洋河股份：2017年年度报告（英文版）

Section I Important Statements, Contents and Definitions

The Board of Directors, Board of Supervisors, directors, supervisors and senior management of JiangsuYanghe Brewery Joint-Stock Co., Ltd. (hereinafter referred to as the Company) hereby guarantee thatthe information presented in this report is free of any false records, misleading statements or materialomissions, and shall Individually and together be legally liable for truthfulness, accuracy andcompleteness of its contents.

Mr. Wang Yao, responsible person for the Company, Mr. Cong Xuenian, responsible person foraccounting work and Mr. Yin Qiuming, responsible person for the Company’s financial affairs(Accounting Supervisor) have warranted that the financial statements in this report are true andcomplete.

All directors all attended the board meeting to deliberate this report.

The future plans and some other forward-looking statements mentioned in this report shall not beconsidered as virtual promises of the Company to investors. Therefore investors are kindly reminded topay attention to possible investment risks.

In the annual report, the risks and countermeasures in the operation of the company are described indetail (see 9. Outlook for the Future Development of the Company in Section IV Performance Discussionand Analysis). Investors are kindly reminded to to pay attention to possible investment risks.

The profit distribution plan approved by the board of directors: based on 1,506,988,000 shares, a cashdividend of RMB 25.50 will be distributed for every 10 existing shares held, 0 shares of Bonus shares(Tax inclusive), and reserves would not be converted into share capital.

Section XII Documents Available for Preference ..............232

Accounting firm engaged by the Company

Sponsors engaged by the Company to continuously perform its supervisory function during theReporting Period

□ Applicable √ N/A

Financial advisor engaged by the Company to continuously perform its supervisory function during theReporting Period Reporting Period

□ Applicable √ N/A

Whether the Company performed a retroactive adjustment to or restatement of accounting data due tochanges of accounting policies and correction of accounting errors

□ Yes √ No

□ Applicable √ N/A

No such differences for the Reporting Period.

□ Applicable √ N/A

No such differences for the Reporting Period.

Unit:RMBWhether there are any material differences between the financial indicators above or their summationsand those which have been disclosed in quarterly or semi-annual reports

□ Yes √ No

√ Applicable □ N/A

Unit:RMB

Explain the reasons if the Company classifies an item as a non-recurring profit/loss according to thedefinition in the Explanatory Announcement No. 1 on Information Disclosure for Companies OfferingTheir Securities to the Public-Non-Recurring Profits and Losses, or classifies any non-recurringprofit/loss item mentioned in the said explanatory announcement as a recurring profit/loss item.

□ Applicable √ N/A

No such cases for the Reporting Period.

Whether the Company needs to comply with the requirement disclosure of special industry.

No

The Company is mainly engaged in the production and sales of liquor. The production of liquor adoptssolid-state fermentation, mainly including starter-making, brewing, stocking, packaging and so on. Thesales of liquor mainly adopts two modes, namely distribution and retailing. During the reporting period,the company's primary business and business mode had not changed. According to the Guidelines forthe Industry Classification of Listed Companies (2012 Revision) issued by CSRC, the Company belongsto C15 Manufacturing industry of liquor, beverages and refined tea.

The company is the national large-scale liquor production enterprise. Among the enterprises in the liquorindustry, the Company is the only one that has two China' time-honored brands, the two famous Chineseliquor, namely Yanghe and Shuanggou. and the Company has six China' well-known trademarks. Theleading products of the Company are a series of mellow liquor including Dream Blue, Yanghe BlueClassic, Shuanggou Zhenbaofang, Yanghe Daqu, Shuanggou Daqu. They have high brand awarenessand reputation throughout the country.

During the reporting period, there was a new round of growth period in the liquor industry after the deepadjustment. The consumption of liquor market is obviously upgraded. High-end and secondary high-endLiquor showed the simultaneously rising of volume and price during the year. The concentration of theindustry has accelerated significantly, and the famous liquor enterprises developed better. According tothe disclosed liquor industry periodic report, the Company's revenue and profit ranked third in the liquorindustry.

□ Applicable √ N/A

Whether the Company needs to comply with the requirement disclosure of special industry.

No

The Company has obvious advantages in natural environment, quality technology, brand influence,sales network and so on. Those are the Company’s unique core competitiveness. The corecompetitiveness of the company has not changed during the reporting period.

The Company is based in Suqian, the capital of Chinese liquor with 'three rivers, two lakes and onewetland'. Suqian is one of the three famous wetland liquor producing areas in the world, enjoying equalpopularity with the Scotch Whisky producing area and the French Cognac producing area. It is the onlynatural oxygen bar in Jiangsu province without acid rain. The long history and unique ecologicalenvironment provide a good source of water, soil and air for production of liquor and spirits. Especiallythe microorganism condition significantly benefits the production of liquor and spirits. The Yanghebrewing originated in the Sui and Tang Dynasties, flourished in the Ming and Qing Dynasties. It had beensold in Jianghuai area during the period of Yong Zheng of Qing Dynasty. It has a good reputation that'Dainty taste derived from fortune spring and liquor ocean, which makes Yanghe rank first place inJianghuai area'. Shuanggou alongside Yanghe has been praised as the origin of Chinese natural liquorby domestic and overseas experts due to the discovery of drunken ape fossils in Xiacaowan.

Considering the diversification and individuation of consumption demand, the Company took the lead inbreaking the traditional classification of liquor flavor. The Company classifies the liquor by taste and putemphasis on taste value. The Company strengthens the mellowness of liquor, puts forward the new styleof the mellow liquor quality, and deeply meets the core demand of the target consumers. It successfullyestablishes the system framework of new production technology and mellowness mechanism of mellowliquor catering to market consumption. In June 2008, 'Mellowness' was first written into the nationalstandard in China Protected Geographical Indication Product- Yanghe Daqu ( Standard No.GB/T220406-2008).

The Company has 26 National Liquor Tasting Committee members, 69 Provincial Liquor TastingCommittee members and 1845 technicians. The Company also has a number of national and provincialtechnical research and development platforms. The obvious advantage of technical talents providestechnical support for the continuous improvement of the quality. Dream Blue and Mellow Sujiu, therepresentative products of mellow liquor, have won the national quality awards, such as National BestQuality Award, Liquor and Spirits Design Award and National Liquor and Spirits Sensory Quality Award.

In 2017, in the national liquor taster contest sponsored by China Alcoholic Drinks Association, thenational liquor taster Zhu Fanggang from the Company, standing out from more than 120 contestants,ranked the first place in the contest. 3 prize-winners of the top 10 were from the Company. The Companyhas the most prize-winners in the Top 10 enterprises. It highlights the strong talent advantage of theCompany again.

The Company, as one of the eight old famous liquor enterprises, is the only one that has two China'time-honored brands, the two famous Chinese liquor, namely Yanghe and Shuanggou and the Companyhas six China' well-known trademarks, including Yanghe, Shuanggou, Yanghe Blue Classic,Zhenbaofang, Dream Blue, Su. The Company whose brand worth $4.281 billion has been selected in2017 Global Liquor Brand Value Top 50 and ranked third/second globally/in China by Brand Finance, aworld-famous brand value research organization. In 2017, the Company whose brand worth RMB35.526 billion ranked the top 100 in China's 500 Most Valuable Brands released by World Brand Lab.

The Company also was listed in the Global Top 2000 World listed companies published by Forbes, theworld finance and economics magazine. Dream Blue was selected as one of the top 10 brands in CCTVNational Brand Plan.

The Company has a sales and marketing team with the largest number of personnel, the latest conceptand the strongest executive force in the industry. The Company has cooperated with more than 8000distributors, has more than 30 thousand ground promotion employees, and continues to enhance thedeep distribution mode. At present, the Company has the most powerful marketing network platform inthe Chinese liquor industry. It has penetrated into every county and city throughout the country. Highspeed channel has been basically established, laying a solid foundation for market expansion andcategory extension in the future. At the same time, as a traditional enterprise, the Company has alsoinsisted on exploring new marketing mode, and has made certain achievements in internet applicationinnovation.

In 2017, the Company made solid progress in all aspects of work according to laws and regulations suchas Corporation Law, Securities Law, Articles of Incorporation, Rules Governing Listing of Stocks onShenzhen Stock Exchange and Guidelines on standard operation of SME Board Listed Companies onShenzhen Stock Exchange and achieved sustainable and healthy development. During the year, theCompany achieved operating revenue of RMB 19.918 billion, up 15.92% from last year; and net profitattributable to shareholders of the listed company of RMB 6.627 billion, a 13.73% year-on-year increase.

During the reporting period, the Company carried out main tasks and performance including thefollowing six aspects:

1.1 Focused on excellent execution and channel deepening to improve sales and marketing to a higherlevel with indomitable struggle attitude. Firstly, marketing was significantly enhanced through laying asolid foundation and storing potential energy. Core products’ prices were steadily raised through precisepositioning of marketing strategy and strictly execution and control. New breakthroughs of grouppurchase and attracting investment were achieved through taking further selected policy. Grabbingopportunity of consumption upgrade and accelerated volume-driven growth of Dream Blue improvedmarketing performance to a higher level. Secondly, focusing on resource and telling good stories toenhance brand building. “China Dream, Dream Blue” sounded the strongest voice at the New Year’sConcert in the National Centre For The Performing Arts. Dream Blue obtained the naming right of BoaoForum and held auctions for dealership of “Dream Blue Handcraft Class” successfully. “Blue DreamManual Class” was widely praised for “Excellent Quality and Creative Design”. High-end brandconnotation was manifested and brand influence was enhanced through a series of creative eventmarketing such as “CCTV National Brand Experience Day— state-run media into Yanghe”, “GuyuForum” and “Open Toupai Liquor Cellar Festival”.

1.2 Focused on “Quality First”, striving for benchmarking and making liquor quality better withpainstaking craftsman’s attitude. Firstly, “Quality First” made liquor quality better. Focusing on the overallrequirements of “strengthening soft feeling and satisfaction” and the orientation of quality improvement,base liquor quality and soft degree were steadily enhanced through optimizing process parametersscientifically. Meanwhile, core product quality was overall upgraded through large-scale market researchand multiple inferior-quality product selection, in order to improve consumer experience further. Secondly,deepening scientific research guided by technology. Among 5 categories 21 research projects, mostachieved good results though comprehensive advance and priority breakthrough at difficult points. TheCompany positively participated in establishing industry standards and achieved the transformation from“guiding the company” to “leading the industry”.

1.3 Focused on “San Xing jiu Hua”, solidifying foundation, enhancing efficiency and improvingmanagement with unremitting effort. Firstly, focused on upper and lower linkage and exemplary role;issued and implemented “Sujiu Basic Law”, which became the staff’s basic code of conduct. TheCompany comprehensively optimized working standard and content related to employees. Executionwas further enhanced through deepening the movement and strengthening work-style construction.

Secondly, linking work at selected spots with that in entire areas and stimulating vitality comprehensively.

The Company insisted on the orientation of question and the core of rectifying and reforming, promotedlong-term management and achieved sharp decline of recurrence rate of all types of problems. TheCompany pushed forward the progress of improvement projects to further improve operating efficiencyand performance. Thirdly, "unity of knowledge and practice" and highlighting initiative. The Companypushed forward initiative management to a higher level through creating atmosphere, improvingmechanism and optimizing environment. Meanwhile, as deepening “San Xing jiu Hua”, the Companyachieved the steady improvement of basic management.

1.4 Focused on service upgrade, precise development and enhancing supply-guarantee capacity withsustaining and high efficiency. Firstly, supply-guarantee capacity was enhanced during peak season.

Linkage between production and sales was improved efficiently. The Company devoted to “internalenhancing efficiency and external synergy”. Detailed programme smoothed the pace and overallarrangements. Accurate plan made inventory appropriate and smoothed production. Flexible schedulingboosted production and enhancing safeguarding capacity. Paying attention to improvement decreasedcost, enhanced performance and smoothed production, which reduced cost of around RMB 10 million.

Secondly, deepening projects brought about good results and the effect of supply chain managementwas significant. The Company carried out 7 research projects efficiently and positively pushed forwardthe supply chain management improvement project. Overall optimization process and innovativemanagement mode improved the performance of economy and management.

1.5 Focused on concept interaction, multidimensional deepening and promoting culture construction withusing the lion sheep effect. Firstly, further expand cultural atmosphere. Employees’ pride and honor andteam cohesion and centripetal forces were enhanced though organizing festival art performance atSpring Festival, Mid-autumn Festival, Lantern Festival and so on. Art performance told stories ofcraftsmen, promoted enterprise spirit and showed employees’ style through the form of song, cross talk,comedy sketches, reciting and so on. Secondly, further enhancing cultural diffusion. The Companyattracted more and more audiences and fans through online and offline activities based on “First Class”cultural construction standard. During the sealed ceremony, the Company elucidated and diffused thestories of craftsmen and their spirits and skills based on the theme of “Ingenuity, Dream Blue”. The salesrose more than expected and public praise effect achieved the desired goal. Thirdly, further deepeninginteraction culture. During the year, the Company helped 300 needy workers and succored 133 poorfamilies. Employees’ sense of gain was enhanced by health examination and gratuitous treatment.

Employees’ skill level was improved by skill competitions and business contests. The Company furtherpromoted the enterprise spirit and ingenuity through setting up typical examples of dedicated advancedemployees.

1.6 Focused on thinking leading, taking a giant leap, improving new business to a higher level withdevelopment trend of creativity and Innovation. Firstly, focused on Innovation and steady upgrade ofInternet transformation. The Phase I of Overall Marketing Project was successfully online on a trial basis.

FFC and Eco-sphere Project over-fulfilled the annual sale quota. The Banquet Platform Project, internetbusiness research and IT projects were further deepened. These work brought about significant dataapplication effect, pushed forward the channel management optimization and lay a solid foundation foraccurate marketing control. The Company focused on “Guide Platform” and “Interactive Product”. Thesetwo business modules successfully bred “WeChat Business Project Team” and “Customer ManagementProject Team”. Secondly, steady improvement of capital operation with great concentration. TheCompany built Maotai-flavor liquor production and management platform and invested in a winecompany whose comprehensive strength ranked No.2 in Chile. It laid a solid foundation for improvingwine quality and the investment maintained a good income level for three consecutive years.

Same with the contents presented in “1.Overview” of this section

Unit：RMB

√ Applicable □ N/A

Whether the Company needs to comply with disclosure requirements of special industryNo

Unit：RMB

Under the circumstances that the statistical standards for the Company’s main business data adjusted inthe Reporting Period, the Company’s main business data in the current year is calculated based onadjusted statistical standards at the end of the Reporting Period

□ Applicable √ N/A

√ Yes □ No

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

□ Applicable √ N/A

□ Applicable √ N/A

By business and product segment

Unit：RMB

Unit：RMB

Note:

The 32.27% decrease in consumption tax and surcharges was mainly due to the change of tax paying

method from withholding and remitting tax by trustee to direct payment by the Company on September 1,2017. In addition, the accounting method of consumption tax changed from the cost of production of

manufacturing consignment to the taxes and surcharges generated from producing and selling liquor bythe company.

√ Yes □ No

①The subsidiary corporations newly consolidated in the current year

②The subsidiary corporations no longer consolidated in the current year

□ Applicable √ N/A

Sales to major customers of the Company

Information on top five customers

Other information on major customers

□ Applicable √ N/A

Major suppliers of the Company

Information on top five suppliers

Other information on major suppliers

□ Applicable √ N/A

Unit：RMB

√ Applicable □ N/A

In the Reporting Period, the Company continued to push forward technology research and development.

The Company achieved significant results from twenty-one research projects in five areas. Throughconducting a systematic research on healthy liquor in Health Liquor Theory System Project. Healthyfunctional substances in Yanghe Liquor have been found and some good results in health experiencehave been achieved. Beneficial Elements of Brewing By-product Project achieved deep utilization offermented grains and this project was successfully selected for key research and development plan ofJiangsu Province. Solid State Fermentation of Fermented Grains Testing Project obtained industrystandard approval and achieved the transformation from “guiding the company” to “leading the industry”.

Meanwhile, focused on the overall requirements of “strengthening soft feeling and satisfaction” and theorientation of quality improvement, base liquor quality and soft degree were steadily enhanced throughoptimizing process parameters scientifically

Information about R&D input

Reason for any significant YPY change in the percentage of the R&D input in the operating revenues

□ Applicable √ N/A

Reason for any sharp variation in the percentage of the capitalized R&D input and rationale

□ Applicable √ N/A

Unit：RMB

Explanation of why the data above varied significantly

√ Applicable □ N/A

a. Mainly due to the increased cash received from returns on investment, cash inflows from investingactivities increased 265.83% from last year.

b. Mainly due to the increased cash paid for investments, cash outflows due to investing activitiesincreased 143.46% from last year.

c. Mainly due to more increased cash received from returns on investment than the increased cash paidfor investments, net cash flows from investing activities increased 30.23% from last year.

d. Mainly due to the positive net cash flows from investing activities and net cash flows from financingactivities as compared with last year, in cash and cash equivalent increased 68.61% from last year.

Explanation of main reasons leading to the material difference between net cash flows from operatingactivities during the Reporting Period and net profit for the year

□ Applicable √ N/A

√ Applicable □ N/A

Unit：RMB

Unit：RMB

□ Applicable √ N/A

There was letter of credit deposit of RMB 1.5 million in cash at bank and on hand. The right wasrestricted.

√ Applicable □ N/A

□ Applicable √ N/A

□ Applicable √ N/A

□ Applicable √ N/A

□ Applicable √ N/A

No such cases in the Reporting Period

□ Applicable √ N/A

No such cases in the Reporting Period

□ Applicable √ N/A

√ Applicable □ N/A

Main subsidiaries and joint companies with an over 10% influence on the Company’s net profit

Unit：RMB

Acquisition and disposal of subsidiaries during the Reporting Period

√ Applicable □ N/A

□ Applicable √ N/A

First, accelerated development and rapid growth of liquor industry profit. In 2017, the revenue and profitof liquor industry continued to maintain the rapid growth benefited from mass consumption upgrade,consumption structure shift and so on. According to statistic data published by National Bureau ofStatistics, during the year, liquor enterprise above designated size accumulatively achieved revenues ofRMB 565.442 billion, up 14.42% from last year and accumulatively achieved total profit before tax ofRMB 102.848 billion, up 35.79% from last year. In the future, liquor industry will benefit fromconsumption upgrade dividend further with simultaneously rising of volume and price of high-end andsecondary high-end products and the rise of middle class.

Second, increased competition and gradual formation of liquor industry structure. In 2017, with thefurther intensification of liquor market, the industry comprehensively entered the era of squeezecompetition. Famous liquor enterprises constantly strengthened the advantage of products, brand,channel and market. In each product segments – high-end, secondary high-end, mid-/low-end andsmall-packaged products, national brands or representative brands in different mainstream consumptionprice ranges have preliminarily emerged. The liquor industry development structure and competitivesituation are being gradually formed and it will be further enhanced in the further market competition.

Third, divergence accelerated and strong players turn stronger. In 2017, the high-end and secondaryhigh-end products benefited from the rapid growth of market size. It showed the prosperity ofsimultaneously rising of volume and price during the year. The growth rate of famous liquor enterprisesthat had great capacity of product, brand and channel was significantly higher than industry averagelevel. With continued rising trend of merger and acquisition and industry concentration，famous liquorenterprises that had great advantage in capital, management, brand, talent and channel will win out inthe liquor market competition and obtain more market share in the future.

In 2018, the Company continued to adhere to the strategy of “Wu Du Wu Mi”. The Company tried to bethe most dedicated, professional and far-sighted liquor enterprise that understands, distills and sellsliquor. The further development goal is to become a long-lasting leading enterprise across the life cycleconstantly.

In 2018, the general work vision is to develop better, comprehensively push forward “One Six Eight”Strategy and strive for achieving more than 20% year-on-year growth of operating revenue.

The meaning of so-called “One Six Eight” Strategy as follows:

“One” refers to focusing on one growth target and striving for leading position in the industry.

“Six” refers to adhering to six principles: trend position principle, Internet plus principle, qualitybreakthrough principle, high-end breakthrough principle, foundation reinforcement principle and bottomline improving principle.

“Eight” refers to pushing forward eight projects:

First, marketing innovation project. The Company pushes forward brand strategy innovation, focuses oncontent production and transmission mode, tells brand stories and improves brand value through bigevent and public benefit marketing. The Company pushes forward product innovation and brandupgrade of “Dream Blue” while constantly improving the product image of “Sea Blue” and “Sky Blue” andreleasing the potential of “Shuanggou”. The Company enhances marketing strategy innovation andpushed forward the dynamic and precis control of marketing, thus creating powerful potential energy ofmarketing.

Second, intelligent manufacturing project. The Company proactively pushes forward “integration ofinformatization and industrialization” and establishes the intelligent brewery with brewing network asprincipal line. The brewery has clear hierarchy including equipment, craft, control, management,decision-making analysis and etc. It achieves integration of management and control and optimumdistribution of resources. The Company establishes new generation intelligent brewery that achievesdigitization, visualization, integration and intelligence, leading to intelligent production andmanufacturing.

Third, technology research and development project. The Company comprehensively pushes forwardthe upgrade of six key projects including mellow quality, health examination,research topic selection andapplication of results. The Company endeavour to complete the six projects including the meaning ofmellow health and database of microorganism, focuses on health mechanism analysis of mellow spiritand leads the healthy development direction of mellow spirit.

Fourth, management optimization project. The Company focuses on quality management and control,financial auditing and team building. The Company pushes forward making “San Xing jiu hua”, long-termmanagement, new mode of financial management and control, management auditing and automation ofmechanism practicable. The Company puts emphasis on high-level talent training, provides acompetitive platform for the promotion, fully designs a scientific assessment scheme and establishesmore flexible incentive mechanism of market-oriented employment.

Fifth, digital transformation project. The Company deepens the data business development, completesthe establishment of front-end business scenario of community and user program and further deepssustainable operation of micronet business. The Company focuses on application breakthrough andachieves Information exchange and sharing, focuses on transformation breakthrough and achievespreliminary digitization to support “Weiketang” ecosphere, focuses on system breakthrough and buildsuser-centered operation strategy mechanism with multidimensional convergence of product, content,scenario, community and data, focuses on program breakthrough and improves platform service abilityof overall marketing program, thus achieving digital transformation.

Sixth, capital strategy project. The Company focuses on consumption upgrade and Internettransformation opportunity, pushes forward making core business, development business and financialinvestment program practicable, carries out research and analysis on unmanned retail business modeand current situation and development trend of new retailing, conducts a study on “big health” andconsumption upgrade, looks for new channel and operation mode, pushes forward resources sharingbetween Yanghe and Interested parties, thus establishing a multidimensional ecosphere of symbiosis,alternation and recycle.

Seventh, the Party building project. The Company takes the Thought on Socialism with ChineseCharacteristics for a New Era as a guide to action, studies spirit of the 19 CPC National Congress

th

thoroughly and firmly, comprehends the instructions and spirit of plenary session of provincial Partycommittee and municipal Party committee, disaggregates and implements spirit of the meeting of theCompany’s party committee, trade union and youth league. The Company improves the Party buildingproject to higher level through pushing forward the Party building and talent organization based on todayand future.

Eighth, culture-shaping project. The Company enhances characteristic culture construction, pushesforward Shuanggou sealed ceremony, ensures the improvement of reputation and marketing, improvessense of ritual and experience of “Open Toupai Liquor Cellar Festival” and enhances the brandreputation. The Company pushes forward making “Ten Thousand People Brand Plan” practicable, tellinggood stories of Sujiu based on reputation and characteristic, cultivating multilevel fans and absorbingmore Sujiu fans. The Company creates the career development platform that helps employee growthand promotion, thus achieving the common growth and development of employees and the Company.

First, uncertain risk of macro-economy. Nowadays, the external International economic developmentenvironment is unpredictable. It may have some influence on sustainable medium-to-high speed growthof China economy. Once there is unpredictable or uncontrolled change of domestic macroeconomicenvironment or industrial policy, it brings some risks to the healthy development of liquor industry orliquor enterprises.

Second, increased market competition risk. Nowadays, liquor market starts a new round of marketcompetition. Famous liquor enterprises recover rapid growth, optimize product structure, Intensify effortsto attract investment, enhance channel construction and further deepen terminal, leading to moretensive market competition. Meanwhile, liquor industry faces reconstruction of price, channel andservice system. It poses a serious challenge to enterprises whether they can adapt to the newtransformational change.

Third, risk of consumption concept change. Nowadays, in daily life, the preference of spirit consumersdecreases and there is a diversified development trend of liquor consumption as consumers pay moreattention to healthy life concept, promote moderate drinking and the age structure adjustment of liquorconsumers. The liquor industry and liquor enterprises need to face a realistic problem that how theyprecisely grasp the consumption change and lead the future spirit consumption trend.

√ Applicable □ N/A

Formulation, execution or adjustments of profit distribution policy, especially cashdividend policy, for common shareholders in the Reporting Period

□ Applicable √ N/A

On May 19, 2017, the Company held 2016 annual shareholders' meeting, and the plan forprofit distribution for 2016 was deliberated and approved by this meeting. Plan for profitdistribution for 2016: Based on its total of 1506.988 million shares as at 31 December2016, the company distributed a cash dividend of RMB 21 (tax inclusive) per 10 shares toall shareholders. The total cash dividend is RMB 3164.6748 million (including tax). Thebook closure day was 15 June 2016 and the ex-right & ex-dividend day 16 June 2016.

Plans (or preliminary plans) for profit distribution and converting capital reserves intoshare capital for common shareholders for the recent three years (including the ReportingPeriod) are as following:

Preliminary plan for profit distribution for 2017: Based on its total of 1506.988 millionshares as at 31 December 2017, the company is to distribute a cash dividend of RMB

25.5 (tax inclusive) per 10 shares to all shareholders. The total cash dividend is RMB3842.8194 million (including tax).

Plan for profit distribution for 2016: Based on its total of 1506.988 million shares as at 31December 2016, the company distributed a cash dividend of RMB 21 (tax inclusive) per10 shares to all shareholders. The total cash dividend is RMB 3164.6748 million (includingtax). The book closure day was 15 June 2016 and the ex-right & ex-dividend day was 16June 2016.

Plan for profit distribution for 2015: Based on its total of 1506.988 million shares as at 31December 2015, the company distributed a cash dividend of RMB 18 (tax inclusive) per10 shares to all shareholders. The total cash dividend is RMB 2712.584 million (includingtax). The book closure day was 16 June 2015 and the ex-right & ex-dividend day was 17June 2015.

Cash dividend distribution over the recent three years (including the Reporting Period)

Unit: RMB

The Company made a profit in the Reporting Period and the profit distributed to commonshareholders of the Company (without subsidiaries) was positive, but it did not put forwarda preliminary plan for cash dividend distribution to its common shareholders

□ Applicable √ N/A

√ Applicable □ N/A

√ Applicable □ N/A

□ Applicable √ N/A

□ Applicable √ N/A

No such cases in the Reporting Period.

□ Applicable √ N/A

√ Applicable □ N/A

In 2017, the Ministry of Finance issued The Accounting Standards for Enterprises No.42-Non-current assets held for sale, disposal group and termination of operation. It has beenimplemented since 28 May 2017. The non-current assets, disposal group and terminationof operation existing in the implement date are treated by prospective application.

In 2017, the Ministry of Finance revised The Accounting Standards for Enterprises No. 16-Government Grants. Since 12 June 2017, the government grants existing in 1 Januaryhave been treated by prospective application. The recent government grants from 1January 2017 to the implementation date are adjusted according to the revised standard.

In 2017, the Ministry of Finance issued Notice of the Ministry of Finance on Revising theformat of general corporate financial statements. It revises the formation of generalcorporate financial statements, which is applicable for financial statements of fiscal year2017 and subsequent periods.

The above changes in significant accounting policies were approved by sixth session ofthe third meeting of the board of directors. The adjustment was made by the Companybased on requirements of the above standards and notices. The impact of items andamounts in financial report stated as follows:

□ Applicable √ N/A

No such cases in the Reporting Period.

√ Applicable □ N/A

Newly incorporated subsidiaries in this period

Subsidiaries that is no longer included in the consolidated range from this period

CPAs firm at present

Whether the CPAs firm was changed in the current period

□ Yes √ No

Engagement of any CPAs firm for internal control audit, financial advisor or sponsor

√ Applicable □ N/A

The Company appointed Jiangsu Suyajincheng CPA LLP as the internal control auditor forthis year. The remuneration in total paid by the Company to Jiangsu Suyajincheng CPALLP for its audit of the Company’s financial report and internal control conditions for 2017was RMB530 thousand.

□ Applicable √ N/A

□ Applicable √ N/A

No such cases in the Reporting Period.

□ Applicable √ N/A

No such cases in the Reporting Period.

□ Applicable √ N/A

No such cases in the Reporting Period.

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□ Applicable √ N/A

No such cases in the Reporting Period.

□ Applicable √ N/A

No such cases in the Reporting Period.

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No such cases in the Reporting Period.

□ Applicable √ N/A

No such cases in the Reporting Period.

□ Applicable √ N/A

No such cases in the Reporting Period.

□ Applicable √ N/A

No such cases in the Reporting Period.

□ Applicable √ N/A

No such cases in the Reporting Period.

□ Applicable √ N/A

No such cases in the Reporting Period.

□ Applicable √ N/A

No such cases in the Reporting Period.

√ Applicable □ N/A

Entrust assets in the Reporting Period.

Unit： RMB0, 000

Information about significant amount of individual entrust finance or high-risk entrustfinance with principle unguranteed and poor liquidity.

√ Applicable □ N/A

Unit： RMB0,000

Entrust finance expected to be failed to recover principle or other situation leading toimpairment

□ Applicable √ N/A

□ Applicable √ N/A

No such cases in the Reporting Period.

□ Applicable √ N/A

No such cases in the Reporting Period.

The information about taking social responsibilities disclosed in 2017 Annual SocialResponsibilities Report in detail on www.cninfo.com.cn on 27 April 2018.

According to the overall arrangement of overcoming poverty and achieving prosperity(work of “Gua Cun Bao Hu”) by Suqian municipal committee and municipal government,the Company actively responded the municipal appeal and made the work practicable.

The Company’s counterpart support objects were Qiuzhuang village and 200 low-incomefamilies living in Dagou village and Taiping village, Zhenglou Town, Yanghe New District.

The goal of target poverty alleviation is to achieve that the collective economic income ofreaches more than 180 thousand by the end of 2019 and 200 low-income families living inDagou village and Taiping village out of poverty.

The Company has continued to work hard for counterpart support( work of “Gua Cun BaoHu” and “San Jin San Bang”) since 2017 as follows:

First, the Company worked hard for counterpart support (work of “Gua Cun Bao Hu” and“San Jin San Bang”) required by municipal government including poverty alleviationinformation submission, feedback on problems shown on the public number (Jiangsu Visit)and concerns raised by farmers, “Gua Cun Bao Hu ”-Plan,Progress and Performance,“Zoujiceng, Tiaojiegou, Zhusanxia” ,mass poverty alleviation fellowship, “Sunshinealleviation”. The donation of mass poverty alleviation fellowship amounted to RMB 3million by the Company and employees. The Dream Blue charitable foundation financedpoor college students and helped poor students attend university. The Companyadvocated setting up “Yuanmeng Plan” education fund with Suqian chamber of commercein Nanjing. The donation amounted RMB 500 thousand and helped 50 college freshmenfrom poor families in Suqian.

Second, the Company pushed forward the annual work plan of (work of “Gua Cun BaoHu”) and helped poor families out of poverty. The total donation amounted more thanRMB 100 thousand by cadres and Party members. The Company assisted the villages inindustrial restructuring and leveling 700 mu of land for circulation. The Company alsohelped the villages pave more than 400 meters cement road, established a convenientservice center. The air-conditioning in Party member activity room was installed toimprove the condition. In particular, the Company donated RMB 400 thousand taken fromthe party membership dues to set up party group service center for 8 poor rural partybranches in Suqian in order to actively respond to the “party membership dues warmgrass roots activity” organized by organization department of the provincial partycommittee. The Company donated RMB 100 thousand to help Qiuzhaung village buildinfrastructure and donated RMB 100 thousand to help 200 low-income families living inDagou village and Taiping village in order to make the work of “Gua Cun Bao Hu” and“San Jin San Bang” practicable. By the end of 2017, there were 87 families out of povertyamong 101 families in Dagou village and the year-over-year increase of annual incomeper head of other families reached more than RMB 500. There were 66 families out ofpoverty among 99 families in Taiping village and the year-over-year increase of annualincome per head of other families reached more than RMB 500. The collective economicincome of Qiuzhuang village reached RMB 185.2 thousand and fulfilled the annual taskrequirement.

Third, the Company organized featured activities related to poverty alleviation includingthe special activity of Dragon Boat Festival (“Thousands of words are always friendship”)and organizing young volunteers to visit nursing home in Zhenglou Town for caringactivities. The Company took the opportunity of celebrating the 96th birthday of the CPCand institutionalization and normalization of the party building studies mechanism to bringthe work of “Gua Cun Bao Hu” and “San Jin San Bang” into a series of activities andeducation content and to organize new Party members to have an oath ceremony inQiuzhuang village.

In 2018, the Company will studies spirit of the 19th CPC National Congress thoroughlyand firmly. The Company will take targeted poverty alleviation and accelerating povertyeradication as its own duty and continue to make counterpart support plan seriouslybased on the task of poverty alleviation. The Company will push forward the povertyalleviation plan and work hard to complete the annual task of counterpart support. TheCompany will push forward the work of “Gua Cun Bao Hu” and “San Jin San Bang” withhigh quality and efficiency in order to enhance the rural development, enrich the people,build closer relationship between cadres and the masses and make a contribution to“Liang Ju Yi Gao”.

Whether the listed company and its subsidiaries belong to heavy polluting industriesprescribed by the environmental protection departments of China

Information about construction and operation of anti-pollution installations

18.3.1 Waste water treatment: In 2017, sewage treatment stations of the Company andsubsidiaries worked properly and efficiently and effluent quality was superior to relatedindustry standards.

18.3.2 Solid waste treatment: the solid waste of the Company and subsidiaries mainlyincluded vinasse, sludge and household garbage. The Company entrusted Jiangsu GuguiNew Material Joint-Stock Co.,Ltd., Guizhou Maifeng Biology Co.,Ltd., Jiangsu WoyeBiology Technology Development Co.,Ltd., Sihong County Hengli Property Management

Co.,Ltd. and local office of environment and sanitation to dispose the above solid waste.

Information about environmental impact assessment of construction project and otherauthorization from the administrative department in charge of environmental protection

The Company and subsidiaries have all necessary licenses and certificates includingenvironmental impact assessment report of construction project, “San Tong Shi” materialsexamination and acceptance report and waste discharge permit.

The prepared plan for environmental emergencies

The Company and subsidiaries made prepared plan for environmental emergenciesrespectively and have all necessary licenses and certificates related to the contingencyplan. They were put on record by Jiangsu Provincial Environmental Protection Office andGuizhou Provincial Environmental Protection Office. In 2017, the Company andsubsidiaries carried out emergency exercises about operating trouble of waste watertreatment and pipe network blocking. 6 emergency exercises were carried out during theyear and environment emergency response capability was enhanced.

Environment self-monitoring scheme

The Company and subsidiaries respectively prepared environment self-monitoringschemes based on requirement in order to achieve the quality control and guarantee ofoverall process of pollutant source monitoring. The schemes were put on record bySuqian environmental monitor station and Xiuwen County environmental monitor station.

The Company entrusted Taike Detection Technology Jiangsu Co.,Ltd., Sihongenvironmental monitor station and Xiuwen County environmental monitor station as thethird party to conduct sewage testing monthly and the testing results were timely issuedon information distributing platform.

Other environment information should be disclosed

N/A

Other information about environment protection

Information about emissions and saving energy

A.In 2017, the Company and subsidiaries spent more than RMB 3.8 million upgrading andrebuilding the sewage treatment stations. Air environmental quality within site was greatlyimproved and the indicators were superior to related standards.

B.The performance of recovery and comprehensive utilization of marsh gas wassignificant and the steam output from marsh gas burning was more than 43 thousand tons.

It achieved the economic result valued more than 7.9 million.

C.The Company actively responded to state and local requirements and shut down 2coal-fired boilers (20 tons) and 1 coal-fired boilers (10 tons). The Company adoptedcentralized heating and the environment performance was greatly improved. It savedmore than 25 thousand tons of coal and reduced 50.88 tons of sulfur dioxide, 55 tons ofoxynitride, 9.9 tons of dust particles, more than 12 thousand tons of slag and 58 thousandtons of greenhouse gas.

D.In 2017, the environment protection work was professionally recognized and wasawarded honorary title of “All-China Excellent Enterprise in Environment Protection”issued by All-China Environment Federation.

√ Applicable □ N/A

19.1 Suqian Blue Sky Trade Co., Ltd. was the company’s second-largest shareholder andheld 166,702,906 shares. The shareholding ratio is 11.06%; Suqian Blue Ocean Trade

Co., Ltd. was the company’s third-largest shareholder and held 156,435,720 shares. Theshareholding ratio is 10.38%. On 16 August 2016, Jiangsu Blue Alliance Joint-Stock Co.,Ltd., Suqian Blue Sky Trade Co., Ltd. and Suqian Blue Ocean Trade Co., Ltd. signed amerger agreement. The shares held by Suqian Blue Sky Trade Co., Ltd. and Suqian BlueOcean Trade Co., Ltd. was succeeded to Jiangsu Blue Alliance Joint-Stock Co., Ltd. aftermerger. The Company issued a prompted announcement of changes in equity (No.2016-021), a detailed report of change in equity and 2 simplified report of change in equityon 18 August 2016. The Company disclosed the announcement of completion ofregistration of shares held by more than 5% shareholders. The negotiability registrationwas completed by Blue Alliance, Blue Sky Trade and Blue Ocean Trade.

19.2 The Company indirectly held partnership share of Jiangsu Jiequan EmergingIndustry Development Fund (Limited Partnership) via Jiangsu Xinghe InvestmentManagement Co.,Ltd. and Nanjing Xingnahe Venture Capital Investment partnership(Limited Partnership). Jiangsu Jiequan Emerging Industry Development Fund (LimitedPartnership) completed fund-raising and put in record in AMAC. The record numbers areSCF515 and SCL005. It was disclosed in detail on the announcement of cooperativeinvestment with professional investment institutions (No: 2017-021) on 30 December2017 and the announcement of progress of cooperative investment with professionalinvestment institutions (No: 2018-011) on 12 April 2018.

□ Applicable √ N/A

Unit：Share

Reasons for the change in shares

√ Applicable □ N/A

The main reason for the change in shares is that the shares of directors and top managersare locked.

Approval of share changes

□Applicable √N/A

Transfer of share ownership

√Applicable □N/A

Blue Alliance merged and signed the Merger Agreement with Blue Sky Trade and BlueOcean Trade.After the merger, there was existence of Blue Alliance and cancellation ofBlue Sky Trade and Blue Ocean Trade. Blue Alliance took up the rights and obligations ofBlue Sky Trade and Blue Ocean Trade. 166,702,906 shares (including 37,993,906circulation stock and 128,709,000 restricted shares before IPO) held by Blue Sky Tradeand 156,435,720 shares（including 35,664,720 circulation stock and 120,771,000restricted shares before IPO）were fully transferred to Blue Alliance on 23 November2017.

Effects of changes in shares on the basic EPS, diluted EPS, net assets per share

attributable to common shareholders of the Company and other financial indexes over thelast year and the last Reporting period

□Applicable √N/A

Other contents that the Company considers necessary or is required by the securitiesregulatory authorities to disclose

□Applicable √N/A

√Applicable □N/A

Unit：Share

□Applicable √N/A

□Applicable √N/A

□Applicable √N/A

Unit：Share

Did any of the top 10 common shareholders or the top non-restricted common

shareholders of the Company conduct any promissory repurchase during the ReportingPeriod.

□ Yes √ No

The top 10 non-restricted common shareholders,the top10 common shareholders did notconduct any promissory repurchase during the Reporting Period.

Nature of controlling shareholder：Local state-owned

Type of controlling shareholder：Corporation

Change of the controlling shareholder during the Reporting Period

□Applicable √N/A

No such cases in the Reporting Period

Nature of actual controller：Local State-owned Assets Supervision and AdministrationCommission

Type of actual controller：Corporation

Change of the actual controller during the Reporting Period

□Applicable √N/A

No such cases in the Reporting Period.

Ownership and control relations between the actual controller and the Company

State-owned Assets Supervision and Administration Commission of Suqian

100%

Jiangsu Yanghe Group Co.,Ltd.

100%

Jiangsu Yanghe Brewery Joint-Stock Co., Ltd.

The actual controller control the company via trust or other ways of assets management

□Applicable √ N/A

√Applicable □ N/A

□Applicable √ N/A

□ Applicable √ N/A

No such cases in the Reporting Period

Professional background, work experience and major position of directors, members ofsupervisory Committee, senior management.

Mr. Wang Yao, born in December 1965, Master of engineering of Jiangnan University,Master of Business Administration of Nanjing University, Senior Engineer of theresearcher level, Representative of the 19th National Congress of the Communist Party ofChina, Craft master of Chinese liquor. He used to serve as Secretary of the Party branchand Director of crushing and starter-making workshop of Jiangsu Yanghe BreweryJoint-Stock Co., Ltd., Chairman, General Manager and Secretary of the Party Committeeof Jiangsu Yanghe Group Color Printing CO.,Ltd., Deputy General Manager, ViceSecretary of Party Committee, Secretary of the Discipline Inspection Commission ofJiangsu Shuanggou Co., Ltd., Deputy General Manager, Vice Secretary of PartyCommittee and President Assistant of Jiangsu Su Wine industry Co., LTD., GeneralManager and Vice President of Jiangsu Shuanggou Brewery Co., Ltd., Chairman andSecretary of the the Party Committee Su Wine Trading Co., Ltd.. He is Chairman andSecretary of the the Party Committee of the Company, Chairman of Su Wine Trading Co.,Ltd., Director of Blue Alliance currently.

Mr. Zhong Yu, born in May 1964, Master Degree, Senior Engineer, Master of Chineseliquor. He was the Director of Technology and Environmental Protection Department ofJiangsu Shuanggou Brewery; Vice Chief Engineer, President Assistant and Director ofProduction and Technology Center of Jiangsu Shuanggou Brewery Co., Ltd., ViceGeneral Manager of Yanghe Branch of Jiangsu Yanghe Brewery Joint-Stock Co., Ltd.,Brewing Director, President Assistant, Vice President of the Company, General Managerof Siyang Branch. Currently, He is Deputy Chairman, President, Vice Secretary of the theParty Committee of Yanghe, General Manager of Yanghe Branch and Chairman ofJiangsu Shuanggou Brewery Co., Ltd.

Mr. Han Feng, born in October 1962, Master Degree. He served as Deputy Head ofSiyang County in Jiangsu province, Member of the Party Committee, Member of standingCommittee of Siyang, Chairman of Jiangsu Yanghe Group CO., Ltd. and JiangsuShuanggou Group CO., Ltd. At present, he is Director of Yanghe, Chairman and Secretaryof the the Party Committee of Suqian Industry Development Group CO., Ltd., Chairman,General Manager of Jiangsu Yanghe Group CO., Ltd. and Jiangsu Shuanggou Group CO.,Ltd.

Mr. Wang Kai was born on August 1977, Bachelor Degree, Intermediate Economist. Hewas Manager of Brand department in Marketing Center of SHANGHAI TOBACCOGROUP CO., Ltd., President Assistant of Shanghai Haiyan Logistics Development CO.,Ltd. He is one of the Directors of Yanghe and Vice General Manager of Shanghai HaiyanLogistics Development CO., Ltd.

Mr. Cong Xuenian, born in January 1966, Master Degree, Senior Economist. He servedas Chief Accountant and Finance Director Jiangsu Yanghe Brewery, Finance Minister ofYanghe Group, Secretary of the Board, Financial Administrator, Director and vicePresident of the Company. At present, he is Secretary of the Board, FinancialAdministrator, Director, and Vice President of the Company, Chairman of Su Wine Fortunemanagement Co., Ltd. and Diector of Blue Alliance.

Mr. Zhou Xinhu, born in August 1962, Master Degree, Senior Engineer, Member of theExpert group of Liquor professional Committee of China Food Industry Association, Chiefwine taster of China and Master of Chinese Wine Critic. He was Technician of YangheGroup, Director of Quality Inspection department and Storage department, Vice GeneralManager of Jiangsu Yanghe Liquor Co., Ltd., Vice Chief Engineer, Chief Engineer andVice President of Company. At present, he is Director, Vice President and Chief Engineerof Company.

Mr. Liu Huashuang was born on December 1970, Master of Business Administration ofFudan University, Accountant. He was the Director of Marketing department and ViceGeneral Manager of Jiangsu Yanghe Liquor Co., Ltd., General Manager of Yanghe BlueClassic, General Manager of Jiangsu Yanghe Liquor Co., Ltd., Member of the StandingParty Committee of Company, Deputy General Manager and Vice Secretary of PartyCommittee of Jiangsu Su wine industrial Co., Ltd., Vice Chairman of Su wine trade groupLimited by Share Ltd. He is the Member of the Standing Party Committee of Company andDirector of Strategic Studies, Secretary of the Party Committee and Vice Chairman of Suwine trade group Limited by Share Ltd. now.

Mr. Xu Zhijian was born on March 1964, Master and Doctor Degree, Professor. He wasDirector of China&Netherlands Business Administration Education Center of NanjingUniversity, Director of EMBA Program of Nanjing University& Cornell University, Directorof International Business Administration Education Center of Nanjing University, AssistantDean of Business College of Nanjing University, Director of the Department of BusinessAdministration of Nanjing University. At present, he is Independent Director of Yanghe,Nanjing Port Co., Ltd., Jiangsu Maysta Chemical Co., Ltd. and Glarun Technology Co.,Ltd., Professor of Business College of Nanjing University.

Ms. Cai Yunqing, born in December 1952, Doctor of Medicine, Professor and DoctoralSupervisor. She was Director of Food Health department and Assistant Station-Master ofJiangse Sanitation and Antiepidemic Station, Director of department of nutrition and foodhygiene, school of public health, Nanjing Medical University, Director of Institute ofnutrition and food science. At present, she is Independent Director of company,Supervisor of Chinese Nutrition Society, Honorary President of Nutrition Society ofJiangsu Province, Vice President of Jiangsu Intelligent aged Research Association andHealth food evaluation Expert of National food and drug Administration.

Mr. Ji Xueqing was born on July 1971, Master degree. He used to be the Project Managerof China Chuangye Investment Group Limited, Chairman and President of NanjingQinghe Investment Group Co., Ltd., Executive Director of Nanjing Shuijinshi InvestmentGroup Co., Ltd., Senior Vice President of Yonyou Network Technology Co., Ltd. At present,he is Independent Director of Yanghe, Independent Director of Nanjing Balance NetworkTechnology Co., Ltd., Chairman of Nanjing Suhe Venture Capital Center, Director ofNanjing Liheng Investment Limited Partnership, Supervisor of Xuzhou Zm-Besta HeavySteel Structure Co., Ltd., Partner of China soft Investment Group.

Mr. Chen Tongguang, borm in April 1966, Bachelor Degree. He was Accountant ofJiangsu Huaiyin Electric Company, Vice Director of Finance department of JiangsuAgricultural College, Vice Director of Accounting Center and Finance department ofYangzhou University, Vice and General Manager Yangda branch of Yangzhou UniversityAsset Operation Co., Ltd. At present, he is Independent Director of Yanghe, GeneralManager Yangda branch of Yangzhou University Asset Operation Co., Ltd. andIndependent Director of Yangzhou Yangjie Electronic Technology Co., Ltd.

Mr. Feng Pantai was born on October 1960, College degree, Senior Economist. He wasVice Director of Sihong Food Bureau, Vice General Manager of Yanghe Group, Directorand Vice President of Company. He has been Chairman of the Supervisory Committee,Member of Standing Committee, Chairman of Trade Union, Director of Blue Alliance.

Mr. Chen Taiqing, born in May 1965, Master degree, Senior Political Engineer, Member ofCommunist Party of China. He was Member of the Party Committee of Jiangsu YangheGroup Co., Ltd., Director of Executive Office, Member of the Party Committee, Director ofHuman Resource Department, Director of Integrated Department, President Assistant,Vice General Manager of Yanghe branch and Secretary of Discipline InspectionCommission of Yanghe. At present, he is Supervisory, Vice Secretary of the PartyCommittee, General Manager and Secretary of the Party Committee of JiangsuShuanggou Distillery Stock Co., Ltd.

Mr. Chen Yiqin, born in August 1961, College degree, Auditor, Certified Public Accountant.

He was Director of the Suqian Municipal Audit Bureau, CFO of Suqian Water InvestmentCompany, Financial Director of Suqian Industry Development Group Co., Ltd. At present,he is Supervisory of Yanghe and Chairman of the Supervisory Committee of SuqianIndustry Development Group Co., Ltd.

Ms. Zhou Wenqi, born in April 1966, College degree, Senior Accountant. She wasFinancial Director of Shanghai Jieqiang No.3 and No.4 distribution center, FinancialAssistant, Deputy Manager, Manager of ShangHai jieqiang Tobacco Sugar &wine (Group)

Co., Ltd. She is Supervisory of Yanghe and CFO of ShangHai jieqiang Tobacco Sugar&wine (Group) Co., Ltd. currently.

Mr. Chen Taisong, born in January 1968, Master degree. He was Member, Secretary ofSiyang Legal Bureau of, secretary, Vice Section Chief, Section Chief, Director Assistant,Vice Director of Siyang Government Office, Alcalde and Secretary of the Party Committeeof Chuancheng town in Siyang country, Vice Secretary of the Party Committee andSecretary of Discipline Inspection Commission and Chairman of the SupervisoryCommittee of Su wine industrial Co., Ltd., Vice Secretary of Discipline InspectionCommission of Yanghe. At present, he is Supervisory, Member of Standing Committee,Director of Organization department of company, Vice Secretary of the Party Committeeand Secretary of Discipline Inspection Commission and Chairman of the SupervisoryCommittee of Su wine trade group Limited by Share Ltd.

Mr. Zhong Li, President of company, resume as above.

Mr. Cong Xuenian, Vice-President of company, resume as above.

Mr. Zhou Xinhu, Vice-President of company, resume as above.

Ms. Lin Qing, born in May 1975, Master degree, Senior Accountant, Certified PublicAccountant. She was Deputy Director of Enterprise department of Suqian Finance Bureau,Director Assistant of Suqian Price Bureau, Member and Vice Director of the PartyCommittee of National Development and Reform Commission, Member of the StandingCommittee of Yanghe, Vice-President of company. At present, she is a member of theStanding Committee of Yanghe and Vice-President of company

Mr. Zhen Bujun, born in January 1967, Master of Business Administration, SeniorEngineer. He was General Manager of Jiangsu Yanghe Group Co., Ltd., General Managerof Suqian State-owned Investment Co., Ltd., Vice General Manager of JiangsuShuanggou Distillery Stock Co., Ltd., Logistics & Purchasing Director and PresidentAssistant of Yanghe. At present, he is Vice-President, member of the Standing Committeeof company, General Manager and Secretary of the Party Committee of Siyang branch.

Mr. Zhu Wei, born in May 1977, Master of Nanjing University. He was Director of HumanResource department of company, Director of Marketing department, Chief MarketingOfficer and Vice General Manager of Su wine trade group Limited by Share Ltd., Directorof Strategy of company, Vice General Manager of Su wine trade group Limited by ShareLtd. He is Vice President of Yanghe and General Manager of Su wine trade group Limitedby Share Ltd. currently.

Position in Shareholder-Holding Companies

√ Applicable □ N/A

Position in Other Companies

√ Applicable □ N/A

Punishments imposed in the recent three years by the securities regulators on theincumbent directors, supervisors and senior management as well as those who left in theReporting Period

□ Applicable √ N/A

The following describes the decision-making procedures, grounds on which decisions aremade and actual remuneration payment of directors, supervisors and senior executives.

Decision-making procedures for directors, supervisors and senior executives: Based onthe "trial implementation measures for the annual salary of general manager (amended)”proposed by the second session and 9th meeting of the board of directors on December29, 2008, "trial method about the annual salary system of chairman (amended)” proposedby the first interim shareholders' meeting on January 18, 2009.

Grounds on which decisions are made of directors, supervisors and senior executives:Based on the Company's operating conditions, refer to the standard of regional economic,industry and market.

Actual remuneration payment of directors, supervisors and senior executives: Accordingto the performance and salary system and pay on time.

Remuneration of directors, supervisors and senior executives during the Reporting Period

Unit: RMB