Tsingtao Brewery : INTERIM REPORT 2020

September 14, 2020 at 09:20 am EDT

Contents

	Page
Financial Report (Unaudited)	2
Management Discussion and Analysis	120
Significant Events	126
Changes to Share Capital and Information of Shareholders	128
Directors, Supervisors, Senior Management Officers and Staff	130
Purchasing, Selling or Redeeming the Securities	131
Review of the Unaudited Interim Results	131
Code of Corporate Governance	131
Definitions	131
Company Information	132

Interim Report 2020 1

Tsingtao Brewery Company Limited

CONSOLIDATED AND COMPANY BALANCE SHEETS

AS AT 30 JUNE 2020

(All amounts in RMB Yuan unless otherwise stated)

						As at
	Note 4	30 June	31 December		30 June	31 December
ASSETS	(unless otherwise	2020		2019		2020		2019
stated)	Consolidated	Consolidated		Company	Company
		(unaudited)				(unaudited)
Current assets		18,956,550,214				8,316,278,699
Cash at bank and on hand	(1)		15,301,983,408			6,073,903,675
Financial assets held for trading	(2)	1,894,596,161		1,523,793,019		-		-
Notes receivable	(3)	29,013,290		75,100,000		27,650,000		75,100,000
Accounts receivable	(4),14(1)	148,968,802		151,069,427		1,421,109,352		1,191,236,318
Advances to suppliers	(5)	160,979,564		117,156,091		95,471,719		81,193,236
Other receivables	(6),14(2)	109,974,545		86,269,436		114,994,007		661,842,853
Inventories	(7),14(3)	2,316,614,699		3,181,769,333		690,770,671		1,440,374,542
Other current assets	(8)	186,721,288		564,677,336			11,100,103		337,621,348
Total current assets		23,803,418,563		21,001,818,050			10,677,374,551		9,861,271,972
Non-current assets		-				59,813
Debt investment	14(4)		-			163,325,489
Long-term equity investments	(9),14(5)	372,733,530		376,641,802		10,738,827,716		10,452,229,369
Other non-current financial assets		600,000		600,000		300,000		300,000
Investment properties	(10)	32,113,394		36,504,682		27,074,418		28,074,694
Fixed assets	(11)	10,230,042,782		10,222,034,465		2,141,453,668		2,075,232,310
Construction in progress	(12)	344,559,663		178,993,842		74,363,796		29,888,393
Right-of-use assets	(13)	121,330,690		66,970,435		31,348,582		29,566,778
Intangible assets	(14)	2,462,738,497		2,558,572,455		484,391,894		507,006,725
Goodwill	(15)	1,307,103,982		1,307,103,982		-		-
Long-term prepaid expenses	(16)	39,869,406		35,255,388		4,403,122		3,897,707
Deferred tax assets	(17)	1,671,282,870		1,455,035,532		953,156,873		885,429,696
Other non-current assets	(19)	119,000,441		72,852,914			27,604,326		31,543,686
Total non-current assets		16,701,375,255		16,310,565,497			14,482,984,208		14,206,494,847
TOTAL ASSETS		40,504,793,818		37,312,383,547		25,160,358,759		24,067,766,819

2Interim Report 2020

Tsingtao Brewery Company Limited CONSOLIDATED AND COMPANY BALANCE SHEETS (Cont'd)

AS AT 30 JUNE 2020

(All amounts in RMB Yuan unless otherwise stated)

						As at
		30 June	31 December		30 June	31 December
		2020		2019	2020		2019
LIABILITIES AND EQUITY	Note 4	Consolidated	Consolidated		Company	Company
		(unaudited)				(unaudited)
Current liabilities		275,645,686				-
Short-term borrowings	(20)		270,906,631		-
Notes payable	(21)	268,063,017		220,825,323		147,762,825		119,897,333
Accounts payable	(22)	3,508,330,149		2,167,178,181		4,211,845,821		2,454,746,492
Contract liabilities	(23)	4,910,305,764		6,275,719,703		3,171,954,571		4,472,664,628
Employee benefits payable	(24)	1,510,316,310		1,458,665,786		518,337,897		531,653,920
Taxes payable	(25)	1,185,036,034		513,058,160		278,349,022		99,681,934
Other payables	(26)	3,862,128,674		2,424,857,501		1,323,950,230		1,011,094,365
Current portion of non-current		34,066,534				11,328,139
liabilities	(27)		22,208,025			9,183,992
Other current liabilities		367,375		361,684			-		-
Total current liabilities		15,554,259,543		13,353,780,994			9,663,528,505		8,698,922,664
Non-current liabilities		-				-
Long-term borrowings	(28)		209,180		-
Lease liabilities	(29)	76,372,100		37,471,885		15,853,654		17,127,751
Long-term payables	(30)	400,853,759		372,579,660		-		-
Deferred income	(31)	2,585,669,190		2,519,926,935		411,152,015		425,786,239
Long-term employee benefits		894,642,666				433,021,374
payable	(32)		931,008,557			425,765,776
Deferred tax liabilities	(17)	169,093,923		184,035,480			-		-
Total non-current liabilities		4,126,631,638		4,045,231,697			860,027,043		868,679,766
Total liabilities		19,680,891,181		17,399,012,691			10,523,555,548		9,567,602,430
Equity		1,350,982,795				1,350,982,795
Share capital	(33)		1,350,982,795		1,350,982,795
Capital surplus	(34)	3,270,837,863		3,444,317,455		4,306,639,721		4,306,633,811
Other comprehensive income	(35)	(50,401,351)	(47,347,633)	(47,445,000)	(47,445,000)
Surplus reserve	(36)	1,400,704,380		1,400,704,380		1,400,704,380		1,400,704,380
General reserve	(37)	234,715,680		234,715,680		-		-
Undistributed profits	(38)	13,900,152,922		12,788,210,357			7,625,921,315		7,489,288,403
Total equity attributable to		20,106,992,289				14,636,803,211
shareholders of the Company			19,171,583,034		14,500,164,389
Non-controlling interests		716,910,348		741,787,822			-		-
Total equity		20,823,902,637		19,913,370,856			14,636,803,211		14,500,164,389
TOTAL LIABILITIES AND EQUITY		40,504,793,818		37,312,383,547		25,160,358,759		24,067,766,819

The accompanying notes form an integral part of these financial statements.

Legal representative:	Principal in charge of accounting:	Head of accounting department:
HUANG Kexing	YU Zhuming	HOU Qiuyan

Interim Report 2020 3

Tsingtao Brewery Company Limited

CONSOLIDATED AND COMPANY INCOME STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020 (All amounts in RMB Yuan unless otherwise stated)

						Six months ended 30 June
ITEM	Note 4	2020			2019	2020		2019
(unless otherwise stated)	Consolidated	Consolidated	Company	Company
			(unaudited)	(unaudited)	(unaudited)	(unaudited)
Revenue	(39),14(6)	15,678,991,336			16,550,665,464		11,266,625,819		11,943,907,237
Less:	Cost of sales	(39),(44),14(6),(7)	(9,131,648,894)		(9,911,821,503)	(8,724,584,290)	(9,300,444,580)
	Taxes and surcharges	(40)	(1,203,887,260)		(1,320,966,492)	(266,409,049)	(311,132,704)
	Selling and distribution expenses	(41),(44),14(7)	(2,865,454,502)		(2,989,388,327)	(1,221,053,868)	(1,496,752,380)
	General and administrative expenses	(42),(44),14(7)	(503,010,708)		(590,627,801)	(160,312,334)	(160,121,596)
	Research and development expenses	(43),(44),14(7)	(6,689,518)		(7,928,139)	(6,689,518)	(7,928,139)
	Finance expenses	(45)	236,113,350			235,121,980		103,782,556		69,735,481
	Including: Interest expenses		(8,490,374)		(6,594,455)	-		-
	Interest income		251,335,596		253,227,854		106,556,345		76,024,825
Add: Other income	(48)	330,275,468			313,300,318		93,102,739		71,781,005
Investment income	(49),14(8)	21,958,363			20,591,398		61,375,664		62,412,037
	Including: Share of profit of associates		16,497,374		19,265,218		15,263,156		17,512,909
	and a joint venture
Profits arising from changes in fair value	(50)	27,783,514			31,023,477		-		-
	(Losses are listed with "-")
Credit impairment losses	(46)	511,352			1,900,121		36,579,878		1,992,659
	(Losses are listed with "-")
Asset impairment losses	(47)	(1,538,581)		(1,259,543)	-		(50,000,000)
	(Losses are listed with "-")
	Gains on disposals of assets	(51)	(8,007,618)		(21,948,784)	(360,712)	(275,870)
	(Losses are listed with "-")

Operating profit	(52)	2,575,396,302			2,308,662,169	1,182,056,885		823,173,150
Add: Non-operating income	6,423,694			15,474,872		1,022,300		1,575,642
Less:	Non-operating expenses	(53)	(23,670,172)		(1,918,592)	(22,907,601)	(621,206)

Total profit	(54)	2,558,149,824			2,322,218,449	1,160,171,584		824,127,586
Less: Income tax expense	(618,702,999)		(596,677,665)	(280,498,135)	(211,757,313)

Net profit		1,939,446,825			1,725,540,784	879,673,449		612,370,273
Classified by continuity of operations
	1,939,446,825			1,725,540,784	879,673,449		612,370,273
Net profit from continuing operations
Net profit from discontinued operations		-			-	-		-
Classified by ownership of the equity		1,854,983,102			1,630,516,036	879,673,449		612,370,273
Attributable to shareholders of the company
Attributable to non-controlling interests		84,463,723			95,024,748	-	-
Other comprehensive income, net of tax	(35)	(3,053,718)		(494,826)	-		-
Other comprehensive income attributable to
shareholders of the Company, net of tax
Items that will be subsequently
	reclassified to profit or loss
	Shares of other comprehensive
	income of investees accounted
	for using the equity method
	that will be subsequently		77,344			32,847	-		-
	reclassified to profit or loss
	Currency translation differences		(3,131,062)		(527,673)	-		-
Total comprehensive income		1,936,393,107			1,725,045,958	879,673,449		612,370,273

Attributable to shareholders of the Company		1,851,929,384			1,630,021,210	879,673,449		612,370,273
Attributable to non-controlling interests		84,463,723			95,024,748	-	-
Earnings per share	(55)	1.373			1.207		-	-
Basic earnings per share
Diluted earnings per share	(55)	1.373			1.207		-	-
The accompanying notes form an integral part of these financial statements.
Legal representative:	Principal in charge of accounting:	Head of accounting department:
HUANG Kexing	YU Zhuming				HOU Qiuyan
4	Interim Report 2020

Tsingtao Brewery Company Limited

CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020 (All amounts in RMB Yuan unless otherwise stated)

					Six months ended 30 June
		2020			2019	2020		2019
ITEM	Note 4	Consolidated	Consolidated	Company	Company
		(unaudited)	(unaudited)	(unaudited)	(unaudited)
Cash flows from operating activities
Cash received from sales of goods or		16,456,593,125					11,230,375,339
rendering of services				17,894,106,323			12,468,599,083
Refund of taxes and surcharges		15,521,340			15,023,705		12,258,112		7,930,176
Cash received relating to other operating		702,021,732					134,161,708
activities	(56)(a)			748,394,912			217,461,180
Sub-total of cash inflows		17,174,136,197			18,657,524,940		11,376,795,159		12,693,990,439
Cash paid for goods and services		(6,254,818,909)	(7,885,257,391)	(6,822,312,617)	(7,851,912,620)
Cash paid to and on behalf of employees		(2,016,727,304)	(2,279,718,132)	(732,067,891)	(804,664,751)
Payments of taxes and surcharges		(2,172,002,536)	(2,899,572,333)	(569,692,296)	(835,671,323)
Cash paid relating to other operating		(1,766,090,548)			(1,098,291,567)
activities	(56)(b)	(1,774,908,973)	(1,088,742,863)

Sub-total of cash outflows		(12,209,639,297)	(14,839,456,829)	(9,222,364,371)	(10,580,991,557)

Net cash flows from operating activities	(57)(a)	4,964,496,900		3,818,068,111	2,154,430,788		2,112,998,882
Cash flows from investing activities
Cash received from disposal of		842,000,000					208,700,000
investments				719,900,000			113,300,000
Cash received from returns on		50,336,309					626,562,928
investments				31,717,895			452,120,892
Net cash received from disposal of fixed
assets, intangible assets and other		15,512,744					1,525,222
long-term assets				223,174,898			526,698
Cash received relating to other investing		184,930,632					543,000
activities	(56)(c)			400,434,385			1,931,450
Sub-total of cash inflows		1,092,779,685		1,375,227,178	837,331,150		567,879,040
Cash paid to acquire fixed assets,
intangible assets and other long-term		(545,343,260)			(158,940,440)
assets		(470,314,049)	(104,563,542)
Cash paid to acquire investments		(1,229,900,000)	(835,000,000)	(301,518,181)	(239,000,000)
Cash paid relating to other investing		(92,640,185)			(933,300)
activities	(56)(d)	(9,122,809)	(1,703,450)

Sub-total of cash outflows		(1,867,883,445)	(1,314,436,858)	(461,391,921)	(345,266,992)

Net cash flows from investing activities		(775,103,760)	60,790,320		375,939,229		222,612,048

Interim Report 2020 5

Tsingtao Brewery Company Limited

CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS (Cont'd)

FOR THE SIX MONTHS ENDED 30 JUNE 2020 (All amounts in RMB Yuan unless otherwise stated)

				Six months ended 30 June
		2020		2019	2020		2019
ITEM	Note 4	Consolidated	Consolidated	Company	Company
		(unaudited)	(unaudited)	(unaudited)	(unaudited)
Cash flows from financing activities		270,120,000				-
Cash received from borrowings			456,620,000		-

Sub-total of cash inflows		270,120,000		456,620,000	-		-

Cash repayments of borrowings		(270,330,000)	(289,335,200)	-		-
Cash payments for distribution of
dividends, profits or interests		(429,763,491)	(42,405,533)	(380,979,595)	-
expenses
Including: Cash payments for dividends,
profit to minority		(41,044,076)	(37,235,100)	-	-
shareholders of subsidiaries
Cash payments relating to other financing		(257,733,732)			(8,066,521)
activities	(56)(e)	(9,571,268)	(6,131,060)

Sub-total of cash outflows		(957,827,223)	(341,312,001)	(389,046,116)	(6,131,060)

Net cash flows from financing activities		(687,707,223)	115,307,999	(389,046,116)	(6,131,060)
Exchange effect on cash and cash
equivalents		6,580,437		199,620	4,047,533		106,719

Net increase in cash and cash equivalents	(57)(a)	3,508,266,354		3,994,366,050	2,145,371,434		2,329,586,589
Add: Cash and cash equivalents at beginning		14,557,393,355				6,043,843,854
of period			11,653,288,328		5,086,721,740

Cash and cash equivalents at end of period	(57)(b)	18,065,659,709		15,647,654,378	8,189,215,288		7,416,308,329

The accompanying notes form an integral part of these financial statements.

Legal representative:	Principal in charge of accounting:	Head of accounting department:
HUANG Kexing	YU Zhuming	HOU Qiuyan

6Interim Report 2020

Tsingtao Brewery Company Limited

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2020 (All amounts in RMB Yuan unless otherwise stated)

						Attributable to shareholders of the Company
		Share	Capital		Other	Surplus	General	Undistributed	Non-	Total
ITEM		comprehensive	controlling	shareholders'
Note 4	capital	surplus		income	reserve	reserve	profits	interests	equity
Balance at 1 January 2019		1,350,982,795		3,444,186,312		(44,696,804)	1,400,704,380			199,512,331		11,619,782,072		719,480,301		18,689,951,387
Movements for the six months
ended 30 June 2019
(unaudited)
Total comprehensive income		-		-		-	-			-		1,630,516,036		95,024,748		1,725,540,784
Net profit
Other comprehensive income	(35)	-		-		(494,826)	-			-		-		-		(494,826)
Total comprehensive income
for the six months		-		-		(494,826)	-			-		1,630,516,036		95,024,748		1,725,045,958
ended 30 June 2019
Profit distribution	(38)
Profit distribution to		-		-		-		-			-		(648,471,742)	(38,174,706)	(686,646,448)
shareholders
Others	(34)	-		38,658			-		-			-		-		-	38,658
Balance at 30 June 2019		1,350,982,795		3,444,224,970		(45,191,630)	1,400,704,380			199,512,331		12,601,826,366		776,330,343		19,728,389,555
(unaudited)
Balance at 31 December 2019
	1,350,982,795		3,444,317,455			(47,347,633)	1,400,704,380			234,715,680		12,788,210,357		741,787,822		19,913,370,856
Balance at 1 January 2020
	1,350,982,795		3,444,317,455			(47,347,633)	1,400,704,380			234,715,680		12,788,210,357		741,787,822		19,913,370,856
Movements for the six months
ended 30 June 2020
(unaudited)
Total comprehensive income		-		-		-	-			-		1,854,983,102		84,463,723		1,939,446,825
Net profit
Other comprehensive income	(35)	-		-		(3,053,718)	-			-		-		-		(3,053,718)
Total comprehensive income
for the six months		-		-		(3,053,718)	-			-		1,854,983,102		84,463,723		1,936,393,107
ended 30 June 2020
Profit distribution	(38)
Profit distribution to		-		-		-		-			-		(743,040,537)	(41,044,076)	(784,084,613)
shareholders
Others	(34)	-		(173,479,592)	-		-			-		-		(68,297,121)	(241,776,713)
Balance at 30 June 2020
	1,350,982,795		3,270,837,863			(50,401,351)	1,400,704,380			234,715,680		13,900,152,922		716,910,348		20,823,902,637
(unaudited)

The accompanying notes form an integral part of these financial statements.

Legal representative:	Principal in charge of accounting:	Head of accounting department:
HUANG Kexing	YU Zhuming	HOU Qiuyan

Interim Report 2020 7

Tsingtao Brewery Company Limited

COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2020 (All amounts in RMB Yuan unless otherwise stated)

								Other					Total
		Share	Capital	comprehensive	Surplus	Undistributed	shareholders'
ITEM	Note 4	capital	surplus	income	reserve	profits	equity
Balance at 1 January 2019		1,350,982,795			4,306,625,628			(48,482,000)	1,400,704,380	7,320,371,233			14,330,202,036
Movements for the six months
ended 30 June 2019
(unaudited)
Total comprehensive income
Net profit		-			-			-		-		612,370,273		612,370,273
Total comprehensive
income for the six
months ended 30 June
2019		-			-	-	-	612,370,273	612,370,273
Profit distribution	(38)
Profit distribution to
shareholders		-	-	-	-	(648,471,742)	(648,471,742)
Others		-	9,256	-	-	-	9,256
Balance at 30 June 2019
(unaudited)		1,350,982,795			4,306,634,884	(48,482,000)	1,400,704,380		7,284,269,764		14,294,109,823
Balance at 31 December 2019
	1,350,982,795	4,306,633,811	(47,445,000)	1,400,704,380		7,489,288,403	14,500,164,389
Balance at 1 January 2020
	1,350,982,795	4,306,633,811	(47,445,000)	1,400,704,380	7,489,288,403	14,500,164,389
Movements for the six months
ended 30 June 2020
(unaudited)
Total comprehensive income
Net profit		-			-			-		-		879,673,449		879,673,449
Total comprehensive
income for the six
months ended 30 June
2020		-			-	-	-	879,673,449	879,673,449
Profit distribution	(38)
Profit distribution to
shareholders		-	-	-	-	(743,040,537)	(743,040,537)
Others		-	5,910	-	-	-	5,910
Balance at 30 June 2020
(unaudited)		1,350,982,795			4,306,639,721			(47,445,000)	1,400,704,380	7,625,921,315			14,636,803,211

The accompanying notes form an integral part of these financial statements.

Legal representative:	Principal in charge of accounting:	Head of accounting department:
HUANG Kexing	YU Zhuming	HOU Qiuyan

8Interim Report 2020

Tsingtao Brewery Company Limited

NOTES TO FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020 (All amounts in RMB Yuan unless otherwise stated)

General information
Tsingtao Brewery Company Limited (the "Company") was established in the People's Republic of China on 16 June 1993. The Company obtained business license as a Sino-foreign joint stock limited company on 27 December 1995. The registered address and head office address of the Company is Qingdao, Shandong province, the PRC, with a total share capital of RMB482,400,000 at establishment.
The Company's H shares have been listed on the Main Board of the Stock Exchange of Hong Kong Limited since 15 July 1993, and its A shares have been listed on the Shanghai Stock Exchange since 27 August 1993. The total share capital upon issue amounted to RMB900,000,000. Subsequently, the Company increased its total share capital to RMB1,308,219,178 after issuing new RMB ordinary shares and corporate convertible bonds which were converted into H shares.
Approved by the Circular [2008] No.445 issued by the China Securities Regulatory Commission, the Company issued convertible bonds with detachable warrants subscription rights on 2 April 2008 at a total size of RMB1.5 billion with the term of 6 years. Upon the exercise period ended on 19 October 2009, 42,763,617 A shares of the Company were issued and the total number of the Company's shares was increased from 1,308,219,178 to 1,350,982,795.
The Company and its subsidiaries (collectively the "Group") are principally engaged in the production and distribution of beer products.
Subsidiaries which are included in the scope of consolidation in this period are disclosed in Note 5(1).
These financial statements have been approved for issue by the Company's Board of Directors on 28 August 2020.
The interim financial statements are not audited.
Summary of significant accounting policies and accounting estimates
The Group applied the accounting policies and accounting estimates based on its business operations characteristics, including impairment of financial assets (Note 2(9)), cost formulas (Note 2(10)), depreciation of fixed assets and amortization of intangible assets (Note 2(13) and (16)), revenue recognition (Note 2(21)),etc.
The areas including significant judgments to determine the critical accounting estimate of the Group are disclosed in Note 2(28).
1. Basis of preparation
  The financial statements are prepared in accordance with the Accounting Standards for Business Enterprises - Basic Standard, and the specific accounting standards and other relevant regulations issued by the Ministry of Finance on 15 February 2006 and in subsequent periods (hereafter collectively referred to as "the Accounting Standards for Business Enterprises" or "CAS") and the disclosure requirements in the Preparation Convention of Information Disclosure by Companies Offering Securities to the Public No.15 - General Rules on Financial Reporting issued by the China Securities Regulatory Commission.
  The financial statements are prepared on a going concern basis.
  The new Hong Kong "Companies Ordinance" came into effect in 3 March 2014. According to the requirement of Hong Kong Companies Ordinance, there are changes to presentation and disclosures of certain information in the financial statements.

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2. Summary of significant accounting policies and accounting estimates (Cont'd)

Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements of the Company for six months ended 30 June 2020 are in compliance with CAS, and truly and completely present the Consolidated and the Company's financial position as at 30 June 2020 and their financial performance, cash flows and other information for the six months then ended.
Accounting period
The Company's accounting year starts on 1 January and ends on 31 December.
Recording currency
The Company's recording currency is Renminbi (RMB). The recording currency of the Company's subsidiaries is determined based on the primary economic environment in which they operate. The recording currency of subsidiaries in Hong Kong SAR and Macau SAR is Hong Kong Dollar (HKD) and Macau Pataca (MOP) respectively. The financial statements are presented in RMB.
Business combinations
1. Business combinations involving enterprises under common control
  The consideration paid and net assets obtained by the absorbing party in a business combination are measured at the carrying amount. If the merged party was acquired by the final control party from a third party in the previous year, then the consideration was measured based on carrying amount of assets and liabilities of the merged party (including the goodwill arising from acquisition by the final control party) in the final control party's consolidated financial statements. The difference between the carrying amount of the net assets obtained from the combination and the carrying amount of the consideration paid for the combination is treated as an adjustment to capital surplus (share premium). If the capital surplus (share premium) is not sufficient to absorb the difference, the remaining balance is adjusted against retained earnings. Costs directly attributable to the combination are included in profit or loss in the period in which they are incurred. Transaction costs associated with the issue of equity or debt securities for the business combination are included in the initially recognised amounts of the equity or debt securities.
2. Business combinations involving enterprises not under common control
  The cost of combination and identifiable net assets obtained by the acquirer in a business combination are measured at fair value at the acquisition date. Where the cost of the combination exceeds the acquirer's interests in the fair value of the acquiree's identifiable net assets, the difference is recognised as goodwill; where the cost of combination is lower than the acquirer's interests in the fair value of the acquiree's identifiable net assets, the difference is recognised in profit or loss for the current period. Costs directly attributable to the combination are included in profit or loss in the period in which they are incurred. Transaction costs associated with the issue of equity or debt securities for the business combination are included in the initially recognised amounts of the equity or debt securities.
3. Purchase of minority equity in subsidiaries
  After the acquisition of the control right over the subsidiary, the Group obtained all or part of the minority equity of the subsidiary owned by the minority shareholder of the subsidiary. In the consolidated financial statements, the assets and liabilities of the subsidiary are reflected by the amount continuously calculated from the date of purchase or combination. The capital surplus shall be adjusted according to the difference between the newly increased long-term equity investment and the net asset share of the subsidiary calculated continuously from the date of acquisition or merger with the newly increased shareholding ratio. If the capital surplus (share premium) is not sufficient to offset the difference, the retained earnings shall be adjusted.

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2. Summary of significant accounting policies and accounting estimates (Cont'd)

Preparation of consolidated financial statements
The consolidated financial statements comprise the financial statements of the Company and all of its subsidiaries.
Subsidiaries are consolidated from the date on which the Group obtains control and are de-consolidated from the date that such control ceases. For a subsidiary that is acquired in a business combination involving enterprises under common control, it is included in the consolidated financial statements from the date when it, together with the Company, comes under common control of the ultimate controlling party. The portion of the net profits realized before the combination date is presented separately in the consolidated income statement.
In preparing the consolidated financial statements, where the accounting policies and the accounting periods of the Company and subsidiaries are inconsistent, the financial statements of the subsidiaries are adjusted in accordance with the accounting policies and accounting period of the Company. For subsidiaries acquired from a business combination involving enterprises not under common control, the individual financial statements of the subsidiaries are adjusted based on the fair value of the identifiable net assets at the acquisition date.
All significant intra-group balances, transactions and unrealized profits are eliminated in the consolidated financial statements. The items which can't be attributable to the shareholders of the Company in subsidiary's equity, net profit or loss, and total comprehensive income of the period, are separately presented in the equity item, in net profit item and total comprehensive income item of the consolidated financial statement respectively. Elimination of intra-group unrealized profit on sale of assets by the Company to its subsidiaries should be in full of the net profit attributable to the shareholders, and elimination of intra-group unrealized profit on sale of assets by subsidiaries to the Company should be allocated between the net profit attributable to the shareholders and non-controlling interests in the ratio of their interests. Elimination of intra-group unrealized profit on sale of assets amongst the subsidiaries should be allocated between the net profit attributable to the shareholders and non-controlling interests, according to the Company's share interest in the subsidiary of selling party.
If the identification of the same transaction is different between the Group and the Company or the subsidiaries as accounting entity, the adjustment should be made in the Group's view.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits that can be readily drawn on demand, and short-term highly liquid investments which are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.
Foreign currency translation
1. Foreign currency transactions
  Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the dates of the transactions.
  At the balance sheet date, monetary items denominated in foreign currencies are translated into functional currency using the spot exchange rates on the balance sheet date. Exchange differences arising from these translations are recognised in profit or loss for the current period, except for those attributable to foreign currency borrowings that have been taken out specifically for the acquisition or construction of qualifying assets, which are capitalized as part of the cost of those assets. Non-monetary items denominated in foreign currencies that are measured at historical costs are translated at the balance sheet date using the spot exchange rates at the date of the transactions. The effect of exchange rate changes on cash is presented separately in the cash flow statement.

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2. Summary of significant accounting policies and accounting estimates (Cont'd)

Foreign currency translation (Cont'd)
1. Translation of foreign currency financial statements
  The asset and liability items in the balance sheets for overseas operations are translated at the spot exchange rates on the balance sheet date. Among the shareholders' equity items, the items other than "undistributed profits" are translated at the spot exchange rates on the transaction dates. The income and expense items in the income statements of overseas operations are translated at the spot exchange rates of the transaction dates. The differences arising from the above translation are presented separately in the shareholders' equity. The cash flows of overseas operations are translated at the spot exchange rates on the dates of the cash flows. The effect of exchange rate changes on cash is presented separately in the cash flow statement.
Financial instruments
A financial instrument is a contract that gives rise to a financial asset of one entity meanwhile form a financial liability or equity instrument of another entity. When the Group becomes a party of the contract, relative financial assets or liabilities are recognised.
1. Financial assets
2. 1. Classification and measurement
    Based on the business mode for management of the Group and cash flow characteristics of contracts, the financial assets are classified into the following categories: (1) financial assets measured at amortized cost; (2) financial assets at fair value through other comprehensive income; (3) financial assets at fair value through profit or loss.
    Financial assets are fairly valued at initial recognition. For financial assets at fair value through profit or loss, related transaction costs are recognised in profit or loss for the current period; for other financial assets, related transaction costs are recognised in the amount of initial recognition. Accounts receivable or notes receivable arising from sales of products or rendering of services (excluding or without regard to significant financing components) are initially recognised at the consideration that is entitled to be charged by the Group as expected.
    Debt instruments
    Debt instruments held by the Group are instruments that meets the definition of financial liabilities from the perspective of the issuer, and are measured by the following three ways:
    Measured at amortized cost:
    The Group's business mode of managing this type of financial assets is to collect contractual cash flows. The contractual cash flow characteristics of such financial assets are consistent with basic loan arrangement, which means the cash flow generated at certain date is only the payment for the principal and the corresponding interest based on unpaid principal. The interest income from such financial assets is recognised by effective interest method. These financial assets include cash at bank and on hand, notes receivable, accounts receivable, other receivables and debt investments. Debt investments due within 1 year (inclusive) at the balance sheet date are listed as the current portion of non-current assets; at acquiring date, debt investments with maturities within one year (inclusive) are listed as other current assets.

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2. Summary of significant accounting policies and accounting estimates (Cont'd)

Financial instruments (Cont'd)
1. Financial assets (Cont'd)
2. 1. Classification and measurement (Cont'd)
    Measured at fair value through other comprehensive income ("FVOCI")
    The Group's business mode of managing this type of financial assets is to collect contractual cash flows as well as capture profit by selling. The character of contractual cash flows is consist with the normal borrowing arrangement. These financial assets are measured at fair value and movements in the carrying amount are taken through other comprehensive income but the impairment loss or gain, exchange gain or loss and interest income using the effective interest rate method are recognised into current profit or loss. These financial assets are listed as other debt investment. The Group lists other debt investment due within one year (including one year) from the balance sheet date as non-current assets due within one year; as at acquiring date, other debt investments, that the due dates are within one year (including one year), are listed as other current assets.
    Measured at fair value through profit or loss ("FVTPL")
    The Group lists those debt instruments that do not meet the criteria for amortised cost or FVOCI as financial assets held for trading that are measured at FVTPL. At the initial recognition, for eliminating or dramatically reducing accounting mismatch, the Group specifies parts of financial assets as those measured at fair value through current profit or loss. The Group lists those expired for more than one year from the balance sheet date and expected to be held for more than one year as other non-current financial assets.
    Equity instruments
    The Group recognises its equity instruments that have no control, joint control and significant influence on the fair value through profit or loss and list them as financial assets held for trading; the equity instruments that are expected to be held for more than a year from the balance sheet date are listed as other non-current financial assets.
    Besides, the Group specifies certain non-tradable equity instrument investments as financial assets that are measured at fair value through other comprehensive income and presented as other equity instrument investments. The relevant dividend income of such financial assets is included in the current profit and loss.
  2. Impairment
    In terms of financial assets measured at amortised cost and investments in debt instruments at fair value through other comprehensive income, the Group recognises their loss provision on the basis of expected credit losses ("ECL").
    Considering the reasonable and supportable information that is related to past events, current situation and forecasting on future economic conditions, the Group, based on the default risk weight, calculates the probability-weighted amount of the present value of the difference between contractual cash flows receivable and cash flows expected to be received, so as to recognise the ECL.

Interim Report 2020 13

2. Summary of significant accounting policies and accounting estimates (Cont'd)

Financial instruments (Cont'd)
1. Financial assets (Cont'd)
2. 1. Impairment (Cont'd)
    At each balance sheet date, the Group separately calculates the ECL of financial instruments at different stage. Financial instruments whose credit risk did not increase significantly after the initial recognition belong to stage 1 and the Group calculates their loss provision based on the ECL in the next 12 months. Financial instruments whose credit risk increased significantly after the initial recognition without credit impairment yet belong to stage 2 and the Group calculates their loss provision based on the lifetime ECL. Financial instruments suffering from credit impairment since initial recognition belong to stage 3 and the Group calculates their loss provision based on the lifetime ECL.
    For the financial instruments with low credit risk at the balance sheet date, the Group assumes their credit risk did not increase significantly after the initial recognition and calculates their loss provision based on the ECL in the next 12 months.
    For the financial instruments at stage 1 and stage 2, and those with low credit risk, the Group calculates their interest income based on their book value before deducting provision for impairment and their effective interest rate. For the financial instruments at stage 3, the Group calculates their interest income based on their amortised cost, which is book value less the provision for impairment, and their effective interest rate.
    For notes receivable, accounts receivable and contract assets formed from daily operations such as sales of goods and rendering of services, whether significant financing components exists or not, the Group calculates their loss provision based on the lifetime ECL.
    When a single financial asset is unable to assess ECL at a reasonable cost, the Group classified receivables into certain groupings based on their credit risk characteristics and calculated ECL based on the grouping basis. Basis for grouping is as follows:

Bank acceptance notes	Banks with low credit risk
Accounts receivable	Dealers
Accounts receivable	Subsidiaries
Other receivables	Guarantee deposits
Other receivables	Receivables from subsidiaries
Other receivables	Receivables from other entities

For accounts receivable on the grouping basis and notes receivable, the Group calculates the ECL by referring to historical credit loss experience, considering current situation and future economic conditions, and based on the exposure at default ("EAD") and lifetime ECL ratio. For other receivables on the grouping basis, the Group calculates the ECL by referring to historical credit loss experience, considering current situation and future economic conditions, and based on the EAD and the ECL ratio within 12 months or for the lifetime.

The Group recognises provision for or reversal of losses in profit or loss for the current period. For debt instruments at fair value through other comprehensive income, the Group recognises impairment losses or gains into profit or loss for the current period and adjusts other comprehensive income in the meanwhile.

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2. Summary of significant accounting policies and accounting estimates (Cont'd)

Financial instruments (Cont'd)
1. Financial assets (Cont'd)
2. 1. De-recognitionof financial assets
    A financial asset is derecognised when any of the below criteria is met: (1) the contractual rights to receive the cash flows from the financial asset terminate; (2) the financial asset has been transferred and the Group transfers substantially all the risks and rewards of ownership of the financial asset to the transferee; or (3) the financial asset has been transferred and the Group has not retained control of the financial asset, although the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset.
    When the investment of other equity instruments is de-recognised, the difference between carrying amount and the sum of the consideration received and the change of fair value accumulated in the original direct accounting of other comprehensive income shall be recorded into the retained earnings; when the recognition of other financial assets is de-recognised, the difference between carrying amount and the sum of the consideration received and the change of fair value accumulated in the original direct accounting of other comprehensive income shall be recorded into the current profit and loss.
3. Financial liabilities
  Financial liabilities are classified into financial liabilities at amortised cost and financial liabilities that are at fair value through profit or loss at initial recognition.
  Financial liabilities of the Group are mainly financial liabilities at amortised cost, including notes payable and accounts payable, other payables, borrowings and etc. These financial liabilities are recognised initially at fair value minus transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Those with maturities no more than one year are classified as current liabilities; those with maturities over one year but due within one year at the balance sheet date are classified as the current portion of non-current liabilities; others are classified as non-current liabilities.
  A financial liability is derecognised or partly derecognised when the current obligation is discharged or partly discharged. The difference between the carrying amount of the derecognised part of the financial liability and the consideration paid is recognised in profit or loss.
4. Determination of fair value of financial instruments
  The fair value of a financial instrument that is traded in an active market is determined at the quoted price in the active market. The fair value of a financial instrument that is not traded in an active market is determined by using a valuation technique when it is applicable under current conditions and there are enough available data and other information to support. Those inputs should be consistent with the inputs a market participant would use when pricing the asset or liability, and should maximize the use of relevant observable inputs. When related observable inputs can't be acquired or are not feasible to be acquired, then use unobservable inputs.
Inventories
1. Classification
  Inventories comprise raw materials, packing materials, work in progress and finished goods, and are measured at the lower of cost and net realizable value.

Interim Report 2020 15

2. Summary of significant accounting policies and accounting estimates (Cont'd)

Inventories (Cont'd)
1. Cost formulas
  Cost is determined using the weighted average method. The cost of finished goods and work in progress comprise raw materials, direct labour and systematically allocated production overhead based on the normal production capacity.
2. Basis for determining net realizable values of inventories and method for making provision for decline in the value of inventories
  Provision for decline in the value of inventories is determined at the excess amount of the carrying amounts of the inventories over their net realizable value. Net realizable value is determined based on the estimated selling price in the ordinary course of business, less the estimated costs to completion and estimated costs necessary to make the sale and related taxes.
3. The Group adopts the perpetual inventory system.
4. Amortization methods of low value consumables and packaging materials
  Low value consumables and packaging materials are written off once used and amortised based upon fractional method respectively.
Long-termequity investments
Long-term equity investments is comprised of the Company's long-term equity investments in its subsidiaries, and the Group's long-term equity investments in its joint ventures and associates.
Subsidiaries are the investees over which the Company is able to exercise control. A joint venture is a joint arrangement which is structured through a separate vehicle over which the Group has jointly control together with other parties and has rights to the net assets of the arrangement based on legal forms, contractual terms and other facts and circumstances. An associate is the investee over which the Group has significant influence by participating in the financial and operating policy decisions.
Investments in subsidiaries are presented in the Company's financial statements using the cost method, and are adjusted to the equity method when preparing the consolidated financial statements. Investments in joint ventures and associates are accounted for using the equity method.
1. Determination of investment cost
  For long-term equity investments acquired through a business combination: for long-term equity investments acquired through a business combination involving enterprises under common control, the investment cost shall be the absorbing party's share of the carrying amount of shareholder's equity of the party being absorbed at the combination date; for long-term equity investment acquired through a business combination involving enterprises not under common control, the investment cost shall be the combination cost.
  For long-term equity investments acquired not through a business combination: for long-term equity investment acquired by payment in cash, the initial investment cost shall be the purchase price actually paid; for long-term equity investments acquired by issuing equity securities, the initial investment cost shall be the fair value of the equity securities issued.
2. Subsequent measurement and recognition of related profit and loss
  Long-term equity investments accounted for using the cost method are measured at the initial investment costs, and cash dividends or profit distribution declared by the investees are recognised as investment income in profit or loss.

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2. Summary of significant accounting policies and accounting estimates (Cont'd)

Long-termequity investments (Cont'd)
1. Subsequent measurement and recognition of related profit and loss (Cont'd)
  For long-term equity investments accounted for using the equity method, where the initial investment cost of a long-term equity investment exceeds the Group's share of the fair value of the investee's identifiable net assets at the acquisition date, the long-term equity investment is measured at the initial investment cost; where the initial investment cost is less than the Group's share of the fair value of the investee's identifiable net assets at the acquisition date, the difference is included in profit or loss and the cost of the long-term equity investment is adjusted upwards accordingly.
  For long-term equity investments accounted for using the equity method, the Group recognises the investment income according to its share of net profit or loss of the investee. The Group discontinues recognising its share of net losses of an investee after the carrying amount of the long- term equity investment together with any long-term interests that, in substance, form part of the investor's net investment in the investee are reduced to zero. However, if the Group has obligations for additional losses and the criteria with respect to recognition of provisions under the accounting standards in the contingencies are satisfied, the Group continues recognising the expected losses and the provisions. For changes in shareholders' equity of the investee other than those arising from its net profit or loss, other comprehensive income and profit distribution, the Group records its proportionate share directly into capital surplus. The carrying amount of the investment is reduced by the Group's share of the profit distribution or cash dividends declared by an investee. The unrealised profit or loss arising from the intra-group transactions amongst the Group and its investees is eliminated in proportion to the Group's equity interests in the investees, and then based on which the investment income is recognised. For the loss on the intra-group transaction amongst the Group and its investees attributable to asset impairment, any unrealised loss is not eliminated.
2. Basis for determining existence of control, jointly control or significant influence over investees
  Control is the power to govern the financial and operating policies of the investee so as to obtain benefits from its operating activities and can influence the amount.
  Joint control is the contractually agreed sharing of control over an economic activity, and exists only 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.
3. Impairment of long-term equity investments
  The carrying amounts of long-term equity investments in subsidiaries, joint ventures and associates are reduced to the recoverable amounts when the recoverable amounts are below their carrying amounts (Note 2(18)).
Investment properties
Investment properties are buildings and land use rights that are held for the purpose of leasing, are measured at the initial cost. Subsequent expenditures incurred in relation to an investment property are included in the cost of the investment property when it is probable that the associated economic benefits will flow to the Group and their costs can be reliably measured; otherwise, the expenditures are recognised in profit or loss in the period in which they are occurred.

Interim Report 2020 17

2. Summary of significant accounting policies and accounting estimates (Cont'd)

Investment properties (Cont'd)
The Group adopts cost model for subsequent measurement of investment properties. Land use rights are amortized on the straight-line basis over their approved useful period of 50 years. Buildings are depreciated to their estimated net residual values over their estimated useful lives. The estimated useful lives, the estimated net residual values that are expressed as a percentage of cost and the annual depreciation rates of investment properties are as follows:

	Estimated	Estimated	Annual
	useful lives	residual value	depreciation rate
Buildings	20 - 40 years	3% to 5%	2.4% to 4.9%
Land use rights	50 years	-	2.0%

When an investment property is transferred to owner-occupied properties, it is reclassified as fixed asset or intangible asset at the date of the transfer. When an owner-occupied property is transferred out for earning rentals or for capital appreciation, the fixed asset or intangible asset is reclassified as investment properties at its carrying amount at the date of the transfer.

The investment property's estimated useful life, net residual value and depreciation method applied are reviewed and adjusted as appropriate at each year end.

An investment property is derecognised when it is disposed or when it is permanently withdrawn from use and no future economic benefits are expected from its disposal. The net amount of proceeds from sale, transfer, retirement or damage of an investment property after its carrying amount and related taxes and expenses is recognised in profit or loss for the current period.

The carrying amount of investment properties shall be reduced to the recoverable amount if the recoverable amount is below the carrying amount (Note 2(18)).

Fixed assets
1. Recognition and initial measurement of fixed assets
  Fixed assets comprise buildings, machinery and equipment, motor vehicles and other equipment.
  Fixed assets are recognised when it is probable that the related economic benefits will flow to the Group and the costs can be reliably measured. Fixed assets purchased or constructed by the Group are initially measured at cost at the acquisition date. The fixed assets contributed by the State shareholders at the reorganization of the Company into a corporation entity are recognised based on the revaluated amounts approved by the state-owned assets administration department.
  Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it is probable that the associated economic benefits will flow to the Group and the related cost can be reliably measured. The carrying amount of the replaced part is derecognised. All the other subsequent expenditures are recognised in profit or loss in the period in which they are incurred.
2. Depreciation methods of fixed assets
  Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to their estimated residual values over their estimated useful lives. For the fixed assets that have been provided for impairment loss, the related depreciation charge is prospectively determined based upon the adjusted carrying amounts over their remaining useful lives.

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2. Summary of significant accounting policies and accounting estimates (Cont'd)

Fixed assets (Cont'd)
1. Depreciation methods of fixed assets (Cont'd)
  The estimated useful lives, the estimated residual values expressed as a percentage of cost and the annual depreciation rates of fixed assets are as follows:

		Estimated	Estimated	Annual
	useful lives	residual value	depreciation rate
Buildings	20	- 40 years	3% to 5%	2.4% to 4.9%
Machinery and equipment	5	- 14 years	3% to 5%	6.8% to 19.4%
Motor vehicles	5	- 12 years	3% to 5%	7.9% to 19.4%
Other equipment	5	- 10 years	3% to 5%	9.5% to 19.4%

The estimated useful lives, the estimated residual value of a fixed asset and the depreciation method applied to the asset are reviewed, and adjusted as appropriate at each year end.

1. The carrying amount of fixed assets shall be reduced to the recoverable amount if the recoverable amount is below the carrying amount (Note 2(18)).
2. Disposal of fixed assets
  A fixed asset is derecognised on disposal or when no future economic benefits are expected from its use or disposal. The amount of proceeds from disposals on sale, transfer, retirement or damage of a fixed asset net of its carrying amount and related taxes and expenses are recognised in profit or loss for the current period.
Construction in progress
Construction in progress is measured at actual cost. Actual cost comprises construction costs, installation costs, borrowing costs that are eligible for capitalisation and other costs necessary to bring the fixed assets ready for their intended use. Construction in progress is transferred to fixed assets when the assets are ready for their intended use, and depreciation begins from the following month. The carrying amount of construction in progress is reduced to the recoverable amount when the recoverable amount is below the carrying amount (Note 2(18)).
Borrowing costs
The borrowing costs incurred in the Group that are directly attributable to the acquisition and construction of an asset that needs a substantially long period of time for its intended use commence to be capitalised and recorded as part of the cost of the asset when expenditures for the asset and borrowing costs have been incurred, and the activities relating to the acquisition and construction that are necessary to prepare the asset for its intended use have commenced. The capitalisation of borrowing costs ceases when the asset under acquisition or construction becomes ready for its intended use and the borrowing costs incurred thereafter are recognised in profit or loss for the current period. Capitalisation of borrowing costs is suspended during periods in which the acquisition or construction of a fixed asset is interrupted abnormally and the interruption lasts for more than 3 months, until the acquisition or construction is resumed.
For the specific borrowings obtained for the acquisition or construction of an asset qualifying for capitalisation, the amount of borrowing costs eligible for capitalisation is determined by deducting any interests income earned from depositing the unused specific borrowings in the banks or any investment income arising on the temporary investment of those borrowings during the capitalisation period.

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2. Summary of significant accounting policies and accounting estimates (Cont'd)

Borrowing costs (Cont'd)
For the general borrowings obtained for the acquisition or construction of an asset qualifying for capitalisation, the amount of borrowing costs eligible for capitalisation is determined by applying the weighted average effective interest rate of general borrowings, to the weighted average of the excess amount of cumulative expenditures on the asset over the amount of specific borrowings. The effective interest rate is the rate at which the estimated future cash flows during the period of expected duration of the borrowings or applicable shorter period are discounted to the initial amount of the borrowings.
Intangible assets
Intangible assets comprise land use rights, trademarks, marketing networks, computer software, technology known-how and others. All intangible assets are measured at cost. The intangible assets contributed by the State-owned shareholders at the time of reform of corporate system into a corporation are recognised based on the revaluated amounts approved by the state-owned assets administration department.
1. Land use rights
  Land use rights are amortised on the straight-line basis over their approved useful period from 30 to 50 years. If the acquisition costs of the land use rights and the buildings located thereon cannot be reasonably allocated between the land use rights and the buildings, all of the acquisition costs are recognised as fixed assets.
2. Trademarks
  Trademarks mainly include the "TSINGTAO BEER" trademark which was injected by the founding shareholders into the Company on 16 June 1993 as their capital contributions. The recorded value of the trademark was assessed based on the results of the valuation approved by state-owned assets administration department. Based on the forecast of beer industry and the business position of the Company, the directors are of the view that the "TSINGTAO BEER" trademark has an indefinite useful life, accordingly, it is not subject to amortisation but annual impairment assessments.
  Other trademarks were acquired as a result of acquisitions of certain subsidiaries. They are amortised over their estimated useful lives ranging from 5 to 10 years.
3. Marketing networks
  Marketing networks are the distribution channel identified in the process of business combination of the Company, which are amortised over their estimated useful lives with a range of 5 - 10 years using the straight-line method.
4. Computer software
  Computer software are amortised over their estimated useful lives ranging from 5 to 10 years.
5. Technology known-how
  Technology known-how is amortised on the straight-line basis over their estimated useful lives of 10 years.
6. Periodical review of useful life and amortisation method
  For an intangible asset with a finite useful life, review of its useful life and amortisation method is performed at each year-end, with adjustment made as appropriate.

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2. Summary of significant accounting policies and accounting estimates (Cont'd)

Intangible assets (Cont'd)
1. Research and development
  The expenditure on an internal research and development project is classified into expenditure on the research phase and expenditure on the development phase based on its nature and whether there is material uncertainty that the research and development activities can form an intangible asset at end of the project.
  Expenditure on the research phase, such as planned investigation, evaluation and selection for improvement of the products technology, is recognised in profit or loss in the period when it is incurred. Expenditure on the development phase, such as the designing and testing for the final application of the products technology before the large-scale production, should be capitalised only if all of the following conditions satisfied:
2. - The development of the products technology has been sufficiently proved by the technical team;
  - The budget relating to the products technology improvement has been approved by the management;
  - It can be demonstrated that the products due to products technology improvement have potential market from previous marketing investigation;
  - There are adequate technical and financial resources for improvement of the products technology and the large-scale production; and
  - The expenditure attributable to the improvement of products technology during its development phase can be liable measured.

Other development expenditures that do not meet the conditions above are recognised in profit or loss in the period in which they are incurred. Development costs previously recognised as expenses are not recognised as an asset in a subsequent period. Capitalised expenditure on the development phase is presented as development costs in the balance sheet and transferred to intangible assets at the date that the asset is ready for its intended use.

1. Impairment of intangible assets
  The carrying amount of intangible assets is reduced to the recoverable amount when the recoverable amount is below the carrying amount (Note 2(18)).
Long-termprepaid expenses
Long-term prepaid expenses comprise the expenditure for improvements to right-of-use assets, and other expenditures that have been incurred but should be recognised as expenses over more than one year in the current and subsequent periods. Long-term prepaid expenses are amortised on the straight- line basis over the expected beneficial period and are presented at actual expenditure net of accumulated amortisation.

Interim Report 2020 21

2. Summary of significant accounting policies and accounting estimates (Cont'd)

Impairment of long-term assets
Fixed assets, constructions in progress, right-of-use assets, intangible assets with finite useful lives, investing properties measured at cost method and long-term equity investments in subsidiaries, joint ventures and associates are tested for impairment if there is any indication that the assets may be impaired at the balance sheet date. The intangible assets not ready for intended use yet or with indefinite useful life, are treated at least annually for impairment, irrespective of whether there are any indications of impairment. If the result of the impairment test indicates that the recoverable amount of an asset is less than its carrying amount, a provision for impairment and an impairment loss are recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. Provision for asset impairment is determined and recognised on the individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of a group of assets to which the asset belongs is determined. A group of assets is the smallest group of assets that is able to generate independent cash inflows.
Goodwill that is separately presented in the financial statements is tested at least annually for impairment, irrespective of whether there is any indication that it may be impaired. In conducting the test, the carrying value of goodwill is allocated to the related group of assets or group of asset combinations which are expected to benefit from the synergies of the business combination. If the result of the test indicates that the recoverable amount of a group of assets or group of assets combinations, including the allocated goodwill, is lower than its carrying amount, the corresponding impairment loss is recognised. The impairment loss is first deducted from the carrying amount of goodwill that is allocated to the group of assets or group of asset combinations, and then deducted from the carrying amounts of other assets within the group of assets or groups of asset combinations in proportion to the carrying amounts of assets other than goodwill.
Once the above asset impairment loss is recognised, it will not be reversed for the value recovered in the subsequent periods.
Employee benefits
Employee benefits include short-term employee benefits, post-employment benefits, termination benefits and other long-term employee benefits provided in various forms of remuneration in exchange for service rendered by employees or compensations for the termination of employment relationship.
1. Short-termemployee benefits
  Short-term employee benefits include employee wages or salaries, bonus, allowances and subsidies, staff welfare, premiums or contributions on medical insurance, work injury insurance and maternity insurance, housing funds, union running costs and employee education costs. The employee benefits liabilities are recognised in the accounting period in which the service is rendered by the employees, with a corresponding charge to the profit or loss for the current period or the cost of relevant assets. Employee benefits which are non-monetary benefits are measured at fair value.
2. Post-employmentbenefits
  The Group classifies post-employment benefit plans as either defined contribution plans or defined benefit plans. Defined contribution plans are post-employment benefit plan under which the Group pays fixed contributions into a separate fund and will have no obligation to pay further contributions; and defined benefit plans are post-employment benefit plan that are not defined contribution plan. During the reporting period, the Group post-employment benefits mainly include defined contribution plans such as basic pension and unemployment insurance, and which belong to supplemental retirement benefits.

22Interim Report 2020

2. Summary of significant accounting policies and accounting estimates (Cont'd)

Employee benefits (Cont'd)
1. Post-employmentbenefits (Cont'd) Basic pension insurance
  The employees of the Group participated in the basic social pension insurance organised and implemented by the local labour and social security departments. The Group pays the basic social pension insurance to related local agencies monthly, following the demanding proportion and base. When the employees retire, the local labour and social security departments have obligations to pay the entire basic social pension. When an employee has rendered service to the Group during the accounting period, the Group should recognise liabilities and costs of assets or expenses.
  Supplemental retirement benefits
  In addition to the basic social pension plans, the Group also provides supplementary retirement benefits to those retired employees qualified for certain criteria. Such supplementary benefits are classified as defined benefit plans. The defined benefit obligation recognised in the balance sheet is the present value of the defined benefit obligation, net of the fair value of plan assets. The defined benefit obligation is calculated by a independently actuary using the Projected Unit Credit method and applying interests rates of government bonds that have similar currency and terms to maturity to those of the related pension obligation. The service cost and net interest income related to supplemental retirement benefits are recognised as assets or expenses, and actuarial gains or losses arising from re-measurement of net defined benefit obligation is recognised as other comprehensive income.
2. Termination benefits
  The Group provides compensation for terminating the employment relationship with employees before the end of the employment contracts or as an offer to encourage employees to accept voluntary redundancy before the end of the employment contracts. The Group recognises a liability arising from compensation for termination of the employment relationship with employees, with a corresponding charge to profit or loss at the earlier of the following dates: 1) when the Group cannot unilaterally withdraw the offer of termination benefits because of an employment termination plan or a curtailment proposal; 2) when the Group recognises costs or expenses related to the restructuring that involves the payment of termination benefits.
  Early retirement benefits
  The Group offers early retirement benefits to those employees who accept early retirement arrangements. The early retirement benefits refer to the salaries and social security contributions to be paid to and for the employees who accept voluntary retirement before the normal retirement date prescribed by the State, as approved by the management. The Group pays early retirement benefits to those early retired employees from the early retirement date until normal retirement date. The Group accounts for the early retirement benefits in accordance with the treatment of termination benefits, in which the salaries and social security contributions to be paid to and for the early retired employees from the off-duty date to the normal retirement date are recognised as liabilities with a corresponding charge to the profit or loss for the current period. The differences arising from the changes in the respective actuarial assumptions of the early retirement benefits and the adjustments of benefit standards are recognised in profit or loss in the period in which they occur.
  The termination benefits expected to be paid within one year since the balance sheet date are classified as current liabilities.
Dividends distribution
Cash dividend is recognised as a liability for the period in which the dividend is approved by the shareholders' meeting.

Interim Report 2020 23

2. Summary of significant accounting policies and accounting estimates (Cont'd)

Revenue recognition
Revenue is recognised by the Group based on the amount of consideration that is expected to be charged when clients obtain the control of relative goods and services.
Sale of goods
The Group mainly manufactures and sells beer products to the regional dealers. Based on contracts, the Group delivers products to dealers. After the acceptance of the goods and signing of delivery lists by the dealers, the Group recognises the net amount after deducting consideration payable to the customer as revenue.
After signing contracts with dealers and receiving orders, the Group recoginizes the amount of contract consideration received from the dealers as contract liabilities before delivering products to dealers.
Government Grants
Government grants are transfers of monetary or non-monetary assets from the government to the Group at nil consideration, including relocation compensation, refund of taxes and financial subsidies, etc.
A government grant is recognised when the conditions attached to it can be satisfied and the government grant can be received. For a government grant in the form of transfer of monetary assets, the grant is measured at the amount received or to be received. For a government grant in the form of transfer of non-monetary assets, it is measured at fair value; if the fair value is not reliably determinable, the grant is measured at nominal amount.
Government grants related to assets are those obtained for forming long-term assets by purchase, construction or acquisition in other ways. Grants related to income are government grants other than those related to assets.
The Group recognises government grants related to assets as deferred income and apportions to profit or loss in a systemic manner over the useful lives of the relevant assets.
For government grants related to income, where the grant is a compensation for related expenses or losses to be incurred in the subsequent periods, the grant is recognised as deferred income, and included in profit or loss over the periods in which the related costs are recognised; where the grant is a compensation for related expenses or losses already incurred by the Group, the grant is recognised immediately in profit or loss for the current period.
The Group presents similar types of government grants consistently in the financial statements.
Government grants that are related to daily activities are included in operating profit, otherwise, they are recorded in non-operating income.
The relocation compensations received directly from the government in terms of fiscal budget, which are due to the overall planning of the town, reservoir construction, shanty areas rebuilding, subsidence area management and other public interests, are recognised as payables for specific projects. The payables for specific projects, which attributes to the compensations for the losses on disposal of fixed assets and intangible assets, the expensed expenditure, the downtime losses and the new purchased and constructed assets after the relocation, in the process of the relocation and rebuilding, are transferred to deferred income and accounted for in accordance with the regulation of government grant. The excess of relocation compensation over the amount transferred to deferred income is recognised as capital reserve.
For the policy loans with favourable interest rates, the Group records the loans at the actual amounts and calculates the interests by loan principals and the favourable interest rates. The fiscal interest discounts directly received by the Group offset the relevant borrowing expenses.

24Interim Report 2020

2. Summary of significant accounting policies and accounting estimates (Cont'd)

Deferred tax assets and deferred tax liabilities
Deferred tax assets and deferred tax liabilities are calculated and recognised based on the differences arising between the tax bases of assets and liabilities and their carrying amounts (temporary differences). Deferred tax asset is recognised for the deductible losses that can be carried forward to subsequent years for deduction of the taxable profit in accordance with the tax laws. No deferred tax liability is recognised for a temporary difference arising from the initial recognition of goodwill. No deferred tax asset or deferred tax liability is recognised for the temporary differences resulting from the initial recognition of assets or liabilities due to a transaction other than a business combination, which affects neither accounting profit nor taxable profit (or deductible loss). At the balance sheet date, deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled.
Deferred tax assets are only recognised for deductible temporary differences, deductible losses and tax credits to the extent that it is probable that taxable profit will be available in the future against which the deductible temporary differences, deductible losses and tax credits can be utilized.
Deferred tax liabilities are recognised for temporary differences arising from investments in subsidiaries, associates and joint ventures, except where the Group is able to control the timing of reversal of the temporary difference, and it is probable that the temporary difference will not reverse in the foreseeable future. When it is probable that the temporary differences arising from investments in subsidiaries, associates and joint ventures will be reversed in the foreseeable future and that the taxable profit will be available in the future against which the temporary differences can be utilized, the corresponding deferred tax assets are recognised.
Deferred tax assets and liabilities are offset when:
- the deferred taxes are related to the same tax payer within the Group and the same taxation authority; and
- tax payer within the Group has a legally enforceable right to offset current tax assets against current tax liabilities.
Share-basedpayment

Types of share-based payment
The restricted share incentive plan of the Group refers to share-based payment which settled with the equity instruments of the Company granted by the Group as consideration to relevant incentive objects.
For equity-settledshare-based payment transactions, the Group shall measure the services received, and the corresponding increase in equity directly, at the fair value of the services received. The equity instruments granted do not vest until the counterparty achieve a specified performance condition during the vesting period. According to the fair value of equity instrument on grant date, the Group shall recognise the services to be rendered by the counterparty in related cost or expenses based on the most likely outcome of exercisable equity instrument during the vesting period, with a corresponding increase in capital surplus .The Group shall revise its estimate if subsequent information indicates that the number of the exercisable equity instrument differs from previous estimates and adjust to the actual numbers of exercisable equity instrument on the vesting date.
Methods for determining the fair value of equity instruments
The Group determines the fair value of restricted shares based on the daily closing price of the tradable shares on the grant date of the equity instruments and the liquidity discount.

Interim Report 2020 25

2. Summary of significant accounting policies and accounting estimates (Cont'd)

Share-basedpayment (Cont'd)
1. Basis for confirming the best estimation of exercisable options
  On each balance sheet date of the vesting period, the Group makes the best estimate based on the latest information of the number of employees available for exercise, and modifies the number of options available. On the vesting date, the final estimated number of exercisable equity instruments is consistent with the actual number of exercisable equity instruments.
Leases
A lease is a contract in which the lessor transfers the use rights of assets to the lessee to obtain consideration for a certain period.
The Group as the lessee
The Group recognises the right-of-use assets at the starting date of the lease term, and recognises the lease liabilities at the present value of the outstanding lease payment. Lease payment include fixed payments and payments to be made if it is reasonably certain that the option to purchase or terminate will be exercised. The variable rent determined according to a certain proportion of sale shall be recognised in profit or loss instead of being included in the lease payment when actually incurred. The Group lists the lease liabilities paid within one year (including one year) from the balance sheet date as current portion of non-current liabilities.
The Group's right-of-use assets include leased buildings, land use rights, machinery and equipment and other. The right-of-use asset is initially measured according to the cost, which includes the initial measurement amount of the lease liability, the lease payment paid on or before the starting date of the lease term, the initial direct expense and etc., and deducts the lease incentive received. When the Group can reasonably determine the ownership of the leased asset upon expiration of the lease term, depreciation is recognised within the remaining useful life of the leased asset. If it is impossible to reasonably determine whether the ownership of the leased asset can be acquired at the end of the lease term, the depreciation is calculated within the shorter period between the lease term and the remaining useful life of the leased asset. The carrying amount of right-of-use assets is reduced to the recoverable amount when the recoverable amount is lower than the carrying amount.
For short-term leases, whose lease period is no more than 12 months, and low-value asset leases, which the value of brand-new individual asset is low, the Group chooses not to recognise the right-of-use assets or lease liabilities. The relevant rent expenses are recognised into the current profit or loss or the cost of relevant assets by straight-line method during each period of the lease term.
The Group as the lessor
A financial lease is a lease that substantially transfers almost all the risks and rewards related to the ownership of an asset. An operating lease is a lease other than a financial lease.
1. Operating leases
  When the Group operatingly leases out buildings, machinery equipments and land use rights, the rental income from the operating lease shall be recognised in accordance with the straight-line basis over the lease period.
2. Finance leases
  As at the starting date of the lease period, the Group recognises the finance lease receivables and derecognise relevant assets.

26Interim Report 2020

2. Summary of significant accounting policies and accounting estimates (Cont'd)

Held for sale and discontinued operations
A non-current asset or a disposal group is classified as held for sale when all of the following conditions are satisfied: (1) the non-current asset or the disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such non-current asset or disposal group; (2) the Group has entered a legally enforceable sales agreement with other party and obtained relevant approval, and the sales transaction is expected to be completed within one year.
Non-current assets (except for financial assets and deferred tax assets) that meet the recognition criteria for held for sale are recognised at the amount equal to the lower of the fair value less costs to sell and the carrying amount. Any excess of the original carrying amount over the fair value less the costs to sell is recognised as asset impairment losses.
Such non-current assets and assets/liabilities included in disposal groups as classified as held for sale are accounted for as current assets/liabilities, and are presented separately in the balance sheet.
A discontinued operation is a component of the Group that either has been disposed of or is classified as held for sale, and is separately identifiable operationally and for financial reporting purposes, and satisfies one of the following conditions: (1) represents a separate major line of business or geographical area of operations; (2) is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; and (3) is a subsidiary acquired exclusively with a view to resale.
The net profit from discontinued operations in the income statement includes operating profit or loss and disposal gains or losses of discontinued operations.
Segment information
The Group identifies operating segments based on the internal organization structure, management requirements and internal reporting system, and discloses segment information of reportable segments which is determined on the basis of operating segments.
An operating segment is a component of the Group that satisfies all of the following conditions: (1) the component is able to generate revenues and incur expenses from its ordinary activities; (2) whose operating results are regularly reviewed by the Group's management to make decisions about resources to be allocated to the segment and to assess its performance; and (3) for which the information on financial position, operating results and cash flows is available to the Group. If two or more operating segments have similar economic characteristics and satisfy certain conditions, they are aggregated into one single operating segment.
Critical accounting estimates and judgments
The Group continually evaluates the critical accounting estimates and key judgments applied based on historical experience and other factors, including expectations of future events that are believed to be reasonable.
1. Critical accounting estimates and key assumptions
  The critical accounting estimates and key assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next accounting year are outlined below:
2. 1. Accounting estimates on impairment of goodwill
    The Group tests annually whether goodwill has suffered any impairment. The recoverable amount of group of assets and groups of asset combinations is the present value of the future cash flows expected to be derived from them. These calculations require use of estimates (Note 4(15)).

Interim Report 2020 27

2. Summary of significant accounting policies and accounting estimates (Cont'd)

Critical accounting estimates and judgments (Cont'd)
1. Critical accounting estimates and key assumptions (Cont'd)
2. 1. Accounting estimates on impairment of goodwill (Cont'd)
    If the management revises the gross margin or the pre-tax discount rate that is used in the calculation of the future cash flows of group of assets and groups of asset combinations, and the revised gross profit margin is lower than the one currently used or the revised pre- tax discount rate is higher than the one currently applied, the Group would need to recognise further impairment against goodwill. If the actual gross profit margin is higher or pre-tax discount rate is lower than management's estimates, the impairment loss of goodwill previously provided for is not allowed to be reversed by the Group.
  2. Accounting estimates on impairment of fixed assets
    According to the accounting policies stated in Note 2(18), the Group tests whether fixed assets have suffered any impairment on the balance sheet date. The recoverable amounts of the fixed assets have been determined based on the higher of an asset's present value of the expected future cash flow and fair value less costs to sell. These calculations require the use of accounting estimates.
    For the six months ended 30 June 2020, the Group recognised impairment losses of 1,538,581 (For six months ended 30 June 2019: 1,547,653) for fixed assets based on such evaluation. As at 30 June 2020, the Group recognised the cumulative provision for fixed assets impairment amounting to 440,889,170 (31 December 2019: 469,369,758) (Note 4(11)).
    If the management revises the gross margin or the pre-tax discount rate that is used in the calculation of the future cash flows of group of assets and groups of asset combinations and the revised gross profit margin is lower than the one currently used or the revised pre-tax discount rate is higher than the one currently applied, the Group would need to recognise further impairment against fixed assets. If the actual gross profit margin is higher or pre-tax discount rate is lower than management's estimates, the impairment loss of fixed assets previously provided for is not allowed to be reversed by the Group.
  3. Accounting estimates on recognition of deferred tax assets
    The estimates of deferred tax assets require estimates over future taxable profit and corresponding applicable income tax rates of respective years. The realization of deferred tax assets depends on the realization of sufficient profitability (taxable profit) of the Group. The change in future income tax rates and timing of reversals of taxable temporary differences would affect income tax expense (benefits) and balances of deferred tax. Deviation of aforesaid estimates could result in material adjustment to the carrying amount of deferred income tax.
    As at 30 June 2020, deferred tax assets of 1,671,282,870 have been recognised in the Group's balance sheet. As stated in Note 4(17), the Group has unrecognised deferred tax assets aggregated to approximately 930,420,000 as at 30 June 2020, which mainly attributable to accumulated tax losses and impairment losses of certain subsidiaries. The Group has unrecognised deferred tax assets for such deductible losses and deductible temporary differences due to the fact that there is no certainty of their respective realization of these tax benefits through available future taxable profits of those subsidiaries concerned. In cases where the actual future assessable profits are more or less than expected, a recognition or reversal of deferred tax assets may arise accordingly.

28Interim Report 2020

2. Summary of significant accounting policies and accounting estimates (Cont'd)

Critical accounting estimates and judgments (Cont'd)
1. Critical accounting estimates and key assumptions (Cont'd)
2. 1. Post-retirementbenefits Actuary
    As stated in Note 2(19)(b), the present value of the post-retirement obligation is estimated on an actuarial basis using a number of assumptions. The actuarial valuations, in which discount rate was determined by government bonds of China and the mortality rate was based on published statistics by China Life Annuitant Mortality Table 2010 - 2013, are the best estimation on the post-retirement obligation on balance sheet date. Any changes in these assumptions will have impact on the carrying amount of post-employment obligations, which will be recognised as other comprehensive income in the future.
  2. Measurement of ECL
    The Group calculates the ECL through the EAD and the ECL rate, and determines the ECL rate based on the probability of default and the default loss rate. When determining the ECL rate, the Group uses data such as internal historical credit loss experience and adjusts historical data in combination with current conditions and forward-looking information. In considering forward-looking information, the indicators used by the Group include the risk of economic downturn, changes in the external market environment, changes in customer conditions and etc. The Group regularly monitors and reviews assumptions related to the calculation of ECL. The above estimation techniques and key assumptions have not changed significantly for the six months ended 30 June 2020.

3 Taxation

The main categories and rates of taxes applicable to the Group are set out below:

Category	Tax base		Tax rate
Enterprise income	Taxable income		3%-12%,
tax (a)			16.5%, 25%
Value added tax	Taxable value added amount (Tax payable is calculated using	13%, 9%
("VAT") (b)	the taxable sales amount multiplied by the effective tax	and 6%
	rate less deductible VAT input of current period)
Consumption tax (c)	Sales Price of Beer	Consumption Tax per Unit
	More than or equal to	RMB250 per ton
	RMB3,000 per ton
	Less than RMB3,000 per ton	RMB220 per ton
City maintenance and	Amount of VAT, business tax and consumption tax paid	5% and 7%
construction tax
Education surcharge	Amount of VAT, business tax and consumption tax paid	5%

Interim Report 2020 29

3. Taxation (Cont'd)

The main categories and rates of taxes applicable to the Group are set out below: (Cont'd)
1. Enterprise income tax
2. 1. Hong Kong profits tax and Macau profits supplemental tax
    Tsingtao Brewery Hong Kong Trading Co., Ltd. ("Hong Kong Company") and Asia Brewery (Macau) Co., Ltd. ("Macau Company"), the Company's subsidiaries, were established in Hong Kong and Macau, applying Hong Kong profits tax and Macau profits supplemental tax respectively.
    Hong Kong profits tax has been provided at the rate of 16.5% on the estimated assessable profit for the year. Macau profits supplemental tax is imposed on the estimated taxable profit for the year at a progressive rate scale ranging from 3% to 12%.
  2. Pursuant to the Circular on the Deduction Policies of Relevant Enterprise Income Tax for Equipment and Apparatus (Cai Shui [2018] No. 54) and related regulations issued by the State Administration of Taxation, during the period from 1 January 2018 to 31 December 2020, the newly purchased equipment under 5 million can be recognised in cost and expense of the current period in the month after the assets are put into use, and can be duducted when calculating the taxable income.
3. VAT
  The Group calculated VAT at the VAT rate of 13% on the sales revenue of beer and other products. Revenue from financial service of Tsingtao Brewery Finance LLC. ("Finance Company", a subsidiary of the Company)and revenue from construction business of Tsingtao Brewery Construction Co., Ltd. ("Construction Company", a subsidiary of the Company) are subject to VAT at the rates of 6% and 9% respectively.
4. Consumption tax
  Beer production activities undertaken by the Group are subject to consumption tax. For beer with an ex-factory price (including packaging materials and related deposits) of 3,000 or above per ton, the consumption tax is 250 per ton. Otherwise, the consumption tax is levied at 220 per ton.
5. Withholding Tax
  According to Circular Guoshuihan [2008] No. 897 "Notice on the issue about withholding Enterprise Income Tax on the dividends paid by Chinese resident enterprises to overseas non- resident enterprises H-share holders" issued by State Administration of Taxation on 6 November 2008, a Chinese resident enterprise shall withhold the enterprise income tax on the basis of 10% of the dividends, when it pays dividends to its H-share holders who are overseas non-resident enterprises.

30Interim Report 2020

4. Notes to the consolidated financial statements

Cash at bank and on hand

	30 June	31 December
	2020		2019
	(unaudited)
Cash on hand	220,660		203,723
Bank deposits	6,820,171,906		1,262,542,417
Interbank deposits (i)	11,426,357,360		13,408,414,018
Deposits in central bank (ii)	672,729,670		591,561,976
Other cash balances (iii)	37,070,618		39,261,274
	18,956,550,214		15,301,983,408

Including: cash at bank and on hand overseas (iv)	94,557,588		94,112,833

Interbank deposits represent bank deposits and its interest receivable deposited in domestic banks by Finance Company.
Deposits in central bank represent statutory deposit and its interest receivable deposited in the People's Bank of China by Finance Company, a subsidiary of the Company. As at 30 June 2020, the statutory deposit reserves ratio of Finance Company is 6% (31 December 2019: 6%).
As at 30 June 2020, other cash balances of 31,901,585 (31 December 2019: 31,852,379) represent
housing maintenance fund in the bank; 4,950,000 (31 December 2019: 6,630,000) are pledged as collateral for issuance of bank acceptance (Note 4(21)); the remaining balances are other deposits of 219,033 (31 December 2019: 778,895).
As at 30 June 2020, cash at bank and on hand overseas represents the cash, bank deposits and its interest receivable of Hong Kong Company and Macau Company held in Hong Kong and Macau respectively.

Cash and cash equivalents presented in cash flow statements:
	30 June	31 December
	2020		2019
	(unaudited)
Cash at bank and on hand	18,956,550,214		15,301,983,408
Other receivables - deposits in non-financial institutions	5,447,384		924,748
Less: Restricted deposits in central bank	(672,430,000)	(591,270,000)
Restricted other cash balances	(37,070,618)	(39,261,274)
Interest receivable on deposits	(186,837,271)	(114,983,527)
	18,065,659,709		14,557,393,355

Interim Report 2020 31

4. Notes to the consolidated financial statements (Cont'd)

Financial assets held for trading

	30 June	31 December
	2020		2019
	(unaudited)
Wealth management products (i)	1,796,605,764		1,396,589,764
Fund investment (ii)	97,990,397		127,203,255
	1,894,596,161		1,523,793,019

1. It represents the wealth management products purchased by Finance Company, a subsidiary of the Company. As at 30 June 2020, the fair value is measured based on the estimation of the future cash flow.
2. It represents the fund purchased by Finance Company, a subsidiary of the Company. As at 30 June 2020, its fair value is determined based on the market value on the last trading day of June 2020 issued by relevant fund management company.
Notes receivable

	30 June	31 December
	2020	2019
	(unaudited)
Bank acceptance notes	29,013,290		75,100,000

1. As at 30 June 2020, the Group has no pledged notes receivable (31 December 2019: nil).
2. As at 30 June 2020, the Group's notes receivable which have been endorsed but not yet matured are derecognised amounting to 152,625,119 (31 December 2019: 196,015,000). There are no discounted bank acceptance notes that are not yet matured (31 December 2019: nil).
3. Provision for bad debts
  The Group's notes receivable are all formed from daily operations such as sales of goods and rendering of services. Irrespective of whether there is significant financing component, the Group measures loss provision according to the ECL of the lifetime.
  As at 30 June 2020, the Group considers the bank acceptance notes held have no significant credit risk and will not cause major losses due to the bank default, thus no provision for bad debts is recognised.
Accounts receivable

	30 June	31 December
	2020	2019
	(unaudited)
Accounts receivable	335,193,863		337,040,440
Less: Provision for bad debts	(186,225,061)	(185,971,013)

	148,968,802		151,069,427

The majority of the Group's domestic sales are made by advances from customers. The remains are settled by letters of credit, bank acceptance notes or providing credit terms from 30 to 100 days to dealers.

32Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd)

Accounts receivable (Cont'd)
1. The ageing of accounts receivable based on their recording dates is analysed below:

	30 June	31 December
	2020		2019
	(unaudited)
Within 1 year	149,289,592		151,053,718
1 to 2 years	1,867		47,764
2 to 5 years	206,725		246,918
Over 5 years	185,695,679		185,692,040
	335,193,863		337,040,440

Accounts receivable are mainly recorded based on the dates of transaction. The ageing of accounts receivable represented on their recording dates is basically the same as the ageing represented on the dates of invoice.

(b) As at 30 June 2020, the top five accounts receivable are analysed as follows:

			Provision of	% of total
	Amount	bad debts	balance
	(unaudited)	(unaudited)
Total amount of the top five accounts
receivable	61,926,311		(26,242,020)	18%

As at 30 June 2020, there are no accounts receivable derecognised due to the transfer of financial assets (31 December 2019: nil).
Provision for bad debts
For accounts receivable, irrespective of whether there is significant financing component, the Group measures loss provision according to the ECL of the lifetime.
1. As at 30 June 2020, accounts receivable with amounts that are individually subject to separate assessment for provision are analysed as follows:

			Lifetime	Provision for
	Ending balance	ECL ratio	bad debts
	(unaudited)		(unaudited)

Gansu Nongken Brewery Co., Ltd.	14,996,236		100%	(14,996,236)
Beijing Tsingtao Brewery Sales
Co., Ltd. ("Beijing Sales
Company")	11,245,784		100%	(11,245,784)

	26,242,020			(26,242,020)

As the Group has ceased all business transactions with the above companies, the Group is of the view that it is difficult to collect the receivable amount, therefore full bad debt provision has been made accordingly.

Interim Report 2020 33

4. Notes to the consolidated financial statements (Cont'd)

Accounts receivable (Cont'd)
1. Provision for bad debts (Cont'd)
2. 1. As at 30 June 2020, accounts receivable that are subject to provision for bad debts on the grouping basis are analysed as follows:
    Group - Dealers

30 June 2020 (unaudited)

Ending
balance	Provision for bad debts
	Lifetime
Amount	ECL ratio	Amount

31 December 2019

Ending
balance	Provision for bad debts
		Lifetime
Amount	ECL ratio	Amount

Not overdue	142,837,655	-	-		150,520,204	-	-
Overdue within 1 year	6,451,937	5%	(322,597)	567,465	5%	(28,373)
Overdue within 1-2 years	3,613	50%	(1,806)	20,263	50%	(10,132)
Overdue 2 years or more	159,658,638	100%	(159,658,638)	159,690,488	100%	(159,690,488)

	308,951,843		(159,983,041)	310,798,420		(159,728,993)

1. The provision for bad debts increased in this period is 378,369. The collecting or reversal of provisions for bad debts is 4,451, the corresponding carrying amount is 4,451, the amount of bad debts due to currency translation differences increases by 1,710, and the provision for bad debts written off due to uncollectable beer sales is 121,580.
Advances to suppliers
1. The ageing of advances to suppliers is analysed as follows:

	30 June 2020 (unaudited)		31 December 2019
			% of total			% of total
	Amount		balance	Amount	balance
Within 1 year	154,931,343	96.2%	111,338,319		95.0%
1 to 2 years	1,490,858	0.9%	3,355,283		2.9%
2 to 3 years	3,983,929	2.5%	1,885,206		1.6%
Over 3 years	573,434		0.4%	577,283		0.5%

	160,979,564		100%	117,156,091		100%

As at 30 June 2020, the carrying amount of advances to suppliers over 1 year is 6,048,221 (As at 31 December 2019: 5,817,772), which have not been required to deliver yet due to production plan.

As at 30 June 2020, the total amount of top five advances to suppliers are analysed as follows:
- of total
  Amount balance

(unaudited)

Total amount of the top five advances to suppliers	83,677,287	52%

34Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd)

Other receivables

	30 June	31 December
	2020		2019
	(unaudited)
Receivables on materials and waste materials	27,408,096		19,060,595
Guarantee deposits	25,250,949		21,877,494
Reservation fund	17,662,304		14,544,689
Receivables of refundable cost of land use rights and buildings	17,441,647		17,441,647
Dividends receivable (Note 4(9))	10,488,900		-
Payment on behalf for recycling bottles	8,361,667	8,988,995
Receivables on construction and equipment (i)	2,277,668	1,997,404
VAT refund	1,446,406	963,020
Others	72,172,107	74,760,438
	182,509,744		159,634,282
Less: Provision for bad debts	(72,535,199)	(73,364,846)
	109,974,545		86,269,436

It represents receivables on construction and equipment from third parties to the subsidiaries of the Company, which are Tsingtao Brewery Equipment Manufacturing Co., Ltd. ("Equipment Manufacturing Company") and Tsingtao Brewery Equipment Co., Ltd. ("Machinery and Equipment Company").

(a) The ageing of other receivables is analysed as follows:
		30 June	31 December
		2020	2019
		(unaudited)
Not overdue	106,156,701		83,701,082
Overdue within 1 year	3,647,602		2,319,520
Overdue within 1-2 years	694,709		729,620
Overdue 2 years or more	72,010,732		72,884,060
		182,509,744		159,634,282

Interim Report 2020 35

4. Notes to the consolidated financial statements (Cont'd)

Other receivables (Cont'd)
1. Movement in provision for losses and carrying amount

	Stage one (unaudited)		Stage three (unaudited)
	Next 12 months	Lifetime ECL
	(Credit impairment losses	Total
	ECL (Group)		already occurred)		(unaudited)
	Ending	Provision			Provision	Provision
	for	Ending	for	for
	balance	bad debts	balance	bad debts		bad debts
31 December 2019	3,049,140		(480,786)	72,884,060		(72,884,060)	(73,364,846)
Increase in the current period	2,600,850		(194,492)	-		(6,846)	(201,338)
Reversals in the current period	(1,293,987)	143,965		(887,020)	887,020		1,030,985
Transfer to stage three	(13,692)	6,846		13,692		(6,846)	-

30 June 2020	4,342,311		(524,467)	72,010,732		(72,010,732)	(72,535,199)

As at 30 June 2020, the Group has no other receivables in stage two. The analysis of other receivables in stage one and stage three is as follows:

As at 30 June 2020, other receivables with amounts that are individually subject to separate assessment for provision are analysed as follows:

			ECL ratio for
Stage three	Ending balance	the next	Provision for
12 months	bad debts
	(unaudited)		(unaudited)
Receivables of refundable cost of
land use rights and building i)	17,441,647		100%	(17,441,647)
Receivables from other entities ii)	54,569,085		100%	(54,569,085)

	72,010,732			(72,010,732)

A land use right of the Company was expropriated by the government years ago. The government committed to rendering another new land use right instead. The management considers that the possibility of obtaining new land use right is low, and therefore has transferred the cost of the expropriated land use right of 8,584,437 and cost of buildings on this land of 8,857,210 to other receivables, and full bad debt provision has been recorded accordingly.
As these other receivables are overdue 2 years or more, the Group judged that credit impairment losses had already occurred and full amount provision for bad debts had been recognized.

36Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd)

Other receivables (Cont'd)
1. Movement in provision for losses and carrying amount (Cont'd)
2. 1. As at 30 June 2020 and 31 December 2019, other receivables of provisions for bad debts on grouping basis are in stage one, and the analysis is as follows:

	30 June 2020 (unaudited)			31 December 2019
	Ending						Ending
	balance		Provision for bad debts		balance		Provision for bad debts
					% of total		Provision			% of total
	Amount		Amount	balance		for bad debts		Amount	balance
Guarantee deposits	40,938	(17,994)	5%-50%	1,783,418	(295,918)	5%-50%
Receivables from other entities	4,301,373		(506,473)	5%-50%	1,265,722	(184,868)	5%-50%

	4,342,311		(524,467)		3,049,140	(480,786)

By referring to historical credit loss experience, the Group recognized provision for bad debts based on current conditions and forecasts of future economic situation.

The provision for bad debts increased in the current period is 201,338. The collecting or reversal of provision for bad debts is 1,030,985, and its corresponding carrying amount is 2,175,507. No other receivables was written off in the current period.
As at 30 June 2020, the top five other receivables are analysed as follows:

					% of	Provision for
	Nature	Amount	Ageing	total balance	bad debts
		(unaudited)				(unaudited)
No.1	Dividends receivable	10,488,900		Within six months	6%	-
No.2	Refundable cost of land	8,584,437		More than five years	5%	(8,584,437)
No.3	Payment on behalf for recycling bottles	7,276,755	Within six months	4%	-
No.4	Receivables on materials	5,000,000	More than five years	3%	(5,000,000)
No.5	Receivables on materials	4,616,730	More than five years	3%	(4,616,730)

		35,966,822			21%	(18,201,167)

As at 30 June 2020, the Group does not have government grants recognized as receivable amount.

Interim Report 2020 37

4. Notes to the consolidated financial statements (Cont'd)

Inventories
1. Classification of inventories is as follows:

			30 June 2020 (unaudited)				31 December 2019
	Ending				Carrying	Ending		Carrying
	balance		Provision	amount	balance	Provision	amount
Raw materials	572,536,567	(1,021,240)	571,515,327	557,229,799	(1,021,240)	556,208,559
Packaging materials	736,104,908	(2,517,462)	733,587,446	878,527,021	(2,517,462)	876,009,559
Consigned processing	12,413,970	-	12,413,970
materials	-	-	-
Low-value consumables	79,885,524	-	79,885,524	61,236,850	-	61,236,850
Work in progress	390,697,619	-	390,697,619	407,440,587	-	407,440,587
Finished goods	528,514,813	-	528,514,813	1,280,873,778	-	1,280,873,778

	2,320,153,401			(3,538,702)	2,316,614,699		3,185,308,035	(3,538,702)	3,181,769,333

The movement of inventories is as follows: 30 June 2020

	31 December	Increase in	Decrease in	30 June
	the current	the current
	2019		period	period	2020
			(unaudited)	(unaudited)	(unaudited)
Raw materials	557,229,799		2,115,502,149	(2,100,195,381)	572,536,567
Packaging materials	878,527,021		4,070,652,013	(4,213,074,126)	736,104,908
Consigned processing materials	-		118,597,711	(106,183,741)	12,413,970
Low-value consumables	61,236,850		201,176,834	(182,528,160)	79,885,524
Work in progress	407,440,587		2,599,976,889	(2,616,719,857)	390,697,619
Finished goods	1,280,873,778		8,358,448,006	(9,110,806,971)	528,514,813
	3,185,308,035				2,320,153,401
31 December 2019

	31 December	Increase in	Decrease in
	the current	the current	31 December
	2018		year	year	2019
Raw materials	464,687,748		4,405,646,292	(4,313,104,241)	557,229,799
Packaging materials	806,153,659		8,693,678,209	(8,621,304,847)	878,527,021
Low-value consumables	62,685,451		445,023,058	(446,471,659)	61,236,850
Work in progress	396,253,676		5,077,236,331	(5,066,049,420)	407,440,587
Finished goods	928,748,247		17,353,695,993	(17,001,570,462)	1,280,873,778
	2,658,528,781				3,185,308,035

38Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd)

Inventories (Cont'd)
1. Provisions for decline in the value of inventories are analysed as follows: 30 June 2020

				Increase in	Decrease in the current period	30 June
		31 December	the current
		2019		period	Reversal	Write-off	2020
				(unaudited)	(unaudited)	(unaudited)	(unaudited)

Raw materials	(1,021,240)	-		-	-		(1,021,240)
Packaging materials		(2,517,462)	-		-	-		(2,517,462)

		(3,538,702)	-		-	-		(3,538,702)

31 December 2019
				Increase in	Decrease in the current year
		31 December	the current	Reversal	Write-off	31 December
		2018		year	2019
Raw materials	(2,503,854)	-		-	1,482,614		(1,021,240)
Packaging materials		(4,800,201)	-		288,110	1,994,629		(2,517,462)

		(7,304,055)	-		288,110	3,477,243		(3,538,702)

(d) Provisions for decline in the value of inventories are as follows: Basis for net realisable value

	Raw materials and	Estimated	selling price less the estimated costs to	completion and
	packaging materials	estimated expenses necessary to sale and related taxes
(8) Other current assets
					30 June	31 December
			2020		2019
					(unaudited)
	VAT input to be deducted		80,435,457			272,740,541
	VAT input to be verified		75,623,527			89,535,948
	Credit and factoring business		10,776,625			13,426,255
	Treasury bonds reverse repo investment	9,907,799			-
	Prepaid Enterprise Income tax		9,729,627			187,655,849
	Others			420,887			1,547,000
			186,893,922			564,905,593
	Less: Provision for other current assets		(172,634)		(228,257)
				186,721,288			564,677,336

Interim Report 2020 39

4. Notes to the consolidated financial statements (Cont'd)

Long-termequity investments

30 June

31 December

2020

2019

(unaudited)

Joint Venture (a)

225,692,808

230,912,855

Associates (b)

148,260,722

146,948,947

373,953,530

377,861,802

Less: Provision for impairment of long-term equity investments

(1,220,000)

372,733,530

376,641,802

(a) Joint Venture

30 June 2020

Movements in the current period (unaudited)

Share of

Balance of

net profit or

other

Other

Cash

provision for

31 December

loss using the

comprehensive

equity

dividends

30 June 2020

impairment at

2019

equity method

income

changes

declared

end of period

(unaudited)

Hebei Jiahe Beer Co.,Ltd. ("Hebei Jiahe Company")

230,912,855

4,779,953

(10,000,000)

225,692,808

31 December 2019

Movements in the current year (unaudited)

Share of net

Share of

Balance of

31 December

profit or loss

other

Other

Cash

provision for

using the

comprehensive

equity

dividends

31 December

impairment at

2018

equity method

income

changes

declared

2019

end of year

Hebei Jiahe Company

228,842,662

8,070,193

(6,000,000)

230,912,855

The share of equity interests and voting right held by the Company are both 50% in Hebei Jiahe Company, so the Group owns joint control over Hebei Jiahe Company and accounts for it as a joint venture.

Details of equity interests in the joint venture are disclosed in Note 5(2)(b).

40Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd)

Long-termequity investments (Cont'd)
1. Associates
  30 June 2020

				Movements in the current period (unaudited)
			Share of net	Share of									Balance of
			profit or loss	other		Other	Cash			provision for
	31 December	using the	comprehensive		equity	dividends	30 June 2020	impairment at
	2019		equity method	income		changes	declared	end of period
												(unaudited)	(unaudited)
Yantai Brewery Tsingtao Asahi Co., Ltd.												126,599,366		-
("Yantai Asahi")	127,976,623		9,111,643	-	-			(10,488,900)
Qingdao Zhaoshang Logistics Company Limited.												16,612,973		-
("Zhaoshang Logistics")	15,181,001		1,426,062	-	5,910			-
Tsingtao Brewery Import & Export S.A.R.L												3,828,383		-
("European Company")	2,516,821		1,234,218	77,344	-			-
Liaoning Shenqing Tsingtao Brewery Company												-		-
Limited. ("Liaoning Shenqing")	54,502		(54,502)	-	-			-
Others	1,220,000		-		-		-			-		1,220,000		(1,220,000)

	146,948,947		11,717,421		77,344		5,910			(10,488,900)	148,260,722		(1,220,000)
31 December 2019

					Movements in the current year
			Share of net	Share of									Balance of
	31 December	profit or loss	other		Other	Cash			provision for
	using the	comprehensive		equity	dividends	31 December	impairment at
	2018		equity method	income		changes	declared	2019		end of year
Yantai Asahi	128,559,087		8,462,433	-	-			(9,044,897)	127,976,623		-
Zhaoshang Logistics	11,672,943		3,499,875	-	8,183			-		15,181,001		-
European Company	1,321,393		1,186,015	9,413	-			-		2,516,821		-
Liaoning Shenqing	90,115		(35,613)	-	-			-		54,502		-
Others	1,220,000		-	-	-			-		1,220,000		(1,220,000)

	142,863,538		13,112,710	9,413	8,183			(9,044,897)	146,948,947		(1,220,000)

Details of equity interests in the associates are disclosed in Note 5(2)(c).

Liaoning Shenqing Company's net assets are negative due to continuous losses, and the Group has no obligation to bear additional losses. Therefore, when confirming the share of the Group on the net loss incurred, the book value of the long-term equity investment is written down to zero. As at 30 June 2020, the accumulative unconfirmed investment loss is 11,599 (31 December 2019: 0).

Interim Report 2020 41

4. Notes to the consolidated financial statements (Cont'd)

Investment properties 30 June 2020

		Buildings	Land use rights	Total
Original cost
31	December 2019	84,224,430	8,734,452	92,958,882
Increase in the current period - transfer
from fixed assets (i) (unaudited)	511,728	-	511,728
Decrease in the current period - transfer
to fixed assets and intangible assets
(unaudited)	(13,808,818)	(2,587,486)	(16,396,304)
30	June 2020 (unaudited)	70,927,340	6,146,966	77,074,306
Accumulated depreciation
31	December 2019	(51,492,494)	(2,612,357)	(54,104,851)
Increase in the current period (unaudited)
Accrual	(1,042,518)	(70,095)	(1,112,613)
Transfer from fixed assets (i)	(57,371)	-	(57,371)
Decrease in the current period - transfer
to fixed assets and intangible assets
(unaudited)	10,712,133	1,308,014	12,020,147
30	June 2020 (unaudited)	(41,880,250)	(1,374,438)	(43,254,688)
Provision for impairment
31	December 2019	(2,349,349)	-	(2,349,349)
Decrease in the current period - transfer
to fixed assets (unaudited) (i)	643,125	-	643,125
30	June 2020 (unaudited)	(1,706,224)	-	(1,706,224)
Carrying amount
30	June 2020 (unaudited)	27,340,866	4,772,528	32,113,394
31	December 2019	30,382,587	6,122,095	36,504,682

42Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd)

Investment properties (Cont'd) 31 December 2019

	Buildings	Land use rights	Total
Original cost
31 December 2018	75,682,956	-	75,682,956
Increase in the current year - transfer
from fixed assets and intangible assets	10,454,815	8,734,452	19,189,267
Decrease in the current year - transfer
to fixed assets	(1,913,341)	-	(1,913,341)
31 December 2019	84,224,430	8,734,452	92,958,882
Accumulated depreciation
31 December 2018	(46,171,652)	-	(46,171,652)
Increase in the current year
Accrual	(2,106,715)	(110,127)	(2,216,842)
Transfer from fixed assets and
intangible assets	(4,242,939)	(2,502,230)	(6,745,169)
Decrease in the current year - transfer
to fixed assets	1,028,812	-	1,028,812
31 December 2019	(51,492,494)	(2,612,357)	(54,104,851)
Provision for impairment
31 December 2018	(1,578,536)	-	(1,578,536)
Increase in the current year - transfer
from fixed assets	(770,813)	-	(770,813)
31 December 2019	(2,349,349)	-	(2,349,349)
Carrying amount
31 December 2019	30,382,587	6,122,095	36,504,682
31 December 2018	27,932,768	-	27,932,768

1. For the six months ended 30 June 2020, the fixed assets with carrying amount of 454,357 (cost: 511,728) are reclassified to investment properties as they are used for leasing instead of self-use.
Fixed assets

	30 June	31 December
	2020	2019
	(unaudited)
Fixed assets (a)	10,228,977,264		10,221,482,397
Fixed assets pending for disposal (b)	1,065,518		552,068
	10,230,042,782		10,222,034,465

Interim Report 2020 43

4. Notes to the consolidated financial statements (Cont'd)

Fixed assets (Cont'd)
1. Fixed assets 30 June 2020

			Machinery and		Other
		Buildings	equipment	Vehicles	equipments	Total
Original cost
31	December 2019	7,312,629,435	10,944,686,036	315,594,700	905,875,957	19,478,786,128
Increase in the current period (unaudited)
	Purchase	-	19,747,085	5,235,289	23,997,367	48,979,741
	Transfer from construction in progress	160,372,611	308,101,056	-	11,331,417	479,805,084
	Transfer from investment properties	13,808,818	-	-	-	13,808,818
Decrease in the current period (unaudited)
	Disposal	(2,410,137)	(118,257,280)	(4,540,889)	(1,037,572)	(126,245,878)
	Transfer to construction in progress	(72,396,774)	(54,828,710)	-	(552,951)	(127,778,435)
	Transfer to investment properties	(511,728)	-	-	-	(511,728)
30	June 2020 (unaudited)	7,411,492,225	11,099,448,187	316,289,100	939,614,218	19,766,843,730
Accumulated depreciation
31	December 2019	(1,905,385,451)	(6,001,215,144)	(210,994,112)	(670,339,266)	(8,787,933,973)
Increase in the current period (unaudited)
	Accrual	(98,889,140)	(293,076,619)	(11,333,962)	(38,122,568)	(441,422,289)
	Transfer from investment properties	(10,712,133)	-	-	-	(10,712,133)
Decrease in the current period (unaudited)
	Disposal	1,155,330	72,939,422	4,378,276	747,350	79,220,378
	Transfer to construction in progress	34,350,865	29,054,074	-	408,411	63,813,350
	Transfer to investment properties	57,371	-	-	-	57,371
30	June 2020 (unaudited)	(1,979,423,158)	(6,192,298,267)	(217,949,798)	(707,306,073)	(9,096,977,296)
Provision for impairment
31	December 2019	(141,826,361)	(325,414,187)	(1,703,027)	(426,183)	(469,369,758)
Increase in the current period (unaudited)
	Accrual	-	(1,455,541)	(71,978)	(11,062)	(1,538,581)
	Transfer from investment properties	(643,125)	-	-	-	(643,125)
Decrease in the current period (unaudited)
	Disposal	748,535	29,401,108	134,073	38,481	30,322,197
	Transfer to construction in progress	123,980	216,117	-	-	340,097
30	June 2020 (unaudited)	(141,596,971)	(297,252,503)	(1,640,932)	(398,764)	(440,889,170)
Carrying amount
30	June 2020 (unaudited)	5,290,472,096	4,609,897,417	96,698,370	231,909,381	10,228,977,264
31	December 2019	5,265,417,623	4,618,056,705	102,897,561	235,110,508	10,221,482,397

44Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd)

Fixed assets (Cont'd)
1. Fixed assets (Cont'd) 31 December 2019

		Machinery		Other
	Buildings	and equipment	Vehicles	equipments	Total
Original cost
As at 31 December 2018	7,087,231,168	10,807,663,003	328,835,951	885,060,869	19,108,790,991
Increase in the current year
Purchase	-	29,420,740	7,746,068	87,608,467	124,775,275
Transfer from construction in progress	386,833,039	686,566,613	-	-	1,073,399,652
Transfer from investment properties	1,913,341	-	-	-	1,913,341
Decrease in the current year
Disposal	(31,278,767)	(346,336,544)	(20,987,319)	(64,797,727)	(463,400,357)
Transfer to construction in progress	(121,614,531)	(232,627,776)	-	(1,995,652)	(356,237,959)
Transfer to investment properties	(10,454,815)	-	-	-	(10,454,815)
As at 31 December 2019	7,312,629,435	10,944,686,036	315,594,700	905,875,957	19,478,786,128
Accumulated depreciation
As at 31 December 2018	(1,745,190,417)	(5,776,662,856)	(206,536,703)	(649,567,230)	(8,377,957,206)
Increase in the current year
Accrual	(198,036,044)	(591,536,075)	(23,109,432)	(80,315,974)	(892,997,525)
Transfer from investment properties	(1,028,812)	-	-	-	(1,028,812)
Decrease in the current year
Disposal	13,306,827	244,459,317	18,652,023	57,729,482	334,147,649
Transfer to construction in progress	21,320,056	122,524,470	-	1,814,456	145,658,982
Transfer to investment properties	4,242,939	-	-	-	4,242,939
As at 31 December 2019	(1,905,385,451)	(6,001,215,144)	(210,994,112)	(670,339,266)	(8,787,933,973)
Provision for impairment
As at 31 December 2018	(117,194,676)	(312,955,604)	(1,806,132)	(2,545,307)	(434,501,719)
Increase in the current year
Accrual	(34,510,559)	(86,056,556)	(284,985)	(487,430)	(121,339,530)
Decrease in the current year
Disposal	9,108,061	70,161,277	388,090	2,606,554	82,263,982
Transfer to construction in progress	-	3,436,696	-	-	3,436,696
Transfer to investment properties	770,813	-	-	-	770,813
As at 31 December 2019	(141,826,361)	(325,414,187)	(1,703,027)	(426,183)	(469,369,758)
Carrying amount
As at 31 December 2019	5,265,417,623	4,618,056,705	102,897,561	235,110,508	10,221,482,397
As at 31 December 2018	5,224,846,075	4,718,044,543	120,493,116	232,948,332	10,296,332,066

Interim Report 2020 45

4. Notes to the consolidated financial statements (Cont'd)

Fixed assets (Cont'd)
1. Fixed assets (Cont'd)
  For the six months ended 30 June 2020, fixed assets of the Group with the carrying amount of 63,624,988 (cost: 127,778,435; accumulated depreciation 63,813,350; impairment provision 340,097) are transferred to construction in progress to be upgraded due to the requirements of technology renewal and the likes.
  As at 30 June 2020, there are no fixed assets pledged as collateral for borrowings (31 December 2019: nil).
  For the 6 months ended 30 June 2020, fixed assets accumulated depreciation are 441,422,289 (For the 6 months ended 30 June 2019: 440,919,197), of which 395,725,476, 3,769,283, 40,754,371 and 1,173,159 (For the 6 months ended 30 June 2019: 398,954,967, 3,671,267, 37,039,817 and 1,253,146) have been charged to cost of sales, selling and distribution expenses, general and administrative expenses and research and development expenses respectively.
  The cost of fixed assets transferred from construction in progress amounts to 479,805,084 (For the six months ended 30 June 2019: 668,061,494).
2. 1. Temporarily idle fixed assets
    As at 30 June 2020, the buildings and the machinery and equipment with carrying amount of 63,897,336 (cost 222,889,130) are temporarily idle for the reason of products update (31 December 2019: carrying amount of 73,945,969 (cost: 229,171,949)). The management planned to reallocate these assets among the Group or upgrade. The detailed analysis of these assets is as follows:
    30 June 2020

			Accumulated	Provision for	Carrying
	Cost	depreciation	impairment	amount
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Machinery and equipment	195,757,537		(130,070,996)	(6,135,236)	59,551,305
Buildings	27,131,593		(12,863,964)	(9,921,598)	4,346,031

	222,889,130		(142,934,960)	(16,056,834)	63,897,336
31 December 2019

			Accumulated	Provision for	Carrying
	Cost	depreciation	impairment	amount
Machinery and equipment	202,425,243		(125,632,434)	(7,207,498)	69,585,311
Buildings	26,746,706		(12,485,423)	(9,900,625)	4,360,658

	229,171,949		(138,117,857)	(17,108,123)	73,945,969

Provision for impairment
According to the accounting policies mentioned in Note 2(18), the Group performs impairment test on fixed assets with signs of impairment on the balance sheet date, and made provision for impairment of fixed assets of 1,538,581 for the 6 months ended 30 June 2020.

46Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd)

Fixed assets (Cont'd)
1. Fixed assets (Cont'd)
2. 1. Fixed assets without ownership certificates
    The ownership certificates of the Group's certain buildings have not been obtained. The analysis is as follows:

	30 June	31 December
Reason	2020		2019
	Carrying amount	Carrying amount
	(unaudited)
In the application process	459,871,000	536,747,000
Unable to obtain	87,654,000	89,578,000
	547,525,000		626,325,000

Per consultation with the Company's legal adviser, the Company's directors are of the view that unable to obtain the building ownership certificates will not prevent the Group from legal possession of such facilities, there is no legal restriction for the Group to apply for and obtain the building ownership certificates, and there are no significant adverse impact on the operations of the Group, therefore, no provision for fixed assets impairment is provided. In addition, certain buildings of the Group are still located on parcels of allocated land owned by certain local municipal governments (Note 4 (14)).

Reason

Partial buildings of Shenzhen Asahi Partial buildings of Yangzhou Company Partial buildings of Immense Brewery Company Partial buildings of Xiamen Company

Partial buildings of Wuwei Company Partial buildings of Luzhou Company Partial buildings of Sanshui Company Partial buildings of Suizhou Company Partial buildings of Zhangjiakou Company Partial buildings of Langfang Company Partial buildings of Chenzhou Company Partial buildings of Shaoguan Company Partial buildings of Five Star Company Partial buildings of Wuhu Company Partial buildings of San Ring Company Partial buildings of Xuecheng Company Partial buildings of Zhangjiakou Company Partial buildings of Chenzhou Company Partial buildings of No.1 Factory Partial buildings of Yangzhou Company

In the application process In the application process In the application process In the application process In the application process In the application process In the application process In the application process In the application process In the application process In the application process

Temporary buildings, unable to obtain Temporary buildings, unable to obtain Temporary buildings, unable to obtain Temporary buildings, unable to obtain Temporary buildings, unable to obtain Temporary buildings, unable to obtain Temporary buildings, unable to obtain

Lack of document, unable to obtain Lack of document, unable to obtain

(b) Fixed assets pending for disposal
		30 June	31 December
		2020		2019
		(unaudited)
Machinery, equipment and buildings	1,065,518		552,068

Interim Report 2020 47

4. Notes to the consolidated financial statements (Cont'd) (12) Construction in progress

	30 June 2020 (unaudited)			31 December 2019
	Ending	Provision						Provision
	for	Carrying	Ending		for	Carrying
	balance	impairment	amount	balance		impairment	amount
Relocation project of Dezhou	98,940,503		-		98,940,503
Company				87,230,868	-		87,230,868
Production line improvement of	57,312,672		-	57,312,672
No. 1 Factory			15,310,982	-	15,310,982
Relocation project of Xi'an	42,191,943	-	42,191,943
Company	3,155,194	-	3,155,194
Building project of ShanXi Sales	32,459,744	-	32,459,744
Company	32,388,057	-	32,388,057
Production line improvement of	29,649,761	-	29,649,761
Heze Company	-	-	-
Production line improvement of	18,118,319	-	18,118,319
Kunshan Company	475,558	-	475,558
Relocation project of Langfang	8,339,599	-	8,339,599
Company	7,798,583	-	7,798,583
Production line improvement of	6,166,613	-	6,166,613
Shenzhen Asahi	-	-	-
Production line improvement of	6,044,354	-	6,044,354
Chenzhou Company	4,736	-	4,736
Production line improvement of	3,912,530	-	3,912,530
No. 5 Factory	4,589,025	-	4,589,025
Production line improvement of	3,836,023	-	3,836,023
Jieyang Company	2,669,455	-	2,669,455
Production line improvement of	3,815,473	-	3,815,473
No. 4 Factory	-	-	-
Production line improvement of	3,699,978	-	3,699,978
No. 2 Factory	5,654,908	-	5,654,908
Production line improvement of	3,140,967	-	3,140,967
Hangzhou Company	2,914,644	-	2,914,644
Production line improvement of	2,149,414	-	2,149,414
Zhuhai Company	1,323,949	-	1,323,949
Production line improvement of	1,965,320	-	1,965,320
Jinan Company	-	-	-
Production line improvement of	1,865,595	-	1,865,595
No. 3 Factory	2,593,102	-	2,593,102
Production line improvement of	1,648,712	-	1,648,712
Yulin Company	-	-	-
Production line improvement of	1,642,342	-	1,642,342
Three Ring Company	-	-	-
Production line improvement of	1,557,798	-	1,557,798
Shijiazhuang Company	-	-	-
Production line improvement of	1,016,372	-	1,016,372
Minhang Company	-	-	-
Other projects	15,085,631	-	15,085,631	12,884,781	-	12,884,781

	344,559,663		-	344,559,663		178,993,842	-	178,993,842

48Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd)

Construction in progress (Cont'd)
1. Movement in significant construction in progress 30 June 2020

						Increase in
				Increase in	the current
				period -
				the current	Transfer			30 June	Expenditures
		31 December		period -	from fixed	Transfer to	percentage	Completion	Source
Name	Budget	2019		Purchase	assets	fixed assets	2020	of budget	percentage	of funds
				(unaudited)	(unaudited)	(unaudited)	(unaudited)
Relocation project of Dezhou										98,940,503
Company	212,110,000	87,230,868	93,506,797	-	(81,797,162)	85%	85%	Self-funding
Production line improvement of										57,312,672
No. 1 Factory	151,285,385	15,310,982	54,706,423	2,414,977	(15,119,710)	62%	62%	Self-funding
Relocation project of Xi'an										42,191,943
Company	500,606,250	3,155,194	41,753,841	-	(2,717,092)	9%	9%	Self-funding
Building project of ShanXi										32,459,744
Sales Company	36,367,720	32,388,057	945,758	-	(874,071)	92%	92%	Self-funding
Production line improvement of										29,649,761
Heze Company	57,938,780	-	29,649,761	-	-	93%	51%	Self-funding
Production line improvement										18,118,319
of Kunshan Company	55,230,550	475,558	16,491,575	8,727,719	(7,576,533)	66%	46%	Self-funding
Relocation project of										8,339,599
Langfang Company	250,850,000	7,798,583	2,455,814	-	(1,914,798)	91%	91%	Self-funding
Production line improvement of										6,166,613
Shenzhen Asahi	21,814,645	-	8,494,832	-	(2,328,219)	47%	39%	Self-funding
Production line improvement of										6,044,354
Chenzhou Company	58,527,225	4,736	27,872,950	5,966,817	(27,800,149)	72%	58%	Self-funding
Production line improvement of										3,912,530
No. 5 Factory	52,527,263	4,589,025	43,029,361	-	(43,705,856)	91%	82%	Self-funding
Production line improvement of										3,836,023
Jieyang Company	8,416,750	2,669,455	1,166,568	-	-	67%	52%	Self-funding
Production line improvement of										3,815,473
No. 4 Factory	9,334,000	-	4,829,334	-	(1,013,861)	52%	52%	Self-funding
Production line improvement of										3,699,978
No. 2 Factory	95,330,230	5,654,908	10,319,065	7,469,960	(19,743,955)	79%	79%	Self-funding
Production line improvement of										3,140,967
Hangzhou Company	9,538,504	2,914,644	934,451	30,251	(738,379)	95%	92%	Self-funding
Production line improvement of										2,149,414
Zhuhai Company	16,197,810	1,323,949	6,374,423	307,858	(5,856,816)	73%	72%	Self-funding
Production line improvement of										1,965,320
Jinan Company	4,637,092	-	3,953,373	-	(1,988,053)	90%	85%	Self-funding
Production line improvement of										1,865,595
No. 3 Factory	154,331,742	2,593,102	91,266,072	-	(91,993,579)	63%	61%	Self-funding
Production line improvement of										1,648,712
Yulin Company	6,515,220	-	3,409,297	2,076,095	(3,836,680)	87%	84%	Self-funding
Production line improvement of										1,642,342
Three Ring Company	7,801,529	-	5,511,390	284,529	(4,153,577)	74%	74%	Self-funding
Production line improvement of										1,557,798
Shijiazhuang Company	11,846,802	-	4,818,799	5,989,471	(9,250,472)	91%	91%	Self-funding
Production line improvement of										1,016,372
Minhang Company	3,836,000	-	1,016,372	-	-	26%	26%	Self-funding
Other projects		12,884,781		129,239,661	30,357,311		(157,396,122)	15,085,631

		178,993,842		581,745,917	63,624,988		(479,805,084)	344,559,663

Interim Report 2020 49

4. Notes to the consolidated financial statements (Cont'd)

Construction in progress (Cont'd)
1. Movement in significant construction in progress (Cont'd) 31 December 2019

						Increase in
				Increase in	the current
				year -
				the current	Transfer					Expenditures
		31 December		year -	from fixed	Transfer to	31 December	percentage	Completion	Source
Name	Budget	2018		Purchase	assets	fixed assets	2019		of budget	percentage	of funds
Relocation project of Dezhou
Company	212,110,000	2,062,286	85,168,582	-	-	87,230,868	47%	41%	Self-funding
Building project of ShanXi Sales
Company	36,367,720	29,465,111	2,922,946	-	-	32,388,057	89%	89%	Self-funding
Production line improvement of
No. 1 Factory	230,143,534	17,771,040	44,968,867	13,573,396	(61,002,321)	15,310,982	60%	52%	Self-funding
Relocation project of Langfang
Company	250,850,000	137,069,038	47,582,183	609,325	(177,461,963)	7,798,583	82%	78%	Self-funding
Production line improvement of
No. 2 Factory	106,601,344	4,479,371	21,661,901	12,185,077	(32,671,441)	5,654,908	88%	88%	Self-funding
Production line improvement of
No. 5 Factory	36,147,856	5,610,537	27,093,049	1,693,127	(29,807,688)	4,589,025	99%	99%	Self-funding
Relocation project of Xi'an
Company	500,606,250	-	3,406,964	-	(251,770)	3,155,194	1%	1%	Self-funding
Production line improvement of
Hangzhou Company	9,538,504	-	5,490,778	2,367,432	(4,943,566)	2,914,644	82%	82%	Self-funding
Production line improvement of
Jieyang Company	8,416,750	338,462	2,831,604	-	(500,611)	2,669,455	53%	38%	Self-funding
Production line improvement of
No. 3 Factory	68,194,747	1,749,999	57,820,586	6,314,666	(63,292,149)	2,593,102	97%	97%	Self-funding
Production line improvement of
New Songjiang Company	15,667,898	-	3,310,871	2,669,425	(4,594,455)	1,385,841	38%	38%	Self-funding
Production line improvement
Zhuhai Company	16,197,810	-	4,954,981	-	(3,631,032)	1,323,949	31%	31%	Self-funding
Production line improvement of
Wuwei Company	33,163,105	2,350,068	24,289,042	3,096,682	(28,538,431)	1,197,361	90%	90%	Self-funding
Zhangjiakou Company New Plant
Project	235,610,000	151,363,810	67,185,114	-	(218,464,457)	84,467	93%	93%	Self-funding
Other projects		27,631,572		266,672,451	164,633,151		(448,239,768)	10,697,406

		379,891,294		665,359,919	207,142,281		(1,073,399,652)	178,993,842

For the six months ended 30 June 2020, there are no new increased borrowing costs capitalised (For the six months ended 30 June 2019: nil).

Provision for impairment of construction in progress
For the six months ended 30 June 2020, the management has assessed that there is no impairment risk on construction in progress and did not recognise provision for impairment of construction in progress. (For the six months ended 30 June 2019: nil)

50Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd)

Right-of-useassets 30 June 2020

			Land use	Machinery and
		Buildings	rights	equipment	Others	Total
Original cost
31	December 2019	75,792,267	9,097,754	3,677,046	1,259,170	89,826,237
Increase in the current period and renewal
	(unaudited)	71,143,502	-	-	585,897	71,729,399
Decrease in the current period (unaudited)
	Lease change	(254,133)	(49,539)	-	(150,475)	(454,147)
	Lease expiration	(5,731,948)	-	-	(35,331)	(5,767,279)
30	June 2020 (unaudited)	140,949,688	9,048,215	3,677,046	1,659,261	155,334,210
Accumulated depreciation
31	December 2019	(20,913,741)	(1,115,220)	(720,447)	(106,394)	(22,855,802)
Accrual (unaudited)	(15,703,124)	(555,271)	(360,224)	(296,378)	(16,914,997)
Decrease in the current period (unaudited)	5,731,948	-	-	35,331	5,767,279
30	June 2020 (unaudited)	(30,884,917)	(1,670,491)	(1,080,671)	(367,441)	(34,003,520)
Carrying amount
30	June 2020 (unaudited)	110,064,771	7,377,724	2,596,375	1,291,820	121,330,690
31	December 2019	54,878,526	7,982,534	2,956,599	1,152,776	66,970,435
31 December 2019
			Land use	Machinery and
		Buildings	rights	equipments	Others	Total
Original cost
31 December 2018	-	-	-	-	-
Changes in accounting policies	48,312,421	7,042,220	3,677,046	42,413	59,074,100
1 January 2019	48,312,421	7,042,220	3,677,046	42,413	59,074,100
Increase in the current year and renewal	27,479,846	2,055,534	-	1,216,757	30,752,137
31	December 2019	75,792,267	9,097,754	3,677,046	1,259,170	89,826,237
Accumulated depreciation
31 December 2018	-	-	-	-	-
1 January 2019	-	-	-	-	-
Accrual	(20,913,741)	(1,115,220)	(720,447)	(106,394)	(22,855,802)
31	December 2019	(20,913,741)	(1,115,220)	(720,447)	(106,394)	(22,855,802)
Carrying amount
31	December 2019	54,878,526	7,982,534	2,956,599	1,152,776	66,970,435
31 December 2018	-	-	-	-	-

According to the notice of "Regulations on accounting treatment of rent reduction related to new pneumonia epidemic situation" (the "notice") issued by the Ministry of Finance on 19 June 2020, the Group adopts the simplified method to deal with the rent reduction meeting the requirements of the notice. For the six months ended 30 June 2020, the relevant rent reduction with simplified treatment has an impact on the current profit and loss of about 620,000.

Interim Report 2020 51

4. Notes to the consolidated financial statements (Cont'd)

Intangible assets 30 June 2020

		Land use		Technology	Marketing	Software and
		rights	Trademarks	known-how	networks	others	Total
Original Cost
31	December 2019	2,624,663,664	449,743,612	18,629,100	974,935,670	486,832,730	4,554,804,776
Increase in the current period
	(unaudited)
	Purchase	-	-	-	-	5,041,249	5,041,249
	Transfer from investment
	properties	2,587,486	-	-	-	-	2,587,486
Decrease in the current
	period - Disposal
	(unaudited)	(278,806)	-	-	-	(10,186)	(288,992)
30	June 2020 (unaudited)	2,626,972,344	449,743,612	18,629,100	974,935,670	491,863,793	4,562,144,519
Accumulated amortisation
31	December 2019	(541,417,212)	(342,358,212)	(18,629,100)	(822,501,782)	(271,326,015)	(1,996,232,321)
Increase in the current period
	(unaudited)
	Purchase	(31,064,630)	(12,028,293)	-	(38,933,605)	(19,936,781)	(101,963,309)
	Transfer from investment
	properties	(1,308,014)	-	-	-	-	(1,308,014)
Decrease in the current
	period - Disposal
	(unaudited)	87,942	-	-	-	9,680	97,622
30	June 2020 (unaudited)	(573,701,914)	(354,386,505)	(18,629,100)	(861,435,387)	(291,253,116)	(2,099,406,022)
Carrying amount
30	June 2020 (unaudited)	2,053,270,430	95,357,107	-	113,500,283	200,610,677	2,462,738,497
31	December 2019	2,083,246,452	107,385,400	-	152,433,888	215,506,715	2,558,572,455

52Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd)

Intangible assets (Cont'd) 31 December 2019

	Land use		Technology	Marketing	Software and
	rights	Trademarks	known-how	networks	others	Total
Original Cost
31 December 2018	2,528,519,735	449,743,612	18,629,100	974,935,670	432,612,387	4,404,440,504
Increase in the current year
Purchase	138,413,458	-	-	-	54,253,068	192,666,526
Decrease in the current year
- Disposal	(33,535,077)	-	-	-	(32,725)	(33,567,802)
Transfer into Investment
property	(8,734,452)	-	-	-	-	(8,734,452)
31 December 2019	2,624,663,664	449,743,612	18,629,100	974,935,670	486,832,730	4,554,804,776
Accumulated amortisation
31 December 2018	(500,053,820)	(317,931,829)	(18,629,100)	(739,090,157)	(229,050,083)	(1,804,754,989)
Increase in the current year
Accrual	(56,658,427)	(24,426,383)	-	(83,411,625)	(42,308,657)	(206,805,092)
Decrease in the current year
- Disposal	12,792,805	-	-	-	32,725	12,825,530
Transfer into Investment
property	2,502,230	-	-	-	-	2,502,230
31 December 2019	(541,417,212)	(342,358,212)	(18,629,100)	(822,501,782)	(271,326,015)	(1,996,232,321)
Carrying amount
31 December 2019	2,083,246,452	107,385,400	-	152,433,888	215,506,715	2,558,572,455
31 December 2018	2,028,465,915	131,811,783	-	235,845,513	203,562,304	2,599,685,515

For the six months ended 30 June 2020, the amortisation amount of intangible assets is 101,963,309 (For six months ended 30 June 2019: 106,217,122).

As at 30 June 2020, there are no intangible assets pledged as collateral for borrowings (31 December 2019: nil).

As at 30 June 2020, the relevant legal procedures for certificates application of the Group's land use rights with carrying amount of approximately 1,974,305 (31 December 2019: 2,011,000) are still in process. In addition, as at 30 June 2020, buildings of certain subsidiaries of the Group were located on parcels of allocated land owned by certain local municipal governments. Most of the relevant local governments have undertaken to implement transfer procedures for these lands. Carrying amount of the buildings constructed thereon are approximately 31,687,000 as at 30 June 2020 (31 December 2019: 31,976,000). The Company's directors consider that there is no significant impact on the operations of the Group.

Interim Report 2020 53

4. Notes to the consolidated financial statements (Cont'd)

Goodwill
30 June 2020

			Increase in the	Decrease in the	30 June 2020
	31 December 2019	current period	current period
			(unaudited)	(unaudited)	(unaudited)
Goodwill -
Shandong Region - Immense						958,868,617
Brewery Company	958,868,617		-	-
Shandong Region - Lulansa						227,026,482
Brewery	227,026,482		-	-
South China Region - Nanning						130,895,740
Company	130,895,740	-	-
Southeast China Region -
Fuzhou Company/Xiamen
Company/Zhangzhou
Company/Dongnan Sales						114,031,330
Company	114,031,330	-	-
North China Region - Three
Ring Company/Beifang Sales						24,642,782
Company	24,642,782	-	-
Other Regions	49,049,770		-	-	49,049,770

	1,504,514,721		-	-	1,504,514,721
Less: Provision for impairment -
Shandong Region - Immense						-
Brewery Company	-		-	-
Shandong Region - Lulansa						-
Brewery	-	-	-
South China Region -						(130,895,740)
Nanning Company	(130,895,740)	-	-
Southeast China Region -
Fuzhou Company/Xiamen
Company/Zhangzhou
Company/Dongnan Sales						-
Company	-	-	-
North China Region - Three
Ring Company/Beifang						(24,642,782)
Sales Company	(24,642,782)	-	-
Other Regions	(41,872,217)	-	-	(41,872,217)

	(197,410,739)	-	-	(197,410,739)

	1,307,103,982		-	-	1,307,103,982

54Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd)

Goodwill (Cont'd) 31 December 2019

			Increase in the	Decrease in the
	31 December 2018	current year	current year	31 December 2019
Goodwill -
Shandong Region - Immense
Brewery Company	958,868,617		-	-	958,868,617
Shandong Region - Lulansa
Brewery	227,026,482		-	-	227,026,482
South China Region - Nanning
Company	130,895,740	-	-	130,895,740
Southeast China Region - Fuzhou
Company/Xiamen Company/
Zhangzhou Company/Dongnan
Sales Company	114,031,330	-	-	114,031,330
North China Region - Three
Ring Company/Beifang Sales
Company	24,642,782	-	-	24,642,782
Other Regions	49,049,770		-	-	49,049,770

	1,504,514,721		-	-		1,504,514,721
Less: Provision for impairment -
Shandong Region - Immense
Brewery Company	-		-	-	-
Shandong Region - Lulansa
Brewery	-	-	-	-
South China Region -
Nanning Company	(130,895,740)	-	-	(130,895,740)
Southeast China Region -
Fuzhou Company/Xiamen
Company/Zhangzhou
Company/Dongnan Sales
Company	-	-	-	-
North China Region - Three
Ring Company/Beifang
Sales Company	(24,642,782)	-	-	(24,642,782)
Other Regions	(41,872,217)	-	-	(41,872,217)

	(197,410,739)	-	-		(197,410,739)

	1,307,103,982		-	-		1,307,103,982

Interim Report 2020 55

4. Notes to the consolidated financial statements (Cont'd)

Goodwill (Cont'd)
All goodwill of the Group has been allocated to relevant group of assets and group of asset combinations on purchase date. The goodwill allocation are summarised by operating segments as follows:

	30 June	31 December
	2020		2019
	(unaudited)
Shandong Region	1,185,895,099		1,185,895,099
South China Region	130,895,740	130,895,740
Southeast China Region	114,031,330	114,031,330
North China Region	24,642,782	24,642,782
Other Regions	49,049,770	49,049,770
	1,504,514,721		1,504,514,721

The recoverable amount of asset group and asset group portfolio is based on the five-year budget approved by the management, and then estimated based on the fixed growth rate and calculated by cash flow forecasting method.

(16) Long-term prepaid expenses
	30 June 2020
		31 December	Increase in the	Amortisation
		in the	30 June
		2019	current period	current period	2020
				(unaudited)	(unaudited)	(unaudited)
	Decoration and renovation expenses	24,953,149		10,830,675	(5,146,595)	30,637,229
Factory hardening expenses	3,517,689		665,128		(745,475)	3,437,342
Gardening expenses	1,777,987		-		(627,218)	1,150,769
Others	5,006,563		-		(362,497)	4,644,066

		35,255,388		11,495,803	(6,881,785)	39,869,406
	31 December 2019

		31 December	Increase in the	Amortisation
		in the	31 December
		2018		current year	current year	2019
	Decoration and renovation expenses	21,871,399		11,583,181	(8,501,431)	24,953,149
Factory hardening expenses	4,721,877		1,312,686		(2,516,874)	3,517,689
Gardening expenses	1,496,032		1,364,525		(1,082,570)	1,777,987
Others	5,018,111		645,267		(656,815)	5,006,563

		33,107,419		14,905,659	(12,757,690)	35,255,388

56Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd)

Deferred tax assets and deferred tax liabilities
1. Deferred tax assets without offsetting

		30 June 2020 (unaudited)	31 December 2019
		Deductible				Deductible
		temporary				temporary
		differences and	Deferred	differences and	Deferred
		deductible losses	tax assets	deductible losses	tax assets
Deductible losses	4,316,044		1,079,011		13,396,668		3,349,167
	Provision for asset impairment	55,991,780		13,997,945	56,044,968	14,011,242
	Deferred income	999,166,732	249,791,683	1,072,795,800	268,198,950
	Elimination of intra-group	49,388,864	12,347,216
	unrealised profit	249,124,220	62,281,055
	Accruals of expenses	6,190,823,196	1,547,705,799	4,820,532,160	1,205,133,040

		7,299,686,616		1,824,921,654		6,211,893,816		1,552,973,454
Including:

	Expected to reverse within one			1,471,421,107
	year (inclusive)						1,171,074,254
	Expected to reverse after one			353,500,547
	year						381,899,200
				1,824,921,654				1,552,973,454
(b) Deferred tax liabilities without offsetting

		30 June 2020 (unaudited)		31 December 2019
		Taxable temporary	Deferred tax	Taxable temporary	Deferred tax
		differences	liabilities	differences	liabilities
Business combinations not under	547,006,624		136,751,656
	common control				600,029,908		150,007,477
Depreciation of fixed assets	711,260,467		177,815,117		495,297,448		123,824,362
	Changes in fair value of wealth	24,597,160		6,149,290
	management products			24,589,764		6,147,441
	The difference between carrying
	amount and tax base resulted
	from government grants
	charged in profit or loss in the	8,066,576		2,016,644
	current period			7,976,488		1,994,122

		1,290,930,827		322,732,707		1,127,893,608		281,973,402
Including:

	Expected to reverse within one			51,334,834
	year (inclusive)							39,386,009
	Expected to reverse after one			271,397,873
	year							242,587,393
				322,732,707				281,973,402

Interim Report 2020 57

4. Notes to the consolidated financial statements (Cont'd)

Deferred tax assets and deferred tax liabilities (Cont'd)
1. Deductible temporary differences and deductible losses that are not recognised as deferred tax assets are analysed as follows:

	30 June	31 December
	2020	2019
	(unaudited)
Deductible temporary differences	1,271,192,171		1,226,124,839
Deductible losses	2,450,488,807		2,550,471,144
	3,721,680,978		3,776,595,983

Given the loss-making position of certain subsidiaries, whether it is probable that sufficient future taxable incomes will be available against such deductible losses is highly uncertain. Therefore, the Group has not recognised deferred tax assets of approximately 612,622,000 (31 December 2019: 637,618,000) arising from the accumulated losses that can set off against taxable incomes under tax laws in the period from 2020 to 2025. In addition, given the loss-making position of certain subsidiaries, whether it is probable that sufficient future taxable incomes will be available against temporary differences is highly uncertain or the possibility of obtaining approval on the losses from tax authorities is low. Therefore, the Group also has not recognised deferred tax assets of approximately 317,798,000 (31 December 2019: 306,531,000) arising from the deductible temporary differences resulting from the impact of provision for impairment losses.

Deductible losses that are not recognised as deferred tax assets will be overdue in the following years:

	30 June	31 December
	2020		2019
	(unaudited)
2020	448,061,516		574,266,958
2021	513,603,802		529,147,107
2022	512,962,199		544,822,721
2023	584,073,251		609,128,474
2024	308,844,491		293,105,884
2025	82,943,548		-
	2,450,488,807		2,550,471,144

(e) The net balances of deferred tax assets and liabilities after offsetting are as follows:

	30 June 2020 (unaudited)	31 December 2019
	Offsetting				Offsetting
	amount		Net amounts	amount	Net amounts
Deferred tax assets	153,638,784	1,671,282,870	97,937,922	1,455,035,532
Deferred tax liabilities	153,638,784	169,093,923	97,937,922	184,035,480

58Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd)

Provision for asset impairment and loss 30 June 2020

			Increase	Decrease in the current period
			(unaudited)				30 June
	31 December	in the current

	2019		period	Reversal	Write-off		Others	2020
			(unaudited)						(unaudited)	(unaudited)
Provision for bad debt of accounts receivable	185,971,013		378,369	(4,451)	(121,580)	1,710	186,225,061
Including: Provision for bad debt												26,251,710
recognised individually	26,251,710		-		-		-		-
Provision for bad debt												159,973,351
recognised on grouping basis	159,719,303		378,369		(4,451)	(121,580)	1,710
Provision for bad debt of other receivables	73,364,846		201,338		(1,030,985)	-		-		72,535,199
Provision for bad debt of other current asset	228,257		-		(55,623)	-		-		172,634

Subtotal	259,564,116		579,707	(1,091,059)	(121,580)	1,710	258,932,894
Provision for impairment of inventory	3,538,702		-		-		-			-		3,538,702
Provision for impairment of long-term												1,220,000
investment	1,220,000		-		-		-		-
Provision for impairment of investment												1,706,224
properties	2,349,349		-		-		-		(643,125)
Provision for impairment of fixed assets	469,369,758		1,538,581		-		(30,322,197)	303,028		440,889,170
Provision for impairment of goodwill	197,410,739		-		-		-			-		197,410,739
Subtotal	673,888,548		1,538,581	-	(30,322,197)	(340,097)	644,764,835
											903,697,729
	933,452,664		2,118,288		(1,091,059)	(30,443,777)	(338,387)
31 December 2019

			Increase	Decrease in the current year
	31 December	in the current								31 December

	2018		year	Reversal	Write-off		Others	2019
Provision for bad debt of accounts receivable	191,061,189		41,756	(5,116,804)	(16,264)	1,136	185,971,013
Including: Provision for bad debt
recognized individually	26,751,710		-		(500,000)	-		-		26,251,710
Provision for bad debt
recognized on grouping basis	164,309,479		41,756		(4,616,804)	(16,264)	1,136		159,719,303
Provision for bad debt of other receivables	77,142,452		377,983		(2,466,905)	(1,688,684)	-		73,364,846
Provision for bad debt of other current asset	155,498		228,257		(155,498)	-		-		228,257

Subtotal	268,359,139		647,996	(7,739,207)	(1,704,948)	1,136	259,564,116

Provisions for impairment of inventory	7,304,055		-		(288,110)	(3,477,243)	-	3,538,702
Provisions for impairment of long-term
investment	1,220,000		-		-		-		-		1,220,000
Provisions for impairment of investment
properties	1,578,536		-		-		-		770,813		2,349,349
Provisions for impairment of fixed assets	434,501,719		121,339,530		-		(82,263,982)	(4,207,509)	469,369,758
Provisions for impairment of goodwill	197,410,739		-		-		-			-		197,410,739
Subtotal	642,015,049		121,339,530		(288,110)	(85,741,225)	(3,436,696)	673,888,548

	910,374,188		121,987,526		(8,027,317)	(87,446,173)	(3,435,560)	933,452,664

Interim Report 2020 59

4. Notes to the consolidated financial statements (Cont'd) (19) Other non-current assets

			30 June	31 December
			2020		2019
			(unaudited)
	Prepayments for construction and equipment	119,000,441	72,852,914
(20) Short-term borrowings

			30 June	31 December
		Currency	2020		2019
			(unaudited)
	Unsecured loan (i)	HKD	274,020,000	268,740,000
	Interest payable	HKD	1,625,686	2,166,631

			275,645,686		270,906,631

As at 30 June 2020, short-term loan represents the borrowing from China Construction Bank (Asia) Co., Ltd., with RMB274,020,000 (Original foreign currency: HKD300,000,000) to Hong Kong Company, a subsidiary of the Company (As at 31 December 2019: the borrowing from Bank of China Co. Ltd., with RMB268,740,000 (Original foreign currency: HKD300,000,000)).

As at 30 June 2020, the interest rate of short-term borrowings is 2.67% (31 December 2019: 3.50%).

(21) Notes payable
		30 June	31 December
		2020		2019
		(unaudited)
	Trade acceptance notes	48,815,299		100,758,461
	Bank acceptance notes	219,247,718		120,066,862
		268,063,017		220,825,323

Other cash balances of 4,950,000 (31 December 2019: 6,630,000) are pledged as collateral for the bank acceptance notes of the Group (Note 4(1)(iii)).

60Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd) (22) Accounts payable

	30 June	31 December
	2020		2019
	(unaudited)
Payable for materials purchase	3,225,577,294		2,013,364,203
Payable for beer purchase due to related parties (Note 7(5))	153,203,765		102,848,774
Payable for promotional goods	123,330,816		42,206,864
Others	6,218,274		8,758,340
	3,508,330,149		2,167,178,181

As at 30 June 2020, accounts payable over 1 year with carrying amount of 12,798,554 (31 December 2019: 14,011,253) are mainly payables for materials purchase, for which has not yet been completed.
The ageing of accounts payable based on their recording dates is analysed below:

			30 June	31 December
			2020	2019
			(unaudited)
	Within 1 year	3,495,531,595		2,153,166,928
	1 to 2 years	3,950,197		4,998,759
	2 to 3 years	2,071,821		2,245,977
	Over 3 years	6,776,536		6,766,517
			3,508,330,149		2,167,178,181
(23) Contract liabilities

			30 June	31 December
			2020		2019
			(unaudited)
	Dealer contract liabilities	4,910,305,764		6,275,719,703

The majority of the opening balance of contract liabilities of the Group has been transferred to revenue in the current period.

Interim Report 2020 61

4. Notes to the consolidated financial statements (Cont'd) (24) Employee benefits payable

								30 June	31 December
							2020			2019
							(unaudited)
Short-term employee benefits (a)			1,221,229,813				1,160,930,670
Defined contribution plans (b)						22,161,292			23,671,162
Termination benefits (c)						248,208,273			250,713,615
Supplemental retirement benefits (Note 4(32))				18,326,018				22,959,425
Other retirement benefits (Note 4(32))						390,914			390,914
				1,510,316,310				1,458,665,786
(a) Short-term employee benefits

	30 June 2020
		31 December	Increase in the		Decrease in the		30 June
		2019		current period		current period	2020
				(unaudited)		(unaudited)		(unaudited)
	Wages and salaries, bonus,										844,549,313
	allowances and subsidies	807,442,369		1,555,004,099	(1,517,897,155)
	Staff welfare	1,036,893		111,009,443	(110,949,561)	1,096,775
	Social security contributions	10,672,749		88,351,179	(87,917,613)	11,106,315
	Including: Medical insurance	7,264,574	82,805,445	(82,377,715)	7,692,304
	Work injury insurance	1,700,401	2,242,827	(2,271,785)	1,671,443
	Maternity insurance	1,707,774	3,302,907	(3,268,113)	1,742,568
	Housing funds	16,850,657	137,500,938	(136,373,522)	17,978,073
	Labour union funds and employee										346,499,337
	education funds	324,928,002	55,279,712	(33,708,377)

		1,160,930,670		1,947,145,371	(1,886,846,228)	1,221,229,813
31 December 2019

		31 December	Increase in the		Decrease in the		31 December
		2018		current year		current year	2019
	Wages and salaries, bonus,
	allowances and subsidies	703,999,357		3,447,969,313	(3,344,526,301)	807,442,369
	Staff welfare	871,037		280,558,162	(280,392,306)	1,036,893
	Social security contributions	12,725,361		255,081,357	(257,133,969)	10,672,749
	Including: Medical insurance	9,160,085	218,244,711	(220,140,222)	7,264,574
	Work injury insurance	1,765,883	11,491,750	(11,557,232)	1,700,401
	Maternity insurance	1,799,393	25,344,896	(25,436,515)	1,707,774
	Housing funds	16,948,486	266,156,357	(266,254,186)	16,850,657
	Labour union funds and employee
	education funds	299,137,024	121,150,090	(95,359,112)	324,928,002

		1,033,681,265		4,370,915,279	(4,243,665,874)	1,160,930,670

62Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd)

Employee benefits payable (Cont'd)
1. Defined contribution plans 30 June 2020

		31 December	Increase in the		Decrease in the	30 June
		2019		current period		current period	2020
				(unaudited)		(unaudited)	(unaudited)
Basic pension	19,261,897	81,069,811	(82,251,215)	18,080,493
Unemployment insurance	4,409,265	2,978,098	(3,306,564)	4,080,799

		23,671,162		84,047,909	(85,557,779)	22,161,292
31 December 2019

		31 December	Increase in the		Decrease in the	31 December
		2018		current year		current year	2019
Basic pension	21,020,996	448,615,915	(450,375,014)	19,261,897
Unemployment insurance	4,469,431	16,747,851	(16,808,017)	4,409,265

		25,490,427		465,363,766	(467,183,031)	23,671,162
(c) Termination benefits

								30 June	31 December
							2020		2019
							(unaudited)
Early retirement benefits (Note 4(32))			127,219,638			123,371,385
Other termination benefits (i)					120,988,635			127,342,230
							248,208,273			250,713,615

1. For the six months ended 30 June 2020, the Group has paid other termination benefit of 11,069,869 due to termination of labor relationship.
Defined benefit plan

	30 June	31 December
	2020	2019
	(unaudited)
Supplementary retirement benefits (Note 4(32))	18,326,018		22,959,425

Interim Report 2020 63

4. Notes to the consolidated financial statements (Cont'd) (25) Taxes payable

	30 June	31 December
	2020		2019
	(unaudited)
Enterprise income tax payable	501,907,069		211,357,396
Unpaid VAT	294,862,854		87,811,500
Consumption tax payable (i)	279,048,560		148,495,951
City maintenance and construction tax payable	34,321,884		10,016,179
Education surcharge payable	26,217,737		8,377,748
Others	48,677,930		46,999,386
	1,185,036,034		513,058,160

1. As at 30 June 2020, the Company's individual subsidiaries have accumulated outstanding consumption tax balances from previous years amounting to approximately RMB41,883,000, and the local tax authorities have not yet required these subsidiaries to pay.
Other payables

	30 June	31 December
	2019	2019
	(unaudited)
Accruals for transportation expenses	940,561,443	319,194,913
Guarantee deposits	795,110,010	752,125,817
Payables for equipments and engineering construction	552,595,046	379,395,052
Accruals for advertising expenses	378,994,098	285,777,281
Dividends payable	362,060,942	-
Accruals for labour expenses	132,202,702	73,671,439
Compensation collected in advance for demolition project	106,216,173	106,216,173
Accruals for water, electricity and steam expenses	74,566,409	52,268,924
Accruals for general and administrative expenses	59,893,301	43,722,276
Withholding social expenses for staff	12,959,149	12,241,556
Absorbed deposits from related parties by Finance Company (i)	870,471	19,566,363
Others	446,098,930	380,677,707
	3,862,128,674		2,424,857,501

It represents the principal and interest of deposits absorbed from the Company's associates by Finance Company, a subsidiary of the Company.

As at 30 June 2020, other payables over 1 year with carrying amount of 549,187,882 (31 December 2019: 433,135,935) are mainly liabilities due to acquisition of subsidiaries and payables for equipment and engineering construction.

64Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd) (27) Current portion of non-current liabilities

			30 June	31 December
			2019		2019
			(unaudited)
	Current portion of long-term borrowings (note 4(28))	427,400		418,360
	Current portion of lease liabilities (note 4(29))	33,639,134		21,789,665
			34,066,534		22,208,025
(28) Long-term borrowings

			30 June	31 December
		Currency	2020		2019
			(unaudited)
	Guaranteed	DKK	427,400	627,540
	Less: Current portion of
	guaranteed Borrowing		(427,400)	(418,360)
	(Note 4(27))
			-		209,180

As at 30 June 2020, bank guaranteed borrowing of RMB427,400 (Original foreign currency: DKK400,000) (31 December 2019: RMB627,540 (Original foreign currency: DKK600,000)), is guaranteed by Beijing Development and Reform Commission. The principal amount shall be repaid twice annually based on the equal repayment of principal method, with the last repayment falling due on 1 April 2021. The amount due within one year amounted to 427,400 (31 December 2019: 418,360).

As at 30 June 2020 and 31 December 2019, the long-term borrowings are interest-free borrowings.

(29) Lease liabilities
		30 June	31 December
		2020		2019
		(unaudited)
	Lease liabilities	110,011,234		59,261,550
	Less: Current portion of lease liabilities (Note 4(27))	(33,639,134)	(21,789,665)
		76,372,100		37,471,885

As at 30 June 2020, the Group has no liabilities that will lead to potential cash outflow at the end of the term.

Interim Report 2020 65

4. Notes to the consolidated financial statements (Cont'd) (30) Long-term payables

	30 June	31 December
	2020		2019
	(unaudited)
Payables for specific projects	400,853,759		372,579,660

Payables for specific projects mainly represent the relocation compensation received by subsidiaries from the government. As the relocation has not yet been completed, the amount was temporarily accounted for as "payables for specific projects" in accordance with the requirements under No. 3 Interpretation of Accounting Standards for Business Enterprises issued by the Ministry of Finance.

(31) Deferred income
	30 June 2020
				Increase in	Decrease in	30 June
		31 December	the current	the current
		2019	period	period	2020		Reason
				(unaudited)	(unaudited)	(unaudited)
								2,585,669,190		Grants for relocation and
	Government grants	2,519,926,935	221,275,719		(155,533,464)		technology improvement projects

						Charged to	Charged to
						gains on
						other income	disposals of
		31 December	Increase in the	in the current	assets in the	30 June 2020	Related to
	Government grants items	2019	current period	period	current period	assets/income
				(unaudited)	(unaudited)	(unaudited)	(unaudited)
	Relocation projects
	Malt Factory relocation									380,815,829
	project	393,639,710	-		(12,823,881)	-		Assets
	Xi'an Company									210,304,292
	relocation project	176,686,902	35,606,382	(1,988,992)	-		Assets
	Dezhou Company									161,521,503
	relocation project	98,699,600	67,568,249	(4,746,346)	-		Assets/Income
	Tengzhou Company									145,112,053
	relocation project	150,441,211	-		(5,329,158)	-		Assets
	Suizhou Company									143,367,298
	relocation project	149,099,992	-		(5,732,694)	-		Assets
	Wuwei Company									129,040,560
	relocation project	134,427,971	-		(5,387,411)	-		Assets
	Weinan Company									127,069,604
	relocation project	132,885,544	-		(5,815,940)	-		Assets
	Heze Company									124,204,362
	relocation project	129,770,199	-		(5,565,837)	-		Assets
	Rizhao Company									121,469,628
	relocation project	126,703,263	-		(5,233,635)	-		Assets
	Suqian Company									111,405,234
	relocation project	116,180,374	-		(4,775,140)	-		Assets
	Gansu Nongken Company									103,380,437
	relocation project	109,197,434	-		(5,816,997)	-		Assets
	Zhuhai Company									100,283,281
	relocation project	105,598,119	-		(5,314,838)	-		Assets
	Xingkaihu Company									98,509,149
	relocation project	101,721,776	33,000		(3,245,627)	-		Assets/Income
Yangzhou Company									92,319,315
	relocation project	97,172,162		-		(4,852,847)	-		Assets

66Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd)

Deferred income (Cont'd) 30 June 2020 (Cont'd)

					Charged to	Charged to
					gains on
					other income	disposals of
	31 December	Increase in the	in the current	assets in the	30 June 2020	Related to
Government grants items	2019		current period	period	current period	assets/income
			(unaudited)	(unaudited)	(unaudited)	(unaudited)
Relocation projects
Fuzhou Company									80,383,079
relocation project	86,040,544		-		(5,657,465)	-		Assets
Hansi Baoji Company									45,806,332
relocation project	49,193,675		-		(3,387,343)	-		Assets
Harbin Company									44,503,034
relocation project	47,637,650		-		(3,134,616)	-		Assets
Langfang Company									42,552,117
relocation project	41,630,253		1,505,914		(584,050)	-		Assets
No. 3 Factory relocation									6,254,662
project	7,960,479		-		(1,705,817)	-		Assets
Pengcheng Company									4,951,702
relocation project	6,623,098		-		(1,671,396)	-		Income
Technology improvement
projects
Technology improvement
projects of Maan shan									19,879,976
Company	-		20,000,000	(120,024)	-		Assets
Technology improvement
projects of Shouguang									6,956,758
Company	7,246,624		-		(289,866)	-			Assets
Technology improvement									6,272,288
projects of Luzhou Company	6,834,645		-		(562,357)	-			Assets
Technology improvement
projects of Five Star									5,722,977
Company	6,259,274		-		(322,154)	(214,143)		Assets
Technology improvement
projects of Three Ring									5,320,000
Company	5,600,000		-		(280,000)	-			Assets
Other projects	232,676,436		96,562,174		(60,575,234)	(399,656)	268,263,720

	2,519,926,935		221,275,719		(154,919,665)	(613,799)	2,585,669,190

Interim Report 2020 67

4. Notes to the consolidated financial statements (Cont'd)

Deferred income (Cont'd) 31 December 2019

			Increase in	Decrease in
	31 December	the current	the current	31 December
	2018		year	year	2019		Reason
									Grants for relocation and technology
Government grants	2,343,747,145	542,738,567		(366,558,777)	2,519,926,935		improvement projects

							Charged to
					Charged to	gains on
					disposals of
	31 December	Increase in the	other income in	assets in the	31 December	Related to
Government grants items	2018	current year	the current year	current year	2019	assets/income
Relocation projects
Malt Factory relocation
project	408,842,128	10,228,702		(25,431,120)	-		393,639,710	Assets
Xi'an Company relocation
project	-	178,577,533	(1,890,631)	-	176,686,902	Assets
Tengzhou Company
relocation project	161,122,724	-	(10,656,013)	(25,500)	150,441,211	Assets
Suizhou Company
relocation project	150,824,841	10,044,878	(11,769,727)	-	149,099,992	Assets
Wuwei Company
relocation project	145,327,766	-	(10,899,795)	-	134,427,971	Assets
Weinan Company
relocation project	80,843,472	73,300,721	(21,258,649)	-	132,885,544	Assets
Heze Company
relocation project	96,418,152	43,440,000	(10,087,953)	-	129,770,199	Assets
Rizhao Company
relocation project	137,399,968	-	(10,696,705)	-	126,703,263	Assets
Suqian Company
relocation project	126,117,012	-	(9,936,638)	-	116,180,374	Assets
Gansu Nongken Company
relocation project	121,126,737	-	(11,929,303)	-	109,197,434	Assets
Zhuhai Company
relocation project	126,494,059	-	(12,145,399)	(8,750,541)	105,598,119	Assets
Xingkaihu Company
relocation project	108,147,567	92,333	(6,518,124)	-	101,721,776	Assets/Income
Dezhou Company
relocation project	17,609,154	83,954,612	(2,864,166)	-	98,699,600	Assets/Income
Yangzhou Company
relocation project	107,379,254	-	(10,207,092)	-	97,172,162	Assets
Fuzhou Company relocation
project	99,814,183	-	(12,792,086)	(981,553)	86,040,544	Assets
Hansi Baoji Company
relocation project	56,374,777	-	(7,181,102)	-	49,193,675	Assets
Harbin Company relocation
project	54,089,410	-	(6,451,760)	-	47,637,650	Assets
Langfang Company
relocation project	42,621,044	29,470,430	(30,461,221)	-	41,630,253	Assets/Income
No. 3 Factory relocation
project	11,372,112	-	(3,411,633)	-	7,960,479	Assets
Pengcheng Company
relocation project	10,059,872	-	(3,436,774)	-	6,623,098	Assets

68Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd)

Deferred income (Cont'd) 31 December 2019 (Cont'd)

							Charged to
					Charged to	gains on
					disposals of
	31 December	Increase in the	other income in	assets in the	31 December	Related to
Government grants items	2018		current year	the current year	current year	2019		assets/income
Technology improvement
projects
Technology improvement
projects of Shouguang
Company	6,171,429		1,573,200	(498,005)	-	7,246,624	Assets
Technology improvement
projects of Luzhou
Company	8,404,719		-		(1,172,432)	(397,642)	6,834,645		Assets
Technology improvement
projects of Five Star
Company	10,720,000		-		(1,024,286)	(3,436,440)	6,259,274		Assets
Technology improvement
projects of Three Ring
Company	6,160,000		-		(560,000)	-		5,600,000		Assets
Other projects	250,306,765		112,056,158		(129,235,540)	(450,947)	232,676,436

	2,343,747,145		542,738,567		(352,516,154)	(14,042,623)	2,519,926,935

(32) Long-term employee benefits payable
		30 June	31 December
		2020		2019
		(unaudited)
	Early retirement benefits (a)	599,043,755		646,095,319
	Supplemental retirement benefits (b)	350,380,481		340,479,962
	Other retirement benefits (c)	91,155,000		91,155,000
		1,040,579,236		1,077,730,281
	Less: Early retirement benefits within one year	(127,219,638)	(123,371,385)
	Supplemental retirement benefits within one year	(18,326,018)	(22,959,425)
	Other retirement benefits within one year	(390,914)	(390,914)

		(145,936,570)	(146,721,724)
		894,642,666		931,008,557

The above-mentioned benefits to be paid within one year are represented in employee benefits payable.

Interim Report 2020 69

4. Notes to the consolidated financial statements (Cont'd)

Long-termemployee benefits payable (Cont'd)
1. Early retirement benefits
  Some employees of the Group have retired before their statutory retirement age. As at the balance sheet date, the significant actuarial assumptions used in estimating the early retirement benefits payable by the Group are as follows:

	30 June	31 December
	2020	2019
	(unaudited)
Discount rate (yield-to-maturity of the government	2.18% - 2.82%
bond with the same term)	2.36% - 3.11%
Early retirement benefits charged to profit or loss for the current period:
	Six months	Six months
	ended 30 June	ended 30 June
	2020	2019
	(unaudited)	(unaudited)
General and administrative expenses	(6,334,092)	5,607,586
Finance expenses	3,399,204	4,591,640

Supplemental retirement benefits
Supplemental retirement benefits are provided to those retired employees who met certain criteria and the benefit plan was approved by the board of directors and the President's office. The benefits they can receive depend on their positions and seniorities at the time of retirement. Such defined benefit obligations were calculated by external independent actuary according to the projected unit credit method.
1. Supplemental retirement benefits obligations of the Group:

	30 June	31 December
	2020	2019
	(unaudited)
Defined benefit obligations	350,380,481		340,479,962
Less: Fair value of plan assets	-		-
Defined benefit liabilities	350,380,481		340,479,962

70Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd)

Long-termemployee benefits payable (Cont'd)
1. Supplemental retirement benefits (Cont'd)
2. 1. The movements in supplemental retirement benefits of the Group are as follows:

	Present value
	of the defined
	benefit
	obligation
As at 1 January 2020	340,479,962
Amount charged to profit or loss in the current period (unaudited)
- Service cost	14,659,989
- Interest expense on the net defined benefit obligations	5,362,165
Payment (unaudited)	(10,121,635)
As at 30 June 2020 (unaudited)	350,380,481

	Present value
	of the defined
	benefit
	obligation
As at 1 January 2019	325,266,898
Amount charged to profit or loss in the current year
- Service cost	25,694,999
- Interest expense on the net defined benefit obligations	10,255,000
Re-measurement amount
- Actuarial loss (Note 4(35))	(907,000)
Payment	(19,829,935)
As at 31 December 2019	340,479,962

The significant actuarial assumptions for the present value of the defined benefit obligations of the Group are as follows:

	30 June	31 December
	2020	2019
	(unaudited)
Discount rate	3.25%	3.25%

Mortality refers to China Life Insurance Mortality Table (2010-2013).

Interim Report 2020 71

4. Notes to the consolidated financial statements (Cont'd)

Long-termemployee benefits payable (Cont'd)
1. Supplemental retirement benefits (Cont'd)
2. 1. The sensitivity of the significant actuarial assumptions for the present value of defined benefit obligations is analysed as follows:

		Impact on
		defined benefit obligation
	Change in	Increase in	Decrease in
	assumption	assumption	assumption
		Decrease	Increase
Discount rate	0.25%	2.76%	2.89%

The sensitivity analyses above are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity analyses of present value of the defined benefit obligation, the same method, projected unit credit method, has been applied as well.

1. 1. The Group has not invested in any plan assets, and no separate trustee-administered assets to reimburse the payment of the defined benefit obligation of the Group (31 December 2019: nil).
  2. The weighted average duration of the defined benefit obligations is 11.3 years (31 December 2019: 11.3 years).
  3. Supplemental retirement benefits caused many risks to the Group, and the primary risk is the fluctuation of the interest rates of government bonds. Decreasing in interest rates of government bonds results in increasing in the defined benefit obligation.
2. Other retirement benefits
  According to relevant guidance, other retirement benefits are the benefits that are accrued by the Group this year for the employees who will retire in future years that meet certain conditions.
Share capital

	31 December		Movements in the	30 June
	2019		current period	2020
			(unaudited)	(unaudited)
RMB-denominated ordinary shares	695,913,617	-		695,913,617
Foreign shares listed overseas	655,069,178		-		655,069,178
	1,350,982,795	-		1,350,982,795

As at 30 June 2020, the Company has not received the subscription payment related to the issuance of restricted stock and has not completed registration and other capital increase procedures as stated in Note 11, so the share capital of the Company has not been changed.

72Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd) (33) Share capital (Cont'd)

				31 December	Movements in the	31 December
				2018		current year	2019
	RMB-denominated ordinary shares			695,913,617		-		695,913,617
	Foreign shares listed overseas			655,069,178		-		655,069,178
				1,350,982,795		-		1,350,982,795
(34) Capital surplus

		31 December	Increase in the	Decrease in the	30 June
		2019		current period	current period	2020
				(unaudited)	(unaudited)	(unaudited)
	Share premium (i)	3,356,662,970		-		(173,521,060)	3,183,141,910
	Other capital surplus -	87,654,485		41,468		-		87,695,953
	Share of changes in equity
	other than comprehensive
	income and profit
	distribution of investees
	accounted for using the								(10,190,553)
	equity method	(10,196,463)	5,910			-
	Transfer from capital
	surplus recognised under
	the previous accounting								93,338,214
	system	93,338,214	-			-
	Others	4,512,734	35,558			-		4,548,292
		3,444,317,455		41,468			(173,521,060)	3,270,837,863

		31 December	Increase in the	Decrease in the	31 December
		2018		current year	current year	2019
	Share premium	3,356,662,970		-		-		3,356,662,970
	Other capital surplus -	87,523,342		131,143		-		87,654,485
	Share of changes of equity
	other than comprehensive
	income and profits
	distribution of investees
	accounted for using the
	equity method	(10,204,646)	8,183			-		(10,196,463)
	Transfer from capital
	surplus recognised under
	the previous accounting
	system	93,338,214	-			-		93,338,214
	Others	4,389,774	122,960			-		4,512,734
		3,444,186,312		131,143			-		3,444,317,455

Interim Report 2020 73

4. Notes to the consolidated financial statements (Cont'd)

Capital surplus (Cont'd)
1. On 22 November 2019, the Company signed an equity transfer agreement with Shandong Huashi Beer Co., Ltd. ("Huashi Beer") to transfer 35% of the minority equity of Shandong Lulansa Beer Co., Ltd. ("Lulansa Company"), a subsidiary of the Company, held by Huashi Beer. The equity transaction was completed on 30 June 2020, and the Company's shareholding ratio in Lulansa Company increased from 55% to 90%. The capital surplus shall be adjusted according to the difference between the newly increased long-term equity investment and the net assets continuously calculated from the merger date with the newly increased shareholding ratio. The details are as follows:

Purchase cost - cash paid

Less: The shares of identifiable net assets of Lulansa Company continuously calculated from the merger date shall be determined according to the newly acquired 35% equity ratio

Adjustment of capital reserve

(35) Other comprehensive income

241,818,181

(68,297,121)

173,521,060

	Other comprehensive income in the balance sheet	Other comprehensive income in the income statement of six months ended 30 June 2020
										Less: Transfer
										out from which
										were recognised			Attributable
			Attributable				The pre-tax	in other			Attributable to	to the
			to shareholders				comprehensive			shareholders of	non-controlling
	31 December	of the Company,	30 June	amount in the	income in the	Less: Income	the Company,	interests,
	2019		net of tax	2020		current period	previous periods	tax expense	net of tax	net of tax
			(unaudited)	(unaudited)	(unaudited)	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Items that will not be subsequently
reclassified to profit or loss
Changes arising from re-measurement of					(49,361,000)
defined benefit plan liabilities	(49,361,000)	-	-		-		-	-	-
Items that will be subsequently
reclassified to profit or loss
Shares of other comprehensive income
of investees accounted for using the
equity method that will be subsequently					(580,434)
reclassified to profit or loss	(657,778)	77,344	77,344	-	-	77,344	-
Currency translation differences	2,671,145		(3,131,062)	(459,917)	(3,131,062)	-	-	(3,131,062)	-

	(47,347,633)	(3,053,718)	(50,401,351)	(3,053,718)	-		-	(3,053,718)	-

74Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd) (35) Other comprehensive income (Cont'd)

			Other comprehensive income in the balance sheet	Other comprehensive income in the income statement of six months ended 30 June 2019
														Less: Transfer
														out from which
					Attributable								were recognised					Attributable
													in other			Attributable to	to the
					to shareholders						The pre-tax	comprehensive			shareholders of	non-controlling
			31 December	of the Company,	31 December	amount in the	income in the	Less: Income	the Company,	interests,
			2018		net of tax	2019	current period	previous periods	tax expense		net of tax	net of tax
	Items that will not be subsequently
	reclassified to profit or loss
	Changes arising from re-measurement of
	defined benefit plan liabilities	(50,268,000)	907,000	(49,361,000)	907,000	-		-		907,000	-
	Items that will be subsequently
	reclassified to profit or loss
	Shares of other comprehensive income
	of investees accounted for using the
	equity method that will be subsequently
	reclassified to profit or loss	(667,191)	9,413	(657,778)	9,413	-	-	9,413	-
	Profits or loss from change in wealth
	management products		6,238,387		(3,567,242)	2,671,145	(3,567,242)	-	-	(3,567,242)	-

	Currency translation differences		(44,696,804)	(2,650,829)	(47,347,633)	(2,650,829)	-		-		(2,650,829)	-

(36) Surplus Reserve
					31 December	Appropriation	Decrease				30 June
					in the	in the
							2019					current year	current year				2020
												(unaudited)	(unaudited)			(unaudited)
	Statutory surplus reserve			1,400,704,380							-			-	1,400,704,380

					31 December	Appropriation	Decrease
					in the	in the		31 December
							2018					current year	current year				2019
	Statutory surplus reserve			1,400,704,380							-			-	1,400,704,380

In accordance with the Company Law and the Company's Articles of Association, the Company should appropriate 10% of net profit for the year to the statutory surplus reserve, and the Company can cease appropriation when the statutory surplus reserve accumulated to more than 50% of the registered capital. The statutory surplus reserve can be used to make up for the loss or increase the share capital after approval from the appropriate authorities.

Interim Report 2020 75

4. Notes to the consolidated financial statements (Cont'd) (37) General reserve

	31 December	Appropriation	Decrease	30 June
	in the	in the
	2019		current period	current period	2020
			(unaudited)	(unaudited)	(unaudited)
General reserve	234,715,680		-	-		234,715,680

	31 December	Appropriation	Decrease
	in the	in the	31 December
	2018		current year	current year	2019
			(unaudited)	(unaudited)	(unaudited)
General reserve	199,512,331		35,203,349	-		234,715,680

Pursuant to Caijin [2012] No. 20 "Requirements on Impairment Allowance for Financial Institutions" issued by the Ministry of Finance, Finance Company, a subsidiary of the Company, appropriated general reserve by 1.5% of the ending balance of the risk assets every year based on its risk consideration.

(38) Undistributed profits
		Six months
		ended 30 June
		2020		2019
		(unaudited)
	Undistributed profits at the beginning of the period	12,788,210,357		11,619,782,072
	Add: Net profit attributable to shareholders of the	1,854,983,102
	Company for the current period	1,852,103,376
	Less: appropriated general reserve)	-	(35,203,349)
	Ordinary shares dividend payable (a)	(743,040,537)	(648,471,742)

	Undistributed profits at the end of the period	13,900,152,922		12,788,210,357

Pursuant to the resolution at the Annual General Meeting dated 8 June 2020, the Company approved a cash dividend of RMB0.55 per share (tax included) to the shareholders of the Company with RMB743,040,537, based on a total number of 1,350,982,795 shares (2019: cash dividend of RMB0.48 per share (tax included) to the shareholders of the Company with RMB648,471,742, based on a total number of 1,350,982,795 share).
For the six months ended 30 June 2020, the Company did not declare the distribution of interim dividends (for the six months end 30 June 2019:nil).

76Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd) (39) Revenue and cost of sales

							Six months		Six months
						ended 30 June		ended 30 June
						2020			2019
							(unaudited)		(unaudited)
Revenue from main operation (a)				15,569,515,965			16,406,304,740
Revenue from other operations (b)			109,475,371			144,360,724
						15,678,991,336			16,550,665,464

							Six months		Six months
						ended 30 June		ended 30 June
						2020			2019
							(unaudited)		(unaudited)

Cost of main operation (a)				(9,056,342,173)		(9,819,940,217)
Cost of other operations (b)				(75,306,721)		(91,881,286)

						(9,131,648,894)		(9,911,821,503)
(a) Revenue and cost of main operation

			Six months ended 30 June 2020		Six months ended 30 June 2019
			(unaudited)		(unaudited)
			Revenue from		Cost of		Revenue from		Cost of
			main operation		main operation		main operation		main operation
Sales of beer, etc.	15,569,515,965	(9,056,342,173)	16,406,304,740		(9,819,940,217)

The Group delivers beer products to dealers and revenue shall be recognised after the dealers' acceptance and signing delivery lists of goods.

(b) Revenue and cost of other operations

	Six months ended 30 June 2020	Six months ended 30 June 2019
	(unaudited)		(unaudited)
	Revenue from	Cost of	Revenue from		Cost of
	other operations	other operations	other operations		other operations
Sale of packaging materials	32,104,898		(16,162,094)	34,441,840	(21,784,669)
Transportation services	19,744,416		(24,868,515)	19,728,527	(24,770,420)
Sale of raw materials	6,090,699		(5,963,437)	9,014,315	(8,862,623)
Others	51,535,358		(28,312,675)	81,176,042	(36,463,574)

	109,475,371		(75,306,721)	144,360,724	(91,881,286)

Interim Report 2020 77

4. Notes to the consolidated financial statements (Cont'd) (40) Taxes and surcharges

	Six months	Six months
	ended 30 June	ended 30 June
	2020		2019	Tax base
	(unaudited)	(unaudited)
Consumption tax	891,833,533		981,826,288	Note 3
City maintenance and construction tax	134,417,803		146,345,742	Note 3
Education surcharges	101,551,781		109,791,245	Note 3
Land use tax	26,963,555		30,320,375
Real estate tax	26,289,767		30,234,869
Stamp duty	12,327,962		13,299,555
Others	10,502,859		9,148,418
	1,203,887,260		1,320,966,492

(41) Selling and distribution expenses
		Six months	Six months
		ended 30 June	ended 30 June
		2020		2019
		(unaudited)	(unaudited)
	Handing and transportation expenses	1,154,819,231		1,175,437,089
	Employee benefits expenses	906,330,207	991,664,439
	Advertising related expenses	434,432,527	501,522,714
	Administrative expenses	76,891,542	91,285,087
	Depreciation and amortisation charges	56,203,797	56,412,696
	Services charges	54,927,719	53,075,931
	Material consumptions	32,154,755	33,247,980
	Other expenses	149,694,724	86,742,391
		2,865,454,502		2,989,388,327
(42) General and administrative expenses

		Six months	Six months
		ended 30 June	ended 30 June
		2020		2019
		(unaudited)	(unaudited)
	Employee benefits expenses	274,395,886	360,984,988
	Depreciation and amortisation charges	103,765,498	99,031,677
	Administrative expenses	28,997,017	41,639,323
	Agency fees	22,056,564	14,252,658
	Repair expenses	12,875,427	13,355,469
	Handling and transportation expenses	3,986,501	3,421,344
	Insurance expenses	3,985,813	3,950,440
	Material consumptions	3,153,174	5,444,198
	Other expenses	49,794,828	48,547,704
		503,010,708		590,627,801

78Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd) (43) Research and development expenses

	Six months	Six months
	ended 30 June	ended 30 June
	2020		2019
	(unaudited)	(unaudited)
Employee benefits expenses	4,333,559	5,427,664
Depreciation charges	1,173,159	1,253,146
Material consumption	335,573	641,126
Other expenses	847,227	606,203
	6,689,518		7,928,139

Expenses by nature
The cost of sales, selling and distribution expenses, general and administrative expenses and research and development expenses classified by nature are as follows:

		Six months	Six months
		ended 30 June	ended 30 June
		2020		2019
		(unaudited)	(unaudited)
	Raw materials, packaging materials and consumables used	6,135,661,953		6,791,756,840
	Employee benefits expenses	2,044,235,452		2,376,212,051
	Handling and transportation expenses	1,242,593,037		1,268,505,634
	Changes in inventories of finished goods and work in progress	769,101,933	588,786,084
	Depreciation and amortisation charges	563,023,629	563,008,704
	Finished goods purchased from outside	542,941,953	632,250,473
	Advertising related expenses	434,432,527	501,522,714
	Repair expenses	142,729,722	158,490,026
	Service charges	122,261,352	146,099,752
	Amortisation expenses of packaging materials	108,946,546	119,520,228
	Administrative expenses	107,988,036	136,798,205
	Other expenses	292,887,482	216,815,059
		12,506,803,622		13,499,765,770
(45) Finance expenses

		Six months	Six months
		ended 30 June	ended 30 June
		2020		2019
		(unaudited)	(unaudited)
	Interest expense	8,490,374		6,594,455
	Less: Interest income	(251,335,596)	(253,227,854)
	Exchange gains	(5,494,778)	(850,561)
	Discounting impact of the long-term employee benefits payable	8,761,369		9,718,307
	Interest expense on lease liabilities	2,032,223		1,056,912
	Others	1,433,058		1,586,761
		(236,113,350)	(235,121,980)

Interim Report 2020 79

4. Notes to the consolidated financial statements (Cont'd) (46) Credit impairment losses

				Six months	Six months
				ended 30 June	ended 30 June
				2020		2019
				(unaudited)	(unaudited)

	Losses/(Reversals) of bad debts of accounts receivable	373,918		(505,952)
	Reversals of bad debts of other receivables			(829,647)	(1,325,038)
	Reversals of bad debts of other current assets			(55,623)	(69,131)

				(511,352)	(1,900,121)
(47) Asset impairment losses

				Six months	Six months
				ended 30 June	ended 30 June
				2020		2019
				(unaudited)	(unaudited)
	Impairment losses of fixed assets			1,538,581		1,547,653
	Impairment reversals of inventories			-		(288,110)

				1,538,581		1,259,543
(48) Other incomes

		Six months	Six months
		ended 30 June	ended 30 June	Related to
		2020		2019		assets/income
		(unaudited)	(unaudited)
	Grant for relocation projects	92,770,029	112,177,451	Assets/Income
	Grant for company development	202,670,399	147,445,111	Assets/Income
	Grant for technology improvement projects	1,574,401	1,739,923	Assets
	Grant for other production and operation	33,260,639	51,937,833	Assets/Income
		330,275,468		313,300,318
(49) Investment income

				Six months	Six months
				ended 30 June	ended 30 June
				2020		2019
				(unaudited)	(unaudited)
	Investment income from long-term equity investments	16,497,374
	accounted for using the equity method			19,265,218
	Fund investment income			3,928,423	569,795
	Others			1,532,566	756,385

				21,958,363		20,591,398

There is no significant restriction on transferring funds in the form of investment income.

80Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd) (50) Profit arising from changes in fair value

		Six months	Six months
		ended 30 June	ended 30 June
		2020		2019
		(unaudited)	(unaudited)
	Financial assets at fair value through profit or loss	29,687,419
	Wealth management products	30,952,822
	Fund investment	(1,903,905)	70,655
		27,783,514		31,023,477
(51) Gains on disposals of assets

		Six months	Six months
		ended 30 June	ended 30 June
		2020		2019
		(unaudited)	(unaudited)

	Losses on disposal of fixed assets	(11,460,555)	(21,948,784)
	Gains from disposal of intangible assets	3,452,937		-
		(8,007,618)	(21,948,784)

For the six months ended 30 June 2020, all gains and losses on asset disposal have been regarded as non-recurring profit or loss in the current period.

(52) Non-operating income
		Six months	Six months
		ended 30 June	ended 30 June
		2020		2019
		(unaudited)	(unaudited)
	Gains on unpaid debts	1,577,301		12,912,331
	Penalty gains	4,986	836,499
	Others	4,841,407	1,726,042
		6,423,694		15,474,872

For the six months ended 30 June 2020, all non-operating income has been regarded as non-recurring profit or loss in the current period.

Interim Report 2020 81

4. Notes to the consolidated financial statements (Cont'd) (53) Non-operating expenses

	Six months	Six months
	ended 30 June	ended 30 June
	2020		2019
	(unaudited)	(unaudited)
Donations	13,328,950		306,699
Compensations, defaults and overdue fines	9,863,237		636,136
Others	477,985	975,757
	23,670,172		1,918,592

For the six months ended 30 June 2020, all non-operating expenses have been regarded as non-recurring profit or loss in the current period.

(54) Income tax expense
		Six months	Six months
		ended 30 June	ended 30 June
		2020		2019
		(unaudited)	(unaudited)
	Current income tax calculated according to tax law and
	related regulations in mainland China - China enterprise	849,619,347
	income tax	854,947,080
	Current profits tax calculated according to tax law and	-
	related regulations in Hong Kong - Hong Kong profits tax	1,199,731
	Current profits supplemental tax calculated according to
	tax law and related regulations in Macau - Macau profits	272,547
	supplemental tax	519,074
	Deferred income tax	(231,188,895)	(259,988,220)

		618,702,999		596,677,665

The reconciliation from income tax calculated based on the applicable tax rates and total profit presented in the consolidated financial statements to the income tax expense is listed below:

	Six months	Six months
	ended 30 June	ended 30 June
	2020		2019
	(unaudited)	(unaudited)
Total profit	2,558,149,824		2,322,218,449
Income tax expense calculated at applicable tax rates	638,808,101		579,376,595
Tax impact of equivalent sales and costs, expenses and	22,063,376
losses not deductible for tax purpose	13,713,463
Income not subject to tax	(10,013,778)	(10,551,685)
Impact of utilisation of deductible tax losses and temporary	(60,650,242)
differences from previously unrecognised deferred tax assets	(54,640,876)
Deductible temporary differences of currently	7,782,065
unrecognised deferred tax assets	14,590,218
Deductible tax losses of currently unrecognised deferred	20,713,477
tax assets	54,189,950
Income tax expense	618,702,999		596,677,665

82Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd)

Earnings per share
1. Basic earnings per share
  Basic earnings per share is calculated by dividing consolidated net profit attributable to ordinary shareholders of the Company by the weighted average numbers of ordinary shares outstanding:

	Six months	Six months
	ended 30 June	ended 30 June
	2020		2019
	(unaudited)	(unaudited)
Consolidated net profit attributable to ordinary shareholders	1,854,983,102
of the Company		1,630,516,036
Weighted average numbers of ordinary shares outstanding	1,350,982,795		1,350,982,795
(Note 4(33))
Basic earnings per share	1.373		1.207
Including:
1.373
- Basic earnings per share from continuing operations		1.207

1. Diluted earnings per share
  Diluted earnings per share is calculated by dividing net profit attributable to ordinary shareholders of the Company adjusted based on the dilutive potential ordinary share by the adjusted weighted average numbers of ordinary shares outstanding. As there were no dilutive potential ordinary shares for six months ended 30 June 2020 (For six months ended 30 June 2019: nil), diluted earnings per share equals to basic earnings per share.
Notes to consolidated cash flow statement
1. Cash received relating to other operating activities

	Six months	Six months
	ended 30 June	ended 30 June
	2020		2019
	(unaudited)	(unaudited)
Government grants	386,399,689		341,274,264
Guarantee deposits	274,957,163		331,760,781
Others	40,664,880		75,359,867
	702,021,732		748,394,912

Interim Report 2020 83

4. Notes to the consolidated financial statements (Cont'd)

Notes to consolidated cash flow statement (Cont'd)
1. Cash paid relating to other operating activities

		Six months	Six months
		ended 30 June	ended 30 June
		2020		2019
		(unaudited)	(unaudited)

Handling and transportation expenses	647,628,189		640,431,186
Advertising related expenses	359,960,947		343,692,160
Marketing and promotion expenses	335,010,114		400,867,076
Guarantee deposits	149,275,269		155,327,980
Administrative expenses	105,946,296		128,614,400
Others	168,269,733		105,976,171
		1,766,090,548		1,774,908,973
(c) Cash received relating to other investing activities

		Six months	Six months
		ended 30 June	ended 30 June
		2020		2019
		(unaudited)	(unaudited)

Interest income of Finance Company's deposits	172,143,768		194,673,475
Bidding deposits and others received	12,786,864		10,430,910
Deposit reserve withdrew by Finance Company	-		195,330,000
		184,930,632		400,434,385
(d) Cash paid relating to other investing activities

		Six months	Six months
		ended 30 June	ended 30 June
		2020		2019
		(unaudited)	(unaudited)

Deposit reserve paid by Finance Company	81,160,000		-
Bidding deposits and others paid	11,480,185		9,122,809
		92,640,185		9,122,809

84Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd)

Notes to consolidated cash flow statement (Cont'd)
1. Cash paid relating to other financing activities

	Six months	Six months
	ended 30 June	ended 30 June
	2020		2019
	(unaudited)	(unaudited)
Purchase of minority equity	241,818,181		-
Repayment of lease liabilities	15,915,551		9,571,268
	257,733,732		9,571,268

For the six months ended 30 June 2020, total cash outflows related to lease paid by the Group is 59,908,213. Other cash outflows are recognised into operating activities except repayment of lease liabilities recognised in financing activities mentioned above.

Supplementary information to consolidated cash flow statements
1. Supplementary information to consolidated cash flow statements Reconciliation from net profit to cash flows from operating activities:

	Six months	Six months
	ended 30 June	ended 30 June
	2020		2019
	(unaudited)	(unaudited)
Net profit	1,939,446,825		1,725,540,784
Add: Provision for asset impairment	1,538,581		1,259,543
Reversal for credit impairment	(511,352)	(1,900,121)
Depreciation of right-of-use assets	16,295,306		10,104,434
Depreciation of fixed assets and investment properties	442,534,902		441,972,457
Amortisation of intangible assets	101,963,309		106,217,122
Amortisation of long-term prepaid expenses	6,881,785		8,307,475
Losses on disposal of fixed assets and intangible assets	8,007,618		21,948,784
Profit arising from changes in fair value	(27,783,514)	(31,023,477)
Financial expenses	(141,390,270)	(184,191,532)
Investment income	(21,958,363)	(20,591,398)
Increase in deferred tax assets	(216,247,338)	(254,464,582)
Amortisation of deferred income	(154,919,665)	(208,501,265)
Decrease in deferred tax liabilities	(14,941,557)	(5,523,638)
Decrease in inventories	864,013,024		661,811,762
Decrease in operating receivables	260,382,724		107,894,936
Increase in operating payables	1,901,184,885		1,439,206,827
Net cash flows from operating activities	4,964,496,900		3,818,068,111

Interim Report 2020 85

4. Notes to the consolidated financial statements (Cont'd)

Supplementary information to consolidated cash flow statements (Cont'd)
1. Supplementary information to consolidated cash flow statements (Cont'd) Net increase in cash and cash equivalents

		Six months	Six months
		ended 30 June	ended 30 June
		2020		2019
		(unaudited)	(unaudited)

Cash and cash equivalents at end of the period	18,065,659,709		15,647,654,378
Less: Cash and cash equivalents at beginning of the period	(14,557,393,355)	(11,653,288,328)
Net increase in cash and cash equivalents	3,508,266,354		3,994,366,050
(b) Cash and cash equivalents

		Six months	Six months
		ended 30 June	ended 30 June
		2020		2019
		(unaudited)	(unaudited)
	Cash and cash equivalents (Note 4(1))	18,065,659,709		15,647,654,378
	Including: Cash on hand	220,660		296,521
	Cash at bank that can be readily drawn on	18,059,991,665
	demand		15,645,446,395
	Cash at non-financial institutions that can be	5,447,384
	readily drawn on demand		1,911,462
	Cash and cash equivalents at end of the period	18,065,659,709		15,647,654,378

86Interim Report 2020

4. Notes to the consolidated financial statements (Cont'd) (58) Foreign currency items

	Six months ended 30 June 2020 (unaudited)
	Balance in	Currency
	foreign	exchange	Balance
	currency	rate	in RMB
Cash at bank and cash on hand -	29,635,678	7.0795	209,805,782
USD
EUR	8,414,251	7.9610	66,985,852
HKD	58,791,212	0.9134	53,699,893
MOP	44,519,237	0.8870	39,488,563
			369,980,090
Accounts receivable -
35,825,259	0.9134	32,722,792
HKD
USD	4,421,224	7.0795	31,300,055
MOP	6,571,202	0.8870	5,828,656
EUR	337,760	7.9610	2,688,907
CAD	270,596	5.1843	1,402,851
GBP	132,224	8.7144	1,152,253
			75,095,514
Other receivables -
1,384,456	0.9134	1,264,562
HKD
MOP	341,053	0.8870	302,514
			1,567,076
Short-term borrowings -
300,000,000	0.9134	274,020,000
HKD
Other payables -
482,705	7.0795	3,417,310
USD
MOP	3,288,040	0.8870	2,916,491
HKD	2,019,265	0.9134	1,844,397
			8,178,198
Current portion of non-current liabilities -
400,000	1.0685	427,400
DKK

Foreign currency monetary item mentioned above refers to all currencies other than RMB (the scope is different from the foreign currency items in Note 10(1)(a)).

Interim Report 2020 87

5. Interests in other entities

Interests in subsidiaries
1. The structure of the Group

	Place of	Place of	Principal	Registered	Share proportion	Acquisition
Name	operation	incorporation	activities	capital	Directly	Indirectly	method
Shenzhen Tsingtao Brewery Huanan Holding	Shenzhen, the	Shenzhen, the	Financing	200,000,000	100%	-	Establishment or
Co., Ltd. ("Huanan Holding Company")	PRC	PRC					investment
Tsingtao Brewery (Zhuhai) Co., Ltd.	Zhuhai, the PRC	Zhuhai, the	Manufacturing	60,000,000	-	100%	Establishment or
("Zhuhai Company")		PRC					investment
Tsingtao Brewery (Huangshi) Co., Ltd.	Huangshi, the	Huangshi, the	Manufacturing	168,630,000	97.18%	2.82%	Establishment or
("Huangshi Company")	PRC	PRC					investment
Tsingtao Brewery (Yingcheng) Co., Ltd.	Yingcheng, the	Yingcheng, the	Manufacturing	47,070,000	89.91%	10.09%	Establishment or
("Yingcheng Company")	PRC	PRC					investment
Shenzhen Huanan Tsingtao Brewery Sales	Guangdong, the	Shenzhen, the	Wholesale and	20,000,000	100%	-	Establishment or
Co., Ltd. ("Huanan Sales Company")	PRC	PRC	retail sale				investment
Tsingtao Brewery (Changsha) Co., Ltd.	Changsha, the	Changsha, the	Manufacturing	68,000,000	70%	30%	Establishment or
("Changsha Company")	PRC	PRC					investment
Shanghai Tsingtao Brewery Huadong	Shanghai, the	Shanghai, the	Wholesale and	100,000,000	100%	-	Establishment or
(Holding) Co., Ltd.	PRC	PRC	retail sale				investment
("Huadong Holding Company")
Tsingtao Brewery Huadong Shanghai Sales	Shanghai, the	Shanghai, the	Wholesale and	100,300,000	97.01%	2.99%	Establishment or
Co., Ltd. ("Shanghai Sales Company")	PRC	PRC	retail sale				investment
Nanjing Tsingtao Brewery Huadong Sales	Jiangsu, the PRC	Nanjing, the	Wholesale and	1,000,000	-	100%	Establishment or
Co., Ltd.		PRC	retail sale				investment
Tsingtao Brewery (Wuhu) Co., Ltd.	Wuhu, the PRC	Wuhu, the PRC	Manufacturing	314,290,000	94.27%	5.73%	Establishment or
("Wuhu Company")							investment
Tsingtao Brewery (Maanshan) Co., Ltd.	Maanshan, the	Maanshan, the	Manufacturing	85,000,000	94.12%	5.58%	Establishment or
("Maanshan Company")	PRC	PRC					investment
Tsingtao Brewery (Shouguang) Co., Ltd.	Shouguang, the	Shouguang, the	Manufacturing	60,606,060	99%	-	Establishment or
("Shouguang Company")	PRC	PRC					investment
Tsingtao Brewery (Weifang) Co., Ltd.	Weifang, the	Weifang, the	Manufacturing	75,000,000	100%	-	Establishment or
("Weifang Company")	PRC	PRC					investment
Tsingtao Brewery (Xuzhou) Huaihai Sales	Jiangsu, the PRC	Xuzhou, the	Wholesale and	131,000,000	-	100%	Establishment or
Co., Ltd.		PRC	retail sale				investment
Tsingtao Brewery (Xuecheng) Co., Ltd.	Xuecheng, the	Xuecheng, the	Manufacturing	45,000,000	-	85%	Establishment or
("Xuecheng Company")	PRC	PRC					investment
Tsingtao Brewery (Tengzhou) Co., Ltd.	Tengzhou, the	Tengzhou, the	Manufacturing	61,020,000	76.65%	23.35%	Establishment or
("Tengzhou Company")	PRC	PRC					investment
Tsingtao Brewery (Heze) Co., Ltd.	Heze, the PRC	Heze, the PRC	Manufacturing	130,000,000	93.08%	6.92%	Establishment or
("Heze Company")							investment
Langfang Company	Langfang, the	Langfang, the	Manufacturing	99,000,000	80.80%	19.20%	Establishment or
	PRC	PRC					investment
Tsingtao Brewery Xi'an Han's Group Co.,	Shaanxi, the	Xi'an, the PRC	Manufacturing	287,903,022	100%	-	Establishment or
Ltd. ("Xi'an Company")	PRC		and				investment
			Wholesale
			and retail
			sale
Tsingtao Brewery Hansi Baoji Co., Ltd.	Baoji, the PRC	Baoji, the PRC	Manufacturing	130,000,000	-	100%	Establishment or
							investment
Tsingtao Brewery (Anshan) Co., Ltd.	Anshan, the PRC	Anshan, the	Manufacturing	50,000,000	60%	-	Establishment or
("Anshan Company")		PRC					investment
Tsingtao Brewery (Xingkaihu) Co., Ltd.	Jixi, the PRC	Jixi, the PRC	Manufacturing	200,000,000	100%	-	Establishment or
("Xingkaihu Company")							investment
Tsingtao Brewery (Mishan) Co., Ltd.	Mishan, the PRC	Mishan, the	Manufacturing	118,000,000	100%	-	Establishment or
("Mishan Company")		PRC					investment
Tsingtao Brewery (Harbin) Co., Ltd.	Harbin, the PRC	Harbin, the PRC	Manufacturing	155,600,000	100%	-	Establishment or
("Harbin Company")							investment

88Interim Report 2020

5. Interests in other entities (Cont'd)

Interests in subsidiaries (Cont'd)
1. The structure of the Group (Cont'd)

	Place of	Place of	Principal	Registered	Share proportion	Acquisition
Name	operation	incorporation	activities	capital	Directly	Indirectly	method
Tsingtao Brewery Import/Export Co., Ltd.	Qingdao, the	Qingdao, the	Wholesale and	11,000,000	100%	-	Establishment or
("Import/Export Company")	PRC	PRC	retail sale				investment
Tsingtao Brewery (Dezhou) Co., Ltd.	Pingyuan, the	Pingyuan, the	Manufacturing	25,000,000	100%	-	Establishment or
("Dezhou Company")	PRC	PRC					investment
Tsingtao Brewery (Rizhao) Co., Ltd.	Rizhao, the PRC	Rizhao, the	Manufacturing	290,000,000	100%	-	Establishment or
("Rizhao Company")		PRC					investment
Tsingtao Brewery (Luzhou) Co., Ltd.	Luzhou, the PRC	Luzhou, the	Manufacturing	111,110,000	95%	-	Establishment or
("Luzhou Company")		PRC					investment
Tsingtao Brewery (Taizhou) Co., Ltd.	Taizhou, the	Taizhou, the	Manufacturing	70,000,000	86.43%	13.57%	Establishment or
("Taizhou Company")	PRC	PRC					investment
Hong Kong Company	Hong Kong, the	Hong Kong, the	Wholesale and	40,500,000HKD	100%	-	Establishment or
	PRC	PRC	retail sale				investment
Tsingtao Brewery (Hanzhong) Co., Ltd.	Hanzhong, the	Hanzhong, the	Manufacturing	29,410,000	34%	66%	Establishment or
("Hanzhong Company")	PRC	PRC					investment
Beijing Tsingtao Brewery Beifang Sales Co.,	Beijing, the PRC	Beijing, the	Wholesale and	89,980,000	95%	5%	Establishment or
Ltd. ("Beifang Sales Company")		PRC	retail sale				investment
Qingdao Guangrunlong Logistics Co., Ltd.	Shandong, the	Qingdao, the	Logistics	6,184,000	100%	-	Establishment or
("Guangrunlong Logistics")	PRC	PRC					investment
Tsingtao Brewery (Xiamen) Co., Ltd.	Xiamen, the	Xiamen, the	Manufacturing	90,000,000	-	100%	Establishment or
	PRC	PRC					investment
Xiamen Tsingtao Brewery Dongnan Sales Co.,	Fujian, the PRC	Xiamen, the	Wholesale and	215,000,000	100%	-	Establishment or
Ltd. ("Dongnan Sales Company")		PRC	retail sale				investment
Tsingtao Brewery (Jinan) Co., Ltd.	Jinan, the PRC	Jinan, the PRC	Manufacturing	560,000,000	100%	-	Establishment or
("Jinan Company")							investment
Tsingtao Brewery (Chengdu) Co., Ltd.	Chengdu, the	Chengdu, the	Manufacturing	280,000,000	100%	-	Establishment or
("Chengdu Company")	PRC	PRC					investment
Tsingtao Brewery (Yulin) Co., Ltd.	Yulin, the PRC	Yulin, the PRC	Manufacturing	55,000,000	-	100%	Establishment or
							investment
Tsingtao Brewery Chengyang Sales Co., Ltd.	Qingdao, the	Qingdao, the	Wholesale and	8,000,000	100%	-	Establishment or
("Chengyang Sales Company")	PRC	PRC	retail sale				investment
Tsingtao Brewery Chenzhou Sales Co., Ltd.	Chenzhou, the	Chenzhou, the	Wholesale and	1,000,000	-	100%	Establishment or
	PRC	PRC	retail sale				investment
Machinery and Equipment Company	Qingdao, the	Qingdao, the	Construction	2,000,000	-	100%	Establishment or
	PRC	PRC					investment
Tsingtao Brewery (Shijiazhuang) Co., Ltd.	Shijiazhuang, the	Shijiazhuang,	Manufacturing	321,010,000	100%	-	Establishment or
("Shijiazhuang Company")	PRC	the PRC					investment
Tsingtao Brewery (Taiyuan) Co., Ltd.	Taiyuan, the	Taiyuan, the	Manufacturing	200,000,000	100%	-	Establishment or
("Taiyuan Company")	PRC	PRC					investment
Finance Company	Qingdao, the	Qingdao, the	Financing	1,000,000,000	100%	-	Establishment or
	PRC	PRC					investment
Tsingtao Brewery (Jieyang) Co., Ltd.	Jieyang, the PRC	Jieyang, the	Manufacturing	200,000,000	75%	-	Establishment or
("Jieyang Company")		PRC					investment
Tsingtao Brewery (Shaoguan) Co., Ltd.	Shaoguan, the	Shaoguan, the	Manufacturing	200,000,000	100%	-	Establishment or
("Shaoguan Company")	PRC	PRC					investment
Tsingtao Brewery (Electronic Commerce) Co.,	Qingdao, the	Qingdao, the	Wholesale and	8,000,000	100%	-	Establishment or
Ltd. ("Electornic Commerce Company")	PRC	PRC	retail sale				investment
Tsingtao Brewery (Jiujiang) Co., Ltd.	Jiujiang, the	Jiujiang, the	Manufacturing	200,000,000	90%	-	Establishment or
("Jiujiang Company")	PRC	PRC					investment
Tsingtao Brewery (Pingdu) Sales Co., Ltd.	Qingdao, the	Qingdao, the	Wholesale and	5,000,000	100%	-	Establishment or
("Pingdu Sales Company")	PRC	PRC	retail sale				investment
Shanghai Tsingtao Brewery Sales Co., Ltd	Shanghai, the	Shanghai, the	Wholesale and	96,300,000	-	100%	Establishment or
	PRC	PRC	retail sale				investment

Interim Report 2020 89

5. Interests in other entities (Cont'd)

Interests in subsidiaries (Cont'd)
1. The structure of the Group (Cont'd)

	Place of	Place of	Principal	Registered	Share proportion	Acquisition
Name	operation	incorporation	activities	capital	Directly	Indirectly	method
Tsingtao Brewery (Xuzhou) Enterprise	Xuzhou, the	Xuzhou, the	Wholesale and	10,000,000	100%	-	Establishment or
Management Service Co., Ltd.	PRC	PRC	retail sale				investment
("Xuzhou Enterprise Management ")
Tsingtao Brewery (Luoyang) Co., Ltd.	Luoyang, the	Luoyang, the	Manufacturing	200,000,000	100%	-	Establishment or
("Luoyang Company")	PRC	PRC					investment
Tsingtao Brewery (Shanghai) industrial Co.,	Shanghai, the	Shanghai, the	Wholesale and	416,800,000	100%	-	Establishment or
Ltd. ("Shanghai Industrial Company")	PRC	PRC	retail sale				investment
Tsingtao Brewery (Zhangjiakou) Co., Ltd.	Zhangjiakou, the	Zhangjiakou,	Manufacturing	200,000,000	100%	-	Establishment or
("Zhangjiakou Company")	PRC	the PRC					investment
Tsingtao Brewery (Zaozhuang) Co., Ltd.	Zaozhuang, the	Zaozhuang, the	Manufacturing	200,000,000	100%	-	Establishment or
("Zaozhuang Company") (i)	PRC	PRC					investment
Shanghai Tsingtao Catering Management	Shanghai, the	Shanghai, the	Services	12,000,000	-	80%	Establishment or
Co.,Ltd	PRC	PRC					investment
Tsingtao Brewery (Sanshui) Co., Ltd.	Sanshui, the	Sanshui, the	Manufacturing	5,000,000USD	-	75%	Business combination
("Sanshui Company")	PRC	PRC					not under
							common control
Tsingtao Brewery (Chenzhou) Co., Ltd.	Chenzhou, the	Chenzhou, the	Manufacturing	70,000,000	88.80%	11.20%	Business combination
("Chenzhou Company")	PRC	PRC					not under
							common control
Shenzhen Tsingtao Brewery Asahi Co., Ltd.	Shenzhen, the	Shenzhen, the	Manufacturing	30,000,000USD	51%	-	Business combination
("Shenzhen Asahi")	PRC	PRC					not under
							common control
Nanning Tsingtao Brewery Co., Ltd.	Nanning, the	Nanning, the	Manufacturing	730,000,000	-	75%	Business combination
	PRC	PRC					not under
							common control
Beijing Tsingtao Brewery Three Ring Co.,	Beijing, the PRC	Beijing, the	Manufacturing	29,800,000USD	29%	25%	Business combination
Ltd. ("Three Ring Company")		PRC					not under
							common control
Beijing Tsingtao Brewery Five Star Co., Ltd.	Beijing, the PRC	Beijing, the	Manufacturing	862,000,000	37.64%	25%	Business combination
("Five Star Company")		PRC					not under
							common control
Tsingtao Brewery (Weinan) Co., Ltd.	Weinan, the PRC	Weinan, the	Manufacturing	50,000,000	28%	72%	Business combination
("Weinan Company")		PRC					not under
							common control
Tsingtao Brewery (Gansu) Co., Ltd.	Lanzhou, the	Lanzhou, the	Manufacturing	174,420,800	-	55.06%	Business combination
("Gansu Nongken Company")	PRC	PRC					not under
							common control
Tsingtao Brewery (Wuwei) Co., Ltd.	Wuwei, the PRC	Wuwei, the	Manufacturing	36,100,000	-	99.72%	Business combination
		PRC					not under
							common control
Tsingtao Brewery (Rongcheng) Co., Ltd.	Rongcheng, the	Rongcheng, the	Manufacturing	20,000,000	70%	-	Business combination
("Rongcheng Company")	PRC	PRC					not under
							common control
Tsingtao Brewery (Suizhou) Co., Ltd.	Suizhou, the	Suizhou, the	Manufacturing	24,000,000	-	90%	Business combination
	PRC	PRC					not under
							common control
Tsingtao Brewery (Fuzhou) Co., Ltd.	Fuzhou, the PRC	Fuzhou, the	Manufacturing	26,828,100USD	-	100%	Business combination
		PRC					not under
							common control
Tsingtao Brewery (Zhangzhou) Co., Ltd.	Zhangzhou, the	Zhangzhou, the	Manufacturing	100,000,000	-	90%	Business combination
	PRC	PRC					not under
							common control

90Interim Report 2020

5. Interests in other entities (Cont'd)

Interests in subsidiaries (Cont'd)
1. The structure of the Group (Cont'd)

	Place of	Place of	Principal	Registered	Share proportion	Acquisition
Name	operation	incorporation	activities	capital	Directly	Indirectly	method
Construction Company	Qingdao, the	Qingdao, the	Construction	13,142,176	100%	-	Business combination
	PRC	PRC					not under
							common control
Tsingtao Brewery (Penglai) Co., Ltd.	Penglai, the PRC	Penglai, the	Manufacturing	37,500,000	80%	-	Business combination
("Penglai Company")		PRC					not under
							common control
Tsingtao Brewery Cultural Communication	Qingdao, the	Qingdao, the	Manufacturing	3,500,000	100%	-	Business combination
Co., Ltd. ("Cultural Communication	PRC	PRC					not under
Company")							common control
Tsingtao Brewery Beverage Co., Ltd.	Qingdao, the	Qingdao, the	Manufacturing	130,000,000	100%	-	Business combination
("Beverage Company")	PRC	PRC					not under
							common control
Shandong Xin Immense Brewery Co., Ltd.	Shandong, the	Mengyin, the	Manufacturing	18,760,000USD	75%	25%	Business combination
("Immense Brewery Company")	PRC	PRC	Wholesale				not under
			and retail				common control
			sale
Tsingtao Brewery (Hangzhou) Co., Ltd.	Jiande, the PRC	Jiande, the PRC	Manufacturing	230,000,000	80%	-	Business combination
("Hangzhou Company")							not under
							common control
Macau Companty	Macau, the PRC	Macau, the PRC	Wholesale and	200,000MOP	-	60%	Business combination
			retail sale				not under
							common control
Tsingto Brewery (Shanghai) Market Service	Shanghai, the	Shanghai, the	Wholesale and	334,578,898	-	100%	Business combination
Co., Ltd.	PRC	PRC	retail sale				not under
							common control
Lulansa Company	Zibo, the PRC	Zibo, the PRC	Manufacturing	100,000,000	90%	-	Business combination
							not under
							common control
Equipment Manufacture Company	Qingdao, the	Qingdao, the	Manufacturing	2,897,600	-	100%	Business combination
	PRC	PRC					not under
							common control
Tsingtao Brewery (Shanghai) Investing Co.,	Shanghai, the	Shanghai, the	Financing	907,320,000	100%	-	Business combination
Ltd ("Shanghai Investing Company")	PRC	PRC					not under
							common control
Tsingtao Brewery Shanghai Songjiang	Shanghai, the	Shanghai, the	Manufacturing	50,000,000	-	100%	Business combination
Manufacturing Co., Ltd.	PRC	PRC					not under
							common control
Tsingto Brewery (Suqian) Co., Ltd.	Suqian, the PRC	Suqian, the PRC	Manufacturing	100,000,000	75%	25%	Business combination
("Suqian Company")							not under
							common control
Tsingto Brewery (Xuzhou)	Xuzhou, the	Xuzhou, the	Manufacturing	155,000,000	-	100%	Business combination
Pengcheng Co., Ltd.	PRC	PRC					not under
							common control
Tsingto Brewery (Xuzhou)	Xuzhou, the	Xuzhou, the	Manufacturing	39,336,899	-	100%	Business combination
Co., Ltd. ("Xuzhou Company")	PRC	PRC					not under
							common control
Tsingto Brewery (Yangzhou)	Yangzhou, the	Yangzhou, the	Manufacturing	200,000,000	50%	50%	Business combination
Co., Ltd. ("Yangzhou Company")	PRC	PRC					not under
							common control
Tsingto Brewery (Kunshan) Co., Ltd.	Kunshan, the	Kunshan, the	Manufacturing	731,535,952	-	100%	Business combination
	PRC	PRC					not under
							common control

Interim Report 2020 91

5. Interests in other entities (Cont'd)

Interests in subsidiaries (Cont'd)
1. The structure of the Group (Cont'd)

	Place of	Place of	Principal	Registered	Share proportion	Acquisition
Name	operation	incorporation	activities	capital	Directly	Indirectly	method
Tsingto Brewery (Lianyungang) Co., Ltd.	Lianyungang, the	Lianyungang,	Manufacturing	166,093,523	-	100%	Business combination
	PRC	the PRC					not under
							common control
Tsingto Brewery (Minhang) Co., Ltd.	Shanghai, the	Shanghai, the	Manufacturing	377,251,025	-	96.50%	Business combination
	PRC	PRC					not under
							common control

According to the resolution of the board of directors of the Company, the Company plans to invest RMB200 million to establish a wholly-owned subsidiary Zaozhuang Company, and the business registration of Zaozhuang Company has been completed.

Except Gansu Nongken, whose corporate category is incorporated company by shares, all of the above mentioned subsidiaries are limited liability companies.

There are no restrictions on using the assets of the Group or settling the liabilities of the Group.

(b) Subsidiaries with significant non-controlling interests

			Total dividends
		Non-controlling	distributed to
	Share proportion	the minority
Name of	interests for the	shareholders in	Non-controlling
of non-controlling	six months ended	six months ended	interests as at
subsidiaries	interests	30 June 2020	30 June 2020	30 June 2020
		(unaudited)	(unaudited)	(unaudited)
Shenzhen Asahi	49%	20,887,166	(40,880,700)	203,315,466

Summarised financial information of significant non-wholly owned subsidiaries is as follows:

			As at 30 June 2020 (unaudited)
	Current	Non-current	Total	Current	Non-current	Total
	assets	assets	assets	liabilities	liabilities	liabilities
Shenzhen Asahi	215,724,352	427,448,324	643,172,676	(219,973,994)	(8,176,998)	(228,150,992)
			31 December 2019
	Current	Non-current	Total	Current	Non-current	Total
	assets	assets	assets	liabilities	liabilities	liabilities
Shenzhen Asahi	240,519,444	438,155,341	678,674,785	(215,850,329)	(6,603,887)	(222,454,216)

92Interim Report 2020

5. Interests in other entities (Cont'd)

Interests in subsidiaries (Cont'd)
1. Subsidiaries with significant non-controlling interests (Cont'd)

		Six months ended 30 June 2020 (unaudited)
			Total other	Cash flows
	Revenue	Net profit	comprehensive	from operating
	income	activities
Shenzhen Asahi	358,727,443	42,231,113	42,231,113	48,720,976
		Six months ended 30 June 2019 (unaudited)
			Total other	Cash flows
	Revenue	Net profit	comprehensive	from operating
	income	activities
Shenzhen Asahi	398,514,661	45,658,332	45,658,332	73,012,384

Financial information above represents the amounts of subsidiaries excluding elimination in the Group.

Interests in the Joint Venture and Associates
1. Fundamental information of the significant Joint Venture and Associates

	Place of	Place of		Strategic impact	Share proportion
	operation	incorporation	Principal activities	on the Group	Directly	Indirectly
Joint Ventures -
Hebei Jiahe Company	Shijiazhuang,	Shijiazhuang,	Manufacturing	Yes	50%	-
	the PRC	the PRC
Associates -
Yantai Asahi	Yantai,the PRC	Yantai, the	Manufacturing	Yes	39%	-
		PRC
Zhaoshang Logistics	Qingdao,	Qingdao, the	Logistics	Yes	30%	-
	the PRC	PRC
Liaoning Shenqing	Shenyang,	Shenyang,	Wholesale and retail	Yes	30%	-
	the PRC	the PRC	sale
European Company	France	France	Wholesale and retail	Yes	-	40%
			sale

The equity investments above are accounted for using the equity method.

Interim Report 2020 93

5. Interests in other entities (Cont'd)
(2) Interests in the Joint Venture and Associates (Cont'd)
(b) Summarised financial information of the joint venture
		Hebei Jiahe Company
		30 June	31 December
		2020		2019
		(unaudited)
Current assets	112,023,680		82,331,606
Including: cash and cash equivalents	44,030,036		40,726,999
Non-current assets	91,918,972		93,746,322
Total assets	203,942,652		176,077,928
Current liabilities	(57,729,634)	(22,829,436)

Total liabilities	(57,729,634)	(22,829,436)
Total equity attributable to shareholders of the Company	146,213,018		153,248,492
Adjusted fair value of the identifiable net assets when	77,315,379
	obtained		80,719,792
Adjusted total equity attributable to shareholders of the	223,528,397
	Company		233,968,284
The share of net assets calculated based on the shareholding	111,764,199
	proportion (i)		116,984,142
Adjusting item - goodwill	113,928,609		113,928,609
	- unrealised profits of internal transaction	-		104
Carrying amount of investment on the joint venture	225,692,808		230,912,855

There is no quoted market price for the joint venture investment of the Group.

94Interim Report 2020

5. Interests in other entities (Cont'd)

Interests in the Joint Venture and Associates (Cont'd)
1. Summarised financial information of the joint venture (Cont'd)

	Hebei Jiahe Company
	Six months	Six months
	ended	ended
	30 June 2020	30 June 2019
	(unaudited)	(unaudited)
Revenue	183,350,951		219,027,676
Finance expenses	(209,307)	(182,805)
Income tax expense	3,531,910		6,478,821
Net profit	12,964,526		19,318,169
Total comprehensive income	12,964,526		19,318,169
Adjusted fair value of the identifiable net assets when	(3,404,413)	(4,018,074)
obtained
Adjusted total comprehensive income attributable to	9,560,113		15,300,095
shareholders of the Company
Dividends received from the joint venture in the current
10,000,000		6,000,000
period

1. The share of the net asset of the joint venture was calculated by the share proportion of the Group, based on the equity attributable to shareholders of the Company in the consolidated financial statement of the joint venture, adjusted according to the fair value of the identifiable assets and liabilities of the joint ventures at the acquisition date and conformed to accounting policies of the Group.
Summarised financial information of associates

			30 June 2020 (unaudited)						31 December 2019
	Yantai	Zhaoshang	Liaoning	European	Yantai	Zhaoshang	Liaoning	European
	Asahi	Logistics	Shenqing	Company	Asahi	Logistics	Shenqing	Company
Current assets	326,137,407		150,693,746		21,910,167	12,567,565	273,636,770	140,439,495		36,004,404		26,062,398
Including: cash and cash equivalents	265,833,893		1,483,393		4,486,944	6,044,580	63,087,129	1,182,619		2,893,942		12,920,569
Non-current assets	256,418,299		1,523,034		3,138,799	152,533	252,208,610	1,312,921		3,278,509		144,001

Total assets	582,555,706		152,216,780		25,048,966	12,720,098	525,845,380	141,752,416		39,282,913		26,206,399
Current liabilities	(246,431,234)	(96,840,204)	(25,087,629)	(3,149,140)	(230,020,875)	(91,149,079)	(39,101,240)	(19,914,347)
Non-current liabilities	(59,871,659)	-		-	-	(8,364,072)	-		-		-

Total liabilities	(306,302,893)	(96,840,204)	(25,087,629)	(3,149,140)	(238,384,947)	(91,149,079)	(39,101,240)	(19,914,347)
Total equity attributable to shareholders of the Company	276,252,813		55,376,576		(38,663)	9,570,958	287,460,433	50,603,337		181,673		6,292,052
Adjusted fair value of the identifiable net assets when obtained	24,238,506		-		-	-	26,168,506	-		-		-

Adjusted total equity attributable to shareholders of the Company	300,491,319		55,376,576		(38,663)	9,570,958	313,628,939	50,603,337		181,673		6,292,052
The share of net assets calculated based on the shareholding	117,191,614		16,612,973		(11,599)	3,828,383	122,315,286	15,181,001		54,502		2,516,821
proportion (i)
Adjusting items	9,640,679		-		-	-	9,640,679	-		-		-
- Goodwill
- Unrealised profits of internal transaction	(232,927)	-		-	-	(3,979,342)	-		-		-
- Others (ii)	-		-		11,599	-	-	-		-		-

Book value of investments on Associates	126,599,366		16,612,973		-	3,828,383	127,976,623	15,181,001		54,502		2,516,821

There is no quoted market price for the investments in associates of the Group.

Interim Report 2020 95

5. Interests in other entities (Cont'd)

Interests in the Joint Venture and Associates (Cont'd)
1. Summarised financial information of associates (Cont'd)

	Six months ended 30 June 2020 (unaudited)		Six months ended 30 June 2019 (unaudited)
	Yantai	Zhaoshang	Liaoning	European	Yantai	Zhaoshang	Liaoning	European
	Asahi	Logistics	Shenqing	Company	Asahi	Logistics	Shenqing	Company
Revenue	363,242,870		100,864,022	28,027,208	31,042,970	398,072,240	116,401,153		39,651,511		51,894,850
Net profits/(loss)	15,686,995		4,753,539	(220,336)	3,085,546	16,193,716	6,992,669		(293,413)	4,380,772
Other comprehensive income	-		-	-	193,360	-	30,854		-		82,118
Total comprehensive income	15,686,995		4,753,539	(220,336)	3,278,906	16,193,716	7,023,523		(293,413)	4,462,890
Total comprehensive income attributable to shareholders of the	15,686,995		4,753,539	(220,336)	3,278,906	16,193,716	7,023,523		(293,413)	4,462,890
Company
Adjusted fair value of the identifiable net assets when obtained	(1,930,000)	-	-	-	(1,885,255)	-		-		-

Adjusted total comprehensive income attributable to shareholders	13,756,995		4,753,539	(220,336)	3,278,906	14,308,461	7,023,523		(293,413)	4,462,890

Dividends received from the associates in the current period	-		-	-	-	-	-		-		-

1. The share of the net asset of associates was calculated by the share proportion of the Group, based on the equity attributable to shareholders of the Company in the consolidated financial statement of the associates, adjusted according to the fair value of the identifiable assets and liabilities of the associates at the acquisition date and conformed to accounting policies of the Group.
2. Other adjustments are unrecognized excess losses.
Excess losses of associate

	Accumulated			Accumulated
	unrecognized	Unrecognized
	losses at the	unrecognized
	beginning of	loss in the	losses at the end
	the period	current period	of the period
Liaoning Shenqing	-		11,599		11,599

The Group has no unrecognized commitment related to joint venture investment and no contingent liability related to investment in associates.

96Interim Report 2020

6. Segment information

As the Group is mainly engaged in the production and distribution of beer, the reportable segments of the Group are business units operating in different regions. Different regions require different marketing strategies, and the Group, therefore, separately manages the production and operation of each reportable segment and evaluates their operating results respectively, in order to make decisions on resources allocation and to assess their performance.

Finance Company, a subsidiary of the Company, is principally engaged in the financial businesses of wealth management and agency collection and payment for its members. Due to the unique business characteristics of Finance Company, the Group manages its operation independently and evaluates its operating results separately, to determine its resources allocation and assess its performance.

The Group identified seven reportable segments as follows:

Shandong region segment, responsible for the production and distribution of beer in Shandong region and surrounding regions
South China region segment, responsible for the production and distribution of beer in South China region
North China region segment, responsible for the production and distribution of beer in North China region
East China region segment, responsible for the production and distribution of beer in East China region
Southeast China region segment, responsible for the production and distribution of beer in Southeast China region
Hong Kong, Macau and other overseas region segment, responsible for the distribution of beer in Hong Kong SAR, Macau SAR and other overseas regions
Finance Company segment, engaged in the financial businesses of wealth management and agency collection and payment for its members.

Inter-segment transfer pricing is based on mutually-agreed prices.

Assets are allocated based on the operation of the segments and the physical location of the assets. Liabilities are allocated based on the operation of the segments. Expenses indirectly attributable to each segment are allocated among segments based on the proportion of each segment's revenue.

Segment information as at and for the six months ended 30 June 2020 is listed as follows (unaudited):

		South	North	East	Southeast	Hong Kong,
	Shandong	Macau and	Finance
	China	China	China	China	other overseas	Unallocated	Elimination	Total
	Region	Region	Region	Region	Region	Regions	Company
Revenue from external customers	9,634,098,290	1,287,285,102	2,672,495,940	1,468,818,500	367,903,581	243,359,433	4,386,293	644,197	-	15,678,991,336
Inter-segment revenue	1,083,680,119	491,798,392	902,951,316	158,750,041	3,633,310	51,444,873	12,107,363	248,755	(2,704,614,169)	-
Cost of sales	(6,958,676,107)	(1,130,460,572)	(2,276,680,725)	(1,094,802,111)	(267,029,418)	(200,414,323)	(30,873)	(431,194)	2,796,876,429	(9,131,648,894)
Selling and distribution expenses	(1,993,965,211)	(216,777,063)	(330,255,135)	(218,523,251)	(61,985,930)	(43,947,912)	-	-	-	(2,865,454,502)
Interest income	27,159,502	8,337,806	22,309,952	3,049,892	553,045	909,535	146,946,306	105,879,959	(63,810,401)	251,335,596
Interest expense	(1,645,356)	(2,310,938)	(5,822,824)	(6,032,631)	(34,800)	(4,246,693)	(66,724,998)	-	78,327,866	(8,490,374)
Share of profit of associates and a joint	-	-	-	-	-	-	-	16,497,374	-	16,497,374
venture
Credit impairment reversals/	1,017,305	(142)	(166,562)	(24,175)	-	(370,697)	(2,674,261)	-	2,729,884	511,352
(losses)
Asset impairment losses	(978,368)	-	-	(560,213)	-	-	-	-	-	(1,538,581)
Depreciation and amortisation	(246,440,841)	(83,651,663)	(107,154,311)	(79,693,463)	(19,162,124)	(1,961,412)	(664,864)	(28,946,624)	-	(567,675,302)
Total profit	1,151,357,185	302,465,611	688,540,610	105,982,959	5,958,522	48,477,874	124,481,329	20,908,778	109,976,956	2,558,149,824
Income tax expense	(306,831,017)	(69,567,370)	(157,749,865)	(12,180,112)	(3,299,518)	(11,843,849)	(31,138,862)	-	(26,092,406)	(618,702,999)
Net profit	844,526,168	232,898,241	530,790,745	93,802,847	2,659,004	36,634,025	93,342,467	20,908,778	83,884,550	1,939,446,825
Total assets	13,125,351,478	4,367,750,711	7,872,291,796	3,615,516,553	839,978,604	653,055,456	14,376,340,989	10,495,214,153	(14,840,705,922)	40,504,793,818
Total liabilities	10,628,350,274	2,054,659,427	4,996,943,884	3,064,314,664	571,724,176	717,098,563	11,640,286,971	565,415,559	(14,557,902,337)	19,680,891,181
Non-cash expenses other than depreciation	7,401,377	325,428	2,479,481	407,404	142,200	37,702	-	-	-	10,793,592
and amortisation
Long-term equity investments in associates	-	-	-	-	-	-	-	372,733,530	-	372,733,530
and a joint venture
Additions of non-current assets (i)	445,357,413	79,113,763	117,735,933	104,308,459	11,725,064	1,072,270	-	9,601,081	(3,774,347)	765,139,636

Non-currentassets do not include financial assets, long-term equity investments and deferred tax assets.

Interim Report 2020 97

6. Segment information (Cont'd)

Segment information as at and for the six months ended 30 June 2019 is listed as follows (unaudited):

						Hong Kong,
		South	North	East	Southeast	Macau and
	Shandong	China	China	China	China	other overseas	Finance
	Region	Region	Region	Region	Region	Regions	Company	Unallocated	Elimination	Total
Revenue from external customers	9,971,137,793	1,351,680,003	2,889,682,398	1,626,062,146	392,696,831	315,158,021	3,326,148	922,124	-	16,550,665,464
Inter-segment revenue	1,382,522,436	541,864,880	888,648,397	85,631,176	5,999,454	147,122,630	14,015,349	248,755	(3,066,053,077)	-
Cost of sales	(7,448,217,390)	(1,235,440,415)	(2,477,051,866)	(1,213,563,254)	(314,363,593)	(340,550,353)	(21,979)	(440,729)	3,117,828,076	(9,911,821,503)
Selling and distribution expenses	(1,998,829,500)	(240,973,638)	(372,529,558)	(259,944,145)	(64,054,455)	(53,057,031)	-	-	-	(2,989,388,327)
Interest income	24,099,479	6,236,468	20,220,251	2,757,666	420,935	2,222,385	191,540,239	73,996,714	(68,266,283)	253,227,854
Interest expense	(2,254,540)	(2,576,831)	(6,610,223)	(5,533,681)	-	(3,933,016)	(69,553,123)	-	83,866,959	(6,594,455)
Share of profit of associates and a joint
venture	-	-	-	-	-	-	-	19,265,218	-	19,265,218
Credit impairment reversals/(losses)	1,818,539	35,951	431	(35,035)	-	11,104	(164,207)	-	233,338	1,900,121
Asset impairment (losses)/reversals	(441,476)	-	(574,465)	288,110	(531,712)	-	-	(50,000,000)	50,000,000	(1,259,543)
Depreciation and amortisation	(244,443,680)	(86,007,037)	(103,160,850)	(82,595,197)	(20,546,451)	(1,785,668)	(476,696)	(27,585,909)	-	(566,601,488)
Total profit/(losses)	1,120,166,856	208,761,009	676,437,618	20,073,970	(6,602,460)	66,041,961	170,449,183	(50,919,642)	117,809,954	2,322,218,449
Income tax expense	(297,559,700)	(48,341,470)	(149,533,518)	(23,878,779)	(2,394,358)	(16,185,365)	(42,336,888)	-	(16,447,587)	(596,677,665)
Net profit/(losses)	822,607,156	160,419,539	526,904,100	(3,804,809)	(8,996,818)	49,856,596	128,112,295	(50,919,642)	101,362,367	1,725,540,784
Total assets	13,091,541,246	3,898,454,445	7,037,826,146	3,456,018,930	859,601,444	708,004,007	13,342,521,215	9,148,256,462	(14,085,810,872)	37,456,413,023
Total liabilities	9,403,225,900	1,818,198,411	4,359,158,401	2,646,354,503	553,141,546	761,926,088	11,299,497,775	1,076,076,970	(14,189,556,126)	17,728,023,468
Non-cash expenses other than depreciation
and amortisation	6,441,095	145,526	3,045,520	79,229	6,939	-	-	-	-	9,718,309
Long-term equity investments in associates
and a joint venture	-	-	-	-	-	-	-	374,748,624	-	374,748,624
Additions of non-current assets (i)	242,318,189	30,824,221	184,735,396	40,224,760	11,213,153	1,182,197	168,000	19,737,990	(8,294,764)	522,109,142

1. Non-currentassets do not include financial assets, long-term equity investments and deferred tax assets.
The Group's revenue from external customers in domestic and overseas markets and the total non- current assets other than financial assets and deferred tax assets located domestically and in foreign countries or geographical areas are summarised as follows:

	Six months ended	Six months ended
Revenue from external customers	30 June 2020	30 June 2019
	(unaudited)	(unaudited)
Mainland China	15,381,641,740		16,212,450,430
Hong Kong and Macau SAR	90,763,619		102,950,910
Other overseas regions	206,585,977	235,264,124

	15,678,991,336		16,550,665,464

	30 June 2020	30 June 2019
Total non-current assets	(unaudited)	(unaudited)
Mainland China	15,013,978,883		15,064,384,990
Hong Kong and Macau SAR	15,513,502		15,482,457

	15,029,492,385		15,079,867,447

98Interim Report 2020

7. Related parties and related party transactions

Information of subsidiaries
The general information and other related information of the subsidiaries is set out in Note 5(1).
Information of the joint venture and associates
Except for the information of the joint venture and associates disclosed in Note 5(2), the other associates having related parties transactions with the Group are set out below:

	Company name	Relationship with the Group
	Beijing Sales Company	Associate
	Guangzhou General Agency	Associate
(3) Information of other related parties
		Relationship with the Group
	Tsingtao Brewery Group Co., Ltd.	Majority shareholder of the Company
	Fosun International Group Co., Ltd.	Majority shareholder of the Company

Related party transactions
1. Purchases of goods and receiving services

Name of	Nature of		Six months	Six months
	ended	ended
related party	transaction	Pricing policies	30 June 2020	30 June 2019
				(unaudited)	(unaudited)

Yantai Asahi	Purchase of beer	Mutually-agreed prices	359,743,924		395,197,166
Hebei Jiahe Company	Purchase of beer	Mutually-agreed prices	183,198,029		218,682,299
Zhaoshang Logistics	Receiving logistics	Mutually-agreed prices	94,651,413		84,664,952
		service (including
		payment on behalf)
				637,593,366		698,544,417
(b) Sales of goods and providing services

Name of	Nature of		Six months	Six months
	ended	ended
related party	transaction	Pricing policies	30 June 2020	30 June 2019
				(unaudited)	(unaudited)

Liaoning Shenqing	Sale of beer and	Mutually-agreed prices	28,151,444
		materials			31,448,440
European Company	Sale of beer and	Mutually-agreed prices	21,257,079
		materials			37,882,588
				49,408,523		69,331,028

Interim Report 2020 99

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Tsingtao Brewery Company Limited published this content on 14 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 September 2020 13:19:05 UTC

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Apr. 29	Tsingtao Brewery Company Limited Reports Earnings Results for the First Quarter Ended March 31, 2024	CI
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