                 1.11
     PhaseIIofCRMproject              1,876,678.         0.00  1,876,678   1,876,678.         0.00  1,876,678
                                         16                  .16        16                  .16
     Renovationofrainsewagepipenetwork    8,529,729.              8,529,729   8,529,729.              8,529,729
     outsidethefactory                                  0.00                           0.00
                                         73                  .73        73                  .73
     PhaseIIofBPMproject                   0.00         0.00      0.00   1,025,641.         0.00  1,025,641
                                                                       03                  .03
     ExhibitioncenterofBengbuproducts     878,152.15         0.00  878,152.1  878,152.15         0.00  878,152.1
                                                              5                             5
     Hangzhouexperiencepavilion          895,690.29         0.00  895,690.2   99,622.64         0.00  99,622.64
                                                              9
     Tianjinexperiencepavilion                 0.00         0.00      0.00  113,207.55         0.00  113,207.5
                                                                                            5
     Technicalimprovementprojectof        8,374,584.              8,374,584                       113,207.5
     automationofbrewing                               0.00           113,207.55         0.00
                                         66                  .66                             5
     HalfopenwinelibraryinGujingplant     28,060,455         0.00  28,060,45   1,127,033.         0.00  1,127,033
                                        .11                  5.11        31                  .31
     Renovationprojectofdeepdisposalof     3,634,231.              3,634,231   3,634,231.              3,634,231
      sewagedisposalstation                              0.00                           0.00
                                         28                  .28        28                  .28
    
    
    ~ 113 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
                                            Endingbalance                   Beginningbalance
                 Item                Carrying   Depreciation   Carrying   Carrying    Depreciation   Carrying
                                    amount      reserves      value     amount      reserves      value
     YellowCraneTowerChateauand                                      2,726,775.              2,726,775
     museum                             0.00         0.00      0.00                  0.00
                                                                       89                  .89
     Equipmentinstallationproject               0.00         0.00      0.00   1,096,197.         0.00  1,096,197
                                                                       71                  .71
                                   14,531,206              14,531,20   7,360,664.              7,360,664
     Otherprojectswithsmallsingleamount                    0.00                           0.00
                                        .65                  6.65        08                  .08
     CrushingplantproductionlineofWuliang   1,162,393.         0.00  1,162,393       0.00         0.00      0.00
                                         16                  .16
     RenovationprojectofZhangjisewagefor   1,867,356.              1,867,356
      upgrading                                       0.00               0.00         0.00      0.00
                                         20                  .20
     35KVelectricpowerproject           668,437.01         0.00  668,437.0       0.00         0.00      0.00
                                                              1
     ProjectofAnhuiinShanghaioffice       1,521,295.         0.00  1,521,295       0.00         0.00      0.00
                                         56                  .56
     Renovationprojectofmonitoring                             589,185.4
     upgrading                       589,185.45         0.00               0.00         0.00      0.00
                                                              5
                 Total               76,076,053         0.00  76,076,05  54,496,798         0.00  54,496,79
                                        .22                  3.22        .56                 8.56
    
    
    (2) Changes of Significant Construction in Progress
    
                                                             Amountthat      Other
                        Estimated       Beginning      Increase     transferredto    decreased      Ending
        Nameofitem
                         number        balance       Amount     fixedassetsof  amountofthe    balance
                                                              theperiod      period
     Operation network of
     Gujing               8,350,000.00    5,272,286.37     942,121.54         0.00   6,214,407.91         0.00
     Renovationprojectof
     potentialsafety        180,107,600.00   20,643,371.11     350,137.01  17,506,850.31         0.00   3,486,657.81
     concerns
     PhaseIIofCRM         2,300,000.00    1,876,678.16         0.00         0.00         0.00   1,876,678.16
    
    
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    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
                    project
                    Renovationofrain
                    sewagepipenetwork     10,520,000.00    8,529,729.73         0.00         0.00         0.00   8,529,729.73
                    outsidethefactory
                    PhaseIIofBPM
                    project               2,600,000.00    1,025,641.03     683,760.68         0.00   1,709,401.71         0.00
                    Exhibitioncenterof
                    Bengbuproducts         2,100,000.00     878,152.15         0.00         0.00         0.00    878,152.15
                    HangzhouExperience
                    Center               7,000,000.00      99,622.64     796,067.65         0.00         0.00    895,690.29
                    TianjinExperience
                    Center               5,600,000.00     113,207.55    2,170,915.12         0.00   2,284,122.67         0.00
                    Technical
                    improvementproject
                    ofautomationof       274,300,000.00     113,207.55    8,261,377.11         0.00         0.00   8,374,584.66
                    brewing
                    Halfopenwine
                    libraryinGujing       109,916,500.00    1,127,033.31   26,933,421.80         0.00         0.00  28,060,455.11
                    plant
                    Renovationprojectof
                   deepdisposalof
                   sewagedisposal         8,500,000.00    3,634,231.28         0.00         0.00         0.00   3,634,231.28
                   station
                    YellowCraneTower
                    Chateauandmuseum     26,000,000.00    2,726,775.89         0.00         0.00   2,726,775.89         0.00
                    Equipment
                    installationproject        3,400,000.00    1,096,197.71     838,290.60   1,934,488.31         0.00         0.00
                    Otherprojectswith
       69,885,610.00    7,360,664.08   13,127,144.67   5,507,596.42    449,005.68  14,531,206.65
                    smallsingleamount
                    Crushingplant
                    productionlineof       13,411,600.00         0.00    1,162,393.16         0.00         0.00   1,162,393.16
                    Wuliang
                    Renovationprojectof
                   Zhangjisewagefor      8,000,000.00          0.00    1,867,356.20         0.00         0.00   1,867,356.20
                   upgrading
                    35KVelectricpower
                    project               1,252,920.43          0.00     668,437.01         0.00         0.00    668,437.01
                    ProjectofAnhuiin
                    Shanghaioffice          8,000,000.00          0.00    1,521,295.56         0.00         0.00   1,521,295.56
    
    
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    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
     Renovationprojectof
     monitoringupgrading     25,000,000.00         0.00     589,185.45         0.00         0.00    589,185.45
           Total         766,244,230.43   54,496,798.56   59,911,903.56  24,948,935.04  13,383,713.86  76,076,053.22
    
    
    (Continued)
    
                                                               Of which:
                                 Proportion                                 Capitalization
                                                   Accumulative   theamount
                                 estimatedof   Project                          rateofthe
                                                    amount of      ofthe                 Capital
             Project name           theproject   Progress                         interestsof
                                                    capitalized    capitalized               resources
                                accumulative    (%)                           theperiod
                                                     interests     interestsof
                                  input(%)                                     (%)
                                                               the period
     OperationnetworkofGujing             74.42   100.00                                    Self-owned
                                                                                          fund
     Renovationprojectofpotentialsafety                                                       Self-owned
     concerns                           72.19    95.00                                        fund
     PhaseIIofCRMproject                81.59    97.00                                    Self-owned
                                                                                          fund
     Renovationofrainsewagepipe                                                           Self-owned
     networkoutsidethefactory               81.08    95.00                                        fund
     PhaseIIofBPMproject                 65.75   100.00                                    Self-owned
                                                                                          fund
     ExhibitioncenterofBengbuproducts        41.82    90.00                                    Self-owned
                                                                                          fund
     HangzhouExperienceCenter             12.80    90.00                                    Self-owned
                                                                                          fund
     TianjinExperienceCenter               40.79   100.00                                    Self-owned
                                                                                          fund
     Technicalimprovementprojectof                                                          Self-owned
     automationofbrewing                  3.05     5.00                                        fund
     HalfopenwinelibraryinGujingplant       27.82    70.00                                    Self-owned
                                                                                          fund
     Renovationprojectofdeepdisposalof                                                       Self-owned
      sewagedisposalstation                 42.76    95.00                                        fund
     YellowCraneTowerChateauand                                                          Self-owned
     museum                           57.69   100.00                                        fund
     Equipmentinstallationproject             56.90    50.00                                    Self-owned
                                                                                          fund
     Otherprojectswithsmallsingle            29.32    50.00                                    Self-owned
    
    
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                                                               Of which:
                                 Proportion                                 Capitalization
                                                   Accumulative   theamount
                                 estimatedof   Project                          rateofthe
                                                    amount of      ofthe                 Capital
             Project name           theproject   Progress                         interestsof
                                                    capitalized    capitalized               resources
                                accumulative    (%)                           theperiod
                                                     interests     interestsof
                                  input(%)                                     (%)
                                                               the period
     amount                                                                                fund
     Crushingplantproductionlineof                                                          Self-owned
     Wuliang                            8.67    10.00                                        fund
     RenovationprojectofZhangjisewage                                                       Self-owned
      forupgrading                       23.34    30.00                                        fund
     35KVelectricpowerproject              53.35    60.00                                    Self-owned
                                                                                          fund
     ProjectofAnhuiinShanghaioffice         19.02    80.00                                    Self-owned
                                                                                          fund
     Renovationprojectofmonitoring                                                          Self-owned
     upgrading                           2.36    10.00                                        fund
                Total                                                                    --
    
    
    14. Intangible Assets
    
           Item          Landuseright      Patentright        Software        Trademark         Total
     I.  Original  carrying
     value
     1.Beginningbalance     628,279,302.56     45,889,466.19     16,616,834.45    169,116,600.00    859,902,203.20
     2.Increasedamountof
                         55,254,656.00            0.00      9,215,354.37            0.00     64,470,010.37
     theperiod
     (1)Purchase            55,254,656.00            0.00      1,250,519.12            0.00     56,505,175.12
     (2)InternalR&D               0.00            0.00            0.00            0.00            0.00
     (3)Transferof
     constructionin                 0.00            0.00      7,964,835.25            0.00      7,964,835.25
     progress
     3.Decreasedamount
                                0.00           0.00            0.00            0.00            0.00
     oftheperiod
     (1)Disposal                   0.00            0.00            0.00            0.00            0.00
    
    
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           Item          Landuseright      Patentright        Software        Trademark         Total
     4.Endingbalance        683,533,958.56     45,889,466.19     25,832,188.82    169,116,600.00    924,372,213.57
     II.     Accumulated
     amortization
     1.Beginningbalance      115,286,620.37     45,721,513.97      7,162,253.07       350,373.12    168,520,760.53
     2.Increasedamountof
                          6,916,352.72        24,038.88      1,548,668.39            0.00      8,489,059.99
     theperiod
     (1)Withdrawal           6,916,352.72        24,038.88      1,548,668.39            0.00      8,489,059.99
     3.Decreasedamount
                                0.00           0.00            0.00            0.00            0.00
     oftheperiod
     (1)Disposal                   0.00            0.00            0.00            0.00            0.00
     4.Endingbalance        122,202,973.09     45,745,552.85      8,710,921.46       350,373.12    177,009,820.52
     III.     Depreciation
     reserves
     1.Beginningbalance             0.00            0.00            0.00            0.00            0.00
     2.Increasedamountof
                                0.00           0.00            0.00            0.00            0.00
     theperiod
     (1)Withdrawal                 0.00            0.00            0.00            0.00            0.00
     3.Decreasedamount
                                0.00           0.00            0.00            0.00            0.00
     oftheperiod
     (1)Disposal                   0.00            0.00            0.00            0.00            0.00
     4.Endingbalance               0.00            0.00            0.00            0.00            0.00
     IV.Carryingvalue
     1.  Ending  carrying
                        561,330,985.47       143,913.34     17,121,267.36    168,766,226.88    747,362,393.05
     value
     2. Beginning carrying
                        512,992,682.19       167,952.22      9,454,581.38    168,766,226.88    691,381,442.67
     value
    
    
    15. Goodwill
    
                 Item              Beginningbalance        Increase          Decrease     Endingbalance
    
    
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                                                Generatedfrom
                                                  enterprise    Other   disposal Disposal
                                                   merger
    YellowCraneTowerDistilleryCo.,Ltd.      478,283,495.29         0.00    0.00    0.00    0.00  478,283,495.29
                 Total                478,283,495.29         0.00    0.00    0.00    0.00  478,283,495.29
    
    
    16. Long-term Unamortized Expenses
    
                                                                                       Other
                            Beginning      Increased    Amortization    Other       Ending
             Item                                                                     reasonsfor
                             balance        amount       amount     decrease     balance
                                                                                      decrease
     Yeasthouse&yeastframe
     project                    293,193.37         0.00    293,193.37       0.00         0.00
     Reform on highly qualified
     baseliquidproject                 0.00         0.00         0.00       0.00         0.00
     Winewarehousegoodsshelf      281,780.60         0.00    281,780.60       0.00         0.00
     Specialty  store  decoration
     engineering                      0.00         0.00         0.00       0.00         0.00
     Beijing experience  centre
     decoration                17,095,147.21         0.00   1,221,548.10       0.00  15,873,599.11
     The relocation compensation
     ofBeijingexperiencecenter     8,625,000.00         0.00    750,000.00       0.00   7,875,000.00
     Potteryjarwarehouse        10,652,526.78         0.00   2,203,971.00       0.00   8,448,555.78
     Decoration project of wine
     culturemuseum              179,544.67         0.00    179,544.67       0.00         0.00
     SewageTreatmentProject      3,650,000.00         0.00    300,000.00       0.00   3,350,000.00
     Afforestationfees             241,885.66         0.00    121,885.18       0.00    120,000.48
     Renovation  of  potential
     safetyconcerns               805,933.61         0.00    805,933.61       0.00         0.00
     Shenzhenexperiencecentre     3,552,763.50    134,384.47    676,097.56       0.00   3,011,050.41
     Others                   3,671,221.27     29,203.60    494,317.69       0.00   3,206,107.18
     Landscaperenovationof
                             1,963,083.52        0.00    512,108.76       0.00   1,450,974.76
     ZuimeiChateau
     ZhengzhouExperience
                             4,174,238.80        0.00    263,636.16       0.00   3,910,602.64
     Center
    
    
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                                                                                       Other
                            Beginning      Increased    Amortization    Other       Ending
             Item                                                                     reasonsfor
                             balance        amount       amount     decrease     balance
                                                                                      decrease
     ShanghaiExperienceCenter     2,412,303.20         0.00    629,296.50       0.00   1,783,006.70
     HefeiExperienceCenter       1,945,119.27         0.00    466,828.62       0.00   1,478,290.65
     Renovationprojectofplant
       offruitandvegetablewine    1,025,154.32         0.00    246,037.02       0.00    779,117.30
     Kitchenrenovationof
                              651,423.70         0.00     55,049.82       0.00    596,373.88
     BeijingExperienceCenter
     DecorationprojectofBeijing
     ProductDisplayand           450,450.45     18,078.94     46,852.98       0.00    421,676.41
     ReceptionCenter
     DecorationofDingyuanpub           0.00    407,980.05     45,331.12       0.00    362,648.93
     DecorationofTianjin
      EcperienceCenter                 0.00   2,284,122.67     76,137.42       0.00   2,207,985.25
     DecorationprojectofYellow
     CraneTowerChateau         7,567,753.85  12,933,525.46   1,174,692.46       0.00  19,326,586.85
             Total           69,238,523.78  15,807,295.19  10,844,242.64       0.00  74,201,576.33
    
    
    17. Deferred Income Tax Assets/Deferred Income Tax Liabilities
    
    (1) List of Deferred Income Tax Assets
    
                                      Ending balance                     Beginningbalance
              Item          Deductibletemporary                   Deductibletemporary   Deferredincometax
                                         Deferred incometaxassets
                              Differences                          Differences           assets
    Bad debtprovision               43,341,035.03         10,835,258.76     43,446,673.17        10,853,076.08
    Impairment ofinventories           32,676,185.64          8,169,046.41     31,398,636.15         7,804,115.47
     Impairment  provision  of  the
    fixed assets                     4,906,459.78          1,226,614.95     16,319,563.99         4,079,686.68
    Deferred income                 41,140,119.46         10,285,029.86     43,706,503.22        10,614,699.02
    Accrued expenses               751,867,337.27        187,966,834.32     170,866,990.79        42,716,747.69
    Deductible losses                 9,959,599.85          2,489,899.96     36,422,859.63         9,100,740.51
    Unrealized internalsalesprofits       11,070,788.80          2,767,697.20      8,947,215.47         2,236,803.87
    Deducted payrollpayable                 0.00               0.00     19,804,188.04         4,751,608.42
    
    
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    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
     carryingforwardtothenext
     period
              Total              894,961,525.83        223,740,381.46     370,912,630.46        92,157,477.74
    
    
    (2) Lists of Deferred Income Tax Liabilities
    
                                            Endingbalance                  Beginningbalance
                  Item               Taxabletemporary Deferredincometax  Taxabletemporary Deferredincometax
                                      differences        liabilities        differences       liabilities
    Change of fair value of trading financial
    assets                                 281,087.04        70,271.76        44,379.27        11,094.82
    Change in fair value of available-for-sale
    financial assets                         11,224,735.80      2,806,183.95     71,361,103.28     17,840,275.82
    Additional deduction of difference of fixed
    assets                               12,915,766.17      3,228,941.54      7,851,477.60      1,962,869.40
    Asset  evaluation  increment  of  business
    combination notunderthesamecontrol        395,728,044.05     98,932,011.01    399,859,463.44     99,964,865.86
                  Total                 420,149,633.06    105,037,408.26    479,116,423.59    119,779,105.90
    
    
    (3) List of Unrecognized Deferred Income Tax Assets
    
                 Item                       Endingbalance                  Beginningbalance
    Deductible temporarydifference                              26,699.90                       54,697.36
    Deductible losses                                      4,729,929.29                     4,331,653.92
                 Total                                 4,756,629.19                     4,386,351.28
    
    
    18. Other Non-current Assets
    
                 Item                        Endingbalance                   Beginningbalance
     Certificateofdeposit                                  300,000,000.00                    300,000,000.00
     Prepaymentofequipmentandhouse                        12,474,025.99                    17,910,214.56
     purchase
                 Total                                312,474,025.99                    317,910,214.56
    
    
    19. Notes Payable
    
                Category                     Endingbalance                  Beginningbalance
    Bank acceptancebill                                  141,790,230.00                   200,750,000.00
    Trade acceptance                                     46,282,864.09                           0.00
    
    
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                Category                     Endingbalance                  Beginningbalance
                 Total                                188,073,094.09                   200,750,000.00
    
    
    20. Accounts Payable
    
    (1) List of Accounts Payable
    
                 Item                       Endingbalance                  Beginningbalance
    Payment formaterials                                  180,724,444.02                   260,407,500.55
    Prepayment forprojectsandequipment                       57,035,111.24                    89,176,879.87
    Others                                             54,842,512.43                    86,030,659.41
                 Total                                292,602,067.69                   435,615,039.83
    
    
    (2) Significant Accounts Payable Aging over One Year
    
                 Item                       Endingbalance              Unpaid/Un-carry-overreason
    ACompany                                          2,252,093.02 Finalpaymentoftheproject
    B Company                                          1,090,000.00 Finalpaymentoftheproject
    C Company                                           769,163.75 Finalpaymentoftheproject
    D Company                                           577,691.84 Finalpaymentoftheproject
    E Company                                           393,392.70 Finalpaymentoftheproject
                 Total                                 5,082,341.31              --
    
    
    21. Advance from Customers
    
                 Item                        Endingbalance                   Beginningbalance
     Loans                                            803,222,097.92                    503,083,108.13
                 Total                                803,222,097.92                    503,083,108.13
    
    
    22. Payroll Payable
    
    (1) List of Payroll Payable
    
               Item            Beginningbalance       Increase          Decrease        Endingbalance
    I. Short-termsalary                 371,459,202.44      612,262,256.05      734,646,283.48      249,075,175.01
    II. Post-employment benefit-defined         914,811.93      60,856,284.57      60,886,100.79        884,995.71
    contribution plans
    III. Terminationbenefits                     0.00             0.00             0.00             0.00
    IV. Other benefits due within one             0.00             0.00             0.00             0.00
    
    
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    year
               Total                372,374,014.37      673,118,540.62      795,532,384.27      249,960,170.72
    
    
    (2) List of Short-term Salary
    
               Item             Beginningbalance       Increase          Decrease        Endingbalance
    1. Salary,bonus,allowance,subsidy      298,131,004.17      540,715,242.30      670,816,860.60      168,029,385.87
    2. Employeewelfare                  3,692,980.00       5,249,944.98       8,942,924.98             0.00
    3. Socialinsurance                    236,208.08      23,336,040.33      23,332,954.33         239,294.08
    Of which: 1. Medical insurance         196,904.35      20,334,551.37      20,331,465.37         199,990.35
    premiums
    Work-related injuryinsurance              20,069.87       1,243,369.69       1,243,369.69         20,069.87
    Maternity insurance                    19,233.86       1,758,119.27       1,758,119.27         19,233.86
    4. Housingfund                     9,051,999.88      24,981,359.37      24,018,883.07      10,014,476.18
    5. Laborunionbudgetandemployee      60,347,010.31      17,979,669.07       7,534,660.50      70,792,018.88
    education budget
    6. short-termpaidabsence                    0.00             0.00             0.00             0.00
    7. Short-termprofitssharingplan               0.00             0.00             0.00             0.00
               Total                371,459,202.44      612,262,256.05      734,646,283.48      249,075,175.01
    
    
    (3) List of Drawing Scheme
    
               Item             Beginningbalance       Increase          Decrease        Endingbalance
     1.Basicpensionbenefits                867,739.31       58,763,572.31       58,793,391.53         837,920.09
     2.Unemploymentinsurance              47,072.62        2,092,712.26        2,092,709.26          47,075.62
               Total                   914,811.93       60,856,284.57       60,886,100.79         884,995.71
    
    
    23. Taxes Payable
    
                 Item                       Endingbalance                  Beginningbalance
    VAT                                              18,061,149.68                    78,832,243.10
    Consumption tax                                      19,628,722.12                   210,532,348.09
    Corporate incometax                                  333,472,335.50                    92,299,563.98
    Personal incometax                                    6,210,976.43                     3,949,866.64
    
    
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                 Item                       Endingbalance                  Beginningbalance
    Urban maintenanceandconstructiontax                      12,851,793.29                    11,904,195.78
    Stamp tax                                            661,823.10                      486,594.48
    Education Surcharge                                   11,943,990.42                    11,127,386.19
    Others                                             11,107,919.90                    11,852,647.19
                 Total                                413,938,710.44                   420,984,845.45
    
    
    24. Other Accounts Payable
    
                Nature                       Endingbalance                  Beginningbalance
    Margin &cashpledge                                  934,758,741.09                   874,462,125.60
    Quality guaranteedeposit                                42,694,470.42                    12,061,326.71
    Housing deduction                                    10,014,476.18                     9,051,999.88
    Unsettled salesdiscount                                 36,395,275.05                    54,471,463.99
    Others                                             80,123,743.71                    82,496,637.16
                 Total                               1,103,986,706.45                  1,032,543,553.34
    
    
    25. Other Current Liabilities
    
                 Item                       Endingbalance                  Beginningbalance
    Accrued expenses                                    804,829,022.62                   182,846,942.10
                 Total                                804,829,022.62                   182,846,942.10
    
    
    26. Deferred Revenue
    
          Item       Beginningbalance      Increase         Decrease       Endingbalance    Formedreason
    Government subsidies      43,706,503.22            0.00      2,566,383.76      41,140,119.46Relatedtoassets
          Total           43,706,503.22            0.00      2,566,383.76      41,140,119.46      --
    
    
    Of which, items involved in government subsidies:
    
                                                     Decrease                             Related
                    Beginning            Recordedinto    Recorded                     Ending      to
         Item                  Increase                          Offset    Other
                     balance            non-operating    intoother                     balance     assets/
                                                              costs   decrease              income
                                        revenue       income
     Technical reform                                                                       Related
                     317,708.39     0.00          0.00    31,249.98    0.00    0.00      286,458.41   tothe
     of       wine
    
    
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                                                     Decrease                             Related
                    Beginning            Recordedinto    Recorded                     Ending      to
         Item                  Increase                          Offset    Other
                     balance            non-operating    intoother                     balance     assets/
                                                              costs   decrease              income
                                        revenue       income
     production                                                                            assets
     system
                                                                                        Related
     Instruments
                    1,212,750.00    0.00          0.00   110,250.00    0.00    0.00     1,102,500.00   tothe
     subsidies                                                                             assets
     Intelligent  solid
     brewing                                                                             Related
     technology         182,291.61     0.00          0.00    15,625.02    0.00    0.00      166,666.59   tothe
     innovation                                                                            assets
     project
     Anhui   service
                                                                                        Related
     industry
                    1,380,487.88    0.00          0.00   146,341.44    0.00    0.00     1,234,146.44   tothe
     development                                                                           assets
     guidefund
     Anhui innovative
     province
     construction                                                                           Related
     independent       3,409,210.00     0.00          0.00   365,272.50    0.00    0.00     3,043,937.50   tothe
     innovation ability                                                                       assets
     construction
     subsidy
     Energy-saving
     and     reform
                                                                                        Related
     project      of
                     165,750.00     0.00          0.00    76,500.00    0.00    0.00       89,250.00   tothe
     coal-fired                                                                             assets
     industry   boiler
     andglassfurnace
                                                                                        Related
     Bozhou    city
                     120,000.00     0.00          0.00    30,000.00    0.00    0.00       90,000.00   tothe
     logistics   center                                                                       assets
    
    
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    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
                                                     Decrease                             Related
                    Beginning            Recordedinto    Recorded                     Ending      to
         Item                  Increase                          Offset    Other
                     balance            non-operating    intoother                     balance     assets/
                                                              costs   decrease              income
                                        revenue       income
     project
                                                                                        Related
     Equipment
                     865,168.63     0.00          0.00    71,769.86    0.00    0.00      793,398.77   tothe
     subsidy                                                                              assets
     Financial subsidy                                                                       Related
     for energy-saving    465,956.93     0.00          0.00   265,811.76    0.00    0.00      200,145.17   tothe
     project                                                                               assets
     Financial subsidy                                                                       Related
     for   technology    950,152.42     0.00          0.00   267,110.76    0.00    0.00      683,041.66   tothe
     innovation                                                                            assets
     Specialfundto
     enterprise                                                                            Related
     development        82,500.00     0.00          0.00    15,000.00    0.00    0.00       67,500.00   tothe
     directedby                                                                            assets
     municipalfinance
                                                                                        Related
     Iottraceability
                    4,083,750.00    0.00          0.00   556,875.00    0.00    0.00     3,526,875.00   tothe
     systemproject                                                                          assets
                                                                                        Related
     Landrefund      23,663,240.29     0.00          0.00   275,103.09    0.00    0.00    23,388,137.20   tothe
                                                                                        assets
     Motor and boiler                                                                       Related
     energy-saving       550,000.16     0.00          0.00    68,749.98    0.00    0.00      481,250.18   tothe
     reformproject                                                                          assets
     Automated
                                                                                        Related
     storage hook and
                     453,125.00     0.00          0.00    46,875.00    0.00    0.00      406,250.00   tothe
     product  quality                                                                       assets
     onlinemonitoring
     Researchfundon                                                                       Related
                     563,400.00     0.00          0.00        0.00    0.00    0.00      563,400.00   tothe
     smart
    
    
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    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
                                                     Decrease                             Related
                    Beginning            Recordedinto    Recorded                     Ending      to
         Item                  Increase                          Offset    Other
                     balance            non-operating    intoother                     balance     assets/
                                                              costs   decrease              income
                                        revenue       income
     Koji-making                                                                           assets
     technology
     Renovationof                                                                         Related
     GujingZhangji      930,208.35     0.00          0.00    23,749.98    0.00    0.00      906,458.37   tothe
     SpiritRoom                                                                           assets
     Keytechnical
     cooperationon                                                                         Related
     isotopic           480,000.00     0.00          0.00        0.00    0.00    0.00      480,000.00   tothe
     authenticityof                                                                          assets
     importantfood
     Food   security                                                                       Related
     enhancement       965,517.25     0.00          0.00    68,965.50    0.00    0.00      896,551.75   tothe
     project                                                                               assets
     Comprehensive                                                                        Related
     subsidiesforair
     pollution         2,865,286.31     0.00          0.00   131,133.89    0.00    0.00     2,734,152.42   tothe
     prevention                                                                            assets
         Total      43,706,503.22     0.00          0.00  2,566,383.76    0.00    0.00    41,140,119.46
    
    
    27. Share Capital
    
                                          Increase/decreaseinReportingPeriod(+,-)
          Item        Beginningbalance   Newly    Bonus   Bonusissue                    Endingbalance
                                                              Others    Subtotal
                                   issueshare   shares   fromprofit
    The sumofshares       503,600,000.00      0.00      0.00       0.00      0.00      0.00    503,600,000.00
    
    
    28. Capital Reserves
    
           Item         Beginningbalance         Increase            Decrease          Endingbalance
    Capital premium           1,262,552,456.05               0.00               0.00       1,262,552,456.05
    Other capitalreserves          32,853,136.20               0.00               0.00         32,853,136.20
          Total             1,295,405,592.25               0.00               0.00       1,295,405,592.25
    
    
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    29. Other Comprehensive Income
    
                                                  ReportingPeriod
                                       Less: recorded
                                          inother
                                       comprehensive             Attributableto
                   Beginning               incomein                         AttributabletoIncomebefore                        ownersofthe               Ending
         Item                            priorperiod   Less:Income             non-controlling
                    balance    taxationinthe andtransferred  taxexpense   Companyas   interestsafter   balance
                            Current Period   inprofitor             theparentafter     tax
                                         lossinthe                  tax
                                          Current
                                          Period
    I.        Other
    comprehensive
    income cannot be
    reclassified   into        0.00        0.00        0.00        0.00        0.00        0.00       0.00
    profits and losses
    in future
    II.        Other
    comprehensive
    reclassified   into 53,520,827.44 -41,442,155.53  14,020,658.94 -10,360,538.89 -45,102,275.58        0.00 8,418,551.86
    profits orlosses
    Of which: profits
    or   losses   of
    change   in  fair
    value        of 53,520,827.44 -41,442,155.53  14,020,658.94 -10,360,538.89 -45,102,275.58        0.00 8,418,551.86
    available-for-sale
    financial assets
    Total          53,520,827.44 -41,442,155.53  14,020,658.94 -10,360,538.89 -45,102,275.58        0.00 8,418,551.86
    
    
    30. Surplus Reserves
    
           Item          Beginningbalance         Increase            Decrease          Endingbalance
    Statutory surplusreserves        256,902,260.27              0.00               0.00       256,902,260.27
           Total              256,902,260.27              0.00               0.00       256,902,260.27
    
    
    Notes: Based on the regulations of the Corporation Law and Article of Association, the Company should
    
    withdraw 10% of the statutory surplus reserves according to the net profits. If the accumulated amount of the
    
    statutory surplus reserves exceeded the 50% of the registered capital, the Company could no more withdraw.
    
    31. Retained Profits
    
    ~ 128 ~
    
    Gujinggong Liquor Aged Original Liquor Interim Report 2018
    
                               Item                            ReportingPeriod    Sameperiodoflast
                                                                                   year
    Beginning balanceofretainedprofitsbeforeadjustments                      4,349,649,698.42     3,503,069,053.49
    Total beginningbalanceofretainedprofitsbeforeadjustments(Increase+,decrease-)            0.00             0.00
    Beginning balanceofretainedprofitsafteradjustments                       4,349,649,698.42     3,503,069,053.49
    Add: NetprofitattributabletoownersoftheCompany                         892,422,337.64     1,148,740,644.93
    Less: Withdrawalofstatutorysurplusreserves                                     0.00             0.00
    Withdrawal ofdiscretionalsurplusreserves                                       0.00             0.00
    Withdrawal ofgenericriskreserve                                             0.00             0.00
    Dividend ofcommonstockpayable                                     503,600,000.00      302,160,000.00
    Dividend ofcommonstocktransferintosharecapital                                 0.00             0.00
    Ending retainedprofits                                            4,738,472,036.06     4,349,649,698.42
    
    
    32. Operating Revenues and Costs
    
                              ReportingPeriod                        Sameperiodoflastyear
         Item
                      Salesrevenue          Costofsales          Salesrevenue          Costofsales
    Main operations        4,761,127,411.98       1,030,168,914.20       3,640,782,146.34         891,178,513.56
    Other operations          21,956,483.35         12,506,554.04         29,345,618.25         22,000,685.35
         Total           4,783,083,895.33       1,042,675,468.24       3,670,127,764.59         913,179,198.91
    
    
    33. Business Taxes and Surcharges
    
                        Item                         ReportingPeriod         Sameperiodoflastyear
    Consumption tax                                          563,325,650.24             477,359,578.63
    Urban maintenance,constructiontaxandeducationalsurcharge            142,213,013.80             107,125,009.74
    Urban landusetax                                           6,015,282.37              6,268,387.32
    Real estatetax                                              8,375,687.33              8,038,252.32
    Stamp duty                                                3,804,040.42              3,894,182.32
    Others                                                   5,733,499.37              3,445,944.18
                       Total                               729,467,173.53             606,131,354.51
    
    
    Notes: the measurement standards of business tax and surcharges see Notes V. Taxation
    
    34. Sales Expenses
    
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                 Item                      ReportingPeriod                Sameperiodoflastyear
    Employee’s remuneration                              136,422,226.05                   123,985,954.16
    Business travelcharges                                 46,668,654.04                    47,121,726.34
    Advertising expense                                  340,669,501.89                   185,979,223.96
    Transport fees                                       26,869,004.77                    23,693,930.48
    Promotion fees                                     661,443,573.05                   556,575,629.94
    Sample wine                                       153,728,608.24                   113,260,666.41
    Labor cost                                        194,269,250.64                   157,857,846.03
    Other salesexpenses                                  37,229,496.49                    41,213,783.81
                 Total                              1,597,300,315.17                  1,249,688,761.13
    
    
    35. Administration Expenses
    
                 Item                     ReportingPeriod                Sameperiodoflastyear
    Employee’s remuneration                              156,429,758.02                    138,467,339.94
    Office expenses                                     15,386,308.57                     6,842,426.24
    Repair charge                                      30,444,032.33                     29,106,759.72
    Depreciation charge                                  29,064,059.09                     28,961,402.74
    Amortization ofintangibleassets                           8,489,059.99                     7,794,696.58
    Sewage charge                                      6,066,176.72                     11,408,909.28
    Business travelcharges                                 1,093,709.89                       847,155.37
    Water&electricityfees                                 5,668,025.21                     5,009,938.09
    Others                                           27,859,207.90                     34,983,067.47
                Total                               280,500,337.72                    263,421,695.43
    
    
    36. Financial Expenses
    
                 Item                      ReportingPeriod                Sameperiodoflastyear
    Interest expenses                                           0.00                           0.00
    Less: Interestincome                                  21,644,883.48                    17,954,811.63
    Exchange gainsandlosses                                 608,331.71                      409,322.34
    Others                                              751,645.22                      280,846.64
    
    
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                 Item                      ReportingPeriod                Sameperiodoflastyear
                 Total                               -20,284,906.55                   -17,264,642.65
    
    
    37. Asset Impairment Loss
    
                 Item                      ReportingPeriod                Sameperiodoflastyear
    Bad debtloss                                          -105,638.14                     -260,798.74
    Inventory fallingpriceloss                                1,277,549.50                    -2,023,855.12
                 Total                                 1,171,911.36                    -2,284,653.86
    
    
    38. Gain on Changes in Fair Value
    
                          Sources                          ReportingPeriod      Sameperiodoflastyear
    Financial assetsatfairvaluethroughprofitorloss                            236,707.77            -119,656.35
    Of which:gainsonchangesinfairvalueofderivativefinancialassets                    0.00                 0.00
                           Total                                   236,707.77            -119,656.35
    
    
    39. Investment Income
    
                               Item                             ReportingPeriod    SamePeriodoflast
                                                                                   year
    Investment incomefromdisposaloffinancialassetsatfairvaluethroughprofitorloss       1,271,471.00       2,329,585.99
    Investment incomefromholdingofavailable-for-dalefinancialassets                 50,743,630.89      22,622,635.21
    Investment incomefromdisposalofavailable-for-salefinancialassets                 10,999,123.54      49,254,878.84
    Other                                                            5,760,794.52       6,810,384.43
                               Total                                68,775,019.95      81,017,484.47
    
    
    40. Asset Disposal Income
    
                                          SamePeriodof
              Item           ReportingPeriod    lastyear    Amountrecordedinthecurrentnon-recurringprofitorloss
     Fixedassetsdisposalincome        154,437.81     487,886.67                                 154,437.81
              Total               154,437.81     487,886.67                                 154,437.81
    
    
    41. Other Income
    
                                        Reporting      Same     Amountrecordedinthecurrentnon-recurring
                   Item                   Period      Periodof
                                                   last year               profitorloss
     Governmentsubsidyrelatedtoroutinebusiness              23,716,926.
                                       4,487,036.05                                    4,487,036.05
     activities                                             49
    
    
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                                        Reporting      Same     Amountrecordedinthecurrentnon-recurring
                   Item                   Period      Periodof
                                                   last year               profitorloss
                                                  23,716,926.
                   Total                 4,487,036.05                                    4,487,036.05
                                                        49
    
    
    42. Non-operating Income
    
                                                                            Amountrecordedinthe
                                                             Same Periodoflast
                      Item                     ReportingPeriod         year        currentnon-recurring
                                                                                profitorloss
    Gains fromdamageorscrapofnon-currentassets               728,876.14              0.00         728,876.14
    Government subsidyunrelatedtoroutinebusiness
                                                    221,000.00         600,000.00         221,000.00
    activities
    Income frompenaltyandcompensations                    7,587,991.61        7,861,891.12        7,587,991.61
    Sales ofscrap                                     5,808,369.37        3,475,474.77        5,808,369.37
    Other                                            412,560.64        3,024,423.78         412,560.64
                      Total                        14,758,797.76       14,961,789.67       14,758,797.76
    
    
    43. Non-operating Expense
    
                                                                           Amountrecordedinthe
                   Item                  ReportingPeriod     SamePeriodoflastyear  currentnon-recurringprofit
                                                                                 orloss
    Losses ondamageorscrapofnon-currentassets          4,303,286.91          1,193,100.98          4,303,286.91
    Other                                       134,726.13           995,921.03           134,726.13
                  Total                        4,438,013.04          2,189,022.01          4,438,013.04
    
    
    44. Income Tax Expense
    
    (1) List of Income Tax Expense
    
                 Item                      ReportingPeriod                SamePeriodoflastyear
    Current incometaxexpense                              452,080,424.72                   320,222,019.81
    Deferred incometaxexpense                            -131,290,509.48                  -117,205,486.69
    Total                                             320,789,915.24                   203,016,533.12
    
    
    45. Other Comprehensive Income
    
    Refer to Note VI-29 for details.
    
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    46. Cash Flow Statement
    
    (1) Cash Generated from Other Operating Activities
    
                  Item                       ReportingPeriod              SamePeriodoflastyear
    Margin                                              52,007,634.47                 126,884,726.25
    Government subsidies                                      615,100.00                   7,686,580.00
    Interest income                                        21,644,883.48                  17,954,811.63
    Recovery ofrestrictedmonetarycapital                        460,000,000.00                         0.00
    Other                                               43,953,555.36                  11,155,743.51
                  Total                                578,221,173.31                  163,681,861.39
    
    
    (2) Cash Used in Other Operating Activities
    
                               Item                              ReportingPeriod   SamePeriodoflast
                                                                                   year
    Cash paidinsellingexpenseandadministrativeexpense                         526,682,839.55     414,549,277.31
    Pledged fixedtermdepositsusedtoissuenotespayableorcashdepositofnotes           45,000,000.00            0.00
    Other                                                            49,502,450.93      14,733,112.11
                               Total                                621,185,290.48     429,282,389.42
    
    
    (3) Cash Generated from Other Investing Activities
    
                  Item                       ReportingPeriod              SamePeriodoflastyear
    Received governmentsubsidiesrelatedtoassets                         0.00                   1,646,000.00
                  Total                                       0.00                   1,646,000.00
    
    
    47. Supplemental Information for Cash Flow Statement
    
    (1) Supplemental Information for Cash Flow Statement
    
                       Supplementalinformation                      ReportingPeriod     Sameperiodoflast
                                                                                   year
     1. Reconciliation of net profit to net cash flows generated from operating
     activities
     Netprofit                                                     915,437,666.92      572,114,926.94
     Add:Provisionforimpairmentofassets                                   1,171,911.36       -2,284,653.86
     Depreciationoffixedassets,oil-gasassets,andproductivelivingassets             96,520,768.95      95,173,432.11
    
    
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                       Supplementalinformation                      ReportingPeriod     Sameperiodoflast
                                                                                   year
     Amortizationofinvestmentproperty                                      168,913.08        242,646.14
     Amortizationofintangibleassets                                       8,489,059.99       7,794,696.58
     Amortizationoflong-termprepaidexpenses                               10,844,242.64      22,860,604.61
     Losses on disposal of fixed assets, intangible assets and other long-lived assets
     (gains:negative)                                                   154,437.81        705,214.31
     Lossesonscrapoffixedassets(gains:negative)                             3,574,410.77             0.00
     Lossesfromvariationoffairvalue(gains:negative)                           -236,707.77         119,656.35
     Financecosts(gains:negative)                                          608,331.71        409,322.34
     Investmentloss(gains:negative)                                      -68,775,019.95      -81,017,484.47
     Decreaseindeferredincometaxassets(gains:negative)                      -131,582,903.72     -117,120,093.84
     Increaseindeferredincometaxliabilities
     (“-”meansdecrease)                                                292,394.23       -7,892,851.83
     Decreaseininventory(gains:negative)                                  -77,733,707.57      -59,838,961.48
     Decrease in accounts receivable generated from operating activities (gains:
     negative)                                                   -1,205,967,657.32     -656,394,178.36
     Increaseinaccountspayableusedinoperatingactivities(decrease:negative)         708,414,366.71      652,862,975.93
     Amortizationofdeferredincome                                       2,566,383.76       -2,370,027.39
     Certificateofdeposit                                             405,000,000.00             0.00
     Netcashgeneratedfrom/usedinoperatingactivities                         668,946,891.61      425,365,224.08
     2.Significantinvestingandfinancingactivitieswithoutinvolvementofcash
     receiptsandpayments
     Conversionofdebtintocapital                                              0.00              0.00
     Convertiblecorporatebondsduewithinoneyear                                   0.00              0.00
     Fixedassetsunderfinancinglease                                            0.00              0.00
     3.Netincrease/decreaseofcashandcashequivalents:
     Endingbalanceofcash                                            922,785,957.41      683,630,424.44
     Less:beginningbalanceofcash                                     1,024,088,626.40      527,849,026.07
     Add:endingbalanceofcashequivalents                                        0.00              0.00
    
    
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                       Supplementalinformation                      ReportingPeriod     Sameperiodoflast
                                                                                   year
     Less:beginningbalanceofcashequivalents                                      0.00              0.00
     Netincreaseincashandcashequivalents                               -101,302,668.99      155,781,398.37
    
    
    (2) Cash and Cash Equivalent
    
                        Item                           Endingbalance           Beginningbalance
    I. Cash                                                  922,785,957.41           1,024,088,626.40
    Of which:cashonhand                                          364,726.59               369,197.41
    Bank depositsondemand                                      921,933,834.69            990,617,397.53
    Other monetaryfundsondemand                                    487,396.13             33,102,031.46
    II. Cashandcashequivalents                                           0.00                   0.00
    Of which:Bondinvestmentduewithinthreemonths                            0.00                   0.00
    III. Endingbalanceofcashandcashequivalents                       922,785,957.41           1,024,088,626.40
    
    
    (3) Non-cash Negotiability Amount of Trade Bills
    
                         Item                                    ReportingPeriod
    
    
    Negotiability amount of trade bills 409,809,334.11
    
    Of which: payment for goods 409,809,334.11
    
    48. Assets with Restricted Ownership or Use Right
    
                 Item                     Endingcarryingvalue                Restrictionreason
    Other monetarycapital                                  45,000,000.00Bankdepositspledgedforissuingnotes
    Notes receivable                                      99,930,600.00Pledgedbynotes
                 Total                                144,930,600.00              --
    
    
    VII. Changes of Consolidation Scope
    
    There was no subsidiary newly set up during the Reporting Period.
    
    VIII. Equity in Other Entities
    
    1. Equity in Subsidiary
    
    (1) Subsidiaries
    
                                   Main     Registration    Natureof   Holdingpercentage
                Name              operating      place       business         (%)       Wayofgaining
                                   place                           Directly Indirectly
    
    
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                                   Main     Registration    Natureof   Holdingpercentage
                Name              operating      place       business         (%)       Wayofgaining
                                   place                           Directly Indirectly
    Bozhou GujingSalesCo.,Ltd.          Bozhou,   Bozhou,An