2018 the First Quarter Report of Yantai Changyu Pioneer Wine Co. Ltd. Yantai Changyu Pioneer Wine Co. Ltd. 2018 the First Quarter Report 2018-Final 02 April 2018 1 2018 the First Quarter Report of Yantai Changyu Pioneer Wine Co. Ltd. I. Important Notice The board of directors,the board of supervisors,directors, supervisors & senior managers of the Company collectively and individually accept full responsibility for the truthfulness, accuracy and completeness of the information contained in this report and confirm that to the best of their knowledge and belief there are no unfaithful facts, significant omissions or misleading statements. All directors attended the meeting for deliberating this quarter report. Mr. Zhou Hongjiang (Chairman of the Company), Mr. Jiang Jianxun (Chief Financial Officer) and Mr. Jiang Jianxun (Financial Director) assure the truthfulness, accuracy and completeness of the financial report in the quarter report. 2 2018 the First Quarter Report of Yantai Changyu Pioneer Wine Co. Ltd. II、Corporate Information 1. Key accounting data and financial indicators Whether the Company makes retroactive adjustments or restates the accounting data of previous fiscal years. □ Yes V No The same period of More or less than last Item The report period last year year (%) Business income (CNY) 1,804,057,976.00 1,896,586,469.00 -4.88% Net profit attributed to the shareholders of the listed 479,444,238.00 516,634,494.00 -7.20% company (CNY) Net profit attributed to the shareholders of the listed 466,181,564.00 512,684,945.00 -9.07% company after deducting the irregular profit and loss (CNY) Net cash flows from the 507,263,964.00 384,358,508.00 31.98% operating activities (CNY) Basic earnings per share 0.70 0.75 -6.67% (CNY) Diluted earnings per share 0.70 0.75 -6.67% (CNY) Weighted average for earning 5.24% 6.10% -0.86% rate of the net assets The end of the More or less than last The end of last year report period year (%) Total assets (CNY) 13,134,043,590.00 12,536,755,208.00 4.76% Net Assets attributed to the shareholders of the listed 9,380,239,163.00 8,906,342,299.00 5.32% company (CNY) Details of irregular profit and loss V Yes □ No Unit:CNY From beginning of year Item Explanation to end of report period Gain on disposal of non-current assets, including 84,719.00 the reversal of accrued impairment provision Government grants credited in profit and loss (except for those recurring government grants that are closely related to the entity's operation, 16,861,473.00 in line with related regulations and have proper basis of calculation) Other non-operating income and expenses 525,389.00 Less: Income tax effect 4,252,831.00 3 2018 the First Quarter Report of Yantai Changyu Pioneer Wine Co. Ltd. Minority interests effect(after-tax) -43,924.00 Total 13,262,674.00 -- The reasons shall be made clear and definitely as to the irregular profit and loss that the Company has defined by virtue of the Explanatory Announcement on Public Company’s Information Disclosure No.1 - Irregular Profit and Loss and as to regarding the irregular profit and loss as recurrent profit and loss as specified in the Explanatory Announcement on Public Company’s Information Disclosure No.1 - Irregular Profit and Loss. □Available V Not available There is no situation regarding the non-recurring profit and loss as defined and specified in the Explanatory Announcement on Public Company’s Information Disclosure No.1 - Non-recurring Profit and Loss as recurrent profit and loss. 2. The total number of shareholders and top 10 shareholders at the end of the report period 1) The number of the common shareholders and preferred shareholders with recovered voting power as well as the shareholding of top 10 shareholders Unit: share 44,606 Total number of 0 Total number of common preferred shareholders at the end of report shareholders with recov period ered voting power at the end of report period The top 10 common shareholders Number Pledged or Character of Percentage of frozen Name of Shareholders Shares held shareholders (%) restricted Share Amo shares status unt Domestic non- 50.40% 345,473,856 YANTAI CHANGYU GROUP state-owned 0 -- 0 COMPANY LIMITED legal person Foreign legal 3.08% 21,090,219 GAOLING FUND,L.P. 0 -- 0 person CHINA SECURITIES FINANCE State-owned 2.28% 15,638,655 0 -- 0 CORP legal person BBH BOS S/A FIDELITY FD - Foreign legal 2.22% 15,241,826 0 -- 0 CHINA FOCUS FD person GUOTAI JUNAN Foreign legal 1.00% 6,828,497 SECURITIES(HONGKONG) person 0 -- 0 LIMITED SHENWAN HONGYUAN Foreign legal 0.96% 6,554,654 SECURITIES(HONGKONG) person 0 -- 0 LIMITED FIDELITY PURITAN TRUST: Foreign legal 0.89% 6,100,762 FIDELITY SERIES INTRINSIC person 0 -- 0 OPPORTUNITIES FUND UNION LIFE INSURANCE CO., Domestic non- 0.79% 5,446,039 LTD --- DIVIDEND --- state-owned 0 -- 0 PERSONAL INSURANCE legal person 4 2018 the First Quarter Report of Yantai Changyu Pioneer Wine Co. Ltd. DIVIDEND CENTRAL HUIJIN ASSET State-owned 0.69% 4,761,200 0 -- 0 MANAGEMENT LTD. legal person VANGUARD EMERGING Foreign legal 0.55% 3,788,487 MARKETS STOCK INDEX person 0 -- 0 FUND The top 10 common shareholders with unrestricted shares Name of Shareholders Number of Type of share unrestricted Type of Amount shares held share YANTAI CHANGYU GROUP COMPANY LIMITED 345,473,856 A share 345,473,856 GAOLING FUND,L.P. 21,090,219 B share 21,090,219 CHINA SECURITIES FINANCE CORP 15,638,655 A share 15,638,655 BBH BOS S/A FIDELITY FD - CHINA FOCUS FD 15,241,826 B share 15,241,826 GUOTAI JUNAN SECURITIES(HONGKONG) B share 6,828,497 6,828,497 LIMITED SHENWAN HONGYUAN SECURITIES(HONGKONG) B share 6,554,654 6,554,654 LIMITED FIDELITY PURITAN TRUST: FIDELITY SERIES B share 6,100,762 6,100,762 INTRINSIC OPPORTUNITIES FUND UNION LIFE INSURANCE CO., LTD --- DIVIDEND -- A share 5,446,039 5,446,039 -PERSONAL INSURANCE DIVIDEND CENTRAL HUIJIN ASSET MANAGEMENT LTD. 4,761,200 A share 4,761,200 VANGUARD EMERGING MARKETS STOCK B share 3,788,487 3,788,487 INDEX FUND Among the top 10 shareholders, Yantai Changyu Group The explanation for the associated Company Limited has no associated relationship or accordant relationship and accordant action action relationship with the other 9 listed shareholders, and the of the top 10 shareholders relationship among the other shareholders is unknown. Explanation for the top 10 common shareholders who No involved in financing activities and stock trading business(if any) Whether or not the Company’s top 10 common shareholders and top 10 common shareholders with unrestricted shares promise to buy back trading during the report period □ Yes √ No There are no top 10 common shareholders and top 10 common shareholders with unrestricted shares in the Company promise to buy back trading during the report period. 2) The total number of the preferred shareholders and top 10 preferred shareholders at the end of the report period □Available V Not available 5 2018 the First Quarter Report of Yantai Changyu Pioneer Wine Co. Ltd. III Major Issue 1. Great changes and reasons on main accountant data and financial index √Available □Not available Compared the end of the report period with the beginning of the report period: notes receivable increases by 109.5%, mainly due to the growth on bank acceptances; advance payment increases by 93.91%, mainly due to the growth of advances payment for raw material procurement; interest receivable increases by 294.4%, mainly due to the growth of bank term deposits; constructions in progress increases by 12.41%, mainly due to the increase in cumulative investment in technological transformation projects; goodwill increases by 28.02%, mainly due to the Company’s acquisition of goodwill generated by Kilikanoon Estate Pty Ltd in Australia; deposits received increases by 35.28%, mainly due to growth of advances from customers; non-current liabilities due within one year increased by 20.11%, mainly due to the transfer of long-term accounts payable. Compared the same period with last year: operating revenue decreases by 4.88%, although cash received related to sell products and supply labor service in the report period increases by 6.84%, it is affected by those factors including the adjustment of Company’s marketing system, payment and settlement methods of partial marketing expenses, commissioning of new product lines being not completed, as well as product optimization. Meanwhile the Company takes actions in improving purchase mode of partial products, strengthening order drive and small order for distributors etc. that makes slight reduction in sales revenue confirmed by accounting standard; sales expense decreases by 4.17%, mainly owing to decrease in advertising expense; administrative expense increases by 19.8% mainly owing to increase in depreciation and intangible assets amortization; financial expense decreases by 19.17% mainly owing that, with the use of partial bank loan into investment project construction, corresponding loan interest is included into the cost of fixed assets; net profit attributable to parent company decreases by 7.2% mainly owing to decrease in income; Other cash paid related to operating activities increases by 27.27% mainly owing to payment of marketing expense exemplified as advertising expense. The judgment of Company is that with the reformation of organizational structure, marketing policies and marketing system are gradually adjusted into position; the construction of marketing team and incentive measures are further perfected; product structure is constantly optimized; new product lines are ready to complete commissioning, the Company will enter new step of steady development in the future and promote the growth of operating performance. 2. Analysis explanation of the major issue’s process, its influence and the solution □Available V Not available 6 2018 the First Quarter Report of Yantai Changyu Pioneer Wine Co. Ltd. 3. The commitments that the Company’s actual controllers, shareholders, related parties, purchasers, the Company and other related parties do not implement completely exceeding the time limit within report period √available □not available Commitment Commitment Commitment Commitment Commitment Commitments Implementation Party Type content time period Commitments at - - share reform Commitments made in acquisition - - - - report or equity changes report Commitments at asset - - - - restructuring Yantai Solve Changyu horizontal Non-horizontal Has been Group Co., competition 1997.05.18 Permanent competition performing Ltd Clear the According to purpose of "Trademark brand royalty License Contract", the Company will pay trademark Commitments at royalty for the the initial public "Changyu"produ offering or Yantai cts of Yantai refinancing Changyu Changyu Group Has been Group Co., 1997.05.18 Permanent Co., Ltd every performing Ltd year, Yantai Changyu Group Co., Ltd will use trademark to advertise Changyu trademarks and the Contract products. Equity incentive commitments Commitments made to the minority - - - - shareholders of the Company 7 2018 the First Quarter Report of Yantai Changyu Pioneer Wine Co. Ltd. Commitment under timely Yes implementation or not For commitments that exceed the time limit and are not completed, specific reasons of not No completing the implementation and the next step 4. Forecast on the operating performance in the period from January to June of 2018 Warning and explanation for the estimation on the possible loss of cumulative net profit in the period from the beginning of this year to the end of the next report period or the great change comparing with same period of last year. □Available V Not available 5. The situation of security investment □Available V Not available There is no security investment during the report period. 6. The situation of derivative investment □Available V Not available There is no derivative investment during the report period. 7. The activities registration form of receptions, communication and interview etc. during the report period □Available V Not available There are no activities of receptions, communication and interview etc. during the report period. 8. The situation of illegal external guarantee □Available V Not available There is no illegal external guarantee during the report period. 9. The situation of non-operating fund occupation of controlling shareholders and related parties □Available V Not available There is no non-operating fund occupation of controlling shareholders and related parties during the report period. 8 2018 the First Quarter Report of Yantai Changyu Pioneer Wine Co. Ltd. Ⅳ Financial Statements 1. Financial statements 1) Consolidated balance sheet Yantai Changyu Pioneer Wine Co. Ltd. Unit: CNY ITEM At 31 March 2018 At 31 December 2017 Current assets: Monetary fund 1,700,742,920.00 1,402,522,509.00 Financial assets which are measured by fair value and which changes are recorded in current profit and loss Derivative financial liability Notes receivable 512,840,891.00 244,796,818.00 Account receivable 271,084,429.00 263,796,355.00 Advance money 4,688,679.00 2,417,931.00 Interest receivable 841,947.00 240,968.00 Dividend receivable Other account receivable 19,111,859.00 18,737,454.00 Inventories 2,366,202,029.00 2,473,614,046.00 Assets held for sale 2,000,197.00 2,000,197.00 Non-current assets due within one year Other current assets 244,746,112.00 230,822,759.00 Total current assets 5,122,259,063.00 4,638,949,037.00 Non-current assets: Financial assets for sale 469,028.00 467,251.00 Investment held to expiration Long-term account receivable Long-term equity investment Real estate for investment 18,405,315.00 18,467,989.00 Fixed assets 5,343,497,810.00 5,329,083,969.00 Construction in progress 1,153,468,887.00 1,026,141,569.00 Project material Liquidation of fixed assets Biological assets for production 203,462,752.00 201,929,888.00 Oil and gas assets Intangible assets 641,923,417.00 655,448,897.00 Development expenditure Goodwill 164,039,160.00 128,135,981.00 Long-term deferred expenses 228,713,906.00 230,009,231.00 Assets of deferred income tax 257,804,252.00 308,121,396.00 9 2018 the First Quarter Report of Yantai Changyu Pioneer Wine Co. Ltd. Other non-current assets Total non-current assets 8,011,784,527.00 7,897,806,171.00 Total assets 13,134,043,590.00 12,536,755,208.00 Current liabilities: Short-term loan 753,662,515.00 714,434,286.00 Financial liabilities which are measured by fair value and which changes are recorded in current profit and loss Derivative financial liability Notes payable Accounts payable 719,277,810.00 666,442,879.00 Advance money 474,678,260.00 350,894,156.00 Wage payable 162,876,153.00 210,824,234.00 Tax payable 52,527,451.00 145,094,156.00 Interest payable 771,250.00 771,250.00 Dividend payable Other accounts payable 618,535,523.00 602,964,319.00 Liabilities held for sale Non-current liabilities due within one year 133,264,742.00 110,954,827.00 Other current liabilities 15,931,213.00 16,878,199.00 Total current liabilities 2,931,524,917.00 2,819,258,306.00 Non-current liabilities: Long-term loan 172,360,586.00 156,125,854.00 Bond payable Including: Preferred stock Perpetual capital securities Long-term accounts payable 237,000,000.00 259,000,000.00 Long-term wages payable Special accounts payable Deferred income 89,523,491.00 92,918,855.00 Liabilities of deferred income tax 29,217,428.00 24,264,203.00 Other non-current liabilities 7,209,312.00 7,209,312.00 Total non-current liabilities 535,310,817.00 539,518,224.00 Total liabilities 3,466,835,734.00 3,358,776,530.00 Shareholder rights and interests: Share capital 685,464,000.00 685,464,000.00 Other equity instrument Including: Preferred stock Perpetual capital securities Capital public reserve 565,955,441.00 565,955,441.00 Less: Inventory shares Other comprehensive Income -2,438,134.00 3,109,240.00 Reasonable reserve 10 2018 the First Quarter Report of Yantai Changyu Pioneer Wine Co. Ltd. Surplus reserve 342,732,000.00 342,732,000.00 Provision of general risk Retained profit 7,788,525,856.00 7,309,081,618.00 Total owner’s equity attributable to parent Company 9,380,239,163.00 8,906,342,299.00 Minority interests 286,968,693.00 271,636,379.00 Total owner's equity 9,667,207,856.00 9,177,978,678.00 Total liabilities and owner's equity 13,134,043,590.00 12,536,755,208.00 Legal representative: Zhou Hongjiang; Person in charge of accounting : Jiang Jianxun; Person in charge of accounting organ: Jiang Jianxun 11 2018 the First Quarter Report of Yantai Changyu Pioneer Wine Co. Ltd. 2) Balance sheet of parent company Unit: CNY Item At 31 March 2018 At 31 December 2017 Current assets: Monetary fund 619,587,197.00 559,174,466.00 Financial assets which are measured by fair value and which changes are recorded in current profit and loss Derivative financial liability Notes receivable 91,173,459.00 41,645,203.00 Account receivable 7,399,313.00 7,805,333.00 Advance money 883,556.00 99,673.00 Interest receivable 97,500.00 76,646.00 Dividend receivable 287,495,922.00 407,495,922.00 Other account receivable 524,727,297.00 592,274,075.00 Inventories 335,580,040.00 348,042,053.00 Assets held for sale 2,000,197.00 2,000,197.00 Non-current assets due within one year Other current assets 26,310,801.00 29,706,058.00 Total current assets 1,895,255,282.00 1,988,319,626.00 Non-current assets: Financial assets for sale Investment held to expiration Long-term account receivable Long-term equity investment 4,617,128,387.00 4,511,202,204.00 Real estate for investment 18,405,315.00 18,467,989.00 fixed assets 283,857,300.00 288,150,901.00 Construction in progress 6,081,862.00 6,756,349.00 Project material Liquidation of fixed assets Biological assets for production 122,400,380.00 119,572,539.00 Oil and gas assets Intangible assets 69,028,431.00 69,623,219.00 Development expenditure Goodwill Long-term deferred expenses Assets of deferred income tax 25,632,635.00 28,787,907.00 Other non-current assets 3,721,606,444.00 3,718,674,166.00 Total non-current assets 8,864,140,754.00 8,761,235,274.00 Total assets 10,759,396,036.00 10,749,554,900.00 Current liabilities: Short-term loan 600,000,000.00 600,000,000.00 12 2018 the First Quarter Report of Yantai Changyu Pioneer Wine Co. Ltd. Financial liabilities which are measured by fair value and which changes are recorded in current profit and loss Derivative financial liability Notes payable Accounts payable 109,191,325.00 97,833,124.00 Advance money 6,000,000.00 6,000,000.00 Wage payable 59,738,430.00 70,108,076.00 Tax payable 6,404,562.00 14,569,690.00 Interest payable 652,500.00 652,500.00 Dividend payable Other accounts payable 543,246,768.00 544,713,172.00 Liabilities held for sale Non-current liabilities due within one year Other current liabilities 3,523,054.00 3,953,054.00 Total current liabilities 1,328,756,639.00 1,337,829,616.00 Non-current liabilities: Long-term loan - Bond payable Including: Preferred stock Perpetual capital securities Long-term accounts payable Long-term wages payable Special accounts payable Deferred income 12,341,059.00 12,970,473.00 Liabilities of deferred income tax Other non-current liabilities 2,235,802.00 2,235,802.00 Total non-current liabilities 14,576,861.00 15,206,275.00 Total liabilities 1,343,333,500.00 1,353,035,891.00 Shareholder rights and interests: Share capital 685,464,000.00 685,464,000.00 Other equity instrument Including: Preferred stock Perpetual capital securities Capital public reserve 557,222,454.00 557,222,454.00 Less: Inventory shares Other comprehensive Income Reasonable reserve Surplus reserve 342,732,000.00 342,732,000.00 Retained profit 7,830,644,082.00 7,811,100,555.00 Total owner's equity 9,416,062,536.00 9,396,519,009.00 Total liabilities and owner's equity 10,759,396,036.00 10,749,554,900.00 13 2018 the First Quarter Report of Yantai Changyu Pioneer Wine Co. Ltd. 3) Consolidated profit statement Unit: CNY Three months ended 31 Three months ended 31 Item March 2018 March 2017 I. Total Operating Revenue 1,804,057,976.00 1,896,586,469.00 Incl: Operating Revenue 1,804,057,976.00 1,896,586,469.00 II. Total Operating Cost 1,184,474,700.00 1,211,081,443.00 Incl:Operating Cost 625,431,208.00 636,501,146.00 Tax and levies on operations 101,766,053.00 110,070,692.00 Selling expenses 374,283,098.00 390,557,653.00 Administrative expenses 81,613,467.00 68,123,359.00 Finance expenses 4,711,493.00 5,828,593.00 Impairment losses of Assets -3,330,619.00 Add:Gains on increase in fair value of assets - - Investment income - - Incl. Investment income from affiliates - - Gains on assets disposal 84,719.00 -21,933.00 Other income 16,861,473.00 III.Operating profit 636,529,468.00 685,483,093.00 Add:Non-operating income 936,426.00 5,019,039.00 Including: Disposal earnings of non-current asset Less:Non-operating expenses 411,037.00 47,086.00 Incl. Losses from disposal of non-current assets IV.Total Profit before Taxation 637,054,857.00 690,455,046.00 Less:Income tax 158,539,458.00 174,172,291.00 V.Net profit after Taxation 478,515,399.00 516,282,755.00 (I) Going concern net profit 478,515,399.00 516,282,755.00 (II) Discontinued operation net profit Net profit attributable to Parent company 479,444,238.00 516,634,494.00 Minority interest income -928,839.00 -351,739.00 VI. Net after-tax of other comprehensive income -6,819,043.00 1,623,907.00 Net after-tax of other comprehensive income -5,547,374.00 1,372,041.00 attributable to owners of parent company (I) Other comprehensive income items which will - - not be reclassified subsequently to profit of loss 1. Changes as a result of re-measurement of net - - defined benefit plan liability or asset 2. Share of the other comprehensive income of the investee accounted for using equity method which - - will not be reclassified subsequently to profit and loss (II) Other comprehensive income items which -5,547,374.00 1,372,041.00 will be reclassified subsequently to profit or loss 1. Share of the other comprehensive income of the investee accounted for using equity method which - - will be reclassified subsequently to profit or loss 2. Gains or losses arising from changes in fair - - value of available-for-sale financial assets 14 2018 the First Quarter Report of Yantai Changyu Pioneer Wine Co. Ltd. 3. Gains or losses arising from reclassification of held-to-maturity investment as available-for-sale - - financial assets 4. The effect hedging portion of gains or losses - - arising from cash flow hedging instruments 5. Translation differences arising on translation of -5,547,374.00 1,372,041.00 foreign currency financial statements 6. Other - - Net after-tax of other comprehensive income -1,271,669.00 251,866.00 attributable to minority shareholders VII. Total comprehensive income 471,696,356.00 517,906,662.00 Total comprehensive income attributable to 473,896,864.00 518,006,535.00 owners of parent Company Total comprehensive income attributable to -2,200,508.00 -99,873.00 minority shareholders VIII. Earnings per share: (I) Basic earnings per share 0.70 0.75 (II) Diluted earnings per share 0.70 0.75 During this report period, the issue relates to company consolidation under common control, consolidated party completes net profit amount of CNY 0 before being consolidated, and consolidated party completes net profit amount of CNY 0 in the same period of last year. Legal representative: Zhou Hongjiang; Person in charge of accounting: Jiang Jianxun; Person in charge of accounting organ: Jiang Jianxun 15 2018 the First Quarter Report of Yantai Changyu Pioneer Wine Co. Ltd. 4) Profit statement of parent company Unit: CNY Three months ended 31 Three months ended 31 Item March 2018 March 2017 I. Sales Revenue 262,548,732.00 698,458,930.00 less:Cost of sales 223,847,815.00 611,883,847.00 Tax and levies on operations 14,257,566.00 45,787,579.00 Selling and distribution expenses Administrative expenses 20,509,904.00 20,418,872.00 Finance expenses 5,548,315.00 4,922,061.00 Impairment losses of Assets Add:Gains on increase in fair value of assets Investment income 20,000,000.00 24,861,144.00 Incl. Investment income from affiliates Gains on assets disposal 75,000.00 -11,641.00 Other income 1,059,414.00 II. Operating profit 19,519,546.00 40,296,074.00 Add:Non-operating income 47,479.00 466,924.00 Including: Disposal earnings of non-current asset Less:Non-operating expenses 19,985.00 Incl. Losses from disposal of non-current assets III. Total Profit before Taxation 19,567,025.00 40,743,013.00 Less:Income tax 23,498.00 3,970,467.00 IV.Net profit after Taxation 19,543,527.00 36,772,546.00 (I) Going concern net profit (II) Discontinued operation net profit V. Net after-tax of other comprehensive income - Net after-tax of other comprehensive income - attributable to owners of parent company (I) Other comprehensive income items which will - not be reclassified subsequently to profit of loss 1. Changes as a result of re-measurement of net - defined benefit plan liability or asset 2. Share of the other comprehensive income of the investee accounted for using equity method which - will not be reclassified subsequently to profit and loss (II) Other comprehensive income items which will - be reclassified subsequently to profit or loss 1. Share of the other comprehensive income of the investee accounted for using equity method which - will be reclassified subsequently to profit or loss 2. Gains or losses arising from changes in fair value - of available-for-sale financial assets 3. Gains or losses arising from reclassification of - 16 2018 the First Quarter Report of Yantai Changyu Pioneer Wine Co. Ltd. held-to-maturity investment as available-for-sale financial assets 4. The effect hedging portion of gains or losses - arising from cash flow hedging instruments 5. Translation differences arising on translation of - foreign currency financial statements 6. Other - VI. Total comprehensive income 19,543,527.00 36,772,546.00 VII. Earnings per share: (I) Basic earnings per share 0.03 0.05 (II) Diluted earnings per share 0.03 0.05 17 2018 the First Quarter Report of Yantai Changyu Pioneer Wine Co. Ltd. 5) Consolidated cash flow statement Unit: CNY Three months ended 31 Three months ended Item March 2018 31 March 2017 1. Cash flows from operating activities: Cash received from sales of goods and rending of services 1,766,530,391.00 1,653,469,554.00 Tax refund received 6,890,085.00 Other cash received related to operating activities 18,289,974.00 35,857,955.00 Subtotal of cash flows of operating activities 1,791,710,450.00 1,689,327,509.00 Cash paid for goods and services 418,799,244.00 424,736,589.00 Cash paid to and on behalf of employees 152,403,775.00 137,940,254.00 Cash paid for various taxes 486,679,596.00 564,277,054.00 Other cash paid related to operating activities 226,563,871.00 178,015,104.00 Sub-total of cash outflows of operating activities 1,284,446,486.00 1,304,969,001.00 Net cash flow from operating activities 507,263,964.00 384,358,508.00 2. Cash flow from investing activities: Cash received from return of investment Fixed deposit with the term of over 3 months 3,000,000.00 Cash received from obtaining investment profit 35,723.00 25,550.00 Net cash received from disposal of fixed assets, intangible 261,737.00 30,300.00 assets and other long-term assets Net cash received from disposal of branch and other business unit Other cash received related to investing activities Subtotal of cash flows of investment activities 297,460.00 3,055,850.00 Cash paid to acquire fixed assets, intangible assets and other 110,862,244.00 142,789,698.00 long-term assets Fixed deposit with the term of over 3 months 300,000,000.00 5,000,000.00 Cash for investment Net cash paid to acquire branch and other business unit 104,566,419.00 Other cash paid related to investment activities Subtotal of cash outflows of investment activities 515,428,663.00 147,789,698.00 Net cash flow from investing activites -515,131,203.00 -144,733,848.00 3.Cash flow from financing activites Cash received from acquiring investment Including: cash received from acquiring minority shareholders investment by branch Cash received from acquiring loans 96,644,015.00 51,803,310.00 Other cash received related to finaning activities Subtotal cash flows of financing activities 96,644,015.00 51,803,310.00 Cash paid to pay debts 79,119,513.00 18,643,560.00 Cash paid to distribute dividend, profit or pay interest 8,294,731.00 6,949,153.00 Including: dividend and profit paid to minority shareholders by branch Other cash paid related to financing activities Subtotal of cash outflows of financing activities 87,414,244.00 25,592,713.00 Net cash flow from financing activites 9,229,771.00 26,210,597.00 4. Influences of exchange rate fluctuation on cash and cash -571,409.00 197,614.00 equivalents 5. Net Increase in cash and cash equivalents 791,123.00 266,032,871.00 Add: balance at the beginning of the period of cash and cash 1,180,889,274.00 1,256,942,304.00 equivalents 6.Balance at the end of the period of cash and cash equivalents 1,181,680,397.00 1,522,975,175.00 18 2018 the First Quarter Report of Yantai Changyu Pioneer Wine Co. Ltd. 6) Cash flow statement of parent company Unit: CNY Three months ended 31 Three months ended Item March 2018 31 March 2017 1. Cash flows from operating activities: Cash received from sales of goods and rending of services 156,753,252.00 422,763,453.00 Tax refund received Other cash received related to operating activities 42,356,221.00 198,360,050.00 Subtotal of cash flows of operating activities 199,109,473.00 621,123,503.00 Cash paid for goods and services 83,858,780.00 163,847,294.00 Cash paid to and on behalf of employees 35,076,108.00 33,712,684.00 Cash paid for various taxes 27,242,412.00 145,925,056.00 Other cash paid related to operating activities 13,004,908.00 17,540,294.00 Sub-total of cash outflows of operating activities 159,182,208.00 361,025,328.00 Net cash flow from operating activities 39,927,265.00 260,098,175.00 2. Cash flow from investing activities: Cash received from return of investment Fixed deposit with the term of over 3 months 3,000,000.00 Cash received from obtaining investment profit 140,035,723.00 92,701,945.00 Net cash received from disposal of fixed assets, intangible 538,055.00 assets and other long-term assets Net cash received from disposal of branch and other business unit Other cash received related to investing activities Subtotal of cash flows of investment activities 140,573,778.00 95,701,945.00 Cash paid to acquire fixed assets, intangible assets and other 8,617,593.00 1,875,090.00 long-term assets Fixed deposit with the term of over 3 months 300,000,000.00 5,000,000.00 Cash for investment 105,926,184.00 55,192,710.00 Net cash paid to acquire branch and other business unit Other cash paid related to investment activities Subtotal of cash outflows of investment activities 414,543,777.00 62,067,800.00 Net cash flow from investing activites -273,969,999.00 33,634,145.00 3.Cash flow from financing activites Cash received from acquiring investment Including: cash received from acquiring minority shareholders investment by branch Cash received from acquiring loans Other cash received related to finaning activities Subtotal cash flows of financing activities Cash paid to pay debts Cash paid to distribute dividend, profit or pay interest 5,872,500.00 5,055,403.00 Other cash paid related to financing activities Subtotal of cash outflows of financing activities 5,872,500.00 5,055,403.00 Net cash flow from financing activites -5,872,500.00 -5,055,403.00 4. Influences of exchange rate fluctuation on cash and cash equivalents 5. Net Increase in cash and cash equivalents -239,915,234.00 288,676,917.00 Add: balance at the beginning of the period of cash and cash 493,568,866.00 238,003,198.00 equivalents 6.Balance at the end of the period of cash and cash equivalents 253,653,632.00 526,680,115.00 19 2018 the First Quarter Report of Yantai Changyu Pioneer Wine Co. Ltd. 2. Audit report Whether the 1st quarter report has been audited. □Yes √No The first quarter report has not been audited. Yantai Changyu Pioneer Wine Co., Ltd. Board of Directors 27th April 2018 20