TSINGTAO BREWERY COMPANY LIMITED (a Sino-foreign joint stock limited company established in the People s Republic of China)

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1 The Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. TSINGTAO BREWERY COMPANY LIMITED (a Sino-foreign joint stock limited company established in the People s Republic of China) (Stock Code: 168) Price Sensitive Information 2010 First Quarterly Report This announcement is made pursuant to the disclosure requirements of Rule 13.09(1) and 13.09(2) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. The quarterly report (unaudited) contained in this announcement has been prepared in accordance with PRC GAAP and in accordance with the relevant requirements on preparation and disclosure of quarterly report issued by China Securities Regulatory Commission, and has been approved by the Board of Directors of Tsingtao Brewery Company Limited (the Company or the Company ). 1. IMPORTANT NOTICE 1.1 The Board of Directors (the Board ), the Board of Supervisors, and its directors, supervisors and members of senior management of the Company undertake that none of the information contained in this report has false representation, misleading statement or material omission, and jointly and severally accept the responsibilities for the authenticity, accuracy and completeness of its content. 1.2 The 2010 first quarterly report has been considered and approved in written form at the eleventh meeting of the Sixth Board of Directors of the Company. 1.3 The first quarterly financial report of the Company has been reviewed by the Audit & Finance Committee under the Board, but has not been audited. 1.4 JIN Zhi Guo, the legal representative of the Company, SUN Yu Guo, the person in charge of accounting and YU Zhu Ming, the person in charge of the accounting department (accounting officer) declare that the financial report contained in this quarterly report is true and complete. 1

2 2 BASIC INFORMATION OF THE COMPANY 2.1 Major financial information and financial indicators As at the end of the reporting period As at the end of last year Currency: RMB Increase/Decrease from the end of last year (%) Total assets (.00) 16,148,595,491 14,867,452, Owners interests (or shareholders interests) (.00) 8,505,743,185 8,220,579, Net assets per share attributable to shareholders of listed company (.00/per share) From the beginning of the year to the end of the reporting period Increase/Decrease from the corresponding period of last year (%) Net cash flow from operating activities (.00) 1,346,341, Net cash flow from operating activities (.00/per share) Reporting period From the beginning of the year to the end of the reporting period Increase/Decrease from the same period of last year (%) Net profit attributable to shareholders of listed company (.00) 284,626, ,626, Basic earnings per share (.00/per share) Basic earnings per share after extraordinary items (.00/per share) Diluted earnings per share (.00/per share) Weighted average return on net assets (%) Weighted average return on net assets after extraordinary items (%) An increase of 0.26 percentage points An increase of 0 percentage point 2

3 Extraordinary items and amount: Item Unit:.00 Currency: RMB Amount Profits/Losses on disposal of non-current assets -6,486,835 Governmental subsidies included in the profits/losses of the period (excluding those in certain amount or in set amount which are closely related to the usual operations of the enterprises and in compliant with the State laws and regulations) 51,959,101 Other non-operating gains and losses excluding the aforesaid items 7,104,050 Affected amount of income tax -11,985,917 Affected amount of minority shareholders interests (after-tax) -950,503 Total 39,639, List of total number of shareholders and particulars of top ten holders of listed shares without sales restriction as at the end of the reporting period Unit: share Total number of shareholders as at the end of the reporting period (shareholder) 27,228 Particulars of top ten holders of listed shares without sales restriction Name of shareholders (Full name) Number of listed shares without sales restriction held at the end of the reporting period Class of shares HKSCC Nominees Limited 293,232,142 Overseas listed shares Asahi Breweries, Ltd. 266,721,836 Overseas listed shares ICBC (Asia) Nominee Limited 91,641,342 Overseas listed shares Bank of China-Dacheng Blue Chip Steady Securities Investment Fund 18,599,930 National Social Security Fund ,465,900 Industrial Bank Co., Ltd. Industrial Trend Investment Mixed Securities Investment Fund 10,247,744 National Social Security Fund 102 9,200,000 China Construction Bank Yinhua Core Value Selected Stock Securities Investment Fund 8,411,747 China Resources SZITIC Trust Co., Ltd Chongyang No. 3 Securities Investment Collection Fund Trust Program 7,950,000 Industrial Bank Co., Ltd. Industrial Global Vision Stock Securities Investment Fund 4,635,180 3

4 3 SIGNIFICANT EVENTS 3.1 Brief analysis to overall operations of the Company during the reporting period During the reporting period, the Company s sales volume of beer reached million hl, representing an increase of 1.5% comparing with that of the same period in prior year; sales revenues reached RMB4,090 million, representing an increase of 9.0% comparing with that of the same period in prior year; net profit reached RMB280 million, representing an increase of 42.7% comparing with that of the same period in prior year; in which the sales volume of its principal brand, Tsingtao beer, reached 6.96 million hl, representing an increase of 15.3% comparing with that of the same period in prior year. During the reporting period, the sales of beer is not satisfying due to the cold weather, but it turned to be satisfying gradually from month to month as the weather got warmer. Since last year, Tsingtao beer, the principal brand, had been in good trend of growth, which led to the increase of sales revenue and the improvement of profitability. As the peak season for the sales of beer will come soon, the Company will promote the sales of new products and its secondary brand to increase its share in the mid-low-end market when maintaining the satisfying growth trend of high-mid-end market. 3.2 Great changes to main accounting items and financial indicators and the reasons 1. Items in balance sheet End of the reporting period End of last reporting period Increased/ Decreased amount Percentage Cash and cash equivalents 6,358,622,203 5,350,580,742 1,008,041, % Bills receivable 4,500,000 10,750,000-6,250, % Prepayments 386,381, ,233, ,148, % Construction-in-progress 191,896,674 99,271,062 92,625, % Deferred income tax assets 315,990, ,842,706 75,147, % Advances from customers 470,140, ,015, ,125, % Taxes payable 726,819, ,030, ,788, % Deferred government grants 93,257,533 13,034,749 80,222, % 2. Items in income statement Jan Mar 2010 Jan Mar 2009 Increased/ Decreased amount Percentage Investment incomes 2,612,944 55,597 2,557, % Non-operating gains 61,070,569 20,245,251 40,825, % Non-operating losses 8,494,252 2,132,375 6,361, % Expenses of income tax 114,038,788 74,755,073 39,283, % Net profits attributable to shareholders of listed company 284,626, ,424,261 85,201, % 4

5 3. Items in cash flow statement Jan Mar 2010 Jan Mar 2009 Increased/ Decreased amount Percentage Net cash flow from operating activities 1,346,341, ,752, ,589, % Net cash flow from investment activities -308,020, ,582, ,561, % Net cash flow from financing activities -24,881,909 55,828,819-80,710, % (1) The cash and cash equivalents increased from the end of last reporting period, which was mainly due to the increase of net cash flow from operating activities during the reporting period; (2) The bills receivable decreased from the end of last reporting period, which was mainly due to the amounts received from the expired bills receivable during the reporting period; (3) The prepayments increased from the end of last reporting period, which was mainly due to the equity transfer amounts prepaid for the purchase of the equity of Tsingtao Brewery (Jinan) Bao Tu Quan Sales Company Limited (the Target Company ); (4) The construction-in-progress increased from the end of last reporting period, which was mainly due to the increased investments to the technical restructuring and expansion projects of some subsidiaries; (5) The deferred income tax assets increased from the end of last reporting period, which was mainly due to the increase of recognised deferred income tax assets resulting from the increase of the accrued expenses pending for payment of the subsidiaries; (6) The advances from customers increased from the end of last reporting period, which was mainly due to the increase of advances from the customers for the goods received by the subsidiaries; (7) The taxes payable increased from the end of last reporting period, which was mainly due to the increase of taxes payable including value-added tax and income tax resulting from the increase of sales incomes and profits of the Company; (8) The deferred government grants increased from the end of last reporting period, which was mainly due to the compensations received by the subsidiaries from the government for the relocation; (9) The investment incomes increased from the same period of last year, which was mainly due to the increase of recognised investment incomes resulting from the increase of the net profits of the associates invested by the Company comparing with that in last year; (10) The non-operating gains increased from the same period of last year, which was mainly due to the increase of subsidies received by some subsidiaries from the government during the reporting period; (11) The non-operating loss increased from the same period of last year, which was mainly due to the increase of fixed assets disposal losses resulting from the relocation of some subsidiaries during the reporting period; 5

6 (12) The expenses of income tax increased from the same period of last year, which was mainly due to the increase of the expenses of income tax resulting from the increase of total amount of profit during the reporting period comparing with that in last year; (13) The net profits attributable to shareholders of listed company increased from the same period of last year, which was mainly due to the increase of sales incomes resulting from the increase of sales volume and the optimization of product mix; (14) The net cash flow from operating activities increased from the same period of last year, which was mainly due to the increase of revenues from the sales of products resulting from the satisfying growth trend of the sales of principal products during the reporting period; (15) The net cash flow from investment activities increased from the same period of last year, which was mainly due to, firstly, the increase of compensations for relocation received by some subsidiaries from the government during the reporting period; secondly, the decrease of investments paid by the Company during the reporting period; (16) The net cash flow from financing activities decreased from the same period of last year, which was mainly due to the decrease of borrowings during the reporting period comparing with that of the same period in last year. 3.3 Explanation and analysis on significant events, impacts and resolutions Applicable N/A 1. Upon the approval by the Board, the Company had on 1 March 2010 entered into an equity transfer agreement with Tsingtao Brewery Group Company Limited ( Tsingtao Group ), whereby the Company agreed to acquire the entire equity held by Tsingtao Group in the Target Company in the tender auction process in Qingdao Property Rights Exchange ( QDPREx ) for a consideration of RMB million. Such consideration was arrived at with reference to the valuation of the net asset value and the bidding price of the Target Company. For details of the transaction, please refer to the announcement published on 1 March 2010 on the websites of the stock exchanges where the shares of the Company are listed. During the reporting period, the Company had made full payment for the purchased equity of the Target Company to Tsingtao Group to the account designated by QDPREx. As at the end of the reporting period, the procedures for the changes of registration at the industrial and commercial administration for the aforesaid purchased equity had not been completed yet. 2. Upon the approval by the Board, the Company had on 16 April 2010 entered into an Agreement for the Project in the Development Zone with the management committee of Shijiazhuang Economic and Technical Development Zone in Hebei Province (the Shijiazhuang Development Zone ), whereby the Company planned to build a production base of annual output volume of 4 million hl (2 million hl at the first phase) in Shijiazhuang Development Zone. It is planned to invest in at the first phase RMB274.5 million of fixed assets, and invest in RMB200 million as capital fund through establishing a wholly-owned subsidiary in the Shijiazhuang Development 6

7 Zone. Other construction funds needed for the project will be from entrusted loans provided by the Company or by fund raising by itself. The Board is of the view that, the Company choosing to build a new plant in Shijiazhuang, Hebei is for the need of improving its market layouts and resolving the problem of insufficient production capacity, and at the same time for a satisfying investment return, and the project is feasible and necessary. 3.4 Implementation of undertakings made by the Company, shareholders as well as actual controlling parties Applicable N/A 1. As undertaken by the former non-tradable shareholder of the Company in the share reform: (1) No shares held by it shall be listed or transferred on the A-share market within 60 months since the date of such shares can be listed; (2) The controlling shareholder undertook that, in the coming three years after the completion of the share reform, it would propose to the annual general meeting of the Company for the following profit distribution scheme, and promised to vote in favor of the scheme: the profit distribution ratio not less than 70% of the distributable profit of the year of the Company; (3) After the completion of the share reform, the controlling shareholder will propose to the Board for setting up a long-term incentive scheme including stock option. And the Board will implement such long-term incentive scheme under the relevant State regulations or implement after submitting to the general meeting of the Company for approval. After the completion of transfer of state-owned shares of the Company, Tsingtao Group has accepted all obligations required to be fulfilled by the State-owned Assets Supervision and Administration Commission of Qingdao (the former controlling shareholder of the Company) and all undertakings required to be made by it after the implementation of the proposed share reform of the Company 2. Tsingtao Group undertakes that, it will not decrease the shares held in the Company during the period that it implements its share-increasing plan and during the statutory period. During the reporting period, Tsingtao Group had fulfilled the aforesaid undertakings. 3.5 Warning and explanation of any potential substantial losses predictably in accumulated net profit from the beginning of the year to the end of next reporting period or any substantial variance against last year. Applicable N/A 7

8 3.6 Implementation of cash dividends during the reporting period As it is stipulated in the Articles of Association of Tsingtao Brewery Company Limited that, in the annual profit distribution proposal worked out by the Board of Directors of the Company, the profit which to be distributed in cash shall not be less than 30% of the profit attributable of the year, therefore, it considered and approved the profit distribution proposal of the Company for the year 2009 at the tenth meeting of the sixth Board of Directors of the Company to propose for a final dividend of RMB0.16 (with tax) per share for the year This profit distribution proposal will be subject to the approval at the 2009 Annual General Meeting of the Company. For the unaudited balance sheet, income statement and cash flow statement of the Company as at 31 March 2010, please refer to the websites of Shanghai Stock Exchange ( and the Company ( By Order of the Board Tsingtao Brewery Company Limited ZHANG Xue Ju Company Secretary Qingdao, the People s Republic of China 29 April 2010 Directors of the Company as at the date of this announcement hereof are: Executive Directors: Non-executive Directors: Independent Non-executive Directors: Mr. JIN Zhi Guo (Chairman), Mr. WANG Fan (Vice Chairman), Mr. SUN Ming Bo, Mr. LIU Ying Di and Mr. SUN Yu Guo Mr. Fumio YAMAZAKI and Mr. TANG Jun Mr. FU Yang, Ms. LI Yan, Mr. POON Chiu Kwok and Ms. WANG Shu Wen 8