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个股公告正文

古井贡B:2018年年度报告(英文版)

日期:2019-04-27附件下载

    Annual Report 2018
    
    Anhui Gujing Distillery Company Limited
    
    April 2019
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    Part I Important Notes
    
    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 legal representative, Ye Changqing, the Chief Accountant, and Zhu
    
    Jiafeng, the head of the 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 shall NOT be considered as absolute promises of the Company to investors.
    
    Investors, among others, shall be sufficiently aware of the risk and shall differentiate
    
    between plans/forecasts and promises. Again, investors are kindly reminded to pay
    
    attention to possible investment risks.
    
    The Board has approved a final dividend plan as follows: based on the Company’s
    
    total shares on 31 December 2018, a cash dividend of RMB15.00 (tax inclusive) per 10
    
    shares is to be distributed to the shareholders, with no bonus issue from either profit
    
    or capital reserves.
    
    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.
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    Part I Important Notes, Table of Contents and Definitions 2
    
    Part II Corporate Information and Key Financial Information 5
    
    Part III Business Summary 9
    
    Part IV Management Discussion and Analysis 10
    
    Part V Significant Events 28
    
    Part VI Share Changes and Shareholder Information 41
    
    Part VII Preferred Shares 47
    
    Part VIII Directors, Supervisors, Senior Management and Staff 48
    
    Part IX Corporate Governance 56
    
    Part X Corporate Bonds 62
    
    Part XI Financial Statements 63
    
    Part XII Documents Available for Reference 127
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    Definitions
    
                    Term                                      Definition
    The “Company”,“GuJing”or“we”           Anhui Gujing Distillery Company Limited inclusive of its consolidated
                                       subsidiaries,exceptwherethecontextotherwiserequires
    The Companyastheparent                 Anhui Gujing Distillery Company Limited exclusive of subsidiaries, except
                                       wherethecontextotherwiserequires
    Gujing Group                          AnhuiGujingGroupCo.,Ltd.
    YellowCraneTower                     YellowCraneTowerDistilleryCo.,Ltd.
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    Part II Corporate Information and Key Financial InformationI Corporate Information
    
     Stockname                   GujingDistillery,GujingDistillery-B
     Stockcode                   000596,200596
     Stockexchangeforstocklisting     ShenzhenStockExchange
     Company namein Chinese          安徽古井贡酒股份有限公司
     Abbr.                            古井
     CompanynameinEnglish(ifany)    ANHUIGUJINGDISTILLERYCOMPANYLIMITED
     Abbr.(ifany)                 GUJING
     Legalrepresentative             LiangJinhui
     Registeredaddress              GujingTown,BozhouCity,AnhuiProvince,P.R.China
     Zipcode                    236820
     Officeaddress                 GujingTown,BozhouCity,AnhuiProvince,P.R.China
     Zipcode                    236820
     Companywebsite              http://www.gujing.com
     Emailaddress                 gjzqb@gujing.com.cn
    
    
    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
     Emailaddress                     gjzqb@gujing.com.cn               gjzqb@gujing.com.cn
    
    
    III Media for Information Disclosure and Place where this Report Is Lodged
    
     Newspapers  designated  by  the  Company  for  ChinaSecuritiesJournal,ShanghaiSecuritiesNews,TaKungPao(HK)
     informationdisclosure
     Websitedesignated by CSRC for publication of this  http://www.cninfo.com.cn
     Report
     PlacewherethisReportislodged               TheBoardSecretary’sOffice
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    IV Change to Company Registered Information
    
     Unifiedsocialcreditcode                 913400001519400083
     Change to principal activity of the Company  Nochange
     sincegoingpublic(ifany)
     Every change of controlling shareholder since  Nochange
     incorporation(ifany)
    
    
    V Other Information
    
    The independent audit firm hired by the Company:
    
    Name                     RuihuaCertifiedPublicAccountantsLLP
    Officeaddress               9 F,WestTower,China Overseas Property Plaza, Building No. 7, Courtyard No. 8, Xi Binhe
                             Road,YongDingMen,DongChengDistrict,Beijing,China
    Accountantswritingsignatures    OuChangxianandGaoQiang
    
    
    The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
    
    □ Applicable √ Not applicable
    
    The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
    
    □ Applicable √ Not applicable
    
    VI Key Financial Information
    
    Indicate by tick mark whether there is any retrospectively restated datum in the table below.
    
    □ Yes √ No
    
                                  2018             2017         2018-over-2017         2016
                                                                change(%)
    Operating revenue(RMB)          8,686,140,336.89    6,968,325,048.55           24.65%    6,017,143,660.56
    Net profit attributable to the listed    1,695,231,643.05    1,148,740,644.93           47.57%      829,630,063.38
    company’s shareholders(RMB)
    Net profit attributable to the listed
    company’s  shareholders  before    1,638,204,454.34    1,069,457,368.70           53.18%      792,534,098.54
    exceptional items(RMB)
    Net cash generated from/used in    1,440,881,285.95      930,914,712.78           54.78%    1,183,231,808.06
    operating activities(RMB)
    Basic   earnings   per   share             3.37             2.28           47.81%             1.65
    (RMB/share)
    Diluted   earnings  per  share             3.37             2.28           47.81%             1.65
    (RMB/share)
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    Weighted average return on equity           24.03%           19.09%            4.94%           15.88%
    (%)
                                                               Changeof31
                              31December2018   31December2017   December2018over   31December2016
                                                             31 December2017
                                                                  (%)
    Total assets(RMB)              12,509,928,449.72    10,152,862,119.05           23.22%    8,736,205,153.86
    Equity  attributable to the listed    7,601,984,024.58    6,459,078,378.38           17.69%    5,595,121,383.96
    company’s shareholders(RMB)
    
    
    VII Accounting Data Differences under China’s Accounting Standards for Business
    
    Enterprises (CAS) and International Financial Reporting Standards (IFRS) and Foreign
    
    Accounting Standards
    
    1. Net Profit and Equity under CAS and IFRS
    
    □ Applicable √ Not applicable
    
    No difference for the Reporting Period.
    
    2. Net Profit and Equity under CAS and Foreign Accounting Standards
    
    □ Applicable √ Not applicable
    
    No difference for the Reporting Period.
    
    VIII Key Financial Information by Quarter
    
    Unit: RMB
    
                                   Q1              Q2              Q3              Q4
    Operating revenue                2,559,879,006.93     2,223,204,888.40     1,979,015,719.48    1,924,040,722.08
    Net profit attributable to the listed      581,079,212.12      311,343,125.52      363,302,909.34      439,506,396.07
    company’s shareholders
    Net profit attributable to the listed
    company’s  shareholders  before      568,229,870.99      304,118,603.13      347,165,716.83      418,690,263.39
    exceptional items
    Net cash generated from/used in      193,972,491.77      474,974,399.84     1,868,512,023.38    -1,096,577,629.04
    operating activities
    
    
    Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differs materially from what
    
    have been disclosed in the Company’s quarterly or interim reports.
    
    □ Yes √ No
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    IX Exceptional Gains and Losses
    
    √ Applicable □ Not applicable
    
    Unit: RMB
    
                  Item                   2018           2017           2016            Note
    Gain orlossondisposalofnon-currentassets
    (inclusive   of   impairment   allowance    -10,060,019.55    -10,659,063.45     -6,319,619.72
    write-offs)
    Government subsidies charged to current
    profit or loss (exclusive of government
    subsidies given in the Company’s ordinary     36,041,674.45     34,257,968.39     25,336,275.56
    course ofbusinessatfixedquotasoramounts
    as perthegovernment’suniformstandards)
    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     18,653,228.80     54,544,637.44     16,263,956.97
    financial  assets  (exclusive  of  effective
    portion ofhedgesthatariseintheCompany’s
    ordinary courseofbusiness)
    Reversed portion of impairment allowance
    for accounts receivable which are tested           0.00       491,989.18           0.00
    individually forimpairment
    Non-operating income and expense other     32,375,890.89     27,140,455.30     14,343,655.95
    than theabove
    Less: Incometaxeffects                   18,150,068.72     25,366,619.70     12,229,198.63
        Non-controlling interests effects (net     1,833,517.16     1,126,090.93       299,105.29
    of tax)
    Total                               57,027,188.71     79,283,276.23     37,095,964.84        --
    
    
    Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the Explanatory
    
    Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss
    
    Items:
    
    □ Applicable √ Not applicable
    
    No such cases for the Reporting Period.
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    Part III Business Summary
    
    I Principal Activity of the Company in the Reporting Period
    
    Is the Company subject to any industry-specific disclosure requirements?
    
    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.
    
    In recent years, China’s top liquor companies have basically finished adjusting their teams, strategies, products, etc., and are
    
    experiencing a continuous, strong recovery relying on their superior brand influence and product quality. The big picture for the
    
    liquor industry has taken shape. Regional small and medium liquor producers are in face of a reshuffle, while regionally famous
    
    liquor brands are busy dealing with competition from both larger and smaller fellow companies. As such, the liquor industry has
    
    entered a new normal.
    
    II Significant Changes in Major Assets
    
    1. Significant Changes in Major Assets
    
    Not applicable.
    
    2. Major Assets Overseas
    
    □ Applicable √ Not applicable
    
    III Core Competitiveness Analysis
    
    No material changes occurred to the Company’s core competitiveness in the Reporting Period.
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    Part IV Management Discussion and Analysis
    
    I Overview
    
    In 2018, under the guidance of President Xi Jinping’s thought on socialism with Chinese characteristics for a new era and the spirit of
    
    the 19th National Congress of the Communist Party of China, as well as upholding the values of “Be Honest, Offer Quality Spirits, Be
    
    Stronger and Be Helpful to the Society”, the Company effectively implemented its “Distilled Spirits 5.0” strategy and “Five-Star
    
    Operational Capability” strategy. As a result, its various operating objectives have been successfully fulfilled and its operational
    
    quality is improving.
    
    For 2018, the Company recorded operating revenue of RMB8.686 billion, up 24.65% compared to 2017; a net profit attributable to
    
    the Company as the parent of RMB1.695 billion, rising 47.57% from the year earlier; earnings per share of RMB3.37, 47.81% higher
    
    than 2017; and net cash generated from operating activities of RMB1.441 billion, going up 54.78% on a year-on-year basis.
    
    I. Overall Business Situation of the Company within the Reporting Period
    
    (I) The marketing and brand construction has been advancing further
    
    1. Two products interact and brand recognition has been improved continuously. The Company continued 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", the products of Gulou brand showed their debut in international
    
    high-end activities, walked into Singapore in a global patrol activity where media coverage was intensified, its brand IP was moulded
    
    and the value of Gujing Distillery brand was assessed to be as high as RMB101.865 billion.
    
    2. Market construction has been propelled steadily. The Company concentrated its energy in precise market positioning and added its
    
    resources continuously centering round improving its dynamic sales, removing its stock, deepening its channels, stabilizing price and
    
    cultivating consumption. It endeavored to attract big and strong merchants to build a community of common development for a
    
    win-win result between merchants and the manufacturer and speed up the nationwide investment promotion layout. The Company
    
    spared no effort driving the Golden Triangle Strategy amid Hubei, Henan and Anhui, optimizing and adjusting its organization
    
    structure and the manufacturer-merchant cooperation mode, optimizing its resource allocation, and improving accuracy of capital
    
    input and use.
    
    3. Market penetration of the products has been improved all-roundly. It put new version of Aged Original Liquor Series
    
    Zhongguoxiang and Gu 20 on the market and launched new series products of Xiaoleizi Liquor Series and Yellow Crane Tower and
    
    so on. It upgraded quality of original liquor products all-roundly, highlighted their taste and satisfied the market demands with the
    
    fine liquors.
    
    (II) The management tools and methods have been perfected and innovation level has been improved
    
    1. With emphasis laid on key projects, it drove mechanism innovation, process rebuilding and efficiency improvement. It planned
    
    earlier, optimized the layout of its production line and its inventory structure, and implemented a new mode of "strategic cooperation
    
    plus bid-inviting purchase" all-roundly.
    
    2. It optimized and improved its standardization system and pushed forward its technical, management and operation standardization
    
    continuously. It has taken many measures to improve its food safety and quality guarantee capability all-roundly, build a risk
    
    prevention and control system and escort quality safety of its products in the whole process. It has made fruitful quality innovation
    
    results, and four technical innovation results reached world-leading level, seven technical innovation results won scientific and
    
    technological awards at home, and it has applied for 47 national patents and 4 of its scientific and research results have been
    
    transformed in the Company.
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    3. Gathering talents and wisdom, its transformation of development momentum has been accelerated. It has implemented the
    
    construction of "two pools" and "two channels" deeply, deepened its dynamic talent use and assessment mechanism, implemented
    
    personnel and post interaction and optimization. It has enhanced building of its course system continuously and conducted talent
    
    training and cultivation all-roundly and purposefully at many levels.
    
    (III) Informatization construction has been propelled continuously and its business support capability has been enhanced
    
    continuously
    
    It has been sticking to high standard and enforceability, selected to cooperate with world-class information system integrators and
    
    implementation service providers and planned a digital enterprise information system prudently. It has been driving BPM
    
    informatization construction and has built a user-centered uniform office portal, a uniform mobile portal and perfected its one-stop
    
    business application platform. Its monitoring upgrade and renovation has been completed and achieved full coverage of key areas
    
    and key knots.
    
    (IV) It has safeguarded environment protection bottom-line and created a new situation of safety and environment protection work
    
    The Company has strengthened check and control of potential hazards and propelled implementation of the responsibilities of safe
    
    production entities. It has examined and sorted strictly and implemented environment protection and control projects. Safe production
    
    of the Company realized "four nones", its major potential safety rectification work has been pushed forward steadily and indices of
    
    externally discharged pollutants have been up to the standard steadily.
    
    (V) It has emphasized its political construction and strengthened its anti-corruption education
    
    1. The Company has been sticking to and enhancing the party's leadership, four-aspect awareness, four-aspect self-confidence and
    
    intensifying party-and-management-in-one. It has continued enhancing the construction of its party committee, further operating its
    
    party construction quality management system in a standardized and scientific manner, it has conducted its education for
    
    anti-corruption and occupational warning, and it has strengthened its political and ideological work all-roundly.
    
    2. It has conducted its political warning education deeply and strengthened cultivation of party spirit of party members and party
    
    managerial personnel, continued promoting and carrying forward the Nie Guangrong Spirit, breaking through idleness, laziness,
    
    reluctance, ruffian and pride, and insisted on advocating merit, morality, diligence, performance and integrity.
    
    (VI) Within the reporting period, the following pressure and shortcomings exist in the Company
    
    1. The whole industry has entered an age of famous liquor brands competing with each other, and the cost and difficulty for
    
    competition will be greater.
    
    2. The brand is not strong, and its market exploration still depends on traditional channels.
    
    3. The mechanism obstacle and too many rules and regulations restrain all-round release of its vitality.
    
    II Core Business Analysis
    
    1. Overview
    
    See relevant contents of “I Overview” in “Management Discussion and Analysis”, herein.
    
    2. Revenue and Cost Analysis
    
    (1) Breakdown of Operating Revenue
    
    Unit: RMB
    
                                2018                          2017                Change(%)
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
                                    As %oftotal                     As%oftotal
                    Operatingrevenue   operatingrevenue   Operatingrevenue   operatingrevenue
                                       (%)                           (%)
    Total              8,686,140,336.89           100%   6,968,325,048.55           100%          24.65%
    By operatingdivision
    Manufacturing        8,686,140,336.89         100.00%   6,968,325,048.55         100.00%          24.65%
    By productcategory
    Distilled spirits       8,519,862,666.82          98.09%   6,822,053,599.85          97.90%          24.89%
    Hotel services          86,807,124.18          1.00%     84,238,705.54          1.21%          3.05%
    Other                79,470,545.89          0.91%     62,032,743.16          0.89%          28.11%
    By operatingsegment
    North China          436,508,213.35          5.03%    330,003,884.22          4.74%          32.27%
    Central China        7,867,207,092.57          90.57%   6,270,100,660.83          89.98%          25.47%
    South China             367,741,836.37          4.23%    363,895,263.98          5.22%          1.06%
    Overseas              14,683,194.60          0.17%      4,325,239.52          0.06%         239.48%
    
    
    (2) Operating Division, Product Category or Operating Segment Contributing over 10% of Operating
    
    Revenue or Operating Profit
    
    √ Applicable □ Not applicable
    
    Unit: RMB
    
                    Operating                  Grossprofit    YoYchangein   YoYchangein   YoYchangein
                    revenue      Costofsales      margin    operatingrevenue costofsales(%)   grossprofit
                                                           (%)                     margin(%)
    By operatingdivision
    Manufacturing    8,686,140,336.89 1,932,064,837.65        77.76%        24.65%        17.62%        1.33%
    By productcategory
    Distilled spirits   8,519,862,666.82 1,871,743,548.74        78.03%        24.89%        18.03%        1.28%
    Hotel services      86,807,124.18   38,413,320.64        55.75%        3.05%        7.52%        -1.84%
    Other            79,470,545.89   21,907,968.27        72.43%        28.11%        4.29%        6.29%
    By operatingsegment
    North China      436,508,213.35  162,547,416.58        62.76%        32.27%        27.25%        1.47%
    Central China    7,867,207,092.57 1,647,900,501.51        79.05%        25.47%        19.48%        1.05%
    South China         367,741,836.37  116,078,619.93       68.43%        1.06%       -13.82%        5.44%
    Overseas          14,683,194.60    5,538,299.63        62.28%       239.48%       497.30%       -16.28%
    
    
    Core business data of the prior year restated according to the changed statistical caliber for the Reporting Period:
    
    □ Applicable √ Not applicable
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    (3) Whether Revenue from Physical Sales is Higher than Service Revenue
    
    √ Yes □ No
    
     Operating division       Item            Unit            2018           2017         Change(%)
                      Salesvolume         Ton              82,818.70        84,034.04          -1.45%
    Distilled     spirits     Output           Ton              83,254.25        81,512.19          2.14%
    brewage
                       Inventory          Ton              10,507.81        10,072.26          4.32%
    
    
    Any over 30% YoY movements in the data above and why:
    
    □ Applicable √ Not applicable
    
    (4) Execution Progress of Major Signed Sales Contracts in the Reporting Period
    
    □ Applicable √ Not applicable
    
    (5) Breakdown of Cost of Sales
    
    By operating division
    
    Unit: RMB
    
                                        2018                      2017
       Operating        Item                  As%oftotalcost             As%oftotalcost   Change(%)
        division                  Costofsales                 Costofsales
                                            of sales(%)                 ofsales(%)
    Food         Directmaterials   1,465,613,415.05        75.86% 1,206,208,660.68        73.43%        21.51%
    manufacturing
    Food         Directlaborcost    183,657,819.79        9.51%  168,690,378.21        10.27%        8.87%
    manufacturing
    Food         Manufacturing     134,698,484.31        6.97%  128,448,515.45        7.82%        4.87%
    manufacturing   expenses
    Food         Fuels            87,773,829.59        4.54%   82,508,511.22        5.02%        6.38%
    manufacturing
    
    
    (6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
    
    √ Yes □ No
    
    Subsidiaries Bozhou Gujing Automobile Transportation Company and Hubei Hechuyuan Trading Co., Ltd. are liquidated during the
    
    Reporting Period.
    
    (7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
    
    □ Applicable √ Not applicable
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    (8) Major Customers and Suppliers
    
    Major customers:
    
    Total salestotopfivecustomers(RMB)                                                  1,926,682,447.91
    Total sales to top five customers as % of total sales of the                                        22.18%
    Reporting Period(%)
    Total sales to related parties among top five customers as % of                                         0.00%
    total salesoftheReportingPeriod(%)
    
    
    Information about top five customers:
    
      No.               Customer             Salesrevenuecontributedfor     As%oftotalsalesrevenue(%)
                                           theReportingPeriod(RMB)
       1               CustomerA                      816,876,292.40                         9.40%
       2               CustomerB                      671,236,086.48                         7.73%
       3               CustomerC                      177,047,832.64                         2.04%
       4               CustomerD                      157,259,614.57                         1.81%
       5               CustomerE                      104,262,621.82                         1.20%
      Total                 --                        1,926,682,447.91                        22.18%
    
    
    Other information about major customers:
    
    □ Applicable √ Not applicable
    
    Major suppliers:
    
    Total purchasesfromtopfivesuppliers(RMB)                                               571,734,042.90
    Total purchases from top five suppliers as % of total purchases                                        30.55%
    of theReportingPeriod(%)
    Total purchases from related parties among top five suppliers                                         0.00%
    as %oftotalpurchasesoftheReportingPeriod(%)
    
    
    Information about top five suppliers:
    
       No.               Supplier              PurchaseintheReporting       As%oftotalpurchases(%)
                                                Period(RMB)
        1               SupplierA                      241,572,847.33                        12.91%
        2               SupplierB                      157,379,332.85                         8.41%
        3               SupplierC                       65,735,684.57                         3.51%
        4               SupplierD                       62,861,266.38                         3.36%
        5               SupplierE                       44,184,911.77                         2.36%
       Total                --                         571,734,042.90                        30.55%
    
    
    Other information about major suppliers:
    
    □ Applicable √ Not applicable
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    3. Expense
    
    Unit: RMB
    
                           2018            2017         Change(%)     Reasonforanysignificantchange
    Selling expense          2,682,535,305.26   2,170,081,383.54        23.61%
    Administrative expense      644,997,046.65     591,058,209.64         9.13%
    Finance costs             -51,572,629.73     -25,927,285.82        -98.91% Adjustmentofinvestmentstrategies
    R&D expense             23,966,766.04     12,494,749.46        91.81% Increase  in  R&D  inputs  for  the
                                                                 ReportingPeriod
    
    
    4. R&D Expense
    
    √ Applicable □ Not applicable
    
    We carried out R&D projects in the current year to study and develop new products, improve the quality of our products, study the
    
    intelligent brewage technique and new brewage technique.
    
    Achievements in R&D of the Company: 4 technological innovations have reached the international leading level, 7 technological
    
    innovations have won domestic science and technology prize, 47 technological innovations have applied for national patent and 4
    
    scientific achievements have been converted in the Company.
    
    Details about R&D expense:
    
                                   2018                   2017                Change(%)
    Number ofR&Dpersonnel                       968                    620                 56.13%
    R&D personnel as % of total                 11.63%                  7.76%                  3.87%
    employees
    R&D expense(RMB)                   224,585,370.62            220,278,527.92                  1.96%
    R&D expenseas%of operating                  2.59%                  3.16%                 -0.57%
    revenue
    Capitalized   R&D   expense                   0.00                   0.00                  0.00%
    (RMB)
    Capitalized R&D expense as %                  0.00%                  0.00%                  0.00%
    of totalR&Dexpense
    
    
    Reasons for any significant YoY change in the percentage of R&D expense in operating revenue:
    
    □ Applicable √ Not applicable
    
    Reason for any sharp variation in the percentage of capitalized R&D expense and rationale:
    
    □ Applicable √ Not applicable
    
    5. Cash Flows
    
    Unit: RMB
    
             Item                   2018                   2017                Change(%)
    Subtotal of cash generated from           9,950,615,569.29           7,472,916,271.43                 33.16%
    operating activities
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    Subtotal  of  cash  used  in           8,509,734,283.34           6,542,001,558.65                 30.08%
    operating activities
    Net cash generatedfrom/usedin           1,440,881,285.95            930,914,712.78                 54.78%
    operating activities
    Subtotal of cash generated from           3,530,649,713.30           5,637,814,765.40                -37.38%
    investing activities
    Subtotal  of  cash  used  in           4,656,442,207.19           5,770,329,877.85                -19.30%
    investing activities
    Net cash generatedfrom/usedin          -1,125,792,493.89           -132,515,112.45                -749.56%
    investing activities
    Subtotal  of  cash  used  in            503,616,553.34            302,160,000.00                 66.67%
    financing activities
    Net cash generatedfrom/usedin           -503,616,553.34           -302,160,000.00                -66.67%
    financing activities
    Net increase in cash and cash           -188,527,761.28            496,239,600.33                -137.99%
    equivalents
    
    
    Explanation of why any of the data above varies significantly:
    
    √ Applicable □ Not applicable
    
    (1) The net cash generated from/used in operating activities for the Reporting Period is RMB1,440,881,285.92 with a year-on-year
    
    increase of 54.78% which mainly caused by increase in cash received from sales of goods and providing of labors.
    
    (2) The net cash generated from/used in investing activities for the Reporting Period is RMB-1,125,792,493.89 with a year-on-year
    
    increase of 749.56% which mainly caused by decrease in cash paid for investments.
    
    (3) The net cash generated from/used in financing activities for the Reporting Period is RMB-503,616,553.34 with a year-on-year
    
    decline of 66.67% which mainly caused by increase in dividend distribution.
    
    Reason for any big difference between the net operating cash flow and the net profit for this Reporting Period
    
    □ Applicable √ Not applicable
    
    III Analysis of Non-Core Businesses
    
    □ Applicable √ Not applicable
    
    IV Analysis of Assets and Liabilities
    
    1. Significant Changes in Asset Composition
    
    Unit: RMB
    
                    31 December2018         31December2017     Changein
                   Amount     As%of     Amount     As%of  percentage  Reasonforanysignificantchange
                             totalassets              totalassets    (%)
    Monetary capital 1,705,760,865.12    13.64%1,484,088,626.40    14.62%   -0.98%
    Accounts        29,748,068.74     0.24%   22,466,143.06     0.22%   0.02%
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    receivable
    Inventories     2,407,306,664.86    19.24%2,064,130,297.51    20.33%   -1.09%
    Investment        5,027,228.53     0.04%   5,343,777.33     0.05%   -0.01%
    property
    Long-term equity   4,900,000.00     0.04%         0.00     0.00%   0.04%
    investments
    Fixed assets    1,763,988,530.56    14.10%1,792,254,178.56    17.65%   -3.55%
    Construction  in   93,320,557.56     0.75%   54,496,798.56     0.54%   0.21%
    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   Soldinthe
         Item       amount    changesinthe    changes    theReporting  theReporting   Reporting   Endingamount
                             Reporting    chargedto     Period       Period       Period
                              Period       equity
    Financial assets
    1.     Financial
    assets  at  fair
    value   through
    profit  or  loss    99,800.76   -161,541.19        0.00        0.00  1,545,690.44   861,057.05   622,892.96
    (excluding
    derivative
    financial assets)
    2.
    Available-for-sale 517,086,347.91        0.00 -37,399,293.75        0.00        0.00 273,293,946.70 206,393,107.46
    financial assets
    Subtotal     of 517,186,148.67   -161,541.19 -37,399,293.75        0.00  1,545,690.44 274,155,003.75 207,016,000.42
    financial assets
    Total   of   the 517,186,148.67   -161,541.19 -37,399,293.75        0.00  1,545,690.44 274,155,003.75 207,016,000.42
    above
    Financial              0.00        0.00        0.00        0.00        0.00        0.00        0.00
    liabilities
    
    
    Significant changes to the measurement attributes of the major assets in the Reporting Period:
    
    □ Yes √ No
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    3. Restricted Asset Rights as at the Period-End
    
                 Item                  Endingcarryingvalue(RMB)            Reasonforrestriction
                                                               Structural fixed time deposits not available
    Bank deposits                                       870,000,000.00
                                                               inadvanceanddueinthreemonths
    Other currentassets                                    18,000,000.00Pledgedforopeningbank’sacceptancebill
    Notes receivable                                      30,236,900.00Pledgedforopeningbank’sacceptancebill
    Other monetarycapital                                    200,000.00 Openingbillpledgebankdepositreceipt
                 Total                                918,436,900.00
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    V Investments Made
    
    1. Total Investment Amount
    
    □ Applicable √ Not applicable
    
    2. Major Equity Investments Made in the Reporting Period
    
    □ Applicable √ Not applicable
    
    3. Major 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                           Fairvalue  106,943,823.7       -25,087,573.6                 11,586,297.2          Available-for-sa Self-owne
    as stock       000001 PAYH     70,317,243.98 method            0               8       81,856,250.02        3       0.00 lefinancial    dfunds
        asset
    
    
    ~ 19 ~
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    Domestic/overse                           Fairvalue                                                                Available-for-sa Self-owne
    as stock       601988 ZGYH     44,385,674.20 method    71,313,507.00       -6,466,716.00       64,846,791.00 6,017,812.54       0.00 lefinancial    dfunds
        asset
                      GFNSTYR
                      1st       E 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       0.00 lefinancial    dfunds
                      Investment                                                                                    asset
                      Funds
                       ZXYSDP
        Available-for-sa
    Funds                1st  Assets 200,000,000.0 Fairvalue  211,674,059.1       -5,280,951.67              0.00 10,883,000.0 206,393,107.4 lefinancial    Self-owne
                        Manageme          0 method            3                                         0         6 asset        dfunds
                        nt  Plan
    Other endingholdingsecurities                     --                                                                       --        --
    investments
    Total                         464,702,918.1    --    517,086,347.9    0.00 -37,399,293.7    0.00 273,293,946.7 37,328,977.9 206,393,107.4     --        --
                                         8                  1               5                0        9         6
    Disclosure date of the announcementTheCompanyheldthe6thMeetingofthe8thBoardofDirectorson27August2018,reviewedandapprovedtheproposaloncarryingoutsecurities
    about  the  board’s  consent  for  the investmentbusiness
    securities investment
    Disclosure date of the announcement
    about the general meeting’s consent for N/A
    the securitiesinvestment(ifany)
    
    
    (2) Investments in Derivative Financial Instruments
    
    √ Applicable □ Not applicable
    
    Unit: RMB’0,000
    
    ~ 20 ~
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
        Proportion
        of closing   Actual
              Relationship                      Initial                      Beginning  Purchasedin Soldinthe  Impairment   Ending   investment  gain/loss
      Operator   withthe   Connected   Typeof   investment Startingdate Endingdate  investment     the     Reporting  provision(if  investment  amountin   inthe
               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 29March   8January        5,000     49,970     36,980              17,990     2.37%   60.27
    of national                     nationaldebt           2018      2019
    debt
    Total                                        0.00    --        --         5,000     49,970     36,980              17,990     2.37%   60.27
    Capital sourceforderivativeinvestment           Company’sownfunds
    Lawsuits involved(ifapplicable)                N/A
    Disclosure date of board announcement approving 30August2013
    derivative investment(ifany)
    Disclosure dateofshareholders’meetingannouncement
    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)
    
    
    ~ 21 ~
    
    Gujinggong Liquor Aged Original Liquor Annual 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
                                          throughinvestinginthereasonablefinancialderivativeinstruments, whichwasin favorofimprovingthe serviceefficiencyof the idle
                                          funds;inordertoreducetheinvestmentrisksofthefinancialderivativeinstruments,theCompanyhadsetupcorrespondingsupervision
    Opinion  of  independent  directors  on  derivative mechanismforthefinancialderivativeinstrumentbusinessandformulatedreasonableaccountingpolicyaswellasspecificprinciplesof
    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.
    
    
    5. Use of Funds Raised
    
    □ Applicable √ Not applicable
    
    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
    
    ~ 22 ~
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    VII Major Subsidiaries
    
    √ Applicable □ Not applicable
    
    Major fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10% effect on the Company’s net profit:
    
    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      3,093,871,785.99     140,938,134.68      7,597,867,645.42    1,157,643,625.54     814,144,514.42
    Co., Ltd               materials,
                         feeds   and
                         assistant
                         materials
    Anhui                 Manufacture
    Longrui    Subsidiary    andsaleof        86,660,268.98       289,315,723.90     243,090,486.00       230,615,365.63      44,064,402.64      37,251,729.78
    Glass Co.,              glass
    Ltd                   products
    Yellow                Production
    Crane Tower            andsalesof
    Wine      Subsidiary    distilled         400,000,000.00       926,907,099.60     579,184,692.84       866,368,765.24     130,155,107.42      99,302,371.57
    Industry Co.,            spirit
    Ltd
    Shanghai   Subsidiary    Hotel           54,000,000.00       202,284,926.94      78,654,052.34        78,518,073.84      15,104,828.31      10,155,476.95
    Gujing                management
    
    
    ~ 23 ~
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    Jinhao Hotel            andhouse
    Management            lease
    Co., Ltd.
    
    
    Subsidiaries obtained or disposed in the Reporting Period:
    
    √ Applicable □ Not applicable
    
    Subsidiaries Bozhou Gujing Automobile Transportation Company and Hubei Hechuyuan Trading Co., Ltd. were liquidated in the Reporting Period.
    
    ~ 24 ~
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    VIII Structured Bodies Controlled by the Company
    
    □ Applicable √ Not applicable
    
    IX Prospects
    
    (I) Development Prospect of the Industry the Company is in
    
    1. The industry returns to rationality and growth speed slows down
    
    The liquor and spirits industry is polarized continuously, and the famous liquor and spirits enterprises represented by Moutai will
    
    grow continuously, but their growth paces will slow down and return to a rational growth. On the other hand, thanks to rise of cost of
    
    medium and small sized liquor and spirits enterprises, squeezing of the market and low-end influence on brands will worsen their
    
    business environment further.
    
    2. The trend of consumption upgrade and industrial concentration remain unchanged
    
    On the background of consumption upgrade, a structural change is undergoing for consumption demands, consumption is polarizing
    
    and boosting new consumers becomes the key. The supply-side reform of liquor and spirits industry is being deepened, higher rate of
    
    quality to price for famous liquor and spirit will be provided, and adapting to the trend of consumption upgrade becomes a common
    
    choice of enterprises. At the same time, consumption upgrade is also sinking to cities of lower levels, return of population to cities of
    
    lower levels becomes a trend, and consumption upgrade of tier-3 and tier-4 cities is accelerating. Moreover, famous liquor and spirits
    
    enterprises all over the country further squeeze local enterprises through means of price, direct competition and merger and
    
    acquisition between enterprises, and industrial concentration is further intensified.
    
    3. The industry enters a famous liquor competition stage and capital input will be intensified
    
    In 2019, with growth speed of the industry slowing down, competition among famous liquor and spirits brands will be keener, and
    
    higher requirements are put forth for brand recognition and channel influence of enterprises. Many liquor enterprises conduct delicate
    
    management for channels, attach importance to terminals, and enlarge capital input and improve their brand recognition to ensure
    
    their growth.
    
    4. With construction of digitalized enterprises being accelerated, the liquor and spirits industry is exploring new retail and new
    
    scenario applications
    
    In recent years, with rapid development of internet technologies covering IOT, mega-data and cloud computing, all walks of life are
    
    accelerating their construction of digitalized enterprises and they are exploring new retail and new scenarios constantly. While the
    
    internet is changing the life style and consumption habit of people gradually, it is replacing the traditional offline store marketing
    
    mode gradually, and becoming a must road for transformation and upgrade of many industries. The development mode of "internet +
    
    wine" has become a key point of the layout of liquor enterprises and distributors. With advent of the times of mass consumption,
    
    consumers pay more attention to performance versus cost ratio, their brand awareness is enhancing, consumption distribution
    
    demonstrates characteristics of being wide, scattered and of many levels, and consumption habit becomes diversified. In the future, it
    
    becomes an inevitable trend for development of the liquor and spirits industry that the enterprises should satisfy the more
    
    personalized consumption demands of users through digitalized marketing and innovation.
    
    (II) Development Strategy of the Company
    
    1. Firmly boost "Strategy 5.0, Five-Star Operation” Strategy
    
    Comprehensively fulfill Strategy 5.0 and have the "User-Centered" thought fully and deeply implemented in the Company. Solidly
    
    create the "Five-Star Operation", enhance competitive force, improve quality and efficiency, optimize services and promote healthy
    
    and efficient operation of the enterprise.
    
    2. Firmly boost reform and innovation strategy
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    Deeply boost marketing innovation, technological innovation and mechanism innovation and generate endogenous power of the
    
    enterprise.
    
    3. Firmly create "Talent Highland" strategy
    
    Intensify talent recruitment and attraction and establish flexible talent attraction and wisdom experience borrowing mechanism.
    
    Innovate talent training mode and promote independent cultivation & development and absorption & attraction simultaneously.
    
    4. Firmly boost the strategy of integration of Party governance
    
    Comprehensively strengthen Party discipline, continuously strengthen"four-consciousness", and strengthen political leadership. Need
    
    to take firm political stand, strengthen political orientation, practicallystrengthen"four-consciousness". Thoroughly study and
    
    implement the spirit of the 19th National Congress of the Communist Party of China and Xi Jinping Thought on Socialism with
    
    Chinese Characteristics for a New Era, and guide all the Party members to enhance their thought and action consciousness to
    
    maintain the core.
    
    (III) Operating Revenue Plan of the Company in 2019
    
    In 2019, the Company plans to achieve an operating revenue of RMB10.226 billion, rising 17.74% compared with that of last year;
    
    and achieve a total profit of RMB2.515 billion, rising 6.19% compared with that of last year.
    
    (IV) 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.
    
    (V) Operating Measures
    
    1. Marketing
    
    Centering round the brand rejuvenation project of Gujing Distillery, promote market balance and lay a solid foundation of the base,
    
    and speed up nationalization pace of Gujing Distillery. In terms of brand construction, set a higher market positioning and meanwhile
    
    maintain a higher quality from the international market to the domestic market, strengthen the promotion at home and abroad, and
    
    apply internet thoughts to integrate brand promotion systematically. Centering round the project of emerging customers, strengthen
    
    investment promotion at home and abroad, do well the management, training and service work of customers and development and
    
    maintenance of new customers, and push forward globalization of liquor and spirits. Centering round consumption scenarization,
    
    build first-rate cultural and consumption experience halls, improve middle-end experience, online and offline integration, enhance
    
    interaction and intelligence of experience shops, enhance loyalty of members and realize close-loop marketing.
    
    2. Product Management
    
    Continuously boost intelligent and green brewing process, enhance information, scientific and systematic management of product
    
    quality, lay a solid foundation for quality management. 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
    
    Centering round the users, build a digitalized Gujing. With information linking the management system, consolidate management
    
    contexts, optimize business efficiency and build an intelligent management enterprise. Implement integration of industry and finance,
    
    transform its financial management mode and build a close-loop financial sharing platform. With the key laid on pushing forward
    
    construction of ERP system, build an integrated enterprise management platform and achieve concentrated management, control and
    
    operation. Speed up pushing forward digitalized marketing projects of sales Company, pushing forward digitalized transformation of
    
    marketing, improve the system's support for core business, speed up optimization of information architecture and e-commerce
    
    advancement. Explore internal innovation incentive mechanisms actively, build a tiny enterprise platform and a profit making center
    
    and arouse the passion and motivation of staff members in their business starting and innovation.
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    4. Human Resource
    
    Optimize construction of the talent team, deepen the construction of "artisan pool", "elite pool", "management channel" and
    
    "technical channel", optimize assessment of various levels and personnel management work, implement the flexible employment
    
    mechanism and improve the multi-level talent cultivation system, further improve the assessment and appraisal system and incentive
    
    and restraint mechanism for various kinds of talents.
    
    5. Corporate Cultural Construction
    
    Implementing the party construction principle of "grasp party construction work and promote development centering round business
    
    operation" and the core values of "being honest, offering quality liquor, being stronger and being helpful to the society", deepen party
    
    construction work and construction of corporate culture, and play the guiding and promotion role of party construction and culture in
    
    corporate development. Conduct the education of anti-corruption and occupational warning, enhance ideological and political work
    
    all-roundly and build a firm ideological defense. Guided by party construction and motivated by red army's history, concentrate
    
    energy for promoting development.
    
    In 2019, the board of directors of the Company will go on carrying out the spirit of the 19th National Congress of the Communist
    
    Party of China, guided by the Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, with "Five
    
    modernization" and "Six projects" as the construction drawings, advance Liquor and Spirits 5.0 Strategy, improve the enterprise
    
    management level further, stimulate motive force of talents, go ahead steadily and surely to ensure transformation and upgrade of the
    
    enterprise, achieve a continuous, steady, sound and high-quality development and work hard for achieving a new digitalized,
    
    globalized and legalized Gujing.
    
    X Communications with the Investment Community such as Researches, Inquiries and
    
    Interviews
    
    1. During the Reporting Period
    
    □ Applicable √ Not applicable
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    Part V Significant Events
    
    I Profit Distributions to Ordinary Shareholders (in the Form of Cash and/or Stock)
    
    How the profit distribution policy, especially the cash dividend policy, for ordinary shareholders was formulated, executed or revised
    
    in the Reporting Period:
    
    √ Applicable □ Not applicable
    
    The 2017 Annual General Meeting held on 22 May 2018 reviewed and approved the Company’s Interest Distribution Scheme in
    
    2017 that based on the total shares of 503,600,000 of the Company on 31 December 2017, cash dividends was distributed at
    
    RMB10.00 per 10 shares (tax inclusive), and the total cash dividends distributed was RMB503,600,000.00 (tax inclusive).
    
                                Specialstatementaboutthecashdividendpolicy
    In compliance with the Company’s Articles of Association and Yes
    resolution ofgeneralmeeting
    Specific andcleardividendstandardandratio              Yes
    Complete decision-makingprocedureandmechanism         Yes
    Independent directorsfaithfullyperformedtheirdutiesandplayed Yes
    their duerole
    Non-controlling interests are able to fully express their opinion Yes
    and desireandtheirlegalrightsandinterestsarefullyprotected
    In case of adjusting or changing the cash dividend policy, the
    conditions and procedures involved are in compliance with Noadjustmentsorchanges
    applicable regulationsandtransparent
    
    
    The profit distributions to ordinary shareholders, either in the form of cash or stock, in the past three years (including the Reporting
    
    Period) are summarized as follows:
    
    1. 2016 profit distribution plan of the Company: distribute the cash of RMB6.00 (tax inclusive) for every 10 shares without bonus
    
    issue from capital reserves;
    
    2. 2017 profit distribution plan of the Company: distribute the cash of RMB10.00 (tax inclusive) for every 10 shares without bonus
    
    issue from capital reserves;
    
    3. 2018 profit distribution plan of the Company: distribute the cash of RMB15.00 (tax inclusive) for every 10 shares without bonus
    
    issue from capital reserves.
    
    Unit: RMB
    
                             Netprofit
                           attributable to                 Cash                Totalcash
                   Cash       ordinary                 dividends              dividends
        Year    dividends(tax  shareholdersof   Aas%ofB   forinmost(hseurchCas%ofB    (including   Das%ofB
                inclusive)(A)    thelisted        (%)     reapsurschhaarese)(%)      thoseinother     (%)
                            company in                  (C)                forms)(D)
                            consolidated
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
                          statements forthe
                             year (B)
    2018        755,400,000.00 1,695,231,643.05       44.56%      0.00       0.00% 755,400,000.00      44.56%
    2017        503,600,000.00 1,148,740,644.93       43.84%      0.00       0.00% 503,600,000.00      43.84%
    2016        302,160,000.00   829,630,063.38       36.42%      0.00       0.00% 302,160,000.00      36.42%
    
    
    Indicate by tick mark whether the Company fails to put forward a cash dividend proposal for the ordinary shareholders despite the
    
    facts that the Company has made profits in the Reporting Period and the profits of the Company as the parent distributable to the
    
    ordinary shareholders are positive.
    
    □ Applicable √ Not applicable
    
    II Final Dividend Plan for the Reporting Period
    
    √ Applicable □ Not applicable
    
    Bonus issue from capital reserves for every 10                                                    0
    shares (share)
    Dividend forevery10shares(RMB)(taxinclusive)                                                  15.00
    Bonus issuefromprofitforevery10shares(share)                                                     0
    Totalsharesasthebasisforthefinaldividendplan                                              503,600,000
    (share)
    Totalcashdividends(RMB)(taxinclusive)                                                 755,400,000.00
    Distributable profits(RMB)                                                          5,162,354,747.41
    Percentage ofcashdividends tothetotaldistributed                                                 100%
    profits
                                    Particulars aboutthecashdividends
    The minimumproportionofcashdividend tothisprofitdistributionshouldbe40%whentheCompanydistributed theprofitsunder
    the conditionthattheCompanywasinmaturestagewithlargecapitalcost.
                              Details offinaldividendplanfortheReportingPeriod
    The Company planned to distribute the dividends of RMB755,400,000.00 at RMB15.00 (tax inclusive) per 10 shares based on the
    total sharecapitalatperiod-end of503,600,000 shares.Thereisnobonusissuefromprofit andbonusissuefromcapitalreservesin
    the ReportingPeriod.
    
    
    III Fulfillment of Commitments
    
    1. Commitments of the Company’s Actual Controller, Shareholders, Related Parties and Acquirers, as well
    
    as the Company Itself and other Entities Fulfilled in the Reporting Period or Ongoing at the Period-end
    
    √ Applicable □ Not applicable
    
             Commitment          Promisor     Typeof     Detailsof     Dateof     Termof    Fulfillment
                                         commitment  commitment  commitment  commitment
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
                                                               making
                                                  The Company
                                                  promised that
                                                  Yellow Crane
                                                  Tower
                                                  Distillery Co.,
                                                  Ltd. would
                              AnhuiGujing           realizethe
    Commitments madeinacquisition   Distillery    Performance  operating                          Fulfilledin
    documents orshareholdingalteration Company    commitment  revenueof   29April2016 Y2017-Y2021    2018
    documents                   Limited               RMB1,006.25
                                                  million (tax
                                                  inclusive) and
                                                  the netprofit
                                                  margin would
                                                  be notlower
                                                  than 11.00%
                                                  in 2018.
    Fulfilled ontime               Yes
    Specific reasons for failing to fulfill
    commitments on time and plans for N/A
    next step  (ifany)
    
    
    In accordance with the share transfer agreement signed by the Company with Wuhan Pride Investment Group Co., Ltd. and the
    
    natural person Yan Hongye on the acquisition of Yellow Crane Tower Distillery Co., Ltd. (hereinafter referred to as “Yellow Crane
    
    Tower Distillery”), the Company promised that the operating revenue (tax inclusive) of Yellow Crane Tower Distillery would reach
    
    the following data:
    
    Unit: RMB’0,000
    
                 Period                 Y2017       Y2018       Y2019       Y2020       Y2021
     Committedoperatingrevenue(taxinclusive)    80,500.00    100,625.00    130,812.50    170,056.25    204,067.50
    
    
    Meanwhile, within five years since the delivery date (excluding the year in which the delivery date of target equity is located), the net
    
    profit margin (net profit/operating revenue) of Yellow Crane Tower Distillery for each year shall be not lower than 11.00%. If the
    
    audited net profit margin of Yellow Crane Tower Distillery for each year is lower than 11.00%, the Company should compensate the
    
    balance as required by the agreement; if the net profit margin of Yellow Crane Tower Distillery is lower than 11.00% for consecutive
    
    two years, the transferee has the right to repurchase all shares of Yellow Crane Tower Distillery held by the Company with the price
    
    of RMB816 million.
    
    The realization of commitment on performance in the single statement of Yellow Crane Tower Distillery in 2018 is as follows:
    
    Unit: RMB’0,000
    
             Item           Actualamount      Promisedamount         Difference         Completionrate
     Operating  revenue  (tax       100,696.87           100,625.00              71.87            100.07%
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
     inclusive)
     Netprofit                     9,930.24            9,514.84             415.40            104.37%
     Netprofitratio                  11.46%             11.00%              0.46%            104.19%
    
    
    2. Where there had been an earnings forecast for an asset or project and the Reporting Period was still
    
    within the forecast period, explain why the forecast has been reached for the Reporting Period.
    
    □ Applicable √ Not applicable
    
    IV Occupation of the Company’s Capital by the Controlling Shareholder or Its Related
    
    Parties for Non-Operating Purposes
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    V Explanations Given by the Board of Directors, the Supervisory Board and the Independent
    
    Directors (if any) Regarding the Independent Auditor's “Modified Opinion” on the Financial
    
    Statements of the Reporting Period
    
    □ Applicable √ Not applicable
    
    VI YoY Changes to Accounting Policies, Estimates and Methods
    
    √ Applicable □ Not applicable
    
    The Ministry of Finance enacted the Notice on Revising and Printing Formats of Financial Statements for General Enterprises in
    
    2018 (CK [2018] No. 15) on 15 June 2018 which was required to be implemented as of the date of promulgation. The Company
    
    starts to carry out the aforesaid accounting standards as required by the Ministry of Finance.
    
       No.               Contentsandreasons                 Nameandamountofitemmateriallyinfluenced
             (1)As for the balance sheet, “note receivable” and The “note receivable” and “accounts receivable” were
             “accounts receivable” were incorporated into “notesincorporated into “notes receivable and accounts receivable”,
             receivable  and  accounts  receivable”;  “interestthe  combined  amount  of  the  Reporting  Period  was
             receivable”  and   “dividends  receivable”  were RMB1,377,175,880.08  and  that  of  last  year  was
             incorporatedinto “other receivables”; “liquidation ofRMB743,077,269.84; “interest receivable” and “dividends
             fixed assets” was incorporated into “fixed assets”; receivable” were incorporated into “other receivables”, the
             “engineering  materials”  was  incorporated  intocombine  amount  of  the  Reporting  Period  was
        1    “construction  in  progress”;  “notes  payable”  and RMB43,342,878.22  and  that  of  last  year  was
             “accounts payable” were incorporated into “notesRMB29,273,284.22;“engineeringmaterials”wasincorporated
             payableand accounts payable”; “interest payable” and into “construction in progress”, the combined amount of the
             “dividends payable” were incorporated into “otherReportingPeriodwasRMB93,320,557.56andthatoflastyear
             payables”; “specific payables” was incorporated intowas RMB54,496,798.56; “notes payable” and “accounts
             “long-term payables”. The comparative data were payable” were incorporated into “notes payable and accounts
             adjustedcorrespondingly.                     payable”, the combined amount of the Reporting Period was
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
       No.               Contentsandreasons                 Nameandamountofitemmateriallyinfluenced
                                                   RMB834,156,012.31  and  that  of  last  year  was
                                                   RMB636,365,039.83; “interest  payable”  and  “dividends
                                                   payable” were incorporated into “other payables”, the
                                                   combined  amount  of  the  Reporting  Period  was
                                                   RMB1,192,020,147.82  and  that  of  last  year  was
                                                   RMB1,032,543,553.34.
             (2)As for the income statement, the item of “R&D
             expense”was added and filled in with data of R&D The“administrativeexpense”fortheReportingPeriodandfor
             expense originally  classified  into  “administrativelast year were respectively decreased RMB23,966,766.04 and
        2    expense”; items of “of which: interest expense” and RMB12,494,749.46 which were reclassified into “R&D
             “interestincome”wereaddedundertheitemof“finance expense”.
             costs”.  The  comparative  data  were  adjusted
             correspondingly.
    
    
    VII Retrospective Restatements due to Correction of Material Accounting Errors in the
    
    Reporting Period
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    VIII YoY Changes to the Scope of the Consolidated Financial Statements
    
    √ Applicable □ Not applicable
    
    Subsidiaries Bozhou Gujing Automobile Transportation Company and Hubei Hechuyuan Trading Co., Ltd. were liquidated during
    
    the Reporting Period.
    
    IX Engagement and Disengagement of Independent Auditor
    
    Current independent auditor:
    
    Name ofthedomesticindependentauditor          RuihuaCPAs(LLP)
    The Company’spaymenttothedomesticindependent  160
    auditor (RMB’0,000)
    How many consecutive years the domestic independent 6
    auditor hasprovidedauditservicefortheCompany
    Names ofthecertifiedpublicaccountantsfromthe
    domestic independentauditorwritingsignaturesonthe  OuChangxian,GaoQiang
    auditor’s report
    How many consecutive years the certified public ItisthefirstyearforbothMr.OuChangxianandMr.GaoQiangtoprovide
    accountants  have provided audit service for the auditservicefortheCompany
    Company
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    Indicate by tick mark whether the independent auditor was changed for the Reporting Period.
    
    □ Yes √ No
    
    Independent auditor, financial advisor or sponsor engaged for the audit of internal controls:
    
    √ Applicable □ Not applicable
    
    The Company engaged Ruihua CPAs (LLP) as the internal control auditor in 2018.
    
    X Possibility of Listing Suspension or Termination after Disclosure of this Report
    
    □ Applicable √ Not applicable
    
    XI Insolvency and Reorganization
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    XII Major Legal Matters
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    XIII Punishments and Rectifications
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    XIV Credit Quality of the Company as well as Its Controlling Shareholder and Actual
    
    Controller
    
    □ Applicable √ Not applicable
    
    XV Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures
    
    for Employees
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    XVI Major Related-Party Transactions
    
    1. Continuing Related-Party Transactions
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    3. Related Transactions Regarding Joint Investments in Third Parties
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    4. Credits and Liabilities with Related Parties
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    5. Other Major Related-Party Transactions
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    XVII Major Contracts and Execution thereof
    
    1. Entrustment, Contracting and Leases
    
    (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) Leases
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    2. Major guarantees
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    3. Cash Entrusted to Other Entities for Management
    
    (1) Cash Entrusted for Wealth Management
    
    √ Applicable □ Not applicable
    
    Overview of cash entrusted for wealth management during the Reporting Period
    
    Unit: RMB’0,000
    
        Specific type        Capitalresources       Amountincurred       UndueBalance     Overdueunrecovered
                                                                                 amount
    Trust financialproducts  Self-ownedfunds                   125,000             30,000              0.00
    Bank financialproducts  Self-ownedfunds                   237,000            224,000              0.00
    Broker financial       Self-ownedfunds                    41,000               0.00              0.00
    products
    Others             Self-ownedfunds                    51,708             37,990              0.00
                    Total                            454,708            291,990              0.00
    
    
    Particulars of cash entrusted for wealth management with single significant amount or low security, bad liquidity, and no capital
    
    preservation
    
    Unit: RMB’0,000
    
                                                          Amou Actual             Planfor
                                                           ntof recove            entrusted Overvi
                Type           Sta En       Determin Annua Estim actual  ryof  Allowa  Legal   asset  ewsof
    Name of Type  of  Amo Capital rt  d  Useof   ation  lyield  ate  profit  profit ncefor proced manage events
      the   ofthe  the  unt  resourc dat da  fund  methodof  for  profit orloss orloss impair uresor mentin  and
     trustee  trustee prod        e    e  te       remunerat refere  (if   in    in  ment(if  not    the   query
                 uct                         ion    nce  any) Report Report  any)        futureor index
                                                           ing    ing               not   (ifany
                                                          Period Period
                                    Purchas
                                    ingnew
                                    shares
    CITIC                           offline,
    Wings   Limite                    product 1.2%of
    Asset   d             Self-ow      swith  products’
    Manage  Liabili Fund 20,00 ned         fixed  netvalue 7.00%      1,088. N/A        Yes   Yes
    ment    ty           0 funds       earning and20%              30
    Compan Comp                     s,     ofexcess
    y      any                      reverse earnings
    Limited                          repurch
                                    aseof
                                    nationa
                                    ldebt,
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
                                    andetc.
    Total             20,00   --   --  --   --     --     --       1,088.  --          --     --     --
                       0                                     30
    
    
    Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment for cash
    
    entrusted for wealth management
    
    □ Applicable √ Not applicable
    
    (2) Entrusted Loans
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    4. Other Major Contracts
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    XVIII Corporate Social Responsibility (CSR)
    
    1. Measures Taken to Fulfill CSR Commitment
    
    The Company disclosed Social Responsibilities Report of Enterprises for 2018 on 27 April 2019. (for details, see
    
    http://www.cninfo.com.cn)
    
    2. Measures Taken for Targeted Poverty Alleviation
    
    (1) Plans
    
    In accordance with the "organizations are responsible for villages and individuals are responsible for families” poverty alleviation
    
    work arrangement of BozhouMunicipal Party Committee, the Company has established targeted support towards 176 poor families in
    
    Bali village, Yanglou village and Wuma village, Wuma town, Qiaocheng District, Bozhou. The Company performs poverty
    
    alleviation responsibility, sends relevant personnel to the poverty villages regularly or irregularly for investigation, organizes and
    
    holds forum regularly, gathers advices from the villagers and comes up with specific solutions to the practical difficulties and
    
    problems in the poor villages and poor families.
    
    (2) Summary of the Related Work Done in the Reporting Period
    
    ① Providing poverty alleviation employment post. In accordance with the actual production situation of the Company, the Company
    
    provides employment posts with relaxed conditions for children of poor families in three targeted poor administrative villages in
    
    Wuma town. At present, 6 children of poor families have been employed by Gujing group and realized their aspirations for stable
    
    economic income.
    
    ② Charity sales and support poverty relief were conducted. The Company conducted product charity sale activities to support the
    
    poverty relief work of Wuhu, Lu'an, Anqing, Tongling, six counties under Hefei, Tongcheng, Suzhou and Fuyang, and the
    
    accumulated fund from charity sales reached RMB1,233,500.
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    ③ A student aid activity of "loving-care Gujing passes on true love" was conducted. The Company sent 556 books and 144 sets of
    
    sports articles to the children of Bali Village Primary School, Dali Primary School, Yanglou Village Primary School and Wuma
    
    Village Primary School on the Children's Day.
    
    (3) Subsequent Plans
    
    ① Learn the important discourse on poverty alleviation, and ensure political stand. General Party Secretary Xi Jinping's important
    
    discourse on poverty alleviation work is both an ideological weapon and an action guide. The party organizations of all levels of the
    
    Company shall work out a study plan carefully, strengthen the recognition of party members and management personnel on poverty
    
    alleviation work, and put the poverty alleviation work as a major political task, a top livelihood project and a matter of primary
    
    importance.
    
    ② Know about targeted poverty alleviation movement and report and pass it on well. Carry out the requirements of the
    
    Organizational Department of the Municipal Committee and the Municipal Poverty Alleviation Bureau, unite under the leadership of
    
    heads and fulfill the poverty alleviation work all-roundly.
    
    ③ Absorb aspiring youths in poverty and enlarge employment poverty alleviation and relief. Connect to three positioned assistance
    
    and support villages and two stationed villages actively, absorb aspiring youths in poverty or children of households in poverty to
    
    work in the Company, and widen the income increase channels of households in poverty.
    
    3. Issues Related to Environmental Protection
    
    Indicate by tick mark whether the Company or any of its subsidiaries is identified as a major polluter by the environmental protection
    
    authorities.
    
    Yes
    
     Name of    Nameof    Wayof   Numberof Distribution  Discharge    Discharge   Total  Approved  Excessive
      polluter     major    discharge  discharge ofdischarge concentration   standards  discharge   total    discharge
               pollutants            outlets    outlets             implemented        discharge
                                        Gujing
    Anbui                                plant     32.80mg/L
    Gujing    COD       Directly          3 Zhangji    47.15mg/L   ≦100mg/L   151.55t   155.05t  Naught
    Distillery             discharge           plant
    Co., Ltd.                              Headquarter 72.11mg/L
                                        plant
                                        Gujing
    Anbui                                plant     2.27mg/L
    Gujing    NH3-N     Directly          3 Zhangji    4.54mg/L    ≦10mg/L     14.55t    15.53t  Naught
    Distillery             discharge           plant
    Co., Ltd.                              Headquarter 7.43mg/L
                                        plant
    Anbui               Organized          Gujing    26.86mg/m3
    Gujing    Smoke      discharge          3 plant     57.58mg/m3   ≦80mg/m3     38t    --     Naught
    Distillery             through            Zhangji
    Co., Ltd.             chimney            plant     40.39mg/m3
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
                                        Headquarter
                                        plant
                                        Gujing
    Anbui               Organized          plant     208.53mg/m3
    Gujing    SulfurDioxidedischarge          3 Zhangji    198.51mg/m3 ≦400mg/m3   198.2t    --     Naught
    Distillery             through            plant
    Co., Ltd.             chimney            Headquarter 193.01mg/m3
                                        plant
                                        Gujing
    Anbui               Organized          plant     213.94mg/m3
    Gujing    Nitrogen    discharge          3 Zhangji    237.34mg/m3 ≦400mg/m3   217.2t    --     Naught
    Distillery   oxide       through            plant
    Co., Ltd.             chimney            Headquarter 215.58mg/m3
                                        plant
                                        No. 1
    Anhui               Organized          furnace    41.76mg/m3
    Longrui    Smoke      discharge          3 No.2     32.62mg/m3  ≦200mg/m3   10.18t    --     Naught
    Glass Co.,            through            furnace
    Ltd                 chimney            No.3     37.60mg/m3
                                        furnace
                                        No. 1
    Anhui               Organized          furnace    56.8mg/m3
    Longrui    SulfurDioxidedischarge          3 No.2     149.27mg/m3 ≦850mg/m3   33.86t    --     Naught
    Glass Co.,            through            furnace
    Ltd                 chimney            No.3     134.21mg/m3
                                        furnace
                                        No. 1
    Anhui               Organized          furnace    395.18mg/m3
    Longrui    Nitrogen    discharge          3 No.2     409.07mg/m3 ≦700mg/m3   89.64t    --     Naught
    Glass Co.,  oxide       through            furnace
    Ltd                 chimney            No.3     255.98mg/m3
                                        furnace
    
    
    Construction and operation of facilities for preventing pollution:
    
    1. Construction and operation of the sewage control facilities of the listed Company and its subsidiary companies
    
    (1)In-depth treatment and renovation has been made for the sewage treatment station of Zhangji Plant under Anhui Gujing
    
    Distillery Co., Ltd, the original IC anaerobic jar, oxidization ditch and secondary clarifier sewage treatment process has been changed
    
    into IC anaerobic jar, improved A2/O and in-depth treatment process, and the budgeted investment of the project is about RMB8
    
    million. Currently its renovation has been completed and it is being commissioned. Its sewage treatment capacity is about 600 tons
    
    per day. The sewage is discharge after treatment and up to the standard, and discharge of sewage is in compliance with the direct
    
    discharge requirements in GB27631-2011 Discharge Standard of Water Pollutants for Fermentation Alcohol and Distilled Spirits
    
    Industry.
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    (2)The sewage treatment capacity of the sewage treatment station of the headquarters of Anhui Gujing Distillery Co., Ltd is about
    
    4300 tons per day. IC anaerobic jar, A2/O and in-depth treatment process has been adopted. The sewage is discharged after treatment
    
    and up to the standard, and discharge of sewage is in compliance with the direct discharge requirements in GB27631-2011 Discharge
    
    Standard of Water Pollutants for Fermentation Alcohol and Distilled Spirits Industry.
    
    (3)The sewage treatment capacity of the sewage treatment station of Gujing Subsidiary under Anhui Gujing Distillery Co., Ltd is
    
    about 2300 tons per day. IC anaerobic jar, A2/O and in-depth treatment process is adopted. The sewage is discharged after treatment
    
    and up to the standard, and discharge of sewage is in compliance with the direct discharge requirements in GB27631-2011 Discharge
    
    Standard of Water Pollutants for Fermentation Alcohol and Distilled Spirits Industry.
    
    (4)The production and living sewage of Anhui Longrui Glass Co., Ltd is discharged into the sewage treatment station of Zhangji
    
    Plant under Anhui Gujing Distillery Company Limited, and it is discharged after treatment and up to the standard.
    
    2. Construction and operation situation of waste gas control facilities of the listed Company and its subsidiaries
    
    (1)The flue gas control facilities of thermal power stations of the Headquarters and Gujing Subsidiary of Anhui Gujing Distillery
    
    Company Limited run well, waste gas is discharged through the 80-meter-tall exhaust funnel after the waste gas treatment is up to the
    
    standard, and discharge of flue gas meets the requirements for coal-fired boiler in Table 1 of GB13271-2014 Emission Standard of
    
    Air Pollutants for Industrial Kiln and Furnace. In June, 2018, a super-low discharge renovation project was started, and the process of
    
    cloth-bag dust removal (original)+Limestone-Wet flue gas Desulfurization (renovated) +SNCR Denitrification by non-catalytic
    
    reduction (original) + SCR Denitrificationby catalytic reduction (newly added) + Wet electrostatic precipitator (newly added) has
    
    been adopted, and it has passed the environment assessment and approval of the Municipal Environment Protection Bureau on 2
    
    August 2018, and it is now being renovated.
    
    (2) A coal-to-gas project has been started for the thermal power station of Zhangji Plant under Anhui Gujing Distillery Company
    
    Limited, and it is being renovated now, and the original boiler runs normally. The process of cloth-bag dust removal +Desulfurization
    
    in limestone furnace+SNCR Denitrification by non-catalytic reduction has been adopted, waste gas is discharged through the
    
    45-meter-tall exhaust funnel after the waste gas treatment is up to the standard, and discharge of flue gas meets the requirements for
    
    coal-fired boiler in Table 1 of GB13271-2014 Emission Standard of Air Pollutants for Industrial Kiln and Furnace.
    
    (3)No.2 furnace of Anhui Longrui Glass Co., Ltd has been stopped, No.2 and No.3 furnaces have completed coal-to-gas work and
    
    are running stably. SCR Denitrification by catalytic reduction has been adopted, waste gas is discharged through the 45-meter-tall
    
    exhaust funnel after the waste gas treatment is up to the standard, and discharge of flue gas meets the requirements in GB9078-1996
    
    Emission Standard of Air Pollutants for Boiler.
    
    In 2018, the environment protection facilities of Anhui Gujing Distillery Company Limited and its subsidiaries ran normally in
    
    general, main pollutants can achieve up-to-standard discharge, environment information is opened to the public normally, and they
    
    have performed their social responsibilities properly.
    
    Environmental impact assessment of construction project and other administrative license situation in respect of
    
    environmental protection
    
      No.             Item              CategoryofEIA     EIAapproval(filing)time   EIAapproval(filing)number
            Thetechnicalrenovationprojectof
       1    automatic3-Dfermentation           EIAreportform       28March2018         BHB[2018]No.18
            intelligentbrewingworkroom
            Thetechnicalupgradeand
       2    renovationprojectofboiler'sflue       EIAreportform       2August2018         BHB[2018]No.49
            gassuper-lowemission
       3    Thein-depthtreatmentand           EIAreportform      27August2018         BHB[2018]No.48
            renovationprojectforsewage
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
            treatmentstationinZhangjiPlant
            area
            Theautomatictechnical             EIAregistration
       4    renovationprojectforintelligent          form           24October2018         201834160200000803
            logisticandwarehousing
       5    Thesewagetreatmentstation          EIAregistration     22November2018        201834160200000857
            peculiarsmellcontrolproject            form
            Theboiler'scoal-to-gasprojectin
       6    ZhangjiPlantareaofAnhui           EIAregistration     22November2018        201834160200000858
            GujingDistilleryCompany             form
            Limited
    
    
    Emergency plan for sudden environment affairs
    
    The Company has formulated the Emergency Plan of Anhui Gujing Distillery Company Limited for Sudden Environmental Pollution
    
    Accident, which has been filed with municipal environmental protection bureau. Emergency plan drill has been carried out according
    
    to relevant requirements.
    
    Environmental self-monitoring scheme
    
    The Company has formulated the Self-Monitoring Scheme of Key Pollution Source Enterprises under the National Monitoring and
    
    published it on the website of Bozhou Environmental Protection Bureau.
    
    Other environment information that should be disclosed
    
    Naught
    
    Other related environment protection information
    
    Naught
    
    XIX Other Significant Events
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    XX Significant Events of Subsidiaries
    
    □ Applicable √ Not applicable
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    Part VI Share Changes and Shareholder Information
    
    I. Share Changes
    
    1. Share Changes
    
    Unit: share
    
                            Before         Increase/decreaseintheReportingPeriod(+/-)          After
                                               Sharesas  Sharesas
                               Percentage   New   dividend   dividend                        Percentage
                         Shares    (%)    issues  converted  converted   Other  Subtotal   Shares     (%)
                                                from   fromcapital
                                                profit    reserves
    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 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 and diluted earnings per share, equity per share attributable to the Company’s ordinary
    
    shareholders and other financial indicators of the prior year and the prior accounting period, respectively:
    
    □ Applicable √ Not applicable
    
    Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
    
    □ Applicable √ Not applicable
    
    2. Changes in Restricted Shares
    
    □ Applicable √ Not applicable
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    II. Issuance and Listing of Securities
    
    1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period
    
    □ Applicable √ Not applicable
    
    2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
    
    □ Applicable √ Not applicable
    
    3. Existing Staff-Held Shares
    
    □ Applicable √ Not applicable
    
    III Shareholders and Actual Controller
    
    1. Shareholders and Their Shareholdings at the Period-End
    
    Unit: share
    
                                                                           Number   of
                                                                           preferred
                                                                           shareholders
                        Number     of                                       with resumed
    Number    of         ordinary                    Number  of  preferred         voting  rights
    ordinary         29,761shareholdersatthe        20,097shareholders     with        0 at       the      0
    shareholders           month-end  prior             resumedvotingrights(if         month-end
                        to the disclosure             any)(seenote8)               prior  to  the
                        ofthisReport                                           disclosure  of
                                                                           this Report (if
                                                                           any) (see note
                                                                           8)
                                5%orgreatershareholdersortop10shareholders
        Nameof     Natureof  Shareholding Totalshares Increase/decrease Restricted Non-restricted Sharesinpledgeorfrozen
       shareholder   shareholder  percentage  heldatthe  intheReporting  shares   sharesheld    Status     Shares
                                     period-end    Period      held
    ANHUI  GUJING
    GROUP        State-owned     53.89% 271,404,022                     271,404,022 Inpledge   114,000,000
    COMPANY     legalperson
    LIMITED
    NORGES BANK Foreign legal     2.58% 12,975,637                      12,975,637
                 person
    GAOLING      Foreign legal     2.47% 12,446,408                      12,446,408
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    FUND,L.P.      person
    CHINA INT'L
    CAPITALCORP  Foreignlegal
    HONG KONG   person          1.59%  7,990,369                       7,990,369
    SECURITIES
    LTD
    AGRICULTURAL
    BANK OF
    CHINA- EFUND
    CONSUMPTION Other          1.49%  7,485,278                       7,485,278
    SECTOR STOCK
    SECURITIES
    INVESTMENT
    FUND
    UBS (LUX)
    EQUITY FUND- Foreignlegal
    CHINA        person          1.41%  7,096,361                       7,096,361
    OPPORTUNITY
    (USD)
    CENTRAL
    HUIJIN ASSET  State-owned      1.30%  6,543,600                       6,543,600
    MANAGEMENT legalperson
    CO., LTD.
    GREENWOODS  Foreignlegal
    CHINAALPHA  person          1.12%  5,657,150                       5,657,150
    MASTER FUND
    UBS (LUX)
    EQUITY FUND- Foreignlegal     0.84%  4,214,618                       4,214,618
    GREATER      person
    CHINA (USD)
    HONG KONG
    SECURITIES    Foreignlegal     0.82%  4,129,038                       4,129,038
    CLEARING     person
    COMPANYLTD.
    Strategic investororgenerallegal
    person  becoming  a  top-10N/A
    ordinary shareholderduetorights
    issue (ifany)(seenote3)
    Related   or  acting-in-concertAmong the shareholders above, the Company’s controlling shareholder—Anhui Gujing Group
    parties among the shareholdersCompany Limited—is not a connected party of other shareholders; nor are they parties acting in
    above                   concert as defined in the Administrative Measures on Information Disclosure of Changes in
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
                           Shareholding of Listed Companies. As for the other shareholders, the Company does not know
                           whethertheyareconnectedpartiesorwhethertheybelongtopartiesactinginconcertasdefinedin
                           the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed
                           Companies.
                                     Top10non-restrictedshareholders
                                                                              Shares bytype
        Name ofshareholder              Non-restrictedsharesheldattheperiod-end
                                                                             Type     Shares
    ANHUI   GUJING   GROUP                                                RMB
    COMPANYLIMITED                                              271,404,022 ordinary    271,404,022
                                                                          share
                                                                          Domestically
    NORGES BANK                                                  12,975,637 listedforeign  12,975,637
                                                                          stock
                                                                          Domestically
    GAOLING FUND,L.P.                                               12,446,408 listedforeign  12,446,408
                                                                          stock
    CHINA INT'LCAPITALCORP                                                 Domestically
    HONG KONGSECURITIES                                           7,990,369 listedforeign   7,990,369
    LTD                                                                   stock
    AGRICULTURALBANKOF
    CHINA- EFUND                                                          RMB
    CONSUMPTION SECTOR                                            7,485,278 ordinary      7,485,278
    STOCK SECURITIES                                                       share
    INVESTMENT FUND
    UBS (LUX)EQUITYFUND-                                                  Domestically
    CHINA OPPORTUNITY(USD)                                         7,096,361 listedforeign   7,096,361
                                                                          stock
    CENTRAL HUIJINASSET                                                   RMB
    MANAGEMENT CO.,LTD.                                            6,543,600 ordinary      6,543,600
                                                                          share
    GREENWOODS CHINA                                                     Domestically
    ALPHA MASTERFUND                                              5,657,150 listedforeign   5,657,150
                                                                          stock
    UBS (LUX)EQUITYFUND-                                                  Domestically
    GREATERCHINA(USD)                                             4,214,618 listedforeign   4,214,618
                                                                          stock
    Hong KongSecuritiesClearing                                                 RMB
    Company Ltd.                                                     4,129,038 ordinary      4,129,038
                                                                          share
    Related   or  acting-in-concert Among the shareholders above, the Company’s controlling shareholder—Anhui Gujing Group
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    parties amongtop10unrestricted Company Limited—is not a connected party of other shareholders; nor are they parties acting in
    public shareholders, as well as concert as defined in the Administrative Measures on Information Disclosure of Changes in
    between  top  10  unrestricted Shareholding of Listed Companies. As for the other shareholders, the Company does not know
    public shareholders and top 10 whethertheyareconnectedpartiesorwhethertheybelongtopartiesactinginconcertasdefinedin
    shareholders               the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed
                           Companies.
    Top 10 ordinary shareholders
    involved  in securities marginN/A
    trading (ifany)(seenote4)
    
    
    Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the
    
    Company conducted any promissory repo during the Reporting Period.
    
    □ Yea √ No
    
    No such cases in the Reporting Period.
    
    2. Controlling Shareholder
    
    Nature of the controlling shareholder: controlled by a local state-owned legal person
    
    Type of the controlling shareholder: legal person
    
        Nameofcontrolling         Legal                       Unifiedsocialcredit
           shareholder       representative/person Dateofestablishment        code           Principalactivity
                             in charge
    ANHUI GUJINGGROUP                                                   Makingbeverage,
    COMPANYLIMITED      LiangJinhui       16January1995     91341600151947437P   constructionmaterialsand
                                                                         plastic products,etc.
    Controlling    shareholder’s
    holdings  in  other  listed The  controlling  shareholder  ANHUI  GUJING  GROUP  COMPANY LIMITED  directly
    companies at home or abroad holds100,000,000sharesofHuaanSecuritiesCo.,Ltd.owningtheproportionofsharesof2.76%.
    in theReportingPeriod
    
    
    Change of the controlling shareholder in the Reporting Period:
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    3. Information about the Actual Controller
    
    Nature of the actual controller: Local administrator for state-owned assets
    
    Type of the actual controller: legal person
    
                               Legal          Dateof      Unifiedsocialcredit
      Name ofactualcontroller   representative/person   establishment         code            Principalactivity
                              incharge
    State-owned AssetsSupervision      N/A                          N/A                N/A
    and         Administration
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    Commission  of the People’s
    Government ofBozhou
    Other listed companies athome
    or abroad controlled by the N/A
    actual   controller   in   the
    Reporting Period
    
    
    Change of the actual controller during the Reporting Period:
    
    □ Applicable √ Not applicable
    
    No such cases in the Reporting Period.
    
    Ownership and control relations between the actual controller and the Company:
    
    State-Owned Assets Supervision and Administration Commission of
    
    Bozhou Municipal People’s Government
    
    60%
    
    Anhui Gujing Group Company Limited
    
    53.89%
    
    Anhui Gujing Distillery Company Limited
    
    Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset management.
    
    □ Applicable √ Not applicable
    
    4. Other 10% or Greater Corporate Shareholders
    
    □ Applicable √ Not applicable
    
    5. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,
    
    Reorganizer and Other Commitment Makers
    
    □ Applicable √ Not applicable
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    Part VII Preferred Shares
    
    □ Applicable √ Not applicable
    
    No preferred shares in the Reporting Period.
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    Part VIII Directors, Supervisors, Senior Management and StaffI Change in Shareholdings of Directors, Supervisors and Senior Management
    
                                                           Increase Decrease
                    Incumbent/Forme Gende Ag SotafrtEonfdBeginning   inthe   inthe     Other      Ending
      Name  Officetitle       r        r    e  tenur tenur shareholdin Reportin Reportin increase/decreas shareholdin
                                          e    e   g(share)  gPeriod gPeriod    e(share)    g(share)
                                                           (share)   (share)
    Liang    Chairman                       20   19
    Jinhui    ofthe     Incumbent     Male   53 June June
            Board                         2017 2020
                                         20   19
    Li Peihui  Director   Incumbent     Male   46 June June
                                         2017 2020
    Zhou    Director,                       20   19
    Qingwu   GM      Incumbent     Male   45 June June
                                         2017 2020
            Director,                       20   19
    YanLijun Executive  Incumbent     Male   46 June June
            Deputy                        2017 2020
            GM
            Director,                       20   19
    Xu Peng  Deputy    Incumbent     Male   49 June June
            GM                          2017 2020
            Director,
            Deputy
    Ye      GM,Chief                      20   19
    Changqin Accountant Incumbent     Male   45 June June
    g       ,Secretary                      2017 2020
            ofthe
            Board
            Independen                     20   19
    WangGao tdirector  Incumbent     Male   54 June June
                                         2017 2020
    Song    Independen                     20   19
    Shuyu    tdirector  Incumbent     Male   57 June June
                                         2017 2020
    Du Jie   Independen Incumbent     Male   49 20   19
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
            tdirector                       June June
                                         2017 2020
            Chairman
    Wang    ofthe                         20   19
    Feng     Supervisor Incumbent     Male   54 June June
            y                            2017 2020
            Committee
    Yang                                 20   19
    Xiaofan   Supervisor Incumbent     Male   52 June June
                                         2017 2020
    Fu                                   20   19
    Qiangxin  Supervisor Incumbent     Male   50 June June
                                         2017 2020
            Employee                      20   19
    Zhang Bo supervisor  Incumbent     Male   54 June June
                                         2017 2020
    Wang    Employee                      20   19
    Zibin    supervisor  Incumbent     Male   49 June June
                                         2017 2020
    Zhang    Deputy                        20   19
    Lihong   GM      Incumbent     Male   51 June June
                                         2017 2020
    Zhu     GM                          20   19
    Xianghon assistant   Incumbent     Male   45 June June
    g                                    2017 2020
    Gao     GM                          20   19
    Jiakun    assistant   Incumbent     Male   49 June June
                                         2017 2020
      Total      --         --        --   --   --   --
    
    
    II Change of Directors, Supervisors and Senior Management
    
    □ Applicable √ Not applicable
    
    III Biographical Information
    
    Professional backgrounds, major work experience and current duties in the Company of the incumbent directors, supervisors and
    
    senior management:
    
    1. Mr. Liang Jinhui, male, born in October 1966, is Political Engineer and a deputy to the 13th National People’s Congress who has
    
    educational experience of graduate student, incumbent president of the Company and president and Secretary of CPC of Gujing
    
    Group. He ever took the post of MD, GM, Deputy GM, GM of Bozhou Gujing Sales Co., Ltd., Supervisor of Third Supervisory
    
    Committee, Director of the 4th, 5th and 6th Board of Directors and Chairman of the 7th Board of Directors of the Company.
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    2. Mr. Li Peihui, male, born in July 1973, is a holder of master degree. He is a senior accountant, CPA and member of national
    
    leading accounting talents. At present, he acts as the Company’s Vice Secretary of CPC and president of Gujing Group. He had ever
    
    served as deputy GM and GM of Financial Department, deputy chief accountant, chief accountant, Secretary of Board of Directors
    
    and Director of the Company; Chairman of the Board of Anhui Ruijing Business Travel Group Co. and Anhui Huixin Financial
    
    Investment Group; executive vice president and CFO of Gujing Group; and director of the 7th Board of Directors.
    
    3. Mr. Zhou Qingwu, male, born in February 1974, is a senior accountant and national chief sommelier with educational experience
    
    of graduate student. At present, he is Director and General Manager of the Company, Vice Secretary of CPC of Gujing Group. He
    
    had ever acted as Chairman and General Manager of Bozhou Gujing Packing Material Co., Ltd., Deputy GM and deputy executive
    
    GM of the Company and Director of the 5th , 6th and 7th Board of Directors of the Company.
    
    4. Mr. Yan Lijun, male, June 1973, is a holder of master degree with Senior Taster. Now he is Director, Executive Deputy GM of the
    
    Company, member of CPC Committee of Gujing Group, Chairman of the Board and GM of Bozhou Gujing Sales Co., Ltd. He once
    
    worked as a salesman of Sale Company, District Manager, Director of Market Research, Vice Manager of Planning Department,
    
    Director of Hefei Strategic Operations Center, Vice GM and director of the 7th Board of Directors of the Company.
    
    5. Mr. Xu Peng, male, born in September 1970, has educational experience of undergraduate college. He is the Director and Deputy
    
    GM of the Company, member of CPC Committee of Gujing Group, and Chairman of the Board of Yellow Crane Tower Liquor
    
    Industry Co., Ltd. He had ever acted as Deputy Director and Director of Finance Second Office of Finance Department of the
    
    Company, Manager of Finance Department of Anhui Laobada Co., Ltd., Vice Manager and Manager of Finance Department of the
    
    Company, Deputy General Manager and Chief Supervisor of Market Supervision Department of Bozhou Gujing Sales Company,
    
    Chairman of the Supervisory Committee of the Company, and Chairman of the 7th Board of Directors.
    
    6. Mr. Ye Changqing, male, born in October 1974, is a member of national leading accounting talents (back up) with master degree
    
    and International Certified Internal Auditor. He is the incumbent Director, Deputy GM, Chief Accountant and Secretary of Board of
    
    Directors of the Company. He had ever acted as Chief Auditor of Audit Department, Vice Manager of Audit Department and Vice
    
    Supervisor and Supervisor of Auditing& Supervision Department; and Supervisor of the 4th Supervisory Committee of the Company;
    
    Director and Secretary of the 5th, 6th, and 7th Board of Directors, and Chief Accountant of the Company.
    
    7. Wang Gao, Male, born in April 1965, Doctor of Sociology,Professor of Marketing and vice dean in China Europe International
    
    Business School., Academic Director of Chief Marketing Officer (CMO) Project, Co-Director of Chinese Enterprise Globalization
    
    Research Center and independent director of GOME Holdings Co., Ltd.. He once worked as Associate Professor, Deputy Dean of
    
    Department of Marketing in School of Economics and Management, Tsinghua University, deputy director of China's Retail Research
    
    Center Academic Director of Harvard - central Europe - Tsinghai university senior managers (SEPC) project. Strategic Analysis
    
    Manager of Minute Maid Branch of Coca-Cola Company and senior counselor of The Information Resources Co., Ltd. (IRI).
    
    8. Song Shuyu, male, born in November 1962, is Senior Engineer and Master of Chinese Wine with educational experience of
    
    graduate student. Now, he is Deputy President and Secretary General of China Alcoholic Drinks Association, Secretary-general of
    
    Liquor Branch Association, Secretary General of Market Professional Committee, Secretary General of White Wine Club Technical
    
    Committee, specialist who enjoy the special allowance of the state council. He also is member of Chinese liquor standardization
    
    technical committee, Deputy Secretary General of strong-flavor, Feng-flavour, soybean-flavor and rice flavour Liquor Technical
    
    Committee of Chinese Liquor Standardization Technical Committee, Chairman of Committee of Te-flavour Chinese spirits and
    
    Laobaigan-flavour Chinese spirits standardization technical committee.
    
    9. Mr. Du Jie, male, born in December 1970 is a senior accountant with postgraduate degree, CPA and CTA. Now he is a advisory
    
    service leading partner of Huapu Tianjian Certified Public Accountants (LLP), internal control advisory expert specially hired by
    
    Anhui Provincial Department of Finance, managing accounting advisory expert specially hired by Beijing Municipal Bureau of
    
    Finance, expert talent in Beijing CPA, master tutor specially hired by Business School of Anhui University, independent director of
    
    Shaanxi Bicon Pharmaceutical Company Limited, Beijing NAV Technology Co., Ltd., and Tianjin Lishen Battery Joint-stock Co.,
    
    Ltd. He once acted as senior manager in Business Risk Service Division of Deloitte & Touche and advisory expert in business
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    internal control specially hired by the Ministry of Finance.
    
    10. Mr. Wang Feng, male, born in October 1965, is Senior Economic Engineer who is postgraduate degree holder, incumbent Deputy
    
    Secretary of CPC of Gujing Group and Secretary of Discipline Inspection Commission. He had ever acted as Director and Secretary
    
    of the Second Board of Directors of the Company, Vice General Manager and General Manager of the Company, Director and
    
    Chairman of the 3rd and 4th Board of Directors of the Company, Director of the 5th, 6th, and 7th Board of Directors, and Chairman of
    
    the 7th Supervisory Committee of the Company.
    
    11. Mr. Yang Xiaofan, male, born in April 1967, is a holder of master degree. At present, he is Supervisor of the Company and Vice
    
    President and member of CPC Committee of Gujing Group. He once acted as Vice President and General Manager of Anhui Gujing
    
    Real Estates Group Co., Ltd., Assistant to President of Gujing Group; Director of the 5th, 6th and 7th Board of Directors of the
    
    Company and Supervisor of the 7th Supervisory Committee.
    
    12. Mr. Fu Qiangxin, male, born in October 1969, is a senior accountant and international certified internal auditor with bachelor
    
    degree. Now he serves as Supervisor of the Company and GM of Anhui Huixin Finance Investment Group Co., Ltd. He ever took
    
    posts of accountant of Bozhou Gujing Hotel, Manager of Finance of Bozhou Gujing Integrated Services Company and Bozhou
    
    Gujing Import and Export Trade Company, clerk of Planning and Finance Department, Chief Inspector of Internal Audit Center and
    
    Director of Financial Management Center of Gujng Group and Supervisor of the 6th and 7th Supervisory Committee of the Company.
    
    13. Mr. Zhang Bo, male, born in July 1965, is an economist with bachelor degree. Now, he serves as Employee Supervisor of the
    
    Company and Chairman of the Labor Union of Gujing Group. He once worked as Chairman of the board and GM of Bozhou Gujing
    
    Printing Co., Ltd. and Bozhou Gujing Glassware Manufacturing Co., Ltd. as well as Chairman of the Board of Bozhou Ruineng Heat
    
    and Power Co., Ltd. and Supervisor of the 7th Supervisory Committee of the Company.
    
    14. Mr. Wang Zibin, was born in August 1970 with college degree, CIA and CPA. Now he is Employee Supervisor of the Company,
    
    Deputy Secretary of Commission for Discipline and Inspection and Director of Audit and Supervisory Centre of Gujing Group. He
    
    once served as GM of Auditing Department of Gujing Group, vice director of Hefei marketing centre of Bozhou Gujing Sales
    
    Company and Supervisor of the 7th Supervisory Committee of the Company.
    
    15. Mr. Zhang Lihong, male, born in October 1968, is an economist with bachelor degree. He is incumbent Deputy GM of the
    
    Company and member of CPC Committee and deputy secretary of Commission for Discipline and Inspection of Gujing Group. He
    
    once acted as clerk, Secretary of Operation Department and Market Development Department, Deputy GM, Director of General
    
    Office, Director of Service Centre of Bozhou Gujing Sales Co., Ltd., Director of HR Department and Administrative Service Center
    
    of the Company.
    
    16. Mr. Zhu Xianghong, male, born in September 1974, is a senior Wine Taster with bachelor degree. He is incumbent assistant to
    
    GM of the Company, and GM of Yellow Crane Tower Liquor Industry Co., Ltd. He once acted as GM of Product Department of
    
    Bozhou Gujing Sales Co., Ltd., GM of Hefei Office, regional GM of Northern Anhui Province, GM of Anhui Operating Centre and
    
    standing Deputy GM of Sales Company.
    
    17. Mr. Gao Jiakun, male, born in November 1970, is a holder of bachelor degree. He is incumbent assistant to GM of the Company.
    
    He once served as GM of Production Management Department, Vice Director of Production Management Centre, Chairman of the
    
    Board and GM of Bozhou Pairuite Packing Products Co., Ltd., Director of Finished Products Filling Centre and Production
    
    Management Centre of the Company.
    
    Offices held concurrently in shareholding entities:
    
    √Applicable □Not applicable
    
                                             Office heldin                         Remunerationor
        Name            Shareholdingentity            the     Startoftenure   Endoftenure  allowancefromthe
                                              shareholding                         shareholdingentity
                                                entity
    Liang Jinhui   AnhuiGujingGroupCo.,Ltd.          Chairmanof  1May2014                Yes
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
                                             the Boardof
                                             Directors,
                                             Chairman of
                                             Party
                                             Committee
                                             Deputy
                                             Chairman of  31October
    Li Peihui     AnhuiGujingGroupCo.,Ltd.          Party      2017                    Yes
                                             Committee,,
                                             President
                                             Deputy
                                             Chairman of
                                             Party
    WangFeng    AnhuiGujingGroupCo.,Ltd.          Committee,  1August2010              Yes
                                             Chairman of
                                             Discipline
                                             Inspection
                                             Committee
                                             Vice
                                             President,    1November
    YangXiaofan  AnhuiGujingGroupCo.,Ltd.          memberof   2009                    Yes
                                             the Party
                                             Committee
                                             Chairman of  16October
    Zhang Bo     AnhuiGujingGroupCo.,Ltd.           theLabor   2015                    Yes
                                              Union
                                             Deputy
                                             Chairman of
                                             Discipline
                                             Inspection
    WangZibin   AnhuiGujingGroupCo.,Ltd.          Committee,  27April2015              Yes
                                             Director of
                                             Auditing &
                                             Supervision
                                             Center
               The above-mentioned personnel, though they take posts in shareholders’ entities, comply with the relevant
    Notes        employment requirements of Company Law, Securities Law and never disciplined by CSRC, other relevant
               departments andtheStockExchange.
    
    
    Offices held concurrently in other entities:
    
    √Applicable □Not applicable
    
        Name               Otherentity            Officeheldin Startoftenure   Endoftenure   Remunerationor
                                               the entity                           allowancefrom
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
                                                                                   theentity
    Fu Qiangxin   AnhuiHuixinFinanceInvestmentGroup   GM       27November               Yes
                Co.,Ltd.                                  2017
    Notes        AnhuiHuixinFinanceInvestmentGroupCo.,Ltd.isawholly-ownedsubsidiaryofAnhuiGujingGroupCo.,Ltd.
    
    
    Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and senior
    
    management as well as those who left in the Reporting Period:
    
    □ Applicable √ Not applicable
    
    IV Remuneration of Directors, Supervisors and Senior Management
    
    Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisors and senior
    
    management:
    
    (I) Decision-making procedure of remuneration for Directors, Supervisors and Executive Officers
    
    The Remuneration & Appraisal Committee under the Board of Directors is in charge of drafting appraisal index of senior
    
    management and checking accomplishment of annual index.
    
    (II) Determination basis of remuneration for Directors, Supervisors and Executive Officers
    
    The remuneration is determined based on the annual performance of the Company and the appraisal result in accordance with the
    
    spirits in the Implementation Opinion on Deepening the System Reform of Remuneration of Chargers in Provincial Enterprises
    
    (WF[2015] No. 28), and the Interim Procedures of Remuneration Management of Chargers in Municipal Enterprises (GZG[2017] No.
    
    21) issued by the CPC Anhui Provincial Committee and the People’s Government of Anhui.
    
    (III) Actual Payment of remuneration for Directors, Supervisors and Executive Officers
    
    Payment of the remuneration of Directors, Supervisors and Executive Officers is distributed annually according to check.
    
    Remuneration of directors, supervisors and senior management for the Reporting Period
    
    Unit: RMB'0,000
    
                                                                    Totalbefore-tax
        Name       Officetitle       Gender         Age     Incumbent/Former  remuneration  Anyremuneration
                                                                       fromthe    fromrelatedparty
                                                                      Company
    Liang Jinhui    Chairmanofthe  Male                    53 Incumbent                  Yes
                 Board
    Li Peihui       Director       Male                    46 Incumbent                  Yes
    Zhou Qingwu   Director,GM    Male                    45 Incumbent              84.87 No
                 Director,
    YanLijun      ExecutiveDeputy Male                    46 Incumbent             253.32No
                 GM
    Xu Peng       Director,Deputy  Male                    49 Incumbent              88.56 No
                 GM
    YeChangqing   Director,Deputy  Male                    45 Incumbent              94.86 No
                 GM,Chief
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
                 Accountant,
                 Secretaryofthe
                 Board
    WangGao      Independent    Male                    54 Incumbent                7.5 No
                 director
    Song Shuyu     Independent    Male                    57 Incumbent                7.5 No
                 director
    Du Jie        Independent    Male                    49 Incumbent                7.5 No
                 director
                 Chairmanofthe
    WangFeng     Supervisory     Male                    54 Incumbent                  Yes
                 Committee
    YangXiaofan    Supervisor     Male                    52 Incumbent                  Yes
    Fu Qiangxin    Supervisor     Male                    50 Incumbent                  Yes
    Zhang Bo      Employee      Male                    54 Incumbent                  Yes
                 supervisor
    WangZibin     Employee      Male                    49 Incumbent                  Yes
                 supervisor
    Zhang Lihong   DeputyGM     Male                    51 Incumbent             101.68No
    Zhu Xianghong  GMassistant    Male                    45 Incumbent             241.21No
    Gao Jiakun     GMassistant    Male                    49 Incumbent              82.84 No
         Total          --           --           --            --              969.84      --
    
    
    Equity incentives for directors, supervisors and senior management in the Reporting Period:
    
    □ Applicable √ Not applicable
    
    V Employees
    
    1. Number, Functions and Educational Backgrounds of Employees
    
    Number ofin-serviceemployeesoftheCompanyastheparent                                           5,786
    Number ofin-serviceemployeesofmajorsubsidiaries                                                2,537
    Total numberofin-serviceemployees                                                           8,323
    Total numberofpaidemployeesintheReportingPeriod                                               8,323
    Number ofretireestowhomtheCompanyastheparentorits                                            1,103
    major subsidiariesneedtopayretirementpensions
                                             Functions
                       Function                                      Employees
    Production                                                                             5,357
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    Sales                                                                                 1,600
    Technical                                                                               400
    Financial                                                                               170
    Administrative                                                                            796
    Total                                                                                 8,323
                                        Educationalbackgrounds
                  Educationalbackground                                 Employees
    Master orabove                                                                           65
    Bachelor                                                                              1,719
    Junior college                                                                           1,591
    High schoolorbelow                                                                      4,948
    Total                                                                                 8,323
    
    
    2. Employee Remuneration Policy
    
    The remuneration policy was conducted strictly in line with the related law and regulations of the state, and the plan of operation
    
    performance and profits of the Company and the relevant remuneration policy management.
    
    3. Employee Training Plans
    
    Employee training is significant in the Human resource management. The Company always pay high attention to the employee
    
    training and development, the Company sets up effective training plan combining with the current situation of the Company, annual
    
    plan, nature of the post and the demand of employee learning, which includes new employee induction training, on-job training,
    
    front-line employee operating skills training, management improvement training and part-time study. Continuously improve the
    
    whole quality of the employees, realized a win-win situation and progress between the Company and the employees.
    
    4. Labor Outsourcing
    
    □ Applicable √ Not applicable
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    Part IX Corporate Governance
    
    I General Information of Corporate Governance
    
    Since foundation, the Company constantly perfects corporate governance structure and standardize its management strictly in
    
    accordance with the Company Law, Securities Law, Standard for Governance of Listed Companies, Guide Opinion on Setting up
    
    Independent Directors Systems for Listed Companies as well as principles and requirements of other relevant laws, regulations and
    
    normative documents.
    
    In the reporting period, the Company developed internal control activity, implemented Rules on Management of Assets Provision for
    
    Impairment, The Policy on the Liability of Disclosing Materially Inaccurate Information in Annual Report, Rules for Management of
    
    External Information User and Rules for Management of Insider of Inner Information, perfected internal control system step by step,
    
    promoted normative operation and healthy development. The Board of Directors, the Supervisory Committee and the management of
    
    the Company make decisions, perform rights and assume obligation strictly according to the standard operation rules and inner
    
    control system so as to make sure the standard operation of the Company in the frame of rules and systems.
    
    In the reporting period, according to requirements of China Securities Regulatory Commission and Rules for Listing of Shares in
    
    Shenzhen Stock Exchange and with the “open, fair and just” principle, the Company seriously and timely performed information
    
    disclosure obligation and guaranteed that the information disclosed is true, accurate and complete, free from fictitious presentation,
    
    misleading statements or important omissions, so that all the shareholders will equally acquaint themselves with all the notices of the
    
    Company.
    
    After the reporting period, the Company will continuously optimize and perfect the corporate governance of listed companies, further
    
    improve the standard operation of the Company.
    
    Indicate by tick market whether there is any material incompliance with the regulatory documents issued by the CSRC governing the
    
    governance of listed companies.
    
    □ Yes √ No
    
    No such cases in the Reporting Period.
    
    II The Company’s Independence from Its Controlling Shareholder in Business, Personnel,
    
    Asset, Organization and Financial Affairs
    
    The Company and the controlling shareholder, Anhui Gujing Group Co., Ltd., realized five independences in terms of business,
    
    personnel, assets, organizations and financial affairs, with separate independent calculation, independent and complete business,
    
    independent operation ability, and independent responsibilities and risks. Majority shareholders cannot surpass the shareholders’
    
    general meeting to directly or indirectly interfere with the Company’s decisions and legal production as well as operation activities,
    
    and there is no same trade competition state of the same products between the company and majority shareholders.
    
    III Horizontal Competition
    
    □ Applicable √ Not applicable
    
    IV Annual and Special General Meetings Convened during the Reporting Period
    
    1. General Meeting Convened during the Reporting Period
    
         Meeting          Type      Investorparticipation Dateofthemeeting   Disclosuredate    Indextodisclosed
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
                                       ratio                                       information
                                                                              Announcementon
    The 2017Annual   AnnualGeneral                                                Resolutionsofthe
    General Meeting    Meeting                  58.79%22May2018      23May2018      2017AnnualGeneral
                                                                              Meetingdisclosedon
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    The 1stExtraordinary                                                           Resolutionsofthe1st
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    2018            GeneralMeeting                                                GeneralMeetingof
                                                                              2018disclosedon
                                                                              www.cninfo.com.cn
    
    
    2. Special General Meetings Convened at the Request of Preferred Shareholders with Resumed Voting
    
    Rights
    
    □ Applicable √ Not applicable
    
    V Performance of Duty by Independent Directors in the Reporting Period
    
    1. Attendance of Independent Directors at Board Meetings and General Meetings
    
                       Attendanceofindependentdirectorsatboardmeetingsandgeneralmeetings
                  Totalnumber                                                 The
                   of board                             Board      Board    independent
                  meetingsthe    Board     Boardmeetings    meetings   meetingsthe  directorfailed   General
      Independent    independent   meetings   attendedbywayof   attended    independent  toattendtwo   meetings
        director     directorwas   attendedon  telecommunication  througha   directorfailed  consecutive    attended
                   eligibleto      site                    proxy      toattend      board
                    attend                                                  meetings
                                                                          (yes/no)
    Wang Gao               4          0            4          0          0 No                 1
    Song Shuyu              4          1            3          0          0 No                 0
    Du Jie                  4          1            3          0          0 No                 1
    
    
    Why any independent director failed to attend two consecutive board meetings:
    
    2. Objections Raised by Independent Directors on Matters of the Company
    
    Indicate by tick mark whether any independent directors raised any objections on any matter of the Company.
    
    □ Yes √ No
    
    No such cases in the Reporting Period.
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    3. Other Information about the Performance of Duty by Independent Directors
    
    Indicate by tick mark whether any suggestions from independent directors were adopted by the Company.
    
    √ Yes □ No
    
    Suggestions from independent directors adopted or not adopted by the Company:
    
    During the Reporting Period, the independent directors of the Company made professional opinion or suggestions on the Company's
    
    business decision in strict accordance with the relevant laws, regulations and the Articles of Association of the Company, and
    
    provided independent opinion on issues needing independent directors’ opinion in the independent exercise of their duties, playing a
    
    due role in safeguarding the legitimate rights and interests of the Company's shareholders.
    
    VI Performance of Duty by Specialized Committees under the Board in the Reporting Period
    
    1. Duty performance of the Strategy Committee
    
    The Strategy Committee is under the leadership of the Board of Directors. In the Reporting Period, in strict compliance with the
    
    Specific Implementation Rules for the Strategy Committee, the Strategy Committee conscientiously performed its duties, making a
    
    lot of constructive suggestions for the efficient execution of the Company’s strategy.
    
    2. Duty performance of the Audit Committee
    
    In the reporting period, five members of the Audit Committee diligently and responsibly performed their duties as stipulated in the
    
    relevant rules of the Company:
    
    (1) It reviewed the annual report of the Company in 2018.
    
    (2) Upon discussion with Ruihua Certified Public Accountants for the 2018 annual audit, it determined the schedule for the financial
    
    report and internal control audit for 2018.
    
    (3) It communicated in advance with the CPAs firm and independent directors before the CPAs firm came to the Company and
    
    started the 2018 annual audit.
    
    (4) It reviewed the short form of the preliminary financial statements of 2018 prepared by the financial department of the Company
    
    for the first time before the annual auditor came to the Company and made some helpful suggestions.
    
    (5) After the annual auditor came to the Company and started the audit, it communicated with the registered accountants on the
    
    problems found in the audit and the submission time of the audit report.
    
    (6) After the annual auditor issued the preliminary audit opinion, it reviewed the 2018 annual financial statements again and made the
    
    final resolution.
    
    3. Duty performance of the Nomination Committee
    
    In the reporting period, in strict compliance with the Specific Implementation Rules of the Nomination Committee, the Nomination
    
    Committee vigorously worked on various tasks, which ensured that the senior management staffs of the Company were hired in
    
    compliance with laws and regulations.
    
    (1) In the Reporting Period, the senior management staff hired by the Company satisfied the requirements of the Company Law and
    
    other relevant laws and regulations. They were qualified as senior management staff. They were not in such a case where the
    
    Company Law should forbid them from being senior management staff. Nor they were forbidden by CSRC from entering the
    
    securities market.
    
    (2) In the Reporting Period, the senior management staff of the Company were nominated and hired in line with the Company Law
    
    and the Company’s Articles of Association. The hired personnel have never been punished by CSRC, other relevant authorities or
    
    stock exchanges.
    
    4. Duty performance of Remuneration and Appraisal Committee
    
    (1) The Remuneration and Appraisal Committee affiliated to the Board of Directors, according to relevant regulations of
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    Implementation Rules of Remuneration and Appraisal Committee successfully completed the annual performance appraisal to
    
    directors, supervisors and senior executives in line with standards and procedures of performance appraisal during the reporting
    
    period.
    
    (2) Through the deliberation and assessment of the committee, the consistent opinion was that the general remuneration level
    
    complied with development of the Company; the remuneration level of directors, supervisors and senior executives accurately
    
    reflected the overall performance situation of the Company and individual work performance, which complied with the remuneration
    
    management system; the remuneration plan and procedure of issuing remuneration were in accordance with the laws and did not
    
    violate relevant national laws and regulations.
    
    VII Performance of Duty by the Supervisory Committee
    
    Indicate by tick mark whether the Supervisory Committee found any risk to the Company during its supervision in the Reporting
    
    Period.
    
    □ Yes √ No
    
    The Supervisory Committee raised no objections in the Reporting Period.
    
    VIII Appraisal of and Incentive for Senior Management
    
    The Company has set up a Performance Appraisal and Incentive Mechanism for Senior Executives, which links remuneration of
    
    senior executives with the Company’ performance, the decision-making management adopts the assessment and incentive measures
    
    by linking the annual remuneration with the Company’ economic indexes & management achievement. To promote the standard,
    
    healthy and orderly development of the Company and keep the stability of the Executive Officers, the Company annually sets up the
    
    assessment index for them and signs a written responsibility of business target at the year-begin, then decides their remuneration and
    
    the rewards & punishment at the year-end according to their personal work performance and completion of the Company’s operating
    
    target.
    
    IX Internal Control
    
    1. Material Internal Control Weaknesses Identified for the Reporting Period
    
    □ Yes √ No
    
    2. Internal Control Self-Evaluation Report
    
    Disclosure date of the internal control 27April2019
    self-evaluation report
    Index to the disclosed internal control See  www.cninfo.com.cn for  the  Anhui  Gujing  Distillery  Company  Limited
    self-evaluation report               Self-assessmentReportofInternalControl
    Evaluated entities’combinedassetsas%of                                                      99.13%
    consolidated totalassets
    Evaluated  entities’ combined  operating
    revenue as % of consolidated operating                                                      99.00%
    revenue
                              Identificationstandardsforinternalcontrolweaknesses
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
                 Type              Weaknessesininternalcontroloverfinancial Weaknessesininternalcontrolnotrelated
                                              reporting                   tofinancialreporting
                                  Critical defect: Separate defect or other
                                  defects that result in failure in preventing,
                                  finding out and correcting major wrong
                                  reporting in financial report in time. The
                                  following circumstances  are  deemed as
                                  criticaldefects: (1) Ineffective in controlling
                                  theenvironment;(2)Malpracticeofdirectors, Any of the following circumstances shall
                                  supervisorsand senior management officers;be deemed as a critical defect, and other
                                  (3) According to external auditing, there’scircumstances shall be deemed as major
                                  major wrong reporting in current financial orminordefectsaccordingtotheirdegree
                                  report, which fails to be found by the ofimpact.
                                  companyin its operating process; (4) Major(1) Violate national laws, regulations or
                                  defects found and reported to the top standardizeddocuments;
                                  management fail to be corrected within a (2) Major decision making procedure is
    Nature standard                   reasonable  period  of  time;  (5)  The notscientific;
                                  supervision of  audit  committee of  the (3) Lack of systems results in systematic
                                  companyanditsinternalauditdepartmentfor failure;
                                  internalcontrolisineffective;           (4) Critical or major defects fail to be
                                  (6) Other defects that may affect correct rectified;
                                  judgment of users of statements. Major (5) Other circumstances that have major
                                  defect:Separate defect or other defects that impactonthecompany.
                                  resultinfailureinpreventing,findingoutand
                                  correctingwrongreportinginfinancialreport
                                  in time, which shall be noted by the top
                                  management despite of not attaining or
                                  exceedingcritical level. Minor defect: Other
                                  internal control defects not  constituting
                                  criticalormajordefects.
                                  Criticaldefect:                     Critical defect: The defect with direct
                                  (1)Wrongreporting≥0.5%oftotaloperating property loss amounting to over RMB10
                                  revenue;                         million, has great negative impact on the
                                  (2)Wrongreporting≥5%oftotalprofit;    companyand isdisclosedinpublicinthe
                                  (3)Wrongreporting≥0.5%oftotalassets;   formofannouncement.
                                  (4)Wrong reporting ≥0.5% of total owner’sMajor defect: The defect with direct
    Quantitative standard                                              property  loss  amounting  to  RMB1
                                  equity.                          million to RMB10 million (included), or
                                  Majordefect:                      ispenalizedbygovernmentalauthorityof
                                  (1) Wrong reporting ≥0.2% but <0.5% ofthe country but has not resulted in
                                  totaloperatingrevenue;               negativeimpactonthecompany.
                                  (2)Wrong reporting ≥2% but <5% of total Minor defect: The defect with direct
                                  profit;                          propertylossnomorethanRMB1million
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
                                  (3)Wrong reporting ≥0.2% but <0.5% of(included),   or   is   penalized   by
                                  totalassets;                       governmental   authority   of   the
                                  (4)Wrong reporting ≥0.2% but <0.5% ofprovincial-level or below but has not
                                  totalowner’sequity.                 resulted  in negative impact on  the
                                  Minordefect:                      company.
                                  (1)Wrongreporting<0.2%oftotaloperating
                                  revenue;
                                  (2)Wrongreporting<2%oftotalprofit;
                                  (3)Wrongreporting<0.2%oftotalassets;
                                  (4)Wrong reporting<0.2% of total owner’s
                                  equity.
    Number of material weaknesses in internal                                                          0
    control overfinancialreporting
    Number of material weaknesses in internal                                                          0
    control notrelatedtofinancialreporting
    Number of serious weaknesses in internal                                                          0
    control overfinancialreporting
    Number of serious weaknesses in internal                                                          0
    control notrelatedtofinancialreporting
    
    
    X Independent Auditor’s Report on Internal Control
    
    √ Applicable □ Not applicable
    
                        Opinion paragraphintheindependentauditor’sreportoninternalcontrol
    WebelievethattheCompanyhasmaintainedeffectiveinternalcontrolonfinancialreportinallsignificantrespectsaccordingtothe
    Basic RulesforEnterpriseInternalControlandrelevantregulationson31December2018.
    Independent auditor’sreporton    Disclosed
    internal controldisclosedornot
    Disclosure date              27April2019
    Index tosuchreportdisclosed     Seewww.cninfo.com.cnforAuditReportofInternalControl
    Typeoftheauditor’sopinion     Unmodifiedunqualifiedopinion
    Material  weaknesses  in  internal
    control  not related to financial None
    reporting
    
    
    Indicate by tick mark whether any modified opinion is expressed in the independent auditor’s report on the Company’s internal
    
    control.
    
    □ Yes √ No
    
    Indicate by tick mark whether the independent auditor’s report on the Company’s internal control is consistent with the internal
    
    control self-evaluation report issued by the Company’s Board.
    
    √ Yes □ No
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    Part X Corporate Bonds
    
    Does the Company have any corporate bonds publicly offered on the stock exchange, which were outstanding before the date of this
    
    Report’s approval or were due but could not be redeemed in full?
    
    No.
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    Part XI Financial Statements
    
    I Independent Auditor’s Report
    
    Typeofauditor’sopinion                           Unmodifiedunqualifiedopinion
    Date ofsigningtheauditor’sreport                     26April2019
    Name oftheauditor                               RuihuaCertifiedPublicAccountants(LLP)
    No. oftheauditor’sreport                           RuihuaShenZi【2019】48440010Hao
    Name ofCPA                                   OuChangxian,GaoQiang
    
    
    Text of the Auditor’s Report
    
    To the Shareholders of Anhui Gujing Distillery Company Limited:
    
    I. Opinion
    
    We have audited the accompanying financial statements of Gujing Distillery Original Chinese Spirits (the “Company”), which
    
    comprise the Company’s and consolidated balance sheets as at 31 December 2018, the Company’s and consolidated income
    
    statements, the Company’s and consolidated cash flow statements, the Company’s and consolidated statements of changes in
    
    shareholders’ equity for the year then ended, as well as the notes to the financial statements.
    
    In our opinion, the financial statements attached were prepared in line with the regulations of Accounting Standards for Business
    
    Enterprises in all significant aspects which gave a true and fair view of the consolidated and parent financial position of the Company
    
    as at 31 December 2018 and the consolidated and parent business performance and cash flow of the Company for 2018.
    
    II. Basis for Opinion
    
    We conducted our audit in accordance with Standards on Auditing for Certified Public Accountants. Our responsibilities under those
    
    standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. In
    
    accordance with professional ethics for certified public accountants, we are independent with the Company and we have fulfilled our
    
    other ethical responsibilities. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
    
    our opinion.
    
    III. Key Audit Matters
    
    Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
    
    statements of the Current Period. These matters were addressed in the context of our audit of the financial statements as a whole, and
    
    in forming our opinion thereon, and we do not provide a separate opinion on these matters. The key audit matter identified in our
    
    audit is summarized as follows:
    
    (I) Revenue recognition
    
    1. Description
    
    In 2018, liquor and spirit products of Gujing Distillery achieved an operating revenue of RMB8.519 billion, which occupied 98.08%
    
    of the total amount of its operating revenue, a year-on-year growth of 24.88%. Revenue being one of the key performance indices of
    
    Gujing Distillery, and inherent risks for major wrong reporting exist for revenue recognition. Therefore, we identify revenue
    
    recognition of Gujing Distillery as one of key audit items.
    
    2. Auditing
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    Our audit procedures carried out for this key audit item mainly include:
    
    (1) Understand and assess the design for internal control of Gujing Distillery from review and approval of the sales process of liquor
    
    and spirits business of Gujing Distillery from sales orders to accounting of operating revenue, test the effectiveness of execution of
    
    key internal controls, and test automatic control related to general control and revenue process of Gujing Distillery's information
    
    system.
    
    (2) Sample check sales contract and interview the top management, make an analysis of major risks and remuneration transfer time
    
    related to recognition of operating revenue, and assess the rationality of Gujing Distillery's revenue recognition policy.
    
    (3) Carry out an analysis procedure for operating revenue including analysis of increase and decrease of major clients as dealers,
    
    change of revenue and gross profit rate during the period before and after that and in the sector so as to assess rationality for revenue
    
    recognition.
    
    (4) Select samples to check original notes for recognizing operating revenue and verify authenticity of operating revenue. At the same
    
    time, draw part of original notes and verify them against the book record to verify intactness of operating revenue.
    
    (5) Prove major clients by letters, conduct on-site investigation into the clients with large sales volume and visit their business
    
    operating places and warehouses, check the original notes for their terminal sales, assess authenticity of their terminal sales so as to
    
    verify authenticity of operating revenue of Gujing Distillery.
    
    (6) Conduct a cutoff test of its operating revenue and confirm if revenue recognition of Gujing Distillery is recorded at an appropriate
    
    accounting duration.
    
    (II) Existence, Pricing and Apportion of Stock
    
    1. Description of items
    
    By 31 December 2018, the book value for the stock of Gujing Distillery was RMB2.407 billion, which occupied 19.25% of the total
    
    amount of its assets, of which book value of homemade semi-finished products and goods in process was RMB1.957 billion,
    
    occupying 81.30% of the amount of the year-end stock. Stock, as the most important assets of liquor and spirit enterprises, its
    
    year-end balance is high and occupies a large proportion of the total amount of their assets. Therefore, we identify existence, pricing
    
    and apportion of the stock of Gujing Distillery as a key audit item.
    
    2. Auditing
    
    Our audit procedures carried out for this key audit item mainly include:
    
    (1) Understand and assess the design for business process and internal control related to cost accounting, incoming and outgoing of
    
    stock and inventory and test the effectiveness of execution of key internal controls, and test automatic control related to general
    
    control and stock of Gujing Distillery's information system.
    
    (2) Understand the accounting policies related to stock and assess if they are in line with the accounting principles and systems fit for
    
    the enterprise, if they are consistent with those for the previous years.
    
    (3) Carry out an analysis review procedure: Calculate inventory turnover rate, compare with the previous term and compare with the
    
    other enterprises in the sector. Compare balance of stock and composition of previous and later terms and various months so as to
    
    judge overall rationality of year-end balance and its composition.
    
    (4) Carry out a monitoring procedure for the stock and sample check quantity and status of the stock.
    
    (5) Sample check cost statement and related information, conduct a pricing test for the stock and assess accuracy of amount of
    
    year-end stock of Gujing Distillery.
    
    (6) Obtain the year-end inventory aging list of the stock, and carry out an analytic review of the stock with a long inventory age
    
    combining market situation of the products, and assess if inventory falling price reserve is rational; Obtain the statement for
    
    inventory falling price reserve, review the test process for inventory impairment, sample check if it is conducted in accordance with
    
    the accounting policy of Gujing Distillery, check the change of this term of inventory falling price accrued for previous years and
    
    verify if inventory falling price reserve is accrued adequately.
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    IV. Other Information
    
    The management of the Company is responsible for the other information. The other information comprises all of the information
    
    included in the annual report for 2018 of the Company other than the financial statements and our auditor’s report thereon.
    
    Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion
    
    thereon.
    
    In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
    
    whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or
    
    otherwise appears to be materially misstated.
    
    If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required
    
    to report that fact. We have nothing to report in this regard.
    
    V. Responsibility of Management and Those Charged with Governance for the Financial Statements
    
    The management of the Company is responsible for the preparation and fair presentation of these financial statements in accordance
    
    with Accounting Standards for Business Enterprises to make them a fair presentation and designing, implementing and maintaining
    
    internal control relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or
    
    error.
    
    In preparing the financial statements, the management of the Company is responsible for assessing the Company’s ability to continue
    
    as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
    
    the management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
    
    Those charged with governance are responsible for overseeing the Company’s financial reporting process.
    
    VI. CPA’s Responsibility for the Audit of the Financial Statements
    
    Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
    
    misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. We report our opinion solely to
    
    you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the
    
    contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
    
    with auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
    
    considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
    
    users taken on the basis of these financial statements.
    
    As part of an audit in accordance with auditing standards, we exercise professional judgment and maintain professional skepticism
    
    throughout the audit. We also:
    
    (I) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and
    
    perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for
    
    our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
    
    fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
    
    (II) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
    
    circumstances.
    
    (III) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
    
    made by the management.
    
    (IV) Conclude on the appropriateness of the management’ use of the going concern basis of accounting and, based on the audit
    
    evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the
    
    Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention
    
    in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our
    
    opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or
    
    conditions may cause the Company to cease to continue as a going concern.
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    (V) Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the
    
    financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
    
    (VI) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
    
    Company to express an audit opinion on the financial statements. We are responsible for the direction, supervision and performance
    
    of the Company’s audit. We remain solely responsible for our audit opinion.
    
    We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
    
    significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
    
    We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
    
    independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
    
    independence, and where applicable, related safeguards.
    
    From the matters communicated with those charged with governance, we determine those matters that were of most significance in
    
    the audit of the financial statements of the Current Period and are therefore the key audit matters. We describe these matters in our
    
    auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
    
    determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be
    
    expected to outweigh the public interest benefits of such communication.
    
    Ruihua Certified Public Accountants (LLP) CPA
    
    (Engagementpartner): Ou Changxian
    
    Beijing ·China CPA: Gao Qiang
    
    26 April 2019
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    II Financial Statements
    
    Currency unit for the financial statements and the notes thereto: RMB
    
    1. Consolidated Balance Sheet
    
    Prepared by Anhui Gujing Distillery Company Limited
    
    31 December 2018
    
    Unit: RMB
    
                 Item                      31December2018                 31December2017
    Current assets:
      Monetarycapital                                   1,705,760,865.12                1,484,088,626.40
      Settlementreserve
      Interbankloansgranted
      Financial assets at fair value through                        622,892.96                    99,800.76
    profit orloss
      Derivativefinancialassets
      Notesandaccountsreceivable                           1,377,175,880.08                 743,077,269.84
        Including:Notesreceivable                           1,347,427,811.34                 720,611,126.78
               Accountsreceivable                          29,748,068.74                  22,466,143.06
      Prepayments                                       182,558,000.75                  41,729,637.34
      Premiumsreceivable
      Reinsurancereceivables
      Receivablereinsurancecontractreserve
      Otherreceivables                                     43,342,878.22                  29,273,284.22
        Including:Interestreceivable                            24,923,178.08                  13,883,178.08
               Dividendsreceivable
      Financial assets purchased under resale
    agreements
      Inventories                                       2,407,306,664.86                2,064,130,297.51
      Assetsclassifiedasheldforsale
      Currentportionofnon-currentassets                       300,000,000.00                        0.00
      Othercurrentassets                                 3,012,478,687.20                1,772,310,946.58
    Total currentassets                                   9,029,245,869.19                6,134,709,862.65
    Non-current assets:
      Loansandadvancestocustomers
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
      Available-for-salefinancialassets                          206,393,107.46                 517,086,347.91
      Held-to-maturityinvestments
      Long-termreceivables
      Long-termequityinvestments                              4,900,000.00                        0.00
      Investmentproperty                                    5,027,228.53                  5,343,777.33
      Fixedassets                                      1,763,988,530.56                1,792,254,178.56
      Constructioninprogress                                93,320,557.56                  54,496,798.56
      Productivelivingassets
      Oilandgasassets
      Intangibleassets                                     742,083,609.10                 691,381,442.67
      R&Dexpense
      Goodwill                                         478,283,495.29                 478,283,495.29
      Long-termprepaidexpense                              83,561,473.46                  69,238,523.78
      Deferredincometaxassets                               86,580,171.06                  92,157,477.74
      Othernon-currentassets                                16,544,407.51                 317,910,214.56
    Total non-currentassets                                3,480,682,580.53                4,018,152,256.40
    Total assets                                        12,509,928,449.72               10,152,862,119.05
    Current liabilities:
      Short-termborrowings
      Borrowingsfromcentralbank
      Customer  deposits  and  interbank
    deposits
      Interbankloansobtained
      Financialliabilities at fairvalue through
    profit orloss
      Derivativefinancialliabilities
      Notesandaccountspayable                             834,156,012.31                 636,365,039.83
      Advancesfromcustomers                             1,149,143,310.48                 503,083,108.13
      Financial assets sold under repurchase
    agreements
      Handling charges  and  commissions
    payable
      Payrollpayable                                     457,299,476.43                 372,374,014.37
      Taxespayable                                      372,993,624.18                 420,984,845.45
      Otherpayables                                     1,192,020,147.82                1,032,543,553.34
        Including:Interestpayable
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
               Dividendspayable
      Reinsurancepayables
      Insurancecontractreserve
      Payablesforactingtradingofsecurities
      Payablesforunderwritingofsecurities
      Liabilitiesdirectlyassociatedwithassets
    classified asheldforsale
      Currentportionofnon-currentliabilities
      Othercurrentliabilities                                295,164,745.44                 182,846,942.10
    Total currentliabilities                                 4,300,777,316.66                3,148,197,503.22
    Non-current liabilities:
      Long-termborrowings
      Bondspayable
        Including:Preferredshares
               Perpetualbonds
      Long-termpayables
      Long-termpayrollpayable
      Provisions
      Deferredincome                                     76,636,500.55                  43,706,503.22
      Deferredincometaxliabilities                            102,764,515.11                 119,779,105.90
      Othernon-currentliabilities
    Total non-currentliabilities                               179,401,015.66                 163,485,609.12
    Total liabilities                                      4,480,178,332.32                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:Treasurystock
      Othercomprehensiveincome                              4,794,830.59                  53,520,827.44
      Specificreserve
      Surplusreserves                                     256,902,260.27                 256,902,260.27
      Generalreserve
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
      Retainedearnings                                   5,541,281,341.47                4,349,649,698.42
    Total equity attributable to owners of the                    7,601,984,024.58                6,459,078,378.38
    Company astheparent
    Non-controlling interests                                 427,766,092.82                 382,100,628.33
    Total owners’equity                                   8,029,750,117.40               6,841,179,006.71
    Total liabilitiesandowners’equity                         12,509,928,449.72               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                       31December2018                31December2017
    Current assets:
      Monetarycapital                                   1,078,172,917.59                1,276,262,109.02
      Financial assets at fair value through                       622,892.96                    99,800.76
    profit orloss
      Derivativefinancialassets
      Notesandaccountsreceivable                           1,265,722,336.88                 683,031,572.43
        Including:Notesreceivable                           1,256,336,386.34                 674,521,654.40
               Accountsreceivable                           9,385,950.54                  8,509,918.03
      Prepayments                                        10,869,911.54                  8,534,600.82
      Otherreceivables                                    110,800,665.19                 130,357,778.75
        Including:Interestreceivable
               Dividendsreceivable
      Inventories                                       2,125,826,967.11               1,818,358,884.18
      Assetsclassifiedasheldforsale
      Currentportionofnon-currentassets
      Othercurrentassets                                 1,764,267,968.83                1,554,870,774.98
    Total currentassets                                   6,356,283,660.10                5,471,515,520.94
    Non-current assets:
      Available-for-salefinancialassets                          206,393,107.46                 516,530,547.91
      Held-to-maturityinvestments
      Long-termreceivables
      Long-termequityinvestments                           1,148,213,665.32                1,155,089,408.32
      Investmentproperty                                   24,715,657.40                  26,409,050.95
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
      Fixedassets                                      1,290,714,455.79                1,303,119,011.66
      Constructioninprogress                                86,634,753.93                  44,673,219.38
      Productivelivingassets
      Oilandgasassets
      Intangibleassets                                     189,968,142.25                 185,868,178.71
      R&Dexpense
      Goodwill
      Long-termprepaidexpense                              56,643,945.05                  58,563,409.89
      Deferredincometaxassets                               37,415,458.17                  37,996,747.93
      Othernon-currentassets                                12,474,026.00                  12,474,026.00
    Total non-currentassets                                 3,053,173,211.37               3,340,723,600.75
    Total assets                                         9,409,456,871.47                8,812,239,121.69
    Current liabilities:
      Short-termborrowings
      Financial liabilities at fair value through
    profit orloss
      Derivativefinancialliabilities
      Notesandaccountspayable                             390,939,469.93                 347,757,180.53
      Advancesfromcustomers                             1,123,125,892.84                1,680,678,175.37
      Payrollpayable                                     117,748,485.96                 110,435,403.45
      Taxespayable                                      161,176,957.25                 262,884,211.13
      Otherpayables                                      372,902,293.22                 173,250,790.29
        Including:Interestpayable
               Dividendspayable
      Liabilities directly associated with assets
    classified asheldforsale
      Currentportionofnon-currentliabilities
      Othercurrentliabilities                                 32,605,794.55                  18,296,415.85
    Total currentliabilities                                 2,198,498,893.75                2,593,302,176.62
    Non-current liabilities:
      Long-termborrowings
      Bondspayable
        Including:Preferredshares
               Perpetualbonds
      Long-termpayables
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
      Long-termpayrollpayable
      Provisions
      Deferredincome                                     36,417,554.85                  39,976,048.28
      Deferredincometaxliabilities                             4,828,737.52                  19,792,209.68
      Othernon-currentliabilities
    Total non-currentliabilities                                41,246,292.37                  59,768,257.96
    Total liabilities                                      2,239,745,186.12                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:Treasurystock
      Othercomprehensiveincome                              4,794,830.59                  53,454,736.38
      Specificreserve
      Surplusreserves                                     251,800,000.00                 251,800,000.00
      Retainedearnings                                   5,162,354,747.41                4,103,151,843.38
    Total owners’equity                                   7,169,711,685.35                6,159,168,687.11
    Total liabilitiesandowners’equity                         9,409,456,871.47                8,812,239,121.69
    
    
    3. Consolidated Income Statement
    
    Unit: RMB
    
                Item                         2018                           2017
    1. Revenue                                      8,686,140,336.89                   6,968,325,048.55
      Including:Operatingrevenue                        8,686,140,336.89                   6,968,325,048.55
             Interest income
             Premium income
             Handling   charge  and
    commission income
    2. Costsandexpenses                               6,523,625,714.70                   5,560,167,242.54
      Including:Costofsales                            1,932,064,837.65                   1,642,588,056.43
             Interest expense
             Handling   charge  and
    commission expense
             Surrenders
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
             Net claimspaid
             Net amount provided as
    insurance contractreserve
             Expenditure  on  policy
    dividends
             Reinsurance    premium
    expense
             Taxesandsurcharges                      1,278,907,520.09                   1,136,317,983.99
             Selling expense                          2,682,535,305.26                   2,170,081,383.54
             Administrative expense                      644,997,046.65                    591,058,209.64
             R&D expense                             23,966,766.04                     12,494,749.46
             Finance costs                             -51,572,629.73                    -25,927,285.82
               Including:    Interest                     15,408,022.76                           0.00
    expense
                         Interest                     68,964,800.42                     30,406,069.89
    income
             Asset impairmentloss                        12,726,868.74                     33,554,145.30
    Add: Otherincome                                  35,701,674.45                     32,720,116.60
        Investment income(“-”forloss)                     148,215,468.62                    153,433,358.26
          Including: Share of profit or
    loss ofjointventuresandassociates
        Gain onchangesinfairvalue(“-”                      -161,541.19                      -113,260.71
    for loss)
        Foreign exchange gain (“-” for
    loss)
        Asset disposal income (“-” for                       526,066.38                       254,763.27
    loss)
    3. Operatingprofit(“-”forloss)                        2,346,796,290.45                   1,594,452,783.43
    Add: Non-operatingincome                             35,289,980.44                     30,141,298.15
    Less: Non-operatingexpense                            13,160,175.48                     12,376,817.78
    4. Profitbeforetax(“-”forloss)                        2,368,926,095.41                   1,612,217,263.80
    Less: Incometaxexpense                             628,012,434.53                    426,985,526.34
    5. Netprofit(“-”fornetloss)                          1,740,913,660.88                   1,185,231,737.46
      5.1 Net  profit  from  continuing                   1,740,913,660.88                   1,185,231,737.46
    operations (“-”fornetloss)
      5.2 Net profit from discontinued
    operations (“-”fornetloss)
      Net profit attributable to owners of                   1,695,231,643.05                   1,148,740,644.93
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    the Companyastheparent
      Net   profit   attributable   to                     45,682,017.83                     36,491,092.53
    non-controlling interests
    6. Other comprehensive income, net of                    -48,725,996.85                     17,376,349.49
    tax
      Attributable  to  owners  of  the                    -48,725,996.85                     17,376,349.49
    Company astheparent
       6.1  Items  that  will  not  be
    reclassified toprofitorloss
         6.1.1  Changes  caused  by
    remeasurements  on  defined  benefit
    pension schemes
         6.1.2   Share   of   other
    comprehensive incomeofinvesteesthat
    will not be reclassified to profit or loss
    under equitymethod
       6.2 Itemsthatmaysubsequentlybe                    -48,725,996.85                     17,376,349.49
    reclassified toprofitorloss
         6.2.1   Share   of   other
    comprehensive incomeofinvesteesthat
    will be reclassified to profit or loss
    under equitymethod
         6.2.2 Gain/Loss on changes in
    fair value of available-for-sale financial                    -48,725,996.85                     17,376,349.49
    assets
         6.2.3 Gain/Loss arising from
    reclassification  of  held-to-maturity
    investments   to   available-for-sale
    financial assets
         6.2.4 Effectivegain/loss oncash
    flow hedges
         6.2.5 Differences arising from
    translation       of       foreign
    currency-denominated      financial
    statements
         6.2.6 Other
      Attributable   to   non-controlling
    interests
    7. Totalcomprehensiveincome                         1,692,187,664.03                   1,202,608,086.95
      Attributable  to  owners  of  the                   1,646,505,646.20                   1,166,116,994.42
    Company astheparent
      Attributable   to   non-controlling                     45,682,017.83                     36,491,092.53
    interests
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    8. Earningspershare
      8.1Basicearningspershare                                  3.37                           2.28
      8.2Dilutedearningspershare                                3.37                           2.28
    
    
    4. Income Statement of the Company as the Parent
    
    Unit: RMB
    
                Item                         2018                           2017
    1. Operatingrevenue                               4,255,302,263.38                   3,789,547,842.84
    Less: Costofsales                                 1,772,452,588.66                   1,481,030,950.69
       Taxes andsurcharges                            1,074,150,390.45                    974,280,790.69
       Selling expense                                 177,002,048.12                    172,260,238.41
       Administrative expense                           443,945,470.10                    413,267,601.15
       R&D expense                                   17,321,657.06                     9,762,837.39
       Finance costs                                  -42,463,654.44                    -15,108,236.44
         Including: Interestexpense                        15,408,022.76
                Interest income                         58,659,575.81                     19,115,343.79
       Asset impairmentloss                             11,600,870.40                     31,237,595.99
    Add: Otherincome                                  15,340,983.23                     20,408,700.71
        Investment income(“-”forloss)                     953,463,522.77                    578,847,735.30
          Including: Share of profit or
    loss ofjointventuresandassociates
        Gain onchangesinfairvalue(“-”                      -161,541.19                      -113,260.71
    for loss)
        Asset disposal income (“-” for                           0.00                       23,533.98
    loss)
    2. Operatingprofit(“-”forloss)                        1,769,935,857.84                   1,321,982,774.24
    Add: Non-operatingincome                             29,427,413.82                     17,009,324.56
    Less: Non-operatingexpense                             9,158,255.98                     9,222,061.73
    3. Profitbeforetax(“-”forloss)                        1,790,205,015.68                   1,329,770,037.07
    Less: Incometaxexpense                              227,402,111.65                    231,661,547.32
    4. Netprofit(“-”fornetloss)                          1,562,802,904.03                   1,098,108,489.75
      4.1  Net  profit  from  continuing                   1,562,802,904.03                   1,098,108,489.75
    operations (“-”fornetloss)
      4.2 Net profit from discontinued
    operations (“-”fornetloss)
    5. Other comprehensive income, net of                    -48,659,905.79                     16,139,180.74
    tax
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
      5.1Itemsthat willnot be reclassified
    to profitorloss
       5.1.1  Changes  in  caused  by
    remeasurements  on  defined  benefit
    pension schemes
       5.1.2    Share    of    other
    comprehensive incomeofinvesteesthat
    will not be reclassified to profit or loss
    under equitymethod
      5.2 Items that may subsequently be                    -48,659,905.79                     16,139,180.74
    reclassified toprofitorloss
       5.2.1    Share    of    other
    comprehensive incomeofinvesteesthat
    will be reclassified to profit or loss
    under equitymethod
       5.2.2 Gain/Loss on changes in fair
    value  of available-for-sale financial                    -48,659,905.79                     16,139,180.74
    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
    flow hedges
       5.2.5  Differences  arising  from
    translation       of       foreign
    currency-denominated      financial
    statements
       5.2.6 Other
    6. Totalcomprehensiveincome                         1,514,142,998.24                   1,114,247,670.49
    7. Earningspershare
       7.1Basicearningspershare                                 3.10                           2.18
       7.2Dilutedearningspershare                               3.10                           2.18
    
    
    5. Consolidated Cash Flow Statement
    
    Unit: RMB
    
                Item                         2018                           2017
    1. Cashflowsfromoperatingactivities:
      Proceeds from sale of commodities                   9,158,327,553.33                   7,041,950,513.29
    and renderingofservices
      Netincreaseincustomerdepositsand
    interbank deposits
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
      Net increase in borrowings 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                                      18,279,633.65                     20,901,711.56
      Cashgenerated from other operating                    774,008,382.31                    410,064,046.58
    activities
    Subtotal  of  cash  generated  from                   9,950,615,569.29                   7,472,916,271.43
    operating activities
      Payments  for  commodities  and                   1,141,576,748.20                    685,079,409.14
    services
      Netincreaseinloansandadvancesto
    customers
      Net increase in deposits in central
    bank andininterbankloansgranted
      Payments for claims on original
    insurance contracts
      Interest,  handling  charges  and
    commissions paid
      Policydividendspaid
      Cashpaidtoandforemployees                       1,557,106,771.09                   1,379,482,541.55
      Taxespaid                                    3,095,830,374.91                   2,588,903,933.28
      Cash  used  in  other  operating                   2,715,220,389.14                   1,888,535,674.68
    activities
    Subtotal of cash used in operating                   8,509,734,283.34                   6,542,001,558.65
    activities
    Net  cash  generated  from/used  in                   1,440,881,285.95                    930,914,712.78
    operating activities
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    2. Cashflowsfrominvestingactivities:
      Proceedsfromdisinvestment                        3,392,057,566.06                   5,542,089,013.38
      Investmentincome                                137,503,636.38                     87,735,460.11
      Net proceeds from disposal of fixed
    assets,  intangible  assets  and  other                     1,088,510.86                     2,275,291.91
    long-lived assets
      Net  proceeds  from  disposal  of
    subsidiaries orotherbusinessunits
      Cash generated from other investing                           0.00                     5,715,000.00
    activities
    Subtotal  of  cash  generated  from                   3,530,649,713.30                   5,637,814,765.40
    investing activities
      Payments for acquisition of fixed
    assets,  intangible  assets  and  other                    307,319,114.99                    200,093,340.76
    long-lived assets
      Paymentsforinvestments                          4,349,123,092.20                   5,570,236,537.09
      Netincreaseinpledgedloansgranted
      Net payments for acquisition of
    subsidiaries andotherbusinessunits
      Cash  used  in  other  investing
    activities
    Subtotal of cash used in investing                   4,656,442,207.19                   5,770,329,877.85
    activities
    Net  cash  generated  from/used  in                  -1,125,792,493.89                   -132,515,112.45
    investing activities
    3. Cashflowsfromfinancingactivities:
      Capitalcontributionsreceived
       Including: Capitalcontributionsby
    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
      Cash  used  in  other  financing                       16,553.34                           0.00
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    activities
    Subtotal of cash used in financing                    503,616,553.34                    302,160,000.00
    activities
    Net  cash  generated  from/used  in                   -503,616,553.34                   -302,160,000.00
    financing activities
    4.  Effect of foreign exchange rate
    changes oncashandcashequivalents
    5.  Net increase in cash and cash                   -188,527,761.28                    496,239,600.33
    equivalents
    Add:  Cash  and  cash  equivalents,                   1,024,088,626.40                    527,849,026.07
    beginning oftheperiod
    6. Cashandcashequivalents,endofthe                    835,560,865.12                   1,024,088,626.40
    period
    
    
    6. Cash Flow Statement of the Company as the Parent
    
    Unit: RMB
    
                Item                         2018                           2017
    1. Cashflowsfromoperatingactivities:
      Proceeds from sale of commodities                   3,047,700,512.72                   4,173,273,698.71
    and renderingofservices
      Taxrebates                                       4,523,679.80                     13,013,817.25
      Cashgenerated from other operating                    744,922,683.25                     34,644,114.33
    activities
    Subtotal  of  cash  generated  from                   3,797,146,875.77                   4,220,931,630.29
    operating activities
      Payments  for  commodities  and                   1,151,280,535.30                    899,290,002.74
    services
      Cashpaidtoandforemployees                        556,958,789.26                    509,129,615.74
      Taxespaid                                    1,875,058,501.76                   1,745,217,861.34
      Cash  used  in  other  operating                    606,222,797.89                    711,716,384.50
    activities
    Subtotal of cash used in operating                   4,189,520,624.21                   3,865,353,864.32
    activities
    Net  cash  generated  from/used  in                   -392,373,748.44                    355,577,765.97
    operating activities
    2. Cashflowsfrominvestingactivities:
      Proceedsfromdisinvestment                        2,592,057,566.06                   5,331,270,532.13
      Investmentincome                                956,590,486.35                    523,008,318.40
      Net proceeds from disposal of fixed
    assets,  intangible  assets  and  other                       153,914.79                       501,088.26
    long-lived assets
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
      Net  proceeds  from  disposal  of                     3,587,238.24                           0.00
    subsidiaries orotherbusinessunits
      Cash generated from other investing                           0.00                     1,826,000.00
    activities
    Subtotal  of  cash  generated  from                   3,552,389,205.44                   5,856,605,938.79
    investing activities
      Payments for acquisition of fixed
    assets,  intangible  assets  and  other                    228,181,556.23                    141,317,744.91
    long-lived assets
      Paymentsforinvestments                          2,546,323,092.20                   5,168,236,537.09
      Net payments for acquisition of
    subsidiaries andotherbusinessunits
      Cash  used  in  other  investing
    activities
    Subtotal of cash used in investing                   2,774,504,648.43                   5,309,554,282.00
    activities
    Net  cash  generated  from/used  in                    777,884,557.01                    547,051,656.79
    investing activities
    3. Cashflowsfromfinancingactivities:
      Capitalcontributionsreceived
      Increaseinborrowingsobtained
      Netproceedsfromissuanceofbonds
      Cashgenerated from other financing
    activities
    Subtotal  of  cash  generated  from
    financing activities
      Repaymentofborrowings
      Paymentsforinterestanddividends                     503,600,000.00                    302,160,000.00
      Cash  used  in  other  financing
    activities
    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                   -118,089,191.43                    600,469,422.76
    equivalents
    Add:  Cash  and  cash  equivalents,                    826,262,109.02                    225,792,686.26
    beginning oftheperiod
    6. Cashandcashequivalents,endofthe                    708,172,917.59                    826,262,109.02
    
    
    Gujinggong Liquor Aged Original Liquor Annual Report 2018
    
    period
    
    
    7. Consolidated Statements of Changes in Owners’ Equity
    
    2018
    
    Unit: RMB
    
                                                                         2018
                                           Equity attributabletoownersoftheCompanyastheparent
         Item                Otherequityinstruments              Less:     Other                                      Non-controlling  Totalowners’
                  Share capital Preferred Perpetual     Capitalreserves Treasurycomprehensive Specific   Surplus   General   Retained      interests       equity
                             shares   bonds  Other              stock    income   reserve   reserves   reserve    earnings
    1. Balances as at
    the endoftheprior 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
    year
    Add: Adjustments
    for     changed
    accounting
    policies
      Adjustments for
    corrections    of
    previous errors
      Adjustments for
    business
    combinations
    under   common
    control
      Other
    adjustments
    2. Balances as at 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
    the  beginning of
    
    
    ~ 82 ~
    
    the year
    3.      Increase/
    decrease  in  the                                               -48,725,996.85                       1,191,631,643.05  45,665,464.49 1,188,571,110.69
    period  (“-”  for
    decrease)
      3.1     Total
    comprehensive                                                  -48,725,996.85                       1,695,231,643.05  45,682,017.831,692,187,664.03
    income
      3.2    Capital
    increased    and                                                                                               -16,553.34     -16,553.34
    reduced byowners
       3.2.1
    Ordinary shares
    increased by
    shareholders
       3.2.2 Capital
    increased by
    holders ofother
    equity instruments
       3.2.3
    Share-based
    payments included
    in owners’equity
       3.2.4 Other                                                                                                 -16,553.34     -16,553.34
     3.3      Profit                                                                                 -503,600,000.00            -503,600,000.00
    distribution
       3.3.1
    Appropriation  to
    surplus reserves
    
    
    ~ 83 ~
    
       3.3.2
    Appropriation  to
    general reserve
       3.3.3
    Appropriation  to                                                                                -503,600,000.00            -503,600,000.00
    owners      (or
    shareholders)
       3.3.4 Other
      3.4   Transfers
    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   Loss
    offset by surplus
    reserves
       3.4.4 Changes
    in defined benefit
    pension  schemes
    transferred    to
    retained earnings
       3.4.5 Other
    
    
    ~ 84 ~
    
      3.5   Specific
    reserve
       3.5.1 Increase
    in theperiod
       3.5.2 Used in
    the period
      3.6Other
    4. Balances as at
    the  end  of  the 503,600,000.00                  1,295,405,592.25        4,794,830.59      256,902,260.27      5,541,281,341.47 427,766,092.82 8,029,750,117.40
    period
    
    
    2017
    
    Unit: RMB
    
                                                                         2017
                                           Equity attributabletoownersoftheCompanyastheparent
         Item                Otherequityinstruments              Less:     Other                                      Non-controlling  Totalowners’
                  Share capital Preferred Perpetual     Capitalreserves Treasurycomprehensive Specific   Surplus   General   Retained      interests       equity
                             shares   bonds  Other              stock    income   reserve   reserves   reserve    earnings
    1. Balances as at
    the endoftheprior 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
    Add: Adjustments
    for     changed
    accounting
    policies
      Adjustments for
    corrections    of
    previous errors
    
    
    ~ 85 ~
    
      Adjustments for
    business
    combinations
    under   common
    control
      Other
    adjustments
    2. Balances as at
    the  beginning 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
    the 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
    Ordinary shares
    increased by
    shareholders
       3.2.2 Capital
    increased by
    holders ofother
    equity instruments
       3.2.3
    
    
    ~ 86 ~
    
    Share-based
    payments included
    in owners’equity
       3.2.4 Other
     3.3      Profit                                                                                -302,160,000.00            -302,160,000.00
    distribution
       3.3.1
    Appropriation  to
    surplus reserves
       3.3.2
    Appropriation  to
    general reserve
       3.3.3
    Appropriation  to                                                                                -302,160,000.00            -302,160,000.00
    owners      (or
    shareholders)
       3.3.4 Other
      3.4   Transfers
    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
    
    
    ~ 87 ~
    
       3.4.3    Loss
    offset by surplus
    reserves
       3.4.4 Changes
    in defined benefit
    pension  schemes
    transferred    to
    retained earnings
       3.4.5 Other
      3.5   Specific
    reserve
       3.5.1 Increase
    in theperiod
       3.5.2 Used in
    the period
      3.6Other
    4. Balances as at
    the  end  of  the 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
    period
    
    
    8. Statements of Changes in Owners’ Equity of the Company as the Parent
    
    2018
    
    Unit: RMB
    
                                                                           2018
            Item                     Otherequityinstruments                   Less:      Other     Specific    Surplus      Retained     Totalowners’
                       Share capital  Preferred  Perpetual         Capitalreserves   Treasury  comprehensive
                                   shares   bonds    Other                 stock      income     reserve     reserves      earnings       equity
    1. Balances as at the end 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
    
    
    ~ 88 ~
    
    of theprioryear
    Add:  Adjustments  for
    changed     accounting
    policies
      Adjustments      for
    corrections  of  previous
    errors
      Otheradjustments
    2.  Balances as at the 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                                                        -48,659,905.79                    1,059,202,904.03 1,010,542,998.24
    decrease)
      3.1          Total                                                        -48,659,905.79                    1,562,802,904.03 1,514,142,998.24
    comprehensive income
      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
    
    
    ~ 89 ~
    
    to surplusreserves
       3.3.2  Appropriation
    to     owners     (or                                                                                       -503,600,000.00 -503,600,000.00
    shareholders)
       3.3.3 Other
      3.4  Transfers  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 Loss offset by
    surplus reserves
       3.4.4   Changes  in
    defined  benefit  pension
    schemes  transferred  to
    retained earnings
       3.4.5 Other
      3.5Specificreserve
       3.5.1 Increase in the
    period
       3.5.2  Used in the
    period
      3.6Other
    4. Balances as at the end 503,600,000.00                        1,247,162,107.35           4,794,830.59         251,800,000.00 5,162,354,747.41 7,169,711,685.35
    of theperiod
    
    
    ~ 90 ~
    
    2017
    
    Unit: RMB
    
                                                                           2017
           Item                      Otherequityinstruments                  Less:      Other     Specific     Surplus      Retained     Totalowners’
                       Sharecapital  Preferred  Perpetual         Capitalreserves   Treasury  comprehensive
                                   shares   bonds    Other                 stock      income     reserve     reserves      earnings       equity
    1. Balances as at the end 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
    of theprioryear
    Add:  Adjustments  for
    changed     accounting
    policies
      Adjustments      for
    corrections  of  previous
    errors
      Otheradjustments
    2.  Balances as at the 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
    comprehensive income
      3.2 Capital increased
    and reducedbyowners
       3.2.1 Ordinaryshares
    increased byshareholders
       3.2.2 Capital
    increased byholdersof
    
    
    ~ 91 ~
    
    other equityinstruments
       3.2.3 Share-based
    payments includedin
    owners’equity
       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  Transfers  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 Loss offset by
    surplus reserves
       3.4.4   Changes  in
    defined  benefit pension
    schemes  transferred  to
    retained earnings
       3.4.5 Other
    
    
    ~ 92 ~
    
      3.5Specificreserve
        3.5.1Increase in the
    period
        3.5.2 Used in the
    period
      3.6Other
    4. Balances as at the end 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
    of theperiod
    
    
    ~ 93 ~
    
    Notes to the financial statements for the year ended 31 December 2018
    
    Anhui Gujing Distillery Co., Ltd.
    
    Notes to the Financial Statements
    
    for the Year Ended 31 December 2018
    
    (All amounts are expressed, unless otherwise stated, in CNY.)
    
    Note 1 Company Profile
    
    Anhui Gujing Distillery Co., Ltd. (hereafter “the Company” or "Company") was approved by Anhui
    
    State-owned Assets Administration by WanGuoZiGongZi (1996) NO. 053 (皖国资工字(1996)第053
    
    号文). Anhui Gujing Group Co., Ltd. was the sole sponsor of the Company. The Company was
    
    established by converting the net assets of the main production and operating assets of its core
    
    enterprise Anhui Bozhou Gujing distillery into 155,000,000 shares of state-owned shares with a net
    
    value of 37,716.77 million yuan. The registered place of the Company is Bozhou City, Anhui Province,
    
    People's Republic of China. The Company was established on March 5, 1996 with the approval of
    
    Anhui Secretary of Government (1996) No. 42 (皖政秘(1996)42号文) by the Anhui Provincial
    
    People's Government. The Company started its founding meeting on May 28, 1996, and registered
    
    with the Anhui Provincial Administration for Industry and Commerce on May 30, 1996.
    
    The Company issued 60,000,000 domestic listed foreign shares (hereafter “B” shares) in June 1996
    
    and 20,000,000 domestic listed CNY ordinary shares (hereafter “A” shares) in September 1996, the
    
    par value of ordinary shares is CNY1.00 per share. Both A share and B share are listed on Shenzhen
    
    Stock exchange.
    
    The headquarters of the Company is located in Gujing town, Bozhou city, Anhui province. The
    
    Company and the subsidiaries (collectively called “Group”) is mainly engaged in liquor production and
    
    sales; it belongs to the food manufacturing industry.
    
    The original registered capital was CNY 235 million, the total amount of shares was 235 million,
    
    including state-owned shares 155 million and domestic listed foreign shares 60 million, the par value
    
    is CNY 1 per share.
    
    On May 29, 2006, the shareholder meeting for the Company’s shareholdings reform of A-share
    
    market has discussed and approved the proposal of the shareholdings reform, and the reform was
    
    implemented in June 2006. After the Company’s shareholdings reform implemented, all shares of
    
    the Company became floating shares, which included 147,000,000 shares with restricted condition
    
    on disposal, representing 62.55% of total share capital, and 88,000,000 shares without restricted
    
    condition on disposal, representing 37.45% of total share capital.
    
    Notes to the financial statements for the year ended 31 December 2018
    
    On June 27, 2007, the Company issued the Announcement of release restriction shares by Anhui
    
    Gujing Distillery Co., Ltd., the 11,750,000 restricted outstanding shares with the restricted condition
    
    on disposal became non-restricted in the stock market, and the conversion date is June 29, 2007.
    
    Hence, outstanding shares with the restrict condition on disposal are 135,250,000 shares,
    
    representing 57.55% of total share capital, the share without restricting condition on disposal are
    
    99,750,000 shares, representing 42.45% of total share capital.
    
    On July 17, 2008, the Company issued the Announcement of release restriction shares by Anhui
    
    Gujing Distillery Co., Ltd., the 11,750,000 restricted outstanding shares with the restricted condition
    
    on disposal became non-restricted in the stock market, and the conversion date is on July 18, 2008.
    
    Hence, outstanding shares with the restricted condition on disposal were 123,500,000 shares,
    
    representing 52.55% of total share capital, the share without restricting condition on disposal are
    
    111,500,000 shares, representing 47.45% of total share capital.
    
    On July 24, 2009, the Company issued the Announcement of release restriction shares by Anhui
    
    Gujing Distillery Co., Ltd., the 123,500,000 restricted outstanding shares with the restricted
    
    condition on disposal became non-restricted in the stock market, and the conversion date was on
    
    July 29, 2009. Hence, all shares of the Company became outstanding shares without restricted
    
    condition on disposal.
    
    According to the approval by China Securities Regulatory Commission (the authorization file No.
    
    zhengjianxuke[2011]943), on July 15, 2011, the Company privately issued 16,800,000 shares of
    
    ordinary share (A shares) to specific investors, the par value was CNY 1 per share, and the offering
    
    price was CNY 75 per share, the funds raised amounted to CNY 1,260 million. After deducting the
    
    sundry issuing charges amounting to CNY 32,500,549.73, the actual funds raised amounted to CNY
    
    1,227,499,450.27. The position of the above raised funds has been verified by Reanda Certified
    
    Public Accountants Co., Ltd. with a Capital Verification Report (REANDA YAN ZI[2011]No.1065).
    
    After the non-public issuance, the share capital of the Company increased to CNY 251.80 million.
    
    According to the resolution of 2011 annual general meeting of stockholders, the Company converted
    
    10 shares for each10 shares from capital reserves based on the 251.80 million shares on 31
    
    December 2011, the total number of converted shares was 251.80 million, and the transfer was
    
    implemented in 2012. After the conversion, the registered capital increased to CNY 503.60 million.
    
    As of 31 December 2018, the accumulated number of issued capital was 503.60 million shares.
    
    Refer to Note 6.25 for details.
    
    The Company registered in Gujing town, Bozhou city, Anhui province.
    
    The approved business scope of the Company: grain procurement (operation by license),
    
    production of distilled spirits, brewing equipment, packaging materials, glass bottles, alcohol,
    
    Notes to the financial statements for the year ended 31 December 2018
    
    grease (limited to the by-products from alcohol production), high-tech development, biotechnology
    
    development, deep processing of agricultural and sideline products, sales of self-produced products.
    
    The parent company of the Company and ultimate parent company is Anhui Gujing Group Co., Ltd.
    
    incorporated in China.
    
    The financial statement is approved by the resolution of the board of directors on 26 April 2019.
    
    According to the articles of association, the financial statements will be submitted to the shareholders
    
    meeting for consideration.
    
    A total of 23 subsidiaries of the Company that were included in the scope of consolidation in 2018 are
    
    listed in Note 8 “The equity in other entities”. The scope of consolidation of the Company for the
    
    current year was reduced by one subsidiary from the previous year. Refer to Note 7 “Changes of the
    
    scope of consolidated financial statements” for details.
    
    Note 2 Basis for preparation of the financial statements
    
    The financial statements of the Company have been prepared on basis of going concern in conformity
    
    with Chinese Accounting Standards for Business Enterprises and the Accounting Systems for
    
    Business Enterprises issued by the Ministry of Finance of People’s Republic of China (Ministry of
    
    Finance issued order No.33, the Ministry of Finance revised order No.76) on February 15, 2006, and
    
    revised Accounting Standards (order 42 of the Ministry of Finance) and Compilation Rules for
    
    Information Disclosure by Companies Offering Securities to the Public No.15 – General Provisions on
    
    Financial Reports (2014 Revision) issued by the China Securities Regulatory Commission (CSRC).
    
    According to the relevant accounting regulations in Chinese Accounting Standards for Business
    
    Enterprises, the Company has adopted the accrual basis of accounting. Held-for-sale non-current
    
    assets are measured at the lower of its book value at its classification date and fair value minus
    
    expected disposal costs. Where assets are impaired, provisions for asset impairment are made in
    
    accordance with relevant requirements.
    
    Note 3 Declaration of compliance with the CAS
    
    The financial statements of the Company are recognized and measured in accordance with the
    
    regulations in the Chinese Accounting Standards for Business Enterprises and they give a true and
    
    fair view of the financial position, business result and cash flow of the Company as of December 31
    
    2018. In addition, the financial statements of the Company comply, in all material respects, with the
    
    revised disclosing requirements for financial statements and the Compilation Rules for Information
    
    Disclosure by Companies Offering Securities to the Public No.15—General Provisions on Financial
    
    Reports (2014 Revision) issued by China Securities Regulatory Commission (CSRC) in 2014.
    
    Notes to the financial statements for the year ended 31 December 2018
    
    Note 4 Significant accounting policies and accounting estimates
    
    The Company and subsidiaries are mainly engaged in liquor production and sales. The Company
    
    formulates the specific accounting policies and accounting estimates for revenue recognition and
    
    other transactions and events in accordance with the actual business operation characteristics of the
    
    Company and subsidiaries, and provisions of the relevant accounting standard for business
    
    enterprises, please see Note 4.23 “Revenue” for details. The description of significant account
    
    judgment and estimates made by management, please see Note 4.28 “Significant accounting
    
    judgment and estimates.”
    
    4.1 Accounting period
    
    The accounting period of the Company is classified as interim period and annual period. Interim
    
    period refers to the reporting period shorter than a complete annual period. The accounting period of
    
    the Company is the calendar year from January 1 to December 31.
    
    4.2 Operating cycle
    
    The normal business cycle refers to the period from the purchase of assets for processing to the
    
    realization of cash or cash equivalents. The Company takes 12 months as a business cycle and uses
    
    it as a criterion for liquidity classification of assets and liabilities.
    
    4.3 Monetary Unit
    
    Yuan (CNY) is the currency of the primary economic environment in which the Company and its
    
    domestic subsidiaries operate. Therefore, the Company and its domestic subsidiaries choose CNY as
    
    their functional currency. The Company adopts CNY to prepare its functional statements.
    
    4.4 Accounting for business combinations under common control and under different control
    
    A business combination is a transaction or event that brings together two or more separate entities
    
    into one reporting entity. Business combinations are classified into business combinations involving
    
    enterprises under common control and business combinations not involving enterprises under
    
    common control.
    
    4.4.1 Business combination involving entities under common control
    
    A business combination involving enterprises under common control is a business combination in
    
    which all of the combining enterprises are ultimately controlled by the same party or parties both
    
    before and after the combination, and that control is not transitory.
    
    For a business combination involving enterprises under common control, the party that, on the
    
    combination date, obtains control of another enterprise participating in the combination is the
    
    Notes to the financial statements for the year ended 31 December 2018
    
    absorbing party, while that other enterprise participating in the combination is a party being absorbed.
    
    Combination date is the date on which the absorbing party effectively obtains control of the party
    
    being absorbed.
    
    The assets and liabilities obtained are measured at the carrying amounts as recorded by the
    
    enterprise being combined at the combination date. The difference between the carrying amount of
    
    the net assets obtained and the carrying amount of consideration paid for the combination (or the total
    
    face value of shares issued) is adjusted to the capital premium (or share premium) in the capital
    
    reserve. If the balance of the capital premium (or share premium) is insufficient, any excess is
    
    adjusted to retained earnings.
    
    The cost of a combination incurred by the absorbing party includes any costs directly attributable to
    
    the combination shall be recognized as an expense through profit or loss for the current period when
    
    incurred.
    
    4.4.2 Business combination involving entities not under common control
    
    A business combination involving enterprises not under common control is a business combination in
    
    which all of the combining enterprises are not ultimately controlled by the same party or parties both
    
    before and after the business combination.
    
    For a business combination not involving enterprises under common control, the party that, on the
    
    acquisition date, obtains control of another enterprise participating in the combination is the acquirer,
    
    while that other enterprise participating in the combination is the acquiree. Acquisition date is the date
    
    on which the acquirer effectively obtains control of the acquiree.
    
    For a business combination not involving enterprise under common control, the combined cost
    
    including the sum of fair value, at the acquisition date, of the assets given, liabilities incurred or
    
    assumed, and equity securities issued by the acquirer. The intermediary expenses incurred by the
    
    acquirer in respect of auditing, legal services, valuation and consultancy services, etc. and other
    
    associated administrative expenses attributable to the business combination are recognized in profit
    
    or loss when they are incurred.
    
    The transaction cost arose from issuing of equity securities, or liability securities shall be initially
    
    recognized as equity securities or liability securities.
    
    The contingent consideration related to the combination shall be booked as combination cost at the
    
    fair value at the acquisition date. If within the 12 months after the acquisition, additional information
    
    can prove the existence of related information at the acquisition date and the contingent consideration
    
    need to be adjusted, goodwill can be adjusted.
    
    Combination cost of the acquirer’s interest and identifiable net assets of the acquirer acquired through
    
    the business combination shall be measured by the fair value at the acquisition date. Where the cost
    
    Notes to the financial statements for the year ended 31 December 2018
    
    of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net assets,
    
    the difference shall be recognized as goodwill. Where the cost of combination is less than the
    
    acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference shall be
    
    accounted for according to the following requirements: (i) the acquirer shall reassess the
    
    measurement of the fair values of the acquiree’s identifiable assets, liabilities and contingent liabilities
    
    and measurement of the cost of combination; (ii) if after that reassessment, the cost of combination is
    
    still less than the acquirer’s interest in the fair values of the acquiree’s identifiable net assets, the
    
    acquirer shall recognize the remaining difference immediately in profit or loss for the current period.
    
    Where the temporary difference obtained by the acquirer was not recognized due to conformity with
    
    the conditions applied for recognition of deferred income tax, if, within the 12 months after acquisition,
    
    additional information can prove the existence of related information at acquisition date and the
    
    expected economic benefits on the acquisition date arose from temporary deductible difference by the
    
    acquiree can be achieved, relevant income tax assets can be recognized, and goodwill offset. If the
    
    goodwill is not sufficient, the difference shall be recognized as the profit of the current period.
    
    Apart from above, the differences shall be taken into profit or loss of the current period if the
    
    recognition of deferred income tax assets is related to the combination.
    
    For a business combination not involving enterprise under common control, which achieved in stages
    
    that involves multiple exchange transactions, according to “The notice of the Ministry of Finance on
    
    the issuance of Accounting Standards Interpretation No. 5” (CaiKuai [2012] No. 19) and Article 51 of
    
    “Accounting Standards for Business Enterprises No.33 - Consolidated Financial Statements” on the
    
    “package deal” criterion (see Note 4.5.2), to judge the multiple exchange transactions whether they
    
    are the "package deal". If it belongs to the “package deal” in reference to the preceding paragraphs of
    
    this section and the Notes described in 4.13 “long-term investment” accounting treatment, if it does
    
    not belong to the “package deal” to distinguish the individual financial statements and the consolidated
    
    financial statements related to the accounting treatment:
    
    In the individual financial statements, the total value of the book value of the acquiree's equity
    
    investment before the acquisition date and the cost of new investment at the acquisition date, as the
    
    initial cost of the investment, the acquiree's equity investment before the acquisition date involved in
    
    other comprehensive income, in the disposal of the investment will be in other comprehensive income
    
    associated with the use of infrastructure and the acquiree directly related to the disposal of assets or
    
    liabilities of the same accounting treatment (that is, except in accordance with the equity method of
    
    accounting in the defined benefit plan acquiree is remeasured net changes in net assets or liabilities
    
    other than in the corresponding share of the lead, and the rest into the current investment income).
    
    In the combination financial statements, the equity interest in the acquiree previously held before the
    
    acquisition date re-assessed at the fair value at the acquisition date, with any difference between its
    
    fair value and its carrying amount is recorded as investment income. The previously-held equity
    
    Notes to the financial statements for the year ended 31 December 2018
    
    interest in the acquiree involved in other comprehensive income and other comprehensive income
    
    associated with the purchase of the foundation should be used party directly related to the disposal of
    
    assets or liabilities of the same accounting treatment (that is, except in accordance with the equity
    
    method of accounting in the acquiree is remeasured defined benefit plans other than changes in net
    
    liabilities or net assets due to a corresponding share of the rest of the acquisition date into current
    
    investment income).
    
    4.5 Preparation of the consolidated financial statements
    
    4.5.1 The scope of consolidation
    
    The scope of consolidation for the consolidated financial statements is determined on the basis of
    
    control. Control is the power to govern the financial and operating policies of an enterprise so as to
    
    obtain benefits from its operating activities. The scope of consolidation includes the Company and all
    
    of the subsidiaries. The subsidiary is an enterprise or entity under the control of the Company.
    
    Once the change in the relevant facts and circumstances leading to the definition of the relevant
    
    elements involved in the control of the change, the Company will be re-evaluated.
    
    4.5.2 Preparation of the consolidated financial statements
    
    The subsidiary of the Company is included in the consolidated financial statements from the date
    
    when the control over the net assets and business decisions of the subsidiary is effectively obtained
    
    and excluded from the date when the control ceases.
    
    For a subsidiary disposed of by the Company, the operating results and cash flows before the date of
    
    disposal (the date when control is lost) are included in the consolidated income statement and
    
    consolidated statement of cash flows, as appropriate. For a subsidiary disposed of during the period,
    
    no adjustment is made to the opening balance of the consolidated financial statements.
    
    For a subsidiary acquired through a business combination not under common control, the operating
    
    results and cash flows from the acquisition (the date when the control is obtained) are included in the
    
    consolidated income statement and consolidated statement of cash flows, as appropriate; no
    
    adjustment is made to the opening balance and comparative figures in the consolidated financial
    
    statements.
    
    Where a subsidiary was acquired during the reporting period, through a business combination
    
    involving enterprises under common control, the financial statements of the subsidiary are included in
    
    the consolidated financial statements. The results of operations and cash flow are included in the
    
    consolidated balance sheet and the consolidated income statement, respectively, based on their
    
    carrying amounts, from the date that common control was established, and the opening balances and
    
    the comparative figures of the consolidated financial statements are restated.
    
    When the accounting period or accounting policies of a subsidiary are different from those of the
    
    Notes to the financial statements for the year ended 31 December 2018
    
    Company, the Company makes necessary adjustments to the financial statements of the subsidiary
    
    based on the Company’s own accounting period or accounting policies. Where a subsidiary was
    
    acquired during the reporting period through a business combination not under common control, the
    
    financial statements were reconciled on the basis of the fair value of identifiable net assets at the date
    
    of acquisition. Intra-Group balances and transactions and any unrealized profit or loss arising from
    
    intra-Group transactions are eliminated in preparing the consolidated financial statements.
    
    Minority interest and the portion of the net profit or loss not attributable to the Company are presented
    
    separately in the consolidated balance sheet within shareholders’/ owners’ equity and net profit. Net
    
    profit or loss attributable to minority shareholders in the subsidiaries is presented separately as
    
    minority interest in the consolidated income statement below the net profit line item.
    
    When the amount of loss for the current period attributable to the minority shareholders of a subsidiary
    
    exceeds the minority shareholders’ portion of the opening balance of shareholders’/equity of the
    
    subsidiary, the excess is allocated against the minority interests.
    
    When the Company loses control of a subsidiary due to the disposal of a portion of an equity
    
    investment or other reasons, the remaining equity investment is re-measured at its fair value at the
    
    date when control is lost. The difference between 1) the total amount of consideration received from
    
    the transaction that resulted in the loss of control and the fair value of the remaining equity investment
    
    and 2) the carrying amounts of the interest in the former subsidiary’s net assets immediately before
    
    the loss of the control is recognized as investment income for the current period when control is lost.
    
    Other comprehensive income related to the former subsidiary's equity investment, using the
    
    foundation and the acquiree directly related to the disposal of the same assets or liabilities are
    
    accounted when the control is lost (i.e., in addition to the former subsidiary, which is remeasured at
    
    the net defined benefit plan or changes in net assets and liabilities resulting from, the rest subsidiaries
    
    are transferred to the current investment income). The retained interest is subsequently measured
    
    according to the rules stipulated in the - “Chinese Accounting Standards for Business Enterprises
    
    No.2 - Long-term equity investment” or “Chinese Accounting Standards for Business Enterprises
    
    No.22 - Determination and measurement of financial instruments”. See Note 4.13 Long-term equity
    
    investments and Note 4.9 Financial instruments for details.
    
    Where loss of control over a subsidiary result from multiple transactions (agreements), the
    
    assessment shall be made as to whether the multiple agreements shall be viewed as a whole as a
    
    single transaction. Multiple agreements giving rise to loss of control over a subsidiary is generally
    
    viewed as a whole as a single transaction if the terms, conditions and economic implications of the
    
    multiple agreements satisfy one or more of the following conditions: 1) the agreements are entered
    
    into simultaneously or taking into account the implication of each other; 2) the business objective
    
    cannot be achieved without successful completion of all the agreements; 3)the occurrence of one
    
    Notes to the financial statements for the year ended 31 December 2018
    
    agreement is dependent on the result of at least another one agreement; and/or 4) any one single
    
    agreement is not recognized as economic, and the agreements as a whole is economic. Where
    
    multiple agreements do not satisfy the conditions of being viewed as a single transaction, each
    
    agreement shall be treated and accounted for in accordance with the provisions of disposal of
    
    long-term equity investments not resulting loss of control (see Note 4.13.2.4) or loss of control due to
    
    disposal of shares or other events (see the previous paragraph). Where multiple agreements satisfy
    
    the conditions of being viewed as a single transaction, each agreement shall be treated and
    
    accounted for as a transaction which results in loss of control; differences between the consideration
    
    for disposals prior to loss of control and the net assets proportionate to the shares disposed prior to
    
    loss of control are recognized as other comprehensive income in the consolidated financial
    
    statements and transferred to profit or loss at the time of loss of control.
    
    4.6 Joint arrangement and accounting for joint operations
    
    A joint arrangement is an arrangement of which two or more parties have joint control. A joint
    
    arrangement is either a joint operation or a joint venture, depending on the rights and obligation of the
    
    Company in the joint arrangement. A joint operation is a joint arrangement whereby the Company has
    
    rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a
    
    joint arrangement whereby the Company has rights to the net assets of the arrangement.
    
    The Company accounts for joint ventures using the equity method, see Note 4.13.2.2 for details.
    
    The Company, a joint operator, recognizes in relation to its interest in a joint operation: (a) its assets,
    
    including its share of any assets held jointly; (b) its liabilities, including its share of any liabilities
    
    incurred jointly; (c) its revenue from the sale of its share of the output arising from the joint
    
    operation;(d)its share of the revenue from the sale of the output by the joint operation; and (e)its
    
    expenses, including its share of any expenses incurred jointly.
    
    When the Company enters into a transaction with a joint operation in which it is a joint operator, such
    
    as a sale or contribution of assets, the Company, prior to disposal of the assets to a third party by the
    
    joint operation, recognizes gains and losses resulting from such a transaction only to the extent of the
    
    other parties' interests in the joint operation. When there is evidence of a reduction in the net
    
    realizable value of the assets to be sold or contributed to the joint operation, or of an impairment loss
    
    of those assets which is in line with provision stipulated by CAS 8, those losses are recognized fully
    
    by the Company. When there is evidence of a reduction in the net realizable value of the assets to be
    
    purchased or of an impairment loss of those assets, the Company shall recognize its share of those
    
    losses.
    
    4.7 Cash equivalent
    
    Cash and cash equivalents of the Company include cash on hand, ready usable deposits and
    
    investments having short holding term (normally will be due within three months from the day of
    
    purchase), with strong liquidity and easy to be exchanged into certain amount of cash that can be
    
    Notes to the financial statements for the year ended 31 December 2018
    
    measured reliably and have low risks of change.
    
    4.8 Foreign exchange
    
    4.8.1 Translation in foreign exchange transactions
    
    Transactions denominated in foreign currencies are translated into the functional currency using the
    
    transaction-date spot exchange rates. Where a transaction is conducted purely for the purpose of
    
    exchange one currency into another currency, the exchange rate used to translate the foreign
    
    currency into the functional currency is the exchange rate that is actually used for the currency
    
    exchange.
    
    4.8.2 Translation of foreign monetary currency and non-monetary foreign currency
    
    At the balance sheet date, foreign currency monetary items are translated using the spot exchange
    
    rate at the balance sheet date. All the exchange differences thus resulted are taken to profit or loss,
    
    except for ①those relating to foreign currency borrowings specifically for construction and acquisition
    
    of qualifying assets, which are capitalized in accordance with the principle of capitalization of
    
    borrowing costs, ②hedging accounting, the exchange difference related to hedging instruments for
    
    the purpose of net oversea operating investment is recorded in the comprehensive income till the date
    
    of disposal and recognized in profit or loss of the period; exchange difference from changes of other
    
    account balance of foreign currency monetary items, ③available-for-trade is recorded into profit or
    
    loss except for amortized cost.
    
    Non-monetary foreign currency items measured at historical cost shall still be translated at the spot
    
    exchange rate prevailing on the transaction date, and the amount denominated in the functional
    
    currency is not changed. Non-monetary foreign currency items measured at fair value are translated
    
    at the spot exchange rate prevailing at the date when the fair values are determined. The exchange
    
    difference thus resulted are recognized in profit or loss for the current period or as capital reserve.
    
    4.9 Financial instruments
    
    The Company recognizes the financial assets or liabilities when involved in financial instruments’
    
    agreements. The financial assets or liabilities are measured at fair value when initially recognized. For
    
    financial instruments whose value is measured at fair value, the related trading fees of whom are
    
    recorded into gains or loss; For other financial instruments, the related fees are recognized as part of
    
    initial value.
    
    4.9.1 Recognition of financial assets and liabilities’ fair value
    
    Fair value is the amount for which an asset could be exchanged, or a liability settled, between
    
    knowledgeable, willing parties in an arm’s length transaction. For a financial instrument which has an
    
    active market, the Company uses quoted price in the active market to establish its fair value. The
    
    Notes to the financial statements for the year ended 31 December 2018
    
    quoted price in the active market refers to the price that can be regularly obtained from exchange
    
    market, agencies, industry associations, pricing authorities; it represents the fair market trading price
    
    in the actual transaction.
    
    For a financial instrument which does not have an active market, the Company establishes fair value
    
    by using a valuation technique. Valuation techniques include using recent arm’s length market
    
    transactions between knowledgeable, willing parties, reference to the current fair value of another
    
    instrument that is substantially the same, discounted cash flow analysis and option pricing models.
    
    The Company measures initially and subsequently the fair value of an interest rate swap at the value
    
    of a competitor’s interest rate swap quoted by a recognized financial institution as at the Company’s
    
    balance sheet date in accordance with the principle of consistency.
    
    4.9.2 Classification, recognition and measurement of financial assets
    
    All regular way purchases or sales of financial assets are recognized and derecognized on a trade
    
    date basis. On initial recognition, the Company’s financial assets are classified into one of the four
    
    categories, including financial assets at fair value through profit or loss, held-to-maturity investments,
    
    loans and receivables and available-for-trade financial assets. A financial asset is recognized initially
    
    at fair value. In the case of financial assets at fair value through profit or loss, relevant transaction
    
    costs are immediately charged to the profit and loss of the current period; transaction costs relating to
    
    financial assets of other categories are included in the amount initially recognized.
    
    4.9.2.1 Financial assets at fair value through profit or loss:
    
    Including financial assets held-for-trade and financial assets designated at fair value through profit or
    
    loss.
    
    Financial asset held-for-trade is the financial asset that meets one of the following conditions:
    
    A. the financial asset is acquired for the purpose of selling it in the short term;
    
    B. the financial asset is a part of a portfolio of identifiable financial instruments that are collectively
    
    managed, and there is objective evidence indicating that the enterprise recently manages this portfolio
    
    for the purpose of short-term profits;
    
    C. the financial asset is a derivative, except for a derivative that is designated and effective hedging
    
    instrument, or a financial guarantee contract, or a derivative that is linked to and must be settled by
    
    delivery of an unquoted equity instrument (without a quoted price from an active market) whose fair
    
    value cannot be reliably measured. For such kind of financial assets, fair values are adopted for
    
    subsequent measurement.
    
    A financial asset is designated on initial recognition as at fair value through profit or loss only when it
    
    Notes to the financial statements for the year ended 31 December 2018
    
    meets one of the following conditions:
    
    A. the designation eliminates or significantly reduces the inconsistency in the measurement or
    
    recognition of relevant gains or losses that would otherwise arise from measuring the financial
    
    instruments on different bases.
    
    B. a Group of financial instruments is managed, and its performance is evaluated on a fair value basis
    
    and is reported to the enterprise’s key management personnel. Formal documentation regarding risk
    
    management or investment strategy has prepared.
    
    Financial assets at fair value through profit or loss are subsequently measured at the fair value. Any
    
    gains or losses arising from changes in the fair value and any dividends or interest income earned on
    
    the financial assets are recognized in the profit or loss.
    
    4.9.2.2 Investment held-to-maturity
    
    Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments
    
    and fixed maturity that an entity has a positive intention and ability to hold to maturity. Such kind of
    
    financial assets is subsequently measured at amortized cost using the effective interest method.
    
    Gains or losses arising from derecognition, impairment or amortization are recognized in profit or loss
    
    for the current period.
    
    The effective interest rate is the rate that exactly discounted estimated future cash flows through the
    
    expected life of the financial asset or financial liability or, where appropriate, a shorter period to the net
    
    carrying amount of the financial asset or financial liability.
    
    When calculating the effective interest rate, the Company shall estimate future cash flow considering
    
    all contractual terms of the financial asset or financial liability without considering future credit losses,
    
    and also consider all fees paid or received by the parties to the contract giving rise to the financial
    
    asset and financial liability that are an integral part of the effective interest rate, transaction costs, and
    
    premiums or discounts, etc.
    
    4.9.2.3 Loans and receivables
    
    Loans and receivables are non-derivative financial assets with a fixed, determinable payment that are
    
    not quoted in an active market. Financial assets classified as loans and receivables by the Company
    
    include note receivables, account receivables, interest receivable dividends receivable and other
    
    receivables.
    
    Loans and receivables are subsequently measured at amortized cost using the effective interest
    
    method. Gain or loss arising from derecognition, impairment or amortization is recognized in profit or
    
    loss.
    
    Notes to the financial statements for the year ended 31 December 2018
    
    4.9.2.4 Financial assets available-for-trade
    
    Financial assets available-for-trade include non-derivative financial assets that are designated on
    
    initial recognition as available for trade, and financial assets that are not classified as financial assets
    
    at fair value through profit or loss, loans and receivables or investment held-to-maturity.
    
    Financial assets available-for-trade are subsequently measured at fair value, and gains or losses
    
    arising from changes in the fair value are recognized as other comprehensive income and included in
    
    the capital reserve, except that impairment losses and exchange differences related to amortized cost
    
    of monetary financial assets denominated in foreign currencies are recognized in profit or loss, until
    
    the financial assets are derecognized, at which time the gains or losses are released and recognized
    
    in profit or loss.
    
    Interests obtained and dividends declared by the investee during the period in which the financial
    
    assets available-for-trade are held, are recognized as investment gains.
    
    4.9.3 Impairment of financial assets
    
    The Group assesses at the balance sheet date the carrying amount of every financial asset except for
    
    the financial assets that measured by the fair value. If there is objective evidence indicating a financial
    
    asset may be impaired, a provision is provided for the impairment.
    
    4.9.3.1 Impairment on held-to-maturity investment, loans, and receivables
    
    The financial assets measured by cost or amortized cost write down their carrying value by the
    
    estimated present value of future cash flow. The difference is recorded as an impairment loss. If there
    
    is objective evidence to indicate the recovery of the value of financial assets after impairment, and it is
    
    related to the subsequent event after recognition of loss, the impairment loss recorded originally can
    
    be reversed. The carrying value of financial assets after impairment loss reversed shall not exceed the
    
    amortized cost of the financial assets without provisions of impairment loss on the reserving date.
    
    4.9.3.2 Impairment loss on available-for-trade financial assets
    
    Where the fair value of the equity instrument investment drops significantly or not contemporarily
    
    according to the integrated relevant factors, an available-for-trade financial asset is impaired.
    
    When an available-for-trade financial asset is impaired, the cumulative loss arising from declining in
    
    fair value that had been recognized in the capital reserve shall be removed and recognized in profit or
    
    loss. The amount of the cumulative loss that is removed shall be the difference between the
    
    acquisition cost with a deduction of a recoverable amount less amortized cost, current fair value and
    
    any impairment loss on that financial asset previously recognized in profit or loss.
    
    If, after an impairment loss has been recognized, there is objective evidence that the value of the
    
    Notes to the financial statements for the year ended 31 December 2018
    
    financial asset is recovered, and it is objectively related to an event occurring after the impairment loss
    
    was recognized, the initial impairment loss can be reversed and the reserved impairment loss on
    
    available-for-trade equity instrument is recorded in the profit or loss, the reserved impairment loss on
    
    available-for-trade debt instrument is recorded in the current profit or loss.
    
    The equity instrument where there is no quoted price in an active market, and whose fair value cannot
    
    be reliably measured, or impairment loss on a derivative asset that is linked to and must be settled by
    
    delivery of such an unquoted equity instrument shall not be reversed.
    
    4.9.4 Recognition and measurement of financial assets transfer
    
    The Group derecognizes a financial asset when one of the following conditions is met:
    
    a. the rights to receive cash flows from the asset have expired;
    
    b. the enterprise has transferred its rights to receive cash flows from the asset to a third party under a
    
    pass-through arrangement; or
    
    c. the enterprise has transferred its rights to receive cash flows from the asset and either (a) has
    
    transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor
    
    retained substantially all the risks and rewards of the asset but has transferred control of the asset.
    
    If the enterprise has neither retained all the risks and rewards from the financial asset nor control over
    
    the asset, the asset is recognized according to the extent it exists as a financial asset, and
    
    correspondent liability is recognized. The extent of existence refers the level of risk by the financial
    
    asset changes the enterprise is facing.
    
    For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, (a). the carrying
    
    amount of the financial asset transferred; and (b) the sum of the consideration received from the
    
    transfer and any cumulative gain or loss that had been recognized in other comprehensive income, is
    
    recognized in profit or loss.
    
    If a part of the transferred financial asset qualifies for derecognition, the carrying amount of the
    
    transferred financial asset is allocated between the part that continues to be recognized and the part
    
    that is derecognized, based on the relative fair value of those parts. The difference between (a) the
    
    carrying amount allocated to the part derecognized; and (b) the sum of the consideration received for
    
    the part derecognized and any cumulative gain or loss allocated to the part derecognized which has
    
    been previously recognized in other comprehensive income, is recognized in profit or loss.
    
    4.9.5 Classification and measurement of financial liabilities
    
    The Group’s financial liabilities are, on initial recognition, classified into financial liabilities at fair value
    
    through profit or loss and other financial liabilities. For financial liabilities at fair value through profit or
    
    loss, relevant transaction costs are immediately recognized in profit or loss for the current period, and
    
    transaction costs relating to other financial liabilities are included in the initial recognition amounts.
    
    Notes to the financial statements for the year ended 31 December 2018
    
    4.9.5.1 Financial liabilities measured by the fair value and the changes recorded in profit or loss
    
    The classification by which financial liabilities held-for-trade and financial liabilities designed at the
    
    initial recognition to be measured by the fair value follows the same criteria as the classification by
    
    which financial assets held-for-trade and financial assets designed at the initial recognition to be
    
    measured by the fair value and their changes are recorded in the current profit or loss.
    
    For the financial liabilities measured by the fair value and changes recorded in the profit or loss, fair
    
    values are adopted for subsequent measurement. All the gains or losses on the change of fair value
    
    and the expenses on dividends or interests related to these financial liabilities are recognized in profit
    
    or loss for the current period.
    
    4.9.5.2 Other financial liabilities
    
    Derivative financial liabilities that linked with equity instruments, which do not have a quoted price in
    
    an active market and their fair value cannot be measured reliably, is subsequently measured by cost
    
    Other financial liabilities are subsequently measured at amortized cost using the effective interest
    
    method. Gains or losses arising from derecognition or amortization is recognized in profit or loss for
    
    the current period.
    
    4.9.6 Derecognition of financial liabilities
    
    The Group derecognizes a financial liability (or part of it) when the present underlying obligation (or
    
    part of it) is discharged or canceled or has expired. An agreement between the Company (an existing
    
    borrower) and existing lender to replace original financial liability with a new financial liability with
    
    substantially different terms is accounted for as an extinguishment of the original financial liability and
    
    the recognition of a new liability.
    
    When the Company derecognizes a financial liability or a part of it, it recognizes the difference
    
    between the carrying amount of the financial liability (or part of the financial liability) derecognized the
    
    consideration paid (including any non-cash assets transferred or new financial liabilities assumed) in
    
    profit or loss.
    
    4.9.7 Derivatives and embedded derivatives
    
    Derivative financial instruments include derivatives are initially measured at fair value at the date when
    
    the derivative contracts are entered into and are substantially re-measured at fair value. The gain or
    
    loss caused by the fair value change of the hedging instrument which the hedging is high efficiency
    
    will be recorded into a specific period in accordance with the hedging accounting according to the
    
    hedging relationship. Except for the hedging above, the resulting gain and loss of other derivatives is
    
    recognized in profit or loss.
    
    Notes to the financial statements for the year ended 31 December 2018
    
    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 through 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 date or
    
    at a subsequent balance sheet date, it designates the entire hybrid instrument as a financial asset or
    
    financial liability at fair value through profit or loss.
    
    4.9.8 Offsetting financial assets and financial liabilities
    
    When the Company has a legal right that is currently enforceable to set off the recognized financial
    
    assets and financial liabilities, and intends either to settle on a net basis, or to realize the financial
    
    asset and settle the financial liability simultaneously, a financial asset and a financial liability shall be
    
    offset and the net amount is presented in the balance sheet. Except for the above circumstances,
    
    financial assets and financial liabilities shall be presented separately in the balance sheet and shall
    
    not be offset.
    
    4.9.9 Equity instruments
    
    An equity instrument is any contract that evidences a residual interest in the assets of the Company
    
    after deducting all of its liabilities. The consideration received from issuing equity instruments, net of
    
    transaction costs, are added to shareholders’ equity. All types of distribution (excluding stock
    
    dividends) made by the Company to holders of equity instruments are deducted from shareholders’
    
    equity. The Company does not recognize any changes in the fair value of equity instruments.
    
    4.10 Receivables
    
    The receivables by the Company include account receivables and other receivables.
    
    4.10.1 Impairment of receivables
    
    Receivables are assessed for impairment on balance sheet dates. An impairment allowance for
    
    receivables is recognized if any of the following is present in assessment:
    
    a. significant financial difficulty of the issuer or obligor; or
    
    b. a breach of contract, such as a default or delinquency in interest or principal payments; or
    
    c. it is probable that the borrower will enter bankruptcy or other financial reorganization; or
    
    d. other objective evidence is indicating impairment.
    
    4.10.2 Impairment allowance for receivables
    
    Notes to the financial statements for the year ended 31 December 2018
    
    4.10.2.1 Receivables of individual significance subject to individual assessment and the relevant
    
    impairment allowance
    
    Individual receivables equal to or over CNY 2,000,000.00 are classified as receivables of individual
    
    significance.
    
    Receivables of individual significance are individually assessed for impairment. Receivables of
    
    individual significance assessed as non-impaired upon individual assessment are incorporated into
    
    portfolios of financial assets of similar credit risk characteristics for assessment for impairment by
    
    portfolio. Receivables of individual significance assessed as impaired upon individual assessment are
    
    no longer subject to assessment for impairment by portfolio.
    
    4.10.2.2 Portfolios of receivables of similar credit risk characteristics and the relevant impairment
    
    allowance
    
    A. Classification of portfolios
    
    Receivables of individual insignificance and non-impaired receivables of individual significance upon
    
    individual assessment are classified into portfolios of financial assets on the basis of similarity and
    
    relevance of credit risk characteristics. Credit risk characteristics represent the ability of the issuers or
    
    obligors to make payments in accordance with contracts and future cash flows of the relevant assets.
    
    Evidence of portfolios:
    
    Portfolio Criteria
    
    Portfolio by age Age of receivables
    
    Related party portfolios Entities within the scope of the consolidation.
    
    B. Impairment allowance for portfolios
    
    Impairment allowance for portfolios is measured with reference to portfolio structure, credit risk
    
    characteristics (the ability of the issuers or obligors to make payments in accordance with contracts)
    
    of each portfolio, historical experience, current market economic conditions, and recognized
    
    impairment in each portfolio.
    
    Measurement method for impairment allowance for portfolios
    
    Portfolio Measurement method
    
    Portfolio by age Age analysis method
    
    Related party portfolios No allowance for bad debt
    
    a. Impairment allowance measured by age analysis
    
    Age group Proportion to accounts receivable (%) Proportion to other receivables
    
    Notes to the financial statements for the year ended 31 December 2018
    
                                            (%)
                              Lessthan1year(inclusive,sameapplies
                              tothefollowing)
                              Including:1to6months                                   1.00                        1.00
                       7 to12months                                  5.00                        5.00
                              1to2years                                          10.00                        10.00
                              2to3years                                          50.00                        50.00
                              Over3years                                        100.00                       100.00
    
    
    4.10.2.3 Receivables of individual insignificance subject to individual assessment
    
    Receivables of individual insignificance are individually assessed for impairment is any of the
    
    following is present:
    
    there is disagreement with the issuer or obligor, or are subject to litigation; or it is clearly evidential
    
    that the issuer or obligor is very likely not capable of fulfilling its commitments.
    
    When a receivable of individual insignificance is impaired upon individual assessment for impairment,
    
    an impairment loss is recognized as the excess of its carrying amount over the present value of its
    
    future cash flows and an impairment allowance of the same amount is recognized.
    
    4.10.3 Reversal of impairment allowance for receivables
    
    After the impairment is recognized, if events subsequent to the recognition of the impairment are
    
    objectively evidential that the impairment no longer exists, the impairment allowance and impairment
    
    loss are reversed; however, the reversal shall not cause the carrying amount of the receivable
    
    exceeds its carrying amount as at the reversal date as if no impairment allowance was recognized.
    
    4.11 Inventories
    
    4.11.1 Classification of inventory
    
    The Company’s inventory mainly includes raw materials, semi-finished product, work-in-progress and
    
    finished products.
    
    4.11.2 Costing of inventories
    
    Inventories are initially carried at the actual cost. Cost of inventories includes purchase cost,
    
    conversion cost, and other costs. Cost of the issue is measured using the weighted average method.
    
    4.11.3 Determination of net realizable value of inventories and impairment allowance for inventories
    
    Net realizable value is the estimated selling price in the ordinary course of business less the
    
    estimated costs of completion, the estimated costs necessary to make the sale and relevant taxes.
    
    Net realizable value is determined on the basis of clear evidence obtained and takes into
    
    Notes to the financial statements for the year ended 31 December 2018
    
    consideration the purpose of holding inventories and effect of post balance sheet events.
    
    At the balance sheet date, inventories are measured at the lower of the cost and net realizable value.
    
    If the net realizable value is below the cost of inventories, a provision for decline in value of
    
    inventories is made. The provision for inventories decline in value is normally determined by the
    
    difference of the cost of the individual item less its realizable value. For large quantity and low-value
    
    items of inventories,
    
    provision for decline in value is made based on categories of inventories. For items of inventories
    
    relating to a product line that are produced and marketed in the same geographical area, have the
    
    same or similar end users or purposes, and cannot be practicably evaluated separately from other
    
    items in that product line provision for decline in value is determined on an aggregate basis.
    
    After the provision for decline in value of inventories is made, if the circumstances that previously
    
    caused inventories to be written down below cost no longer exist so that the net realizable value of
    
    inventories is higher than their cost, the original provision for decline in value is reversed and the
    
    reversal is included in profit or loss for the period.
    
    4.11.4 Physical inventories are managed by the perpetual inventory taking system.
    
    4.11.5 Amortisation of low-value consumables and packaging materials
    
    Low-value consumables and packaging materials are fully amortized at the time of issuance.
    
    4.12 Held-for-sale assets and disposal group
    
    The Company classify 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
    
    remeasurement on the balance sheet date. An impairment loss is recognized when the carrying
    
    amount is higher than the fair value less costs to sell, and allowance for impairment is recognized
    
    Notes to the financial statements for the year ended 31 December 2018
    
    accordingly. For the disposal group, the recognized 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 recognize 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 recognized after the reclassification to
    
    non-current assets held for 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 recognized 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 are not subject
    
    to depreciation or amortization. The interest and other expenses on liabilities held in the disposal
    
    group for sale are continuously recognized.
    
    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: (a) The
    
    carrying amount before classification as held for sale after adjustment of depreciation, amortization or
    
    impairment that should be recognized if it is not classified as non-current assets held for sell; (b)
    
    recoverable amount.
    
    4.13 Long-term equity investments
    
    Long-term equity investments in this section refer to the long-term investment through which the
    
    Company has control, joint control, or material influence on the investee. Long-term equity
    
    investments through which the Company does not have control, joint control or material influence on
    
    the investee shall be recognized as available-for-sale financial assets or financial assets measured by
    
    fair value with changes in fair value recognized in profit or loss. See Note 4.9 for details.
    
    Joint control is the contractually agreed sharing of control over economic activity and exists when the
    
    strategic financial and operating decisions relating to the activity require the unanimous consent of the
    
    parties sharing control. Significant influence is the power to participate in the financial and operating
    
    policy decisions of the investee but is not control or joint control over those policies.
    
    4.13.1 Determination of Investment cost
    
    Long-term equity investment acquired through business combination under common control are
    
    measured at the acquirer's share of the combination date book value of the acquiree's net equity in
    
    the ultimate controller's consolidated financial statements. The difference between the initial cost and
    
    cash paid, non-monetary assets transferred, and liabilities assumed by is adjusted to capital reserves,
    
    Notes to the financial statements for the year ended 31 December 2018
    
    and to retained earnings if capital reserves are insufficient. If the consideration is paid by issuing
    
    equity instruments, the initial cost is measured at the acquirer's share of the combination date book
    
    value of the acquiree's net equity in the ultimate controller's consolidated financial statements, with the
    
    face value of the equity instruments issued recognized as share capital and the difference between
    
    the initial cost and the face value of the equity instruments issued adjusted to capital reserves, and to
    
    retained earnings if capital reserves is insufficient. For business combination involving entities under
    
    common control achieved through multiple transactions (acquisition in stages), the multiple
    
    agreements are assessed to determine whether they should be viewed as a lump-sum purchase.
    
    Where multiple agreements of an acquisition in stages are viewed as a lump-sum purchase, the
    
    transactions are viewed as one transaction that acquires the control power. Where multiple
    
    agreements of an acquisition fail the conditions of a lump-sum purchase, long-term equity investment
    
    acquired through business combination under common control are measured at the acquirer's share
    
    of the combination date book value of the acquiree's net equity in the ultimate controller's consolidated
    
    financial statements. The difference between the initial cost, and the book value of the long-term
    
    equity investment before combination date and considerations paid to acquire new shares on the
    
    combination date, is adjusted to capital reserves, and to retained earnings if capital reserves are
    
    insufficient.
    
    Long-term equity investment acquired through business combination not under common control is
    
    measured at combination cost on the combination date. The combination cost includes assets
    
    contributed by the purchaser, liabilities incurred or assumed by, and fair value of the equity
    
    instruments issued by the acquirer. For business combination involving entities not under common
    
    control achieved through multiple transactions (acquisition in stages), the multiple agreements are
    
    assessed to determine whether they should be viewed as a lump-sum purchase. Where multiple
    
    agreements of an acquisition in stages are viewed as a lump-sum purchase, the transactions are
    
    viewed as one transaction that acquires the control power. Where multiple agreements of an
    
    acquisition fail the conditions of a lump-sum purchase, long-term equity investment acquired through
    
    business combination not under common control are measured at the sum of the original book value
    
    of the equity investment on the investee and the new investment cost, which is regarded as the new
    
    initial cost of the long-term investment when transferred to cost method. If the original equity is
    
    measured by the equity method, not accounting treatment is applied to relevant other comprehensive
    
    income temporarily.
    
    The audit, legal services, valuation, and other directly associated administrative expenses incurred by
    
    the acquirer are recognized in profit or loss on the transaction dates.
    
    Long-term equity investments acquired not through business combination are measured at cost on
    
    Notes to the financial statements for the year ended 31 December 2018
    
    initial recognition. Depending on the way of acquisition, the cost of acquisition can be the total cash
    
    paid, the fair value of equity instrument issued, the contract price, the fair value or book value of the
    
    assets given away in the case of non-monetary asset exchange, or the fair value of the relevant
    
    long-term equity investments. The cost of acquisition of a long-term equity investment acquired not
    
    through business combination also includes all directly associated expenses, applicable taxes and
    
    fees, and other necessary expenses. When the Company increase investment to have material
    
    influence or joint control, but not control over the investee, long-term investments are measured at the
    
    sum of the fair value of initial equity investment and cost of new investment as defined in
    
    CAS22-Recognition and Measurement of Financial Assets.
    
    4.13.2 Subsequent measurement and recognition and measurement of gain or loss
    
    Where a long-term equity investment gives the Company either joint control or significant influence
    
    over the respective investee, the investment is subsequently measured using the equity method.
    
    Where a long-term equity investment gives the Company control over the respective investee, the
    
    investment is subsequently measured at cost.
    
    4.13.2.1 Long-term equity investments measured at cost
    
    A long-term equity investment is measured at the cost of investment, excluding declared cash
    
    dividends or profit pending distribution included in the consideration paid. Investment income for the
    
    relevant period from a long-term equity investment measured at cost is recognized as the Company's
    
    share of the cash dividends or profit declared for distribution by the investee.
    
    4.13.2.2 Long-term equity investments measured using the equity method
    
    When the cost of a long-term equity investment measured using the equity method on initial
    
    recognition exceeds the Company's share of the fair value of the respective investee's net identifiable
    
    assets, no adjustment is made to the cost of the investment for the excess. When the Company's
    
    share of the fair value of an investee's net identifiable assets exceeds the cost of the respective
    
    long-term equity investment measured using the equity method on initial recognition, adjustment is
    
    made to the cost of the investment for the difference and the difference is carried to profit or loss for
    
    the period during which the investment is recognized.
    
    Investment income or loss and other comprehensive income for the relevant period from a long-term
    
    equity investment measured using the equity method is measured at the Company's share of the net
    
    profit or loss and other comprehensive income of the respective investee for the relevant period, and
    
    the book value of long-term equity investments is adjusted accordingly. If the investee declares profit
    
    distribution or cash dividends, long-term equity investments are reduced by the Company’s share of
    
    declared profit distribution or cash dividends in the investee. Long-term equity investments will be
    
    adjusted, and capital reserves are recognized with variations other than net profit or loss, other
    
    Notes to the financial statements for the year ended 31 December 2018
    
    comprehensive income, and profit distribution. When computing the Company's share of the net profit
    
    or loss of the investee for the relevant period, net profit or loss of the investee for the relevant period is
    
    adjusted, if necessary, for the fair value of the investee's identifiable assets and identifiable liabilities
    
    on acquisition and the Company's accounting policies and accounting period. Investment income and
    
    other comprehensive income is recognized accordingly. The computation of the Company's share of
    
    the net profit or loss of the investee for the relevant period also eliminates unrealized profit and loss
    
    arising from transactions between the Company and the investee (a joint venture or associate,
    
    whichever is applicable) and contributing or selling assets to the investee which forms an operation, to
    
    the extent of the Company's share calculated by the Company's shareholding in the investee for the
    
    relevant period, except for the unrealized loss resulted from impairment of transferred assets. When
    
    contributing assets to the joint venture or associate by the Company forms an operation, and the
    
    investor acquires the long-term equity investment without control, long-term equity investments are
    
    measured at fair value of the contributed operations, with the difference between initial investment
    
    cost and book value of the contributed operation fully recognized in profit or loss for the period. When
    
    selling assets to the joint venture or associate by the Company forms an operation, the difference
    
    between considerations received and book value of the operation is fully recognized in profit and loss
    
    for the period. When purchasing assets from the joint venture or associate by the Company belongs to
    
    an operation, income and losses are fully recognized as specified in CAS20-Business Combination.
    
    When the Company's share of an investee's net loss exceeds the sum of the carrying amount of the
    
    respective long-term equity investment measured using the equity method and other investments in
    
    the investee, the carrying amount of the long-term equity investment and other investments in the
    
    investee is reduced to zero. If the Company is obliged to share loss of the investee after its long-term
    
    equity investment and other investments have been reduced to zero, an investment loss and provision
    
    is recognized to the extent of the estimated obligation. If the investee reports profits in subsequent
    
    periods, the Company only recognizes its share of profit after its share of profit equals the share of
    
    loss not recognized.
    
    For long-term equity investments in associates and joint ventures which had been held by the
    
    Company before its first time adoption of new accounting standards, where the initial investment cost
    
    of a long-term equity investment exceeds the Company’s share in the investee’s net assets at the time
    
    of acquisition, the excess is amortized and is recognized in profit or loss on a straight-line basis over
    
    the original remaining life.
    
    4.13.2.3 Acquisition of minority interests
    
    If minority interests in an investee is acquired by the Company, during the Company's preparation of
    
    the consolidated financial statements, the difference between the Company's cumulative share of the
    
    investees net assets calculated on the basis of the new shareholding in the investee from the
    
    Notes to the financial statements for the year ended 31 December 2018
    
    acquisition date (or combination date) and the Company's investment in the investee following the
    
    minority interest acquisition is adjusted to capital reserves, and to retained earnings if capital reserves
    
    is insufficient.
    
    4.13.2.4 Disposal of long-term equity investments
    
    On the consolidated financial statements, when partly disposal of a long-term equity investment in a
    
    subsidiary which does not cause loss of control over the subsidiary, the difference between the
    
    consideration for disposal and the net identifiable asset given away proportionate to the disposed
    
    shares in the subsidiary is recognized in equity; partly disposal of a long-term equity investment in a
    
    subsidiary which causes loss of control over the subsidiary is accounted for in accordance with Note
    
    4.5.2.
    
    The difference between the consideration for disposal of long-term equity investments and the
    
    carrying amount of the long-term equity investments disposed of is recognized in profit or loss for the
    
    period during which the investments are disposed of.
    
    When a long-term equity investment measured using the equity method is disposed, and the residual
    
    equity after disposal is still measured using equity method, the respective cumulative other
    
    comprehensive income recognized in equity proportionate to the disposed of investment shall adopt
    
    the same accounting treatment as the investee disposes of relevant assets or liabilities directly.
    
    Movement in investee's equity other than changes in net profit or loss, other comprehensive income,
    
    and profit distribution is recognized in profit or loss proportionally.
    
    When a long-term equity investment measured using the cost method is disposed and the residual
    
    equity after disposal is still measured using cost method, other comprehensive income, which is
    
    recognized by equity method or recognition and measurement applicable to financial instruments prior
    
    to the Company's acquisition of control over the investee, shall adopt the same accounting treatment
    
    as the investee disposes relevant assets or liabilities directly on the date of loss of control, and profit
    
    or loss is recognized proportionally. Movement in investee's equity other than changes in net profit or
    
    loss, other comprehensive income, and profit distribution is recognized in profit or loss proportionally.
    
    Where the Company's control over an investee is lost due to partial disposal of investment in the
    
    investee and the Company continues to have significant influence over the investee after the partial
    
    disposal, the investment is measured by equity method in the Company's separate financial
    
    statements; where the Company's control over an investee is lost due to partial disposal of investment
    
    in the investee and the Company ceases to have significant influence over the investee after the
    
    partial disposal, the investment is measured in accordance with the recognition and measurement
    
    principles applicable to financial instruments in the Company's separate financial statements and the
    
    difference between the fair value and book value of the remaining investment at the date of loss of
    
    control is recognized in profit or loss. Cumulative other comprehensive income relevant to the
    
    investment, which is recognized by equity method or recognition and measurement principles
    
    Notes to the financial statements for the year ended 31 December 2018
    
    applicable to financial instruments prior to the Company's acquisition of control over the investee, shall
    
    adopt the same accounting treatment as the investee disposes relevant assets or liabilities directly on
    
    the date of loss of control, The investee's equity movement other than changes in net profit or loss,
    
    other comprehensive income and profit distribution, as a result of accounting by equity method, is
    
    recognized in profit or loss when control is lost. Where the remaining investment is measured by
    
    equity method, the afore-mentioned other comprehensive income and other equity movement are
    
    recognized in profit or loss proportionate to the disposal; Where the remaining investment is
    
    measured in accordance with the recognition and measurement principles applicable to financial
    
    instruments, the afore-mentioned other comprehensive income and other equity movement are fully
    
    recognized in profit or loss.
    
    Where the Company's joint control or significant influence over an investee is lost due to partial
    
    disposal of investment in the investee, the remaining investment in the investee is measured in
    
    accordance with the recognition and measurement principles applicable to financial instruments, the
    
    difference between the fair value and the book value of the remaining investment at the date of loss of
    
    joint control or significant influence is recognized in profit or loss. Cumulative other comprehensive
    
    income relevant to the investment, which is recognized by equity method or recognition and
    
    measurement principles applicable to financial instruments prior to the Company's acquisition of
    
    control over the investee, shall adopt the same accounting treatment as the investee disposes
    
    relevant assets or liabilities directly on the date of loss of control, The investee's equity movement
    
    other than changes in net profit or loss, other comprehensive income and profit distribution, as a result
    
    of accounting by equity method, is recognized in profit or loss when control is lost.
    
    Where the Company's control over an investee is lost through multiple disposals and the multiple
    
    disposals can be viewed as a lump-sum transaction, the multiple disposals are accounted for one
    
    single transaction which results in the Company's loss of control over the investee. Difference
    
    between the consideration received and the book value of the investment disposed at each time of
    
    disposal is recognized in other comprehensive income and reclassified in full to profit or loss at the
    
    period when control over the investee is lost.
    
    4.14 Investment property
    
    Investment property is held to earn rentals or for capital appreciation or for both. Investment property
    
    includes leased or ready to transfer after capital appreciation land use rights and leased buildings.
    
    Investment property is initially measured at cost. Subsequent expenditures related to an investment
    
    real estate are likely to flow about the economic benefits of the asset, and its cost can be measured
    
    reliably, is included in the cost of investment real estate. Other subsequent expenditure in the profit or
    
    loss when it incurred.
    
    The Group uses the cost model for subsequent measurement of investment property, and in
    
    accordance with the depreciation or amortization of buildings or land use rights policy.
    
    Notes to the financial statements for the year ended 31 December 2018
    
    Investment property impairment test method and impairment accrual method described in Note 20
    
    “Non-current and non-financial assets impairment."
    
    Occupied real estate for investment property or investment property is transferred to the
    
    owner-occupied real estate or stock conversion as the recorded value after the conversion, according
    
    to the book value before the conversion.
    
    Investment property change into the Owner-occupied real estate, since the change of date for the
    
    investment property, is transferred to fixed assets or intangible assets. Change the owner-occupied
    
    property held to earn rentals or for capital appreciation, since the change of date, the fixed assets or
    
    intangible assets to investment property. Conversion occurs when converted to investment property
    
    using the cost model, as the book value before the conversion of the recorded value after the
    
    conversion; converted to investment property measured at fair value model, the fair value of the
    
    conversion date as the recorded value after conversion.
    
    Derecognized, when the investment property is disposed of or permanently withdrawn from use and
    
    the expected economic benefits, cannot be obtained from the disposal of investment property.
    
    Proceeds on disposal of investment property is sold, transferred, retired or damaged through profit or
    
    loss after deducting the book value and related taxes.
    
    4.15 Fixed assets
    
    4.15.1 Definition
    
    Fixed assets refer to the tangible assets that are held for the sake of producing commodities,
    
    rendering labor service, renting or business management and their useful life is in excess of one
    
    fiscal year.
    
    4.15.2 Depreciation of fixed assets
    
    Fixed assets are stated at cost and consider the impact of expected costs of abandoning the initial
    
    measurement. From the following month of a state of intended use, depreciation method of the
    
    straight-line method is used for different categories of fixed assets to take depreciation. The
    
    recognition of the classification, useful life and estimated residual rate are as follows:
    
                        Estimated residualvalue
                     Category               Expectedusefullife                        Depreciation(%)
                               (%)
                               Houses andbuilding                           8.00-35.00            3.00-5.00         2.70-12.10
                               Machineries                                5.00-10.00            3.00-5.00         9.50-19.40
                               Vehicles                                      4.00               3.00             24.25
                               Administrative equipmentandothers                     3.00               3.00             32.33
    
    
    Expected net residual value of fixed assets is the balance of the Company currently obtained from the
    
    Notes to the financial statements for the year ended 31 December 2018
    
    disposal of the asset less the estimated costs of disposal amount, assuming the asset is out of useful
    
    life and state the expected service life in the end.
    
    4.15.3 Assessment of impairment and impairment allowance
    
    Impairment and provisions of fixed assets are disclosed on Note 4.20 Impairment of non-current and
    
    non-financial assets.
    
    4.15.4 Recognition and measurement of fixed assets held under financial lease
    
    A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership of
    
    an asset. The title may or may not eventually be transferred.
    
    Fixed assets that are held under finance leases shall be depreciated by applying the same policy as
    
    that for the fixed assets owned by the Company. If it can be reasonably determined that the ownership
    
    of the leased assets can be obtained at the end of the lease period, the leased assets are depreciated
    
    over their useful lives; otherwise, the leased assets are depreciated over the shorter of the lease
    
    terms and the useful lives of the leased assets.
    
    4.15.5 Other relevant information
    
    A fixed asset is recognized only when the economic benefits associated with the asset will probably
    
    flow to the Company and the cost of the asset can be measured reliably. Subsequent expenditure
    
    incurred for a fixed asset that meets 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 of 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 a change in
    
    accounting estimates.
    
    4.16 Construction in progress
    
    The cost of construction in progress is measured at the actual expenditure incurred, including
    
    construction expenditure and capitalization of borrowing costs and other applicable costs incurred
    
    prior to the completion. An item of construction in progress is reclassified to fixed asset upon
    
    completion.
    
    See Note 4.20 for details of assessment for impairment of construction in progress and impairment
    
    allowance for construction in progress.
    
    4.17 Borrowing costs
    
    Borrowing costs include interests on loans, amortization of discount or premium, ancillary expenses,
    
    and foreign exchange difference on loans denominated in foreign currencies. Borrowing costs directly
    
    Notes to the financial statements for the year ended 31 December 2018
    
    associated with the acquisition of construction of a qualifying asset are eligible for capitalization.
    
    Capitalization starts when expenditure on the qualifying asset is incurred, borrowing costs are
    
    incurred, or production or construction of the qualifying asset for its intended use or sales is started,
    
    whichever is later. Capitalization stops when the qualifying assets reach the condition of its intended
    
    use or sales. All other borrowing costs are recognized in profit or loss for the period during which they
    
    are incurred.
    
    When a loan is taken out specifically for the construction of a particular qualifying asset, the interest
    
    expense capitalized for a particular period is the residual amount after deducting interest income from
    
    unused facilities for the period and/or income from temporary investment of the unused facilities for
    
    the period from the interest expense incurred for the period. Borrowing costs on general purpose
    
    financing are calculated by multiplying the weighted average of the excess of cumulative capital
    
    expenditure over the designated financing facilities with the capitalization rate of general purpose
    
    financing. The capitalisation rate of general purpose financing is calculated as the weighted average
    
    of the interest rates of general purpose financing.
    
    Foreign exchange difference on designated financing denominated in foreign currencies incurred
    
    during the capitalization period is wholly capitalized. Foreign exchange difference on general purpose
    
    financing denominated in foreign currencies is recognized in profit or loss for the period during which
    
    it is incurred.
    
    A qualifying asset is an item of fixed assets, investment property, inventories, etc. which requires a
    
    substantial period of time for the construction or production for its intended use of sales.
    
    If the construction or production of a qualifying asset stops for a period longer than three months,
    
    capitalization of borrowing costs is suspended until the construction or production is resumed.
    
    4.18 Intangible assets
    
    4.18.1 Intangible asset
    
    An intangible asset is an identifiable non-monetary asset without a physical form which is owned or
    
    control by the Company.
    
    Intangible assets are measured at cost on initial recognition. If it is probable that economic benefits
    
    associated with expenditure directly associated with an item of intangible assets will flow to the
    
    Company and the cost of the expenditure can be reliably measured, the expenditure is measured as
    
    part of the intangible asset's initial cost; all other expenditure is recognized in profit or loss for the
    
    period during which it is incurred.
    
    Land use rights acquired are generally recognized as intangible assets. In the case of a
    
    self-constructed building, the costs of acquiring the respective land use right(s) and the costs of
    
    building construction are separately recognized and measured as intangible assets and fixed assets
    
    respectively. In the case of a purchased building, the costs of acquisition are allocated to land use
    
    Notes to the financial statements for the year ended 31 December 2018
    
    right(s) and building; if the reasonable allocation is impossible, the costs of acquisition as a whole are
    
    recognized and measured as fixed assets.
    
    For an item of intangible assets which is with a finite useful life, the residual amount after deducting
    
    its estimated residual value and previously recognized impairment from its cost is amortized over its
    
    estimated remaining useful life using the straight-line method starting from the month in which it
    
    reaches the conditions of its intended use of sales. Intangible assets with infinite useful life are not
    
    amortized.
    
    Useful lives of intangible assets are a review on each balance sheet date. If circumstances indicate
    
    that there is a change in the useful life of an item of intangible assets with a finite useful life, a change
    
    in accounting estimates is carried out. If circumstances indicate that the useful life of an item of
    
    intangible assets with infinite useful life becomes finite, the useful life of the intangible asset is
    
    estimated, and the intangible asset is amortized accordingly.
    
    4.18.2 Research and development expenditure
    
    A research and development project is divided into research stage and development stage.
    
    Expenditure incurred during the research stage is recognized in profit or loss for the period during
    
    which it is incurred.
    
    Expenditure incurred during the development stage is recognized as intangible assets if all of the
    
    following conditions are satisfied:
    
    a. it is technically feasible to complete the intangible asset so that it can be used or sold; and
    
    b. the Company has clear intention to complete the intangible asset and to use it or sell it; and
    
    c. it is evidential that the intangible asset will generate economic benefits either by selling the
    
    intangible asset itself or the goods produced by the intangible asset or by using it internally; and
    
    d. there are sufficient technical, financial and other resources to complete the intangible asset and
    
    the Company is able to use it or sell it, and
    
    e. expenditure incurred in the development stage of the intangible asset can be reliably measured.
    
    Where a research and development project cannot be separated into the research stage and
    
    development stage, all expenditure incurred for the project is recognized in profit or loss for the
    
    period during which it is incurred.
    
    4.18.3 Assessment of impairment and impairment allowance
    
    See Note 4.20 for details of assessment for impairment of intangible assets and impairment
    
    allowance for intangible assets.
    
    4.19 Deferred charges
    
    An item of deferred charges is an expense incurred which brings economic benefits to the Company
    
    for a period exceeding one year starting from the transaction date. An item of deferred charges is
    
    Notes to the financial statements for the year ended 31 December 2018
    
    amortized over its estimated useful life using the straight-line method.
    
    4.20 Impairment of non-current assets
    
    Non-current non-monetary assets, such as fixed assets, construction in progress, intangible assets
    
    with finite useful life, investment property measured by cost, and long-term equity investments in
    
    subsidiaries, joint ventures, and associates, are assessed for impairment on each balance sheet date.
    
    If circumstances on a balance-sheet date indicate that a non-current non-monetary asset is impaired,
    
    the recoverable amount of the asset is estimated. The recoverable amounts of goodwill, intangible
    
    assets with infinite useful live and intangible assets which have not yet reached the conditions of their
    
    intended use or sales are estimated at least once a year regardless of whether there is an indication
    
    of impairment.
    
    If the carrying amount of a non-current non-monetary asset exceeds its estimated recoverable amount,
    
    the excess of the carrying amount over the estimated recoverable amount is recognized as
    
    impairment allowance, and an impairment loss of the same amount is recognized. The estimated
    
    recoverable amount of an asset is the higher of the residual amount after deducting disposal expense
    
    of the asset from its fair value and the present value of its future cash flows. Where there is a sales
    
    contract for an asset, and the contract is entered into for an arm's length transaction, the fair value of
    
    the asset is the contract price; where there isn't a sales contract for an asset, but there is an active
    
    market for it, the fair value of the asset is price offered by the buyer; where there is neither a sales
    
    contract nor an active market for an asset, the fair value of the asset is the best estimate based on all
    
    available information. The disposal cost of an asset includes legal expenses, applicable taxes and
    
    fees and transportation costs directly associated with the asset's disposal and all direct costs
    
    necessary to bring the asset to its sellable condition. The present value of an asset's future cash flows
    
    is calculated by multiplying the cash flows arising from the continual use of the asset and its disposal
    
    at an appropriate discount rate. An impairment allowance is generally calculated on the basis of
    
    individual assets. If it is not possible to estimate the recoverable amount of an individual asset, the
    
    recoverable amount of a cash-generating unit to which the asset belongs is estimated. A
    
    cash-generating unit is the smallest combination of assets that are capable of cash flow generation.
    
    Goodwill separately presented on the (consolidated) financial statements is allocated to
    
    cash-generating units or groups of units that are expected to benefit from the synergy of business
    
    combination for impairment testing. Where the recoverable amount a cash-generating unit (or group of
    
    units) is lower than its carrying amount, an impairment loss is recognized. The impairment loss is
    
    firstly allocated to the goodwill allocated to the unit (or group of units) and then to individual assets pro
    
    rata on the basis of the carrying amount of each asset in the unit (or group of units)
    
    The impairment loss recognized in accordance with this section is irreversible in subsequent periods.
    
    4.21 Employee Benefits
    
    The employee benefits of the Company include short-term employee benefits, post-employment
    
    Notes to the financial statements for the year ended 31 December 2018
    
    benefits, termination benefits and other long-term employee benefits:
    
    Short-term employee benefits include wages, bonuses, allowances and subsidies, welfare, health
    
    insurance, maternity insurance, work injury insurance, housing funds, labor union funds, employee
    
    education funds, non-monetary benefits etc. Short-term employee benefits are recognized as
    
    liabilities and profit or loss account or the costs associated with the asset during the accounting
    
    period when employees actually provide services. The non -monetary benefits are measured at fair
    
    value.
    
    Post-employment benefits include defined contribution plans and defined benefit plans. Defined
    
    contribution plan which includes the basic pension, unemployment
    
    insurance and annuities shall be recognized as cost of related assets or profit or loss.
    
    When the Company terminates the labor relationship with employees prior to the employment
    
    contracts, or encourages employees to accept voluntary redundancy compensation proposals in this
    
    company, a provision shall be recognized for the compensation arising from the termination of
    
    employment relationship with employees at the time when the Company cannot unilaterally withdraw
    
    layoff proposal termination benefits provided due to termination of employment or the Company
    
    ensures the costs related to the payment for termination benefits related to the restructuring, which
    
    one is early to confirm employee benefits liabilities, and recorded as profit or loss. However, if
    
    termination benefits cannot be fully paid within twelve months of the reporting date the liability shall
    
    be processed in accordance with other long-term employee benefits.
    
    Retirement plan adopts the same principles as the termination benefits. The salaries and insurance
    
    to be paid from the date when employees stop providing services to the date of normal retirement
    
    shall be recognized in profit or loss (termination benefits) when satisfying the requirements of a
    
    provision.
    
    Other long-term employee benefits provided by the Company to employees that are in line with
    
    defined contribution plans shall adopt the accounting treatment in accordance with defined
    
    contribution plans, otherwise the accounting treatment of defined benefit plans.
    
    4.22 Provisions
    
    A contingent liability is recognized as provision if all or the following conditions are satisfied:
    
    a. it is a present obligation assumed by the Company; and
    
    b. it is probable that the fulfillment of the obligation will cause economic benefit flows from the
    
    Company; and
    
    c. the amount of the obligation can be reliably measured.
    
    A provision is measured on a balance-sheet date as the best estimate of the amount that is required
    
    for the fulfillment of the present obligation after considering of the risks and uncertainty associated
    
    with the respective contingent events and the time value of money.
    
    Notes to the financial statements for the year ended 31 December 2018
    
    If the amount required for settlement of a provision is wholly or partly reimbursed by a third party, the
    
    reimbursement is recognized separately as an asset to the extent of the carrying amount of the
    
    provision if it is probable that the reimbursement becomes receivable.
    
    4.23 Revenue
    
    4.23.1 Revenue from sales of goods
    
    Revenue arising from sales of goods are recognized if all of the following conditions are satisfied:
    
    significant risks and rewards attached to the ownership of the goods have been transferred to the
    
    buyer; and the Company neither retains continual involvement with management generally
    
    associated with the ownership of the goods nor exercise effective control over the goods sold; and
    
    the amount of revenue can be reliably measured; and it is probable that economic benefits arising
    
    from the sales will flow to the Company; and expenses incurred or to be incurred associated with the
    
    goods sold can be reliably measured.
    
    Revenue arising from domestic sales of goods is recognized when goods are dispatched and
    
    delivered to the buyer, when significant risks and rewards attached to the ownership of the goods
    
    sold are passed to the buyer, when neither continual involvement in the rights normally associated
    
    with the ownership of the goods sold nor effective control over the goods controls are retained, when
    
    revenue arising from the goods sold is reliably measurable, when inflow of future economic benefits
    
    is probable, and when cost incurred or to be incurred associated with the goods sold is reliably
    
    measurable. Revenue arising from non-domestic sales of goods is recognized when goods are
    
    loaded on board and when the export clearance with the custom is completed.
    
    4.23.2 Revenue from rendering of services
    
    When the income of service rendered can be reliably estimated, revenue arising from the service is
    
    recognized based on a percentage of completion on the respective balance sheet date. The
    
    percentage of completion of service rendered is determined by the proportion that costs incurred to
    
    date bear to the estimated total costs.
    
    The outcome of service rendered can be reliably estimated if all of the following conditions are
    
    satisfied: a. the amount of revenue can be reliably measured; b. it is probable that associated
    
    economic benefits will flow to the Company; c. the percentage of completion of service rendered can
    
    be reliably measured; and d. costs incurred to date and to be incurred can be reliably measured.
    
    When the outcome of service rendered cannot be reliably estimated, revenue is recognized to the
    
    extent that costs incurred to date and to is incurred are expected to be reimbursed, and costs
    
    incurred to date are recognized in profit or loss for the periods during which they are incurred. When
    
    costs incurred are not expected to be reimbursed, no revenue is recognized.
    
    If a contract entered into by the Company and a counterparty involves both sales of goods and
    
    Notes to the financial statements for the year ended 31 December 2018
    
    rendering of services and revenue arising from goods sold and services rendered can be
    
    distinguished, revenue from sales of goods and rendering of services are separately accounted for; if,
    
    however, revenue arising from goods sold and services rendered cannot be distinguished or can be
    
    distinguished but cannot be separately measured, all revenue is accounted for as revenue arising
    
    from sales of goods.
    
    4.23.3 Royalty income
    
    Royalties are recognized on an accrual basis in accordance with the substance of the relevant
    
    agreement.
    
    4.23.4 Interest income
    
    Interest income is determined by the length of time over which the Company's financial resources are
    
    used by other parties using the effective interest rate method.
    
    4.24 Government Grants
    
    A government grant is a transfer of monetary and non-monetary assets from the government to the
    
    Company for no consideration, excluding resources transferred to the Company by the government in
    
    the capacity of the shareholder. Government grants include grants related to assets and grants
    
    related to income.
    
    Government grants obtained by the Company which is relevant to construction or acquisition of
    
    long-term assets are classified as asset-related government grants; all other government grants are
    
    classified as revenue-related government grants. For government grants without a specified
    
    beneficiary, the Company performs classification in accordance with the following criteria.
    
    a. Where a grant is obtained for a specified project, the grant is spat into asset-related and revenue
    
    related portions proportionate to the project's investment to expense ratio; the classification is
    
    reviewed on each balance sheet date and revised if necessary.
    
    b. Where a grant is obtained for general purpose, the grant as a whole is classified as a
    
    revenue-related government grant.
    
    If a government grant is in the form of monetary assets, it is measured at the amount received or
    
    receivable. If a government grant is in the form of non-monetary assets, it is measured by the fair
    
    value of the assets; if the fair value of the assets granted cannot be reliably measured, the grant is
    
    measured by the nominal value of the assets and is recognized immediately in profit or loss for the
    
    relevant period.
    
    In general, the Company recognizes a government grant when it is actually received, and measures at
    
    the amount actually received. However, a government grant may be recognized as receivable if it is
    
    objectively evidential on the reporting date that conditions for the grant receipt are satisfied and that
    
    Notes to the financial statements for the year ended 31 December 2018
    
    the grant is receivable. A government grant is recognized as receivable if all following conditions are
    
    satisfied:
    
    a. the amount of the grant is expressly stipulated in an official publication by the authorized
    
    governmental agency or can be reasonably estimated in accordance with fiscal pronouncement
    
    issued by the authorized governmental agency, and the estimate is not subject to significant
    
    uncertainty;
    
    b. the grant is officially disclosed as part of publicly disclosed fiscal subsidized projects by the local
    
    fiscal government bodies in accordance with the Government Information Disclosure Directives and is
    
    managed in accordance with the fiscal plan published and the management of the grant if not
    
    entity-specific, i.e., every eligible entity is entitled to apply;
    
    c. the term for payment is expressly stipulated in the official pronouncement, and the payment is
    
    backed by fiscal planning so that it is reasonable to expect receipt within the term of the payment; and
    
    d. other conditions (inapplicable) need to be satisfied taking into account the Company's
    
    circumstances.
    
    Grants related to assets are recognized as deferred income and amortized over the useful life of the
    
    relevant assets using the straight-line method. A grant related to income is recognized as deferred
    
    income if it is related to expenses or loss to be incurred in the future and is carried to profit or loss for
    
    the period during which the relevant expenses or loss are recognized; it is recognized in profit or loss
    
    for the period during which it is received or becomes receivable if it is related to expenses or loss
    
    already incurred. When assets are sold, transferred, disposed or scraped before the end of useful life,
    
    the remaining differed income will be transferred to profit or loss in the current period of asset
    
    disposal.
    
    The government grants related to the daily activities of the Company are included in other income or
    
    offsetting the related costs according to the substance of the economic business. The government
    
    grants unrelated to the daily activities are included in the non-operating income and expenses.
    
    Where a recognized grant becomes repayable, the amount repayable is firstly charged to the
    
    remaining deferred income (if any); the remaining amount after charge to deferred income is
    
    recognized in profit or loss for the period during which it becomes repayable.
    
    4.25 Deferred tax assets and deferred tax liabilities
    
    4.25.1 Current income tax
    
    The current income tax liability (asset) on a balance-sheet date is measured at the amount of current
    
    income tax payable (receivable) computed in accordance with the relevant tax law. Current income
    
    tax expense is computed on the basis of taxable profit (loss) which is the amount after the adjustment
    
    of the relevant accounting profit (loss) in accordance with the relevant tax law.
    
    Notes to the financial statements for the year ended 31 December 2018
    
    4.25.2 Deferred tax assets and deferred tax liabilities
    
    Deferred tax assets and deferred tax liabilities are recognized on an accrual basis for the temporary
    
    difference between the carrying amounts of assets and liabilities and their tax bases and the
    
    temporary difference arising from the difference in recognition criteria for assets and liabilities between
    
    CAS and relevant tax provisions.
    
    No deferred tax liability is recognized for the temporary taxable difference arising from the initial
    
    recognition of goodwill and the initial recognition of assets and liabilities acquired or assumed resulting
    
    from transactions which are not business combination, and which do not have impact on both
    
    accounting profit and taxable profit (deductible tax loss) at the time of their occurrence. Similarly, the
    
    deferred tax liability is not recognized for temporary taxable difference associated with investments in
    
    subsidiaries, associates, and joint ventures if the Company can control the reverse of the temporary
    
    difference and it is probable that the temporary difference is not expected to reverse in the
    
    foreseeable future. Except for the circumstances described hereabove, the deferred tax liability is
    
    recognized for all other taxable temporary difference.
    
    No deferred tax asset is recognized for the temporary deductible difference arising from the initial
    
    recognition of assets and liabilities acquired or assumed resulting from transactions which are not a
    
    business combination, and which do not have an impact on both accounting profit and taxable profit
    
    (deductible tax loss) at the time of their occurrence. Similarly, deferred tax asset is not recognized for
    
    temporary deductible difference associated with investments in subsidiaries, associates, and joint
    
    ventures if the Company can control the reverse of the temporary difference and it is probable that the
    
    temporary difference is not expected to reverse in the foreseeable future. Except for the
    
    circumstances described hereabove, deferred tax asset is recognized for all other deductible
    
    temporary difference to the extent that it is probable that taxable profit will be available against which
    
    the temporary deductible difference can be utilized.
    
    Deferred tax asset is recognized for deductible tax loss and tax credit carrying forward to the extent
    
    that it is probable that taxable profit will be available against which the deductible tax loss and tax
    
    credit carryforward can be utilized.
    
    Deferred tax assets and deferred tax liabilities are measured on a balance-sheet date on the basis of
    
    tax rates expected to be applicable in accordance with relevant tax law at the time when the relevant
    
    assets are recovered, or relevant liabilities settled.
    
    The carrying amount of deferred tax assets is reviewed on each balance sheet date. If it is probable
    
    that insufficient taxable profit is available to utilize the deferred tax assets, the carrying amount of
    
    deferred tax assets is reduced. When it is probable that sufficient taxable profit becomes available
    
    after the carrying amount of deferred tax assets has been reduced, the reduction is reversed.
    
    4.25.3 Income tax expenses
    
    Income tax expenses include current income tax expenses and deferred income tax expenses.
    
    All current income tax expenses (credit) and deferred income tax expenses (gains) are recognized in
    
    Notes to the financial statements for the year ended 31 December 2018
    
    profit or loss for the relevant period except for a. current income tax and deferred income tax on
    
    transactions and events which are accounted for in other comprehensive income or directly in equity,
    
    which are included in other comprehensive income or directly recognized in equity depending on the
    
    treatment of its underlying transactions and events, and b. deferred income tax arising from business
    
    combination, which is accounted for as an adjustment to the carrying amount of the respective
    
    goodwill.
    
    4.25.4 Offsetting of income tax
    
    A current income tax liability and current income tax asset are presented on (consolidated) financial
    
    statements after netting only if the Company is permitted by law to settle the asset and liability net in
    
    cash and is planning to do so or to recover the asset and settle the liability simultaneously.
    
    A deferred tax asset and deferred tax liability are presented on (consolidated) financial statements
    
    after netting only if all of the following conditions are satisfied: the Company is permitted by law to
    
    settle the current asset and liability related to an income tax net in cash; and the deferred tax asset
    
    and deferred tax liability arising from that income tax is levied by the same tax authority on the same
    
    entity or on different entities but the relevant entities are planning to settle the underlying income tax
    
    net in cash or simultaneously recover the relevant assets and settle the relevant liabilities during each
    
    future period during which significant deferred tax assets and deferred tax liabilities are reversed.
    
    4.26 Lease
    
    A financial lease is a lease which in substance transfers all risks and rewards attached to the
    
    ownership of the leased asset to the lessee although the ownership of the leased asset ultimately may
    
    or may not be transferred. An operating lease is any lease that does not fall within the meaning of a
    
    financial lease.
    
    4.26.1 Operating lease to which the Company is the lessee
    
    Lease payments for an operating lease to which the Company is the lessee are amortized over the
    
    lease term using the straight-line method and recognized in the cost of the relevant asset or expense,
    
    whichever is applicable. Initial expenses incurred for activities directly attributable to the lease are
    
    recognized in profit or loss for the period during which they are incurred. Contingent rental payments
    
    are recognized in profit or loss when they are incurred.
    
    4.26.2 Operating lease to which the Company is the lessor
    
    Rental income from an operating lease to which the Company is the lessor is amortized over the lease
    
    term using the straight-line method. Significant initial expenses incurred for activities directly
    
    attributable to the lease are capitalized at the time when they are incurred and amortized over the
    
    lease term in the same manner as the amortization of rental income; insignificant expenses initial
    
    expenses incurred for activities directly attributable to the lease are recognized in profit or loss for the
    
    period during which they are incurred. Contingent rental income is recognized in profit or loss when it
    
    is received or becomes receivable.
    
    Notes to the financial statements for the year ended 31 December 2018
    
    4.26.3 Financial lease to which the Company is the lessee
    
    At the commencement of a financial lease to which the Company is the Lessee, the lower of the
    
    lease-commencement-date fair value of the leased asset and the present value of the minimum lease
    
    payment is recognized as the cost of the leased asset; the minimum lease payment is recognized as a
    
    long-term payable; and the excess of the long-term payable over the amount recognized as the cost
    
    of the leased asset is recognized as unrecognized lease expenditure. Expenses incurred during the
    
    negotiation and signing of the lease contract for activities directly attributable to the lease are
    
    recognized as part of the cost of the leased asset. The residual amount after deducting the
    
    unrecognized lease expenditure from the long-term payable is divided into non-current liability and
    
    non-current liability due within one year depending on maturity and presented on (consolidated)
    
    financial statements separately.
    
    The unrecognized lease expenditure is amortized over the lease term using the effective interest rate
    
    method, and the amortization is recognized as lease expense in profit or loss for the relevant period.
    
    Contingency lease rental is recognized in profit or loss when it is incurred.
    
    4.26.4 Financial lease to which the Company is the lessor
    
    At the commencement of a financial lease to which the Company is the lessor, the sum of the
    
    minimum lease rental receivable and the initial expenses incurred for activities directly attributable to
    
    the lease is recognized as the initial amount of the respective financial lease rental receivable;
    
    unguaranteed residual value is recorded, if any; the excess of the present value of the sum of the
    
    minimum lease rental receivable, the initial expenses incurred for activities directly attributable to the
    
    lease and the unguaranteed residual value over the sum itself is recognized as unrecognized lease
    
    income. The residual amount after deducting the unrecognized lease income from the financial lease
    
    rental receivable is divided into non-current receivable and non-current receivable due within one year
    
    depending on maturity and presented on (consolidated) financial statements separately.
    
    The unrecognized lease income is amortized over the lease term using the effective interest rate
    
    method, and the amortization is recognized as lease income in profit or loss for the relevant period.
    
    Contingency lease rental income is recognized in profit or loss when it is received or becomes
    
    receivable.
    
    4.27 Changes in major accounting policies and accounting estimates
    
    4.27.1 Change of accounting policies
    
    On June 15, 2018, the Ministry of Finance issued the Notice on Revising and Issuing the Format of
    
    General Enterprise Financial Statements for 2018 (Accounting No. 15), which has been implemented
    
    since June 15, 2018. The Company shall begin to implement the aforementioned accounting
    
    standards at the time required by the Ministry of Finance.
    
    4.28 Significant account judgment and estimates
    
    Notes to the financial statements for the year ended 31 December 2018
    
    During the application of accounting policies, judgements, estimates, and presumption need to be
    
    made for elements of financial statements, which cannot be precisely measured due to inherent
    
    uncertainty existing in operating activities. The judgments, estimates, and presumption are made on
    
    the basis of the Company's past experience and other relevant factors. The exercise of judgements,
    
    estimates, and presumption has an impact on the measurement of revenue, expenses, assets and
    
    liabilities and the disclosure of contingent liabilities on the balance sheet date. However, the inherent
    
    uncertainty of the judgments, estimates, and presumption may result in future significant adjustments
    
    to be made to the measurement of the affected assets and liabilities.
    
    The judgments, estimates, and presumption are regularly reviewed on the basis of going concern.
    
    Where a change in accounting estimates is applicable, its impact on financial statements is
    
    recognized in the period during which the change occurs if the change has an impact on the financial
    
    statements for that period only; and in subsequent periods if the change also has an impact on the
    
    financial statements for subsequent periods.
    
    Significant elements of financial statements and areas that are subject to judgements, estimates and
    
    presumption on the balance-sheet date include the following.
    
    4.28.1 Classification of lease
    
    The Company classifies leases as operating lease and financing lease according to the rule stipulated
    
    in the Accounting Standard for Business Enterprises No. 21--Leasing. The management shall make
    
    analysis and judgment on whether the risks and rewards related to the title of leased assets has been
    
    transferred to the leaser, or whether the Company has substantially held the risks and rewards related
    
    to the ownership of leased assets.
    
    4.28.2 Recognition of impairment allowance for receivables
    
    In accordance with accounting policies applicable to receivables, loss arising from impairment of
    
    receivables is accounted for by allowance. Impairment of receivables are assessed on the basis of the
    
    collectability of receivables and the assessment requires judgements and estimates exercised by the
    
    management. Difference between actual results and the estimates will have impact on the carrying
    
    amount of receivables and the recognition and reverse of impairment allowance for receivable for the
    
    period during which the estimates are changed.
    
    4.28.3 Recognition of impairment allowance for inventories
    
    In accordance with accounting policies applicable to inventories, impairment allowance for inventories
    
    is recognized for inventories of which the carrying amount exceeds the net realizable value and
    
    inventories which are obsolete or have impaired salability. Loss arising from impairment of inventories
    
    is measured on the basis of the salability and net realizable value of the respective inventories.
    
    Judgements and estimates regarding impairment allowance for inventories require conclusive
    
    evidence obtained by the management and consideration of the purpose of inventory holding, impact
    
    Notes to the financial statements for the year ended 31 December 2018
    
    of post balance-sheet-date events and other relevant factors. Difference between actual results and
    
    the estimates will have impact on the carrying amount of inventories and the recognition and reverse
    
    of impairment allowance for inventories for the period during which the estimates are changed.
    
    4.28.4 Fair value of financial instruments
    
    Fair value of financial instruments which are not quoted in an active market are measured by valuation
    
    techniques such as the discounted cash flow model, etc. Estimates of future cash flows, credit risks,
    
    market movement and relevance and choice of the appropriate discount rates are required for the
    
    measurement. Inherent uncertainty is inevitable in making these estimates and the change of
    
    estimates will have impact of the fair value of the respective financial instruments.
    
    4.28.5 Impairment of financial assets available-for-sale
    
    Impairment of available-for-sale financial assets and hence recognition of impairment loss recognized
    
    in profit or loss general depend on estimates and presumption made by the management. In making
    
    the judgements and estimates, the Company assesses the extent and duration that the cost of an
    
    available-for-sale financial asset exceeding its fair value and considers the investee's financial
    
    position and short-term prospects, including factors such as industry environment, technology
    
    advances, credit rating, default rates, and risks faced by peer entities.
    
    4.28.6 Impairment of non-financial, non-current assets
    
    Non-current assets are assessed for indicators of impairment on each balance sheet date. In addition,
    
    intangible assets with infinite useful life are subject to impairment testing on each balance-sheet date
    
    and whenever there is evidence indicating impairment; other non-financial non-current assets are
    
    subject to impairment testing only if their evidence indicating that the carrying amount becomes
    
    non-collectible.
    
    Impairment exists when the carrying amount of an asset or cash-generating unit exceeds its
    
    recoverable amount, which is higher of the residual amount after deducting necessary expenses for
    
    disposal from its fair value and the present value of its future cash flows.
    
    An asset's residual amount after deducting necessary expenses for disposal is determined by
    
    reference to the residual amount after deducting the incremental costs to dispose the asset from the
    
    selling price provided by contracts for sales of similar assets or the observable market price of similar
    
    assets.
    
    When estimating the present value of future cash flows of an asset or cash-generating unit, significant
    
    judgments must be made regarding the production capacity, selling price, relevant operating costs of
    
    the asset or cash-generating unit and relevant discount rates for discounting the cash flows. The
    
    Company considers all available relevant information when determining the recoverable amount,
    
    including estimates regarding future production capacity, selling price and relevant operating costs
    
    made on the basis of reasonable and supportive presumption.
    
    Goodwill is assessed for impairment at least annually. The assessment involves an estimate of the
    
    Notes to the financial statements for the year ended 31 December 2018
    
    present value of the future cash flows associated with the assets or groups of assets to which goodwill
    
    has been allocated. The estimate considers the future cash flows associated with the assets or groups
    
    of assets to which goodwill has been allocated and the applicable discount rates for cash flow
    
    discounting.
    
    4.28.7 Depreciation and amortization
    
    Investment property, fixed assets, and intangible assets are depreciated (amortized) over their useful
    
    lives using the straight-line method after considering of their residual value. Useful lives of these
    
    assets are regularly reviewed for the purpose of determining the depreciation and amortization
    
    recognized for each period. Useful lives are determined on the basis of the Company's past
    
    experience on similar assets and expected new technology development. If existing estimates change
    
    significantly, the adjustment is made to the depreciation and amortization for future periods.
    
    4.28.8 Deferred tax assets
    
    All unutilized tax loss is recognized as deferred tax assets to the extent it is probable that taxable
    
    profit will be available against which the deductible tax loss can be utilized. Significant judgments are
    
    required to estimate the timing and amount of future taxable profit and to consider tax planning
    
    strategy so as to determine the number of deferred tax assets to be recognized.
    
    4.27.9 Income tax
    
    During the ongoing operation of the Company, there is uncertainty in the treatment for and amounts of
    
    certain transactions for income tax purpose. For example, the deductibility of certain expenses for
    
    income tax purpose is subject to the approval by the relevant tax authority. If the ultimate outcome of
    
    the uncertainty differs from the original estimate, the difference will have an impact on the current
    
    income tax expenses and deferred income tax expenses for the relevant period.
    
    4.28.10 Accrued liabilities
    
    Provision is recognized for product warranty, onerous contract, buy-back obligation, etc. on the basis
    
    of contract terms, current knowledge, and past experiences. A provision is recognized when a
    
    contingent event has resulted in a present obligation, the fulfillment of the present obligation will result
    
    in an outflow of economic benefits. The amount recognized is the best estimate of expenses that
    
    would be incurred to fulfill the present obligation. The recognition and measurement of provisions
    
    significantly depend on judgments of the management. In exercising judgment, the Company
    
    assesses risks and uncertainty associated with the contingent events and the time value of money,
    
    etc.
    
    Note 5 Taxation
    
    5.1 Major taxes and tax rate
    
    Tax Tax rate (%)
    
    Notes to the financial statements for the year ended 31 December 2018
    
    Tax Tax rate (%)
    
    Output VAT is charged at 17% or 16% or 6% on taxable income; VAT payable is calculated
    
    Value-added tax
    
    at the excess of output VAT over input VAT.
    
    The consumption taxes have been provided at the rate of CNY 1.00 yuan per kg, or 1,000
    
    Consumption tax ml follow the quantity, and the consumption tax has been provided at the rate of 20% of the
    
    taxable sales.
    
    Urban maintenance Sum of VAT payable, consumption duty payable and business tax payable for the reporting
    
    and construction surcharge period, and exempt and deductible tax at the rate of 1%, 5%, 7%.
    
    Sum of VAT payable, consumption duty payable and business tax payable for the reporting
    
    Education surcharge
    
    period, and exempt and deductible tax at the rate of 3%.
    
    Sum of VAT payable, consumption duty payable and business tax payable for the reporting
    
    Local education surcharge
    
    period, and exempt and deductible tax at the rate of 2%.
    
    Corporate income tax See the table below.
    
    The tax rate of the Company's VAT taxable sales behavior or imported goods is 17% originally.
    
    According to the "Notice of the Ministry of Finance and the State Administration of Taxation on
    
    Adjusting the Value-Added Tax Rate" (Cai Shui [2018] No. 32), the applicable tax rate will be adjusted
    
    to 16% from May 1, 2018.
    
    The income tax rate of entities:
    
    Entity Income tax rate
    
    Anhui Longrui Glass Co., Ltd 15%
    
    Anhui Ruisiweier Technology Co., Ltd 15%
    
    Bozhou Gujing Waste Recycling Co., Ltd. 10%
    
    Wuhan Yashibo tech. Co., Ltd. 10%
    
    Hubei Hechuyuan Commercial Co., Ltd. 10%
    
    Hubei Junhe Advertising Co., Ltd. 10%
    
    Anhui Gujing Distillery Co., Ltd and other subsidiaries 25%
    
    5.2 Tax incentives and approval
    
    5.2.1 Anhui Longrui Glass Co., Ltd., a subsidiary of the Company, was granted the High-tech
    
    Enterprise Certificate (No. GR201734001204) on December 5, 2017 upon the qualification of
    
    high-tech enterprise. The certificate valid for three years and the applicable income tax rate in 2018 is
    
    15%.
    
    Notes to the financial statements for the year ended 31 December 2018
    
    5.2.2 Anhui Ruisiweier Technology Co., Ltd, a subsidiary of the Company, was granted the High-tech
    
    Enterprise Certificate (No. GR201734000832) on October 21, 2017, upon the qualification of high-tech
    
    enterprise. The certificate valid for three years and the applicable income tax rate in 2018 is 15%.
    
    5.2.3 According to the “Notice of the Ministry of Finance and the State Administration of Taxation on
    
    further expanding the scope of preferential income tax policies regarding small low-profit enterprises”
    
    (CaiShui [2018] No. 77), for small low-profit enterprises with an annual taxable income of less than
    
    CNY1000,000.00 (including CNY1000,000.00), that the taxable income is calculated by 50% of
    
    original taxable income, and the corporate income tax rate is 20% from January 1, 2018 to December
    
    31 2020. The subsidiaries of the Company including Bozhou Gujing Waste Reclamation Co., Ltd.,
    
    Wuhan Yashibo Technology Co., Ltd., Hubei Junhe Advertising Co., Ltd. and Hubei Hechuyuan
    
    Commercial Co., Ltd. meet the conditions for small low-profit enterprises and the actual tax rate for
    
    2018 is 10%.
    
    Note 6 Notes to significant elements of the financial statements
    
    Unless otherwise stated, the meaning of "B/f", "C/f", "Current year", "Prior year" in the following notes
    
    (incl. Notes to elements of the separate financial statements) is "January 1, 2018", "December 31,
    
    2018", "the year ended December 31 2018", and "the year ended December 31 2017" respectively.
    
    6.1 Monetary funds
    
                       Items                    Balanceasat31/12/2018        Balanceasat31/12/2017
                                       Cashathand                                         353,429.67                369,197.41
                                       Bankdeposit                                      1,705,175,643.46            1,440,617,397.53
                                       Othermonetaryfunds                                    231,791.99              43,102,031.46
                       Total                            1,705,760,865.12            1,484,088,626.40
                                       Including:Thetotalamountofdepositabroad                           0.00                    0.00
    
    
    Note: CNY 870 million of the bank deposit was structured time deposit as at 31/12/2018, which
    
    cannot be withdrawn before the expiration date. CNY 200 thousand of other monetary funds were
    
    restricted due to pledging for opening bank acceptance as at 31/12/2018. There was no other
    
    restriction on the use of money due to mortgages, pledges, etc. as at the reporting date; there was no
    
    restriction on cross-border remittance of cash deposited in banks outside of China.
    
    6.2 Financial assets measured by fair value with changes in fair value recognized in profit or
    
    loss
    
    Notes to the financial statements for the year ended 31 December 2018
    
                    Items                  Balanceasat31/12/2018           Balanceasat31/12/2017
                               Trading financialassets                               622,892.96                     99,800.76
                               Including: investinequityinstrument                        622,892.96                     99,800.76
                    Total                              622,892.96                     99,800.76
    
    
    6.3 Notes receivable and accounts receivable
    
                   Items                  Balanceasat31/12/2018            Balanceasat31/12/2017
                              Notesreceivable                              1,347,427,811.34                720,611,126.78
                              Accountsreceivable                              29,748,068.74                 22,466,143.06
                   Total                          1,377,175,880.08                743,077,269.84
    
    
    6.3.1 Notes receivable
    
    6.3.1.1 Disclosure by classification
    
                   Items                  Balanceasat31/12/2018            Balanceasat31/12/2017
                              Bankacceptance                               1,347,427,811.34                  720,611,126.78
                   Total                            1,347,427,811.34                  720,611,126.78
    
    
    6.3.1.2 Pledged notes receivable at the end of the current year
    
    Pledged notes receivable as at 31/12/2018 is CNY 30,236,900.00.
    
    6.3.1.3 Immature notes receivable transferred at the end of the current year
    
      Amountderecognizedasat31/12/2018      Amountnotderecognizedasat
                   Items
                                         31/12/2018
                              Bankacceptance                                372,603,010.31                        0.00
                   Total                             372,603,010.31                        0.00
    
    
    6.3.2 Accounts receivable
    
    6.3.2.1 Disclosure by classification
    
    Balance as at 31/12/2018
    
                   Items                  Carryingamount         Allowanceforbaddebt
                                                Book value
         Amount      %oftotal    Amount    %oftotal
                               Accountsreceivableofindividual
               0.00      0.00       0.00       0.00          0.00
                               significancesubjecttoindividually
    
    
    Notes to the financial statements for the year ended 31 December 2018
    
    Balance as at 31/12/2018
    
                   Items                  Carryingamount         Allowanceforbaddebt
                                                Book value
         Amount      %oftotal    Amount    %oftotal
                               assessmentforimpairment
                               Accountsreceivableportfoliosubjectto
         30,397,358.01     100.00   649,289.27       2.14    29,748,068.74
                               impairmentbycreditrisk:
                               Accountsreceivableofindividually
                               insignificancesubjecttoindividually                 0.00      0.00       0.00       0.00          0.00
                               assessmentforimpairment
                   Total                 30,397,358.01    100.00   649,289.27       2.14    29,748,068.74
    
    
    (Continued)
    
    Balance as at 31/12/2017
    
                   Items                  Carryingamount         Allowanceforbaddebt
                                                Book value
         Amount      %oftotal    Amount     %oftotal
                               Accountsreceivableofindividual
                               significancesubjecttoindividually                  0.00     0.00       0.00       0.00          0.00
                               assessmentforimpairment
                               Accountsreceivableportfoliosubjectto
         23,800,576.11    100.00  1,334,433.05       5.61    22,466,143.06
                               impairmentbycreditrisk:
                               Accounts  receivable  of  individually
                               insignificance  subject  to  individually            0.00     0.00       0.00       0.00          0.00
                               assessmentforimpairment
                   Total                 23,800,576.11    100.00  1,334,433.05       5.61    22,466,143.06
    
    
    Disclosure by age:
    
    Balance as at 31/12/2018
    
                   Age
        Carryingamount      Allowanceforbaddebt        %oftotal
                               Within1year                            29,725,877.02           425,642.08               1.43
                               Including:within6months                     26,516,294.24           265,162.94               1.00
                        7– 12months                      3,209,582.78           160,479.14               5.00
    
    
    Notes to the financial statements for the year ended 31 December 2018
    
    Balance as at 31/12/2018
    
                   Age
        Carryingamount      Allowanceforbaddebt        %oftotal
                               1-2years                                497,593.12            49,759.32               10.00
                               2-3years                                    0.00               0.00               0.00
                               Over3years                              173,887.87           173,887.87              100.00
                   Total                     30,397,358.01           649,289.27               2.14
    
    
    6.3.2.2 Recognition, recovery and reversal of allowance for bad debt
    
    The amount of allowance for bad debts recognized during the year is CNY 305,175.40. The amount of
    
    allowance for bad debts recovered during the year is CNY 402,548.18.
    
    6.3.2.3 Accounts receivable written off in current year.
    
    Accounts receivable written off in current year is CNY 587,771.00.
    
    6.3.2.4 Details of top five accounts receivable
    
    The total amount of top five accounts receivables summarised by debtors as at the end of the current
    
    year is CNY 12,183,035.49, accounting for 40.08% of the total accounts receivable as at the end of
    
    current year. The total corresponding allowance for bad debts is CNY 197,792.08.
    
    6.4 Advances to suppliers
    
    6.4.1 Disclosure by age
    
          Balanceasat31/12/2018            Balanceasat31/12/2017
                   Age
        Amount         %oftotal        Amount        %oftotal
                               Within1year                       182,122,465.92          99.76     40,817,554.03          97.81
                               1to2years                          145,534.83           0.08        82,115.23           0.20
                               2to3years                              0.00           0.00       828,648.08           1.99
                               Over3years                          290,000.00           0.16        1,320.00           0.00
                   Total                182,558,000.75         100.00     41,729,637.34         100.00
    
    
    6.4.2 Details of top five advances to suppliers
    
    The total amount of top five advances to suppliers as at the end of the current year is CNY
    
    166,277,841.03, accounting for 91.08% of the total advances to suppliers.
    
    6.5 Other receivables
    
    Items Balance as at 31/12/2018 Balance as at 31/12/2017
    
    Notes to the financial statements for the year ended 31 December 2018
    
                   Items                  Balanceasat31/12/2018            Balanceasat31/12/2017
                              Interestsreceivable                              24,923,178.08                 13,883,178.08
                              Dividendsreceivable                                     0.00                        0.00
                              Otherreceivables                               18,419,700.14                 15,390,106.14
                   Total                            43,342,878.22                 29,273,284.22
    
    
    6.5.1 Interest receivable
    
                   Items                  Balanceasat31/12/2018            Balanceasat31/12/2017
                              Interestonlargedepositreceipts                        24,923,178.08                  13,883,178.08
                   Total                              24,923,178.08                  13,883,178.08
    
    
    6.5.2 Other receivables
    
    6.5.2.1 Disclosure by classification
    
    Balance as at 31/12/2018
    
                   Items                  Carryingamount         Allowanceforbaddebt
                                                 Bookvalue
       Amount      %oftotal      Amount     %oftotal
                               Otherreceivableofindividualsignificance
                               subjecttoindividuallyassessmentfor      40,850,949.35       67.20  40,850,949.35      100.00         0.00
                               impairment
                               Otherreceivableportfoliosubjectto
      19,942,837.52       32.80   1,523,137.38        7.64   18,419,700.14
                               impairmentbycreditrisk:
                               Otherreceivableofindividually
                               insignificancesubjecttoindividually             0.00        0.00        0.00        0.00         0.00
                               assessmentforimpairment
                   Total              60,793,786.87      100.00  42,374,086.73       69.70   18,419,700.14
    
    
    (Continued)
    
    Balance as at 31/12/2017
    
                   Items                 Carryingamount         Allowanceforbaddebt
                                                 Bookvalue
       Amount    %oftotal      Amount      %oftotal
                               Otherreceivableofindividualsignificance   40,850,949.35      71.04     40,850,949.35     100.00          0.00
    
    
    Notes to the financial statements for the year ended 31 December 2018
    
    Balance as at 31/12/2017
    
                   Items                 Carryingamount         Allowanceforbaddebt
                                                Book value
       Amount    %oftotal      Amount      %oftotal
                               subjecttoindividuallyassessmentfor
                               impairment
                               Otherreceivableportfoliosubjectto
     16,651,396.91      28.96     1,261,290.77       7.57    15,390,106.14
                               impairmentbycreditrisk:
                               Otherreceivableofindividually
                               insignificancesubjecttoindividually             0.00       0.00           0.00       0.00          0.00
                               assessmentforimpairment
                   Total             57,502,346.26     100.00     42,112,240.12      73.24    15,390,106.14
    
    
    6.5.2.1.1 Other receivables of individual significance and subject to individual impairment assessment
    
    Balance as at 31/12/2018
    
              Debtor          Carrying       Allowancefor        Rateof
                                                   Reasonforallowance
        amount         baddebt        Allowance(%)
                                               Enterpriseisintheproceeding
                    HengxinSecurities         29,010,449.35      29,010,449.35          100.00
                                               ofliquidationbankruptcy
                                               Enterpriseisintheproceeding
                    JianqiaoSecurities         11,840,500.00      11,840,500.00          100.00
                                               ofliquidationbankruptcy
              Total           40,850,949.35      40,850,949.35          100.00
    
    
    6.5.2.1.2 Other receivables using the aging analysis method for measurement of impairment
    
    allowances
    
    Balance as at 31/12/2018
    
                 Age                 Carrying             Allowancefor             Rateof
            amount              baddebt            Allowance(%)
                           Within1year                          17,617,762.53             211,840.16                1.20
                           Including:within6months                  16,726,199.24             167,261.99                1.00
                    7-12 months                     891,563.29             44,578.17                5.00
    
    
    Notes to the financial statements for the year ended 31 December 2018
    
    Balance as at 31/12/2018
    
                 Age                 Carrying             Allowancefor             Rateof
           amount               baddebt            Allowance(%)
                           1-2years                              934,319.75             93,431.98                10.00
                           2-3years                              345,780.00             172,890.00                50.00
                           Over3years                           1,044,975.24            1,044,975.24               100.00
                 Total                     19,942,837.52            1,523,137.38                7.64
    
    
    6.5.2.2 The classification of other receivables
    
                    Nature                 Balanceasat31/12/2018            Balanceasat31/12/2017
                               Investmentinsecurities                               40,850,949.35                  40,850,949.35
                               Depositandguarantee                                4,749,457.78                   4,593,198.69
                               Loanforbusinesstrip                                  426,435.85                   2,088,800.78
                               Rent,utilitiesandgasolinecharges                         6,786,659.62                   6,241,851.35
                               Others                                         7,980,284.27                   3,727,546.09
                   Total                              60,793,786.87                  57,502,346.26
    
    
    6.5.2.3 Recognition, recovery and reversal of allowance for bad debts
    
    The amount of allowance for bad debts recognized during the year is CNY 261,846.61.
    
    6.5.2.4 Other receivables written off in current year
    
    No written off to bad debts in current year.
    
    6.5.2.5 Details of top five other receivables
    
                                                                Allowance
                                                    %ofthetotal
            Debtor     Relationships      Nature     Carryingamount     Age                 Balanceasatthe
                                                      amount
                                                                 year-end
                Investmentin
               1st          Non-relatedparty               29,010,449.35  Over3years          47.72   29,010,449.35
                securities
    Non-related party Investmentin
               2nd                                   11,840,500.00  Over3years          19.48   11,840,500.00
                securities
               3rd          Non-relatedparty Prepaidoilfees      5,380,076.43 Within6months          8.85      53,800.76
               4th          Non-relatedparty Deposit           500,000.00 Within6months          0.82      5,000.00
               5th          Non-relatedparty Others            455,943.00 Within6months          0.75      4,559.43
    
    
    Notes to the financial statements for the year ended 31 December 2018
    
                                                                Allowance
                                                    %ofthetotal
            Debtor     Relationships      Nature     Carryingamount     Age                 Balanceasatthe
                                                      amount
                                                                 year-end
           Total                              45,704,946.89                    77.62   40,914,309.54
    
    
    6.6 Inventories
    
    6.6.1 Disclosure by classification
    
    Balance as at 31/12/2018
    
                  Items             Carryingamountbefore
                            Impairmentallowance     Netcarryingamount
        impairment allowance
                            Raw materialsandpackaging                  144,856,930.02         13,808,554.40       131,048,375.62
                            Work inprogress                        1,957,452,112.24               0.00      1,957,452,112.24
                            Finished goods                          322,031,842.20          3,225,665.20       318,806,177.00
                  Total                     2,424,340,884.46         17,034,219.60      2,407,306,664.86
    
    
    (Continued)
    
    Balance as at 31/12/2017
    
                  Items              Carryingamountbefore
                         Impairmentallowance     Netcarryingamount
       impairmentallowance
                              Rawmaterialsandpackaging                 132,151,695.59          17,029,623.45        115,122,072.14
                              Workinprogress                       1,705,396,599.74                0.00       1,705,396,599.74
                              Finished goods                         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
    
    
    6.6.2 Impairment allowance for inventories
    
                     Increasedincurrentyear      Decreasedincurrentyear
       Balanceasat                                                Balanceasat
           Items                                          Recoveredor
        31/12/2017        Accrual      Others                 Others     31/12/2018
                                          Written off
               Raw materials
         17,029,623.45     10,354,024.65     0.00    13,575,093.70      0.00    13,808,554.40
               and packaging
               Finished goods        14,395,712.60     2,023,864.72     0.00    13,193,912.12      0.00     3,225,665.20
           Total          31,425,336.05    12,377,889.37     0.00    26,769,005.82      0.00    17,034,219.60
    
    
    6.6.3 Reason for impairment recognition and reversal or written-off
    
    Notes to the financial statements for the year ended 31 December 2018
    
      The basisofrecognitionof      Thereasonforrecovering       Thereasonsforinventory
             Items         impairmentallowancefor       impairmentallowanceof       impairmentwritten-offatthe
           inventories               inventories                currentyear
                   Raw materials  and                                             Rawmaterialsimpaired
     Netrealizablevaluebelowcost  Notapplicable
                   packaging                                                    havebeendisposed
                                               Finished goodsimpaired
                   Finishedgoods      Netrealizablevaluebelowcost  Notapplicable
                                                have beendisposed
    
    
    6.7 Non-current assets due within 1 year
    
                      Items                    Balanceasat31/12/2018        Balanceasat31/12/2017
                                     Non-current assetsduewithin1year                        300,000,000.00                     0.00
                      Total                            300,000,000.00                     0.00
    
    
    6.8 Other current assets
    
                        Items                    Balanceasat31/12/2018       Balanceasat31/12/2017
                                        Financialproducts                                     2,758,000,000.00           1,741,000,000.00
                                        Reverserepurchaseofpledgedtreasurybonds                      179,900,000.00                   0.00
                                        Deductibletax                                          74,578,687.20             31,310,946.58
                        Total                             3,012,478,687.20           1,772,310,946.58
    
    
    6.9 Available-for-sale financial assets
    
    6.9.1 General information
    
            Balance asat31/12/2018                 Balanceasat31/12/2017
              Items                              Netcarrying     Carrying              Netcarrying
     Carryingamount  Impairment                          Impairment
                            amount       amount                amount
                     Availableforsaleequity
      206,393,107.46      0.00  206,393,107.46  517,086,347.91      0.00  517,086,347.91
                     instruments
                     Including:measuredbyfair
      206,393,107.46      0.00  206,393,107.46  517,086,347.91      0.00  517,086,347.91
                     value
                   Measuredbycost             0.00      0.00         0.00         0.00      0.00         0.00
                     Total               206,393,107.46      0.00  206,393,107.46  517,086,347.91      0.00  517,086,347.91
    
    
    6.9.2 The available for sale financial asset which is measured by fair value at the year end
    
                     Classification           Equityinstrument       Debtinstrument            Total
       available forsale       availableforsale
    
    
    Notes to the financial statements for the year ended 31 December 2018
    
                     Classification           Equityinstrument       Debtinstrument            Total
       available forsale       availableforsale
                            Thecostoftheequity
                            instrumentortheamortizedcost          200,000,000.00                0.00         200,000,000.00
                            ofthedebtinstrument
                            Fairvalue                         206,393,107.46                0.00         206,393,107.46
                            Theamountofthefairvalue
                            changerecognizedinto                 6,393,107.46                0.00           6,393,107.46
                            comprehensiveincome
                            Impairmentallowance                       0.00                0.00                0.00
    
    
    6.10 Long-term equity investments
    
                                  Currentyearmovement(+,-)
           Investee  Balanceasat  Additional    Investment  Investmentgainsandlosses Othercomprehensive   Other
     31/12/2017                     recognizedundertheequity                changes
              investment     reduction                     incomeadjustment
                                       method                      inequity
                 Investment    in
                 associates
                 BeijingGuge         0.00 4,900,000.00      0.00               0.00           0.00    0.00
                 TradingCo.,Ltd.
            Total           0.00 4,900,000.00      0.00               0.00           0.00    0.00
    
    
    (Continued)
    
                Current yearmovement(+,-)             Balance     Allowan
              Investee         Declaredcash                       Oth    asat      ceasat
     dividendsorprofits   Allowancerecognized     ers    31/12/2018   31/12/2018
                       Investmentinassociates
                       BeijingGugeTradingCo.,            0.00               0.00     0.00  4,900,000.00        0.00
                       Ltd.
               Total                   0.00               0.00     0.00  4,900,000.00        0.00
    
    
    6.11 Investment property
    
                     Items               Housesandbuildings       Landuserights           Total
                                 1.Cost:
                                 1.1Balanceasat31/12/2017                    8,680,555.75          2,644,592.00       11,325,147.75
                                 1.2Increasedincurrentyear                      146,888.55               0.00         146,888.55
    
    
    Notes to the financial statements for the year ended 31 December 2018
    
                     Items               Housesandbuildings       Landuserights           Total
                                 1.3Decreasedincurrentyear                     146,888.55               0.00         146,888.55
                                 1.3.1Reclassifiedtofixedassets                    146,888.55               0.00         146,888.55
                                 1.3.2Othertransferout
                                 1.4Balanceasat31/12/2018                    8,680,555.75          2,644,592.00       11,325,147.75
                                 2.Accumulateddepreciationand
                                accumulatedamortization
                                 2.1Balanceasat31/12/2017                    5,393,723.68           587,646.74       5,981,370.42
                                 2.2Increasedincurrentyear                      287,616.21            56,026.56         343,642.77
                                 2.2.1Accrualoramortization                      264,677.96            56,026.56         320,704.52
                                 2.2.1Reclassifiedfromfixedassets                   22,938.25               0.00         22,938.25
                                 2.3Decreasedincurrentyear                      27,093.97               0.00         27,093.97
                                 2.3.1Reclassifiedtofixedassets                    27,093.97               0.00         27,093.97
                                 2.3.2Otherdecreases
                                 2.4Balanceasat31/12/2018                    5,654,245.92           643,673.30       6,297,919.22
                                 3.Impairmentallowance
                                 3.1Balanceasat31/12/2017                          0.00               0.00             0.00
                                 3.2Increasedincurrentyear                          0.00               0.00             0.00
                                 3.2.1Accrual                                   0.00               0.00             0.00
                                 3.3Decreasedincurrentyear                         0.00               0.00             0.00
                                 3.3.1Reclassifiedtofixedassets                        0.00               0.00             0.00
                                 3.3.2Othertransferout                             0.00               0.00             0.00
                                 3.4Balanceasat31/12/2018                          0.00               0.00             0.00
                                 4.Carryingamount
                                 4.1Carryingamountasat31/12/2018               3,026,309.83          2,000,918.70       5,027,228.53