YANTAI CHANGYU PIONEER
WINE COMPANY LIMITED
2011 Semi-annual Report
2011.08.09
Important
The Board of Directors，Board of Supervisors, directors, supervisors
and 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
other facts the omission of which would make any statement herein
misleading.
The 2011 Semi-annual Financial Report has not been audited.
The chairman of the Board of Directors Mr. Sun Liqiang, the
accounting director Mr. Leng Bin and the finance principal Mr. Jiang
Jianxun assure the truth and integrity of the financial and
accounting statement in this semi-annual report.
The report is respectively written in both Chinese and English. If
there are any discrepancies between the two versions, the Chinese
version should prevail.
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Contents
1. THE BASIC INFORMATION OF THE COMPANY……………………….………………. 4
2. CHANGES IN SHARE CAPITAL AND SHAREHOLDINGS OF 5
SUBSTANTIAL SHAREHOLDERS…………………..…………………………..…………………
3. INFORMATION OF THE DIRECTORS, SUPERVISORS AND SENIOR 8
MANAGEMENT TEAM…………………………………….……………….. …………
4. THE BOARD OF DIRECTORS’ REPORT….………………………………………. 8
5. MATERIAL EVENTS……………………………..…………………………………….. 13
6. FINANCIAL REPORT………………………………………………………………….. 18
7. DOCUMENTS AVAILABLE FOR INSPECTION………………………………….. 110
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1. THE BASIC INFORMATION OF THE COMPANY
1.1 BRIEF INTRODUCTION TO THE COMPANY
Legal Name in Chinese 烟台张裕葡萄酿酒股份有限公司
Legal Name in English Yantai Changyu Pioneer Wine Company Limited
Abbreviation for the English Name Changyu
Place of listing of the Shares Shenzhen Stock Exchange
Abbreviation of the Shares: Changyu A, Changyu B
Code Number of the Shares: 000869, 200869
Registered Address: 56, Dama Road, Yantai City, Shandong Province
Office Address: 56, Dama Road, Yantai City, Shandong Province
Postal Code: 264000
Web Site: http://www.changyu.com.cn
E-Mail: webmaster@changyu.com.cn
Legal Representative Sun Liqiang
Secretary to the Board of Authorized Representative of
Directors the Securities Affairs
Name Qu Weimin Li Tingguo
Contact Address 56, Dama Road, Yantai City, 56, Dama Road, Yantai City,
Shandong Province Shandong Province
Telephone 0086-535-6633658 0086-535-6633656
Fax 0086-535-6633639 0086-535-6633639
E-Mail quwm@changyu.com.cn stock@changyu.com.cn
The newspapers to disclose “China Securities News”, “Securities Times” in the PRC and “Hong
the Company’s information Kong Commercial Daily” outside the PRC
Web Site for carrying this report http://www.cninfo.com.cn
Semi-Annual Report kept at Secretary department to the Board of Directors
Other relative information
The first registration date September 18, 1997
The original place of registration the Business Administration Bureau of Shandong Province
The registration amendment date June 23, 2006
The registration amendment place the Business Administration Bureau of Shandong Province
The business license number 3700001806012
The registration number of state revenue 37060216500338-1
The registration number of local revenue 370601267100035
The Chinese accountant appointed by Ernst & Young Hua Ming Certified Accounts Company Limited
the Company Office address: Ernst & Young Building, Eastern Plaza, 1 East
Changan Street, Dong Cheng District,Beijing
1.2 THE MAIN ACCOUNTING AND FINANCIAL INFORMATION
1.2.1 Main accountant and Financial data
Unit: CNY
At the end of the at the end of last More or
report period year less (%)
Total assets 6,125,215,014 5,983,377,253 2.37
Total owners’ equity (or shareholders’ equity) 3,978,491,136 3,839,708,341 3.61
Net assets per share attributed to shareholders of listed company 7.55 7.28 3.71
At the report the same period more or
period (Jan.—June) of last year less (%)
Business revenue 3,090,021,567 2,481,885,134 24.50
Business profit 1,159,441,095 774,791,010 49.65
Total profit
1,162,514,940 779,242,762 49.19
Net profit attributed to the shareholders of the listed company 876,955,116 585,674,479 49.73
Net profit after irregular profit & loss 874,766,673 582,953,418 50.06
Basic earnings per share (CNY) 1.66 1.11 49.55
Diluted earnings per share (CNY) 1.66 1.11 49.55
Return on shareholder’ s equity (%) 22.04 19.58 2.46
Net cash flows from operating activities 1,018,887,265 639,706,842 59.27
Net cash flows per share from operating activities 1.93 1.21 59.50
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1.2.2 The irregular profit and loss
Unit: CNY
Item Jan. 2011 – June, 2011 Jan. 2010 – June, 2010
Gain or loss on disposal of non-current assets (99,865) （283,954）
Tax return or relief ultra vires approved, without formal
documented or occasionally happened
Government grant accounted in current profit and loss
(except for those that closely related to the operation,
under national unified standards with certain amount or
quantity) 2,137,979 4,507,854
Gain or loss on fair value change of trading financial assets
and trading financial liabilities, and investment income
from disposal of trading financial liabilities and financial
assets available for sale, except available hedging
operations related to the Company’s daily operation. 52,122 429,107
Other non-operating income and expenses 1,035,730 227,852
Subtract: amount affected on income tax (931,274) （1,220,215）
Subtract: Amount affected on minority interests (after tax) (6,249) （939,583）
Total 2,188,443 2,721,0611
1.2.3 Differences between the PRC Accounting Standards and the
International Accounting Standards
During the report period, the Company had no transaction or issue with any
difference between the PRC Accounting Standards and the International
Accounting Standards, the net profit and the net asset was confirmed to be
same according to the PRC Accounting Standards and the International
Accounting Standards.
2. CHANGES IN SHARE CAPITAL AND SHAREHOLDINGS OF
SUBSTANTIAL SHAREHOLDERS
2.1 Changes in Share Capital
Unit: ’0000Share
Before this change Change (+, -) After this
change
Amount Percentage Allot Distribute Transfer Sub Amount Perce
new bonus other others total ntag
share share capital to e
share
capital
Limited 21303 40.40 -21303 -21303
Shares
1.State share
2.State legal
person share
3.Other 21303 40.40 -21303 -21303
domestic
corporate
share
Including:
Domestic legal 21303 40.40 -21303 -21303
person share
Domestic
natural person
share
4.Foreigner-h
eld share
5
Including:
Overseas legal
person share
Overseas
natural person
share
Unlimited 31425 59.60 +21303 +21303 52728 100.0
Shares 0
1.CNY 13577 25.75 +21303 +21303 34880 66.15
common
share
2.Foreign 17848 33.85 17848 33.85
share listed in
PRC
3.Foreign
share listed
overseas
4.others
Total shares 52728 100 52728 100
2.2 The total and the top 10 shareholders at the end of report period
Total number at the end of report period The Company had 18,004 shareholders. There were
12,529 shareholders with A shares, and 5,475
shareholders with B shares
The top 10 shareholders
Name of Shareholders The character Percentage Number of Number of Lien or
Of the (%) shares limited frozen
shareholders shares shares
YANTAI CHANGYU GROUP COMPANY 265,749,120 0 0
A share 50.40%
LIMITED
HTHK/CMG FSGUFP-CMG FIRST STATE CHINA
B share 3.63% 19,154,622 0 0
GROWTH FD
GAO-LING FUND,L.P. B share 3.43% 18,102,298 0 0
BBH BOS S/A FIDELITY FD - CHINA
B share 1.97% 10,373,597 0 0
FOCUS FD
GOVERNMENT OF SINGAPORE INV. CORP.-
B share 1.20% 6,324,903 0 0
A/C "C"
UBS (LUXEMBOURG) S.A. B share 0.86% 4,543,836 0 0
BBH LUX-FIDELITY FUNDS-EMERGING MARKETS
B share 0.85% 4,499,786 0 0
FUND
GREAT WALL EASE RETURN HYBRID
A share 0.78% 4,100,582 0 0
SECURITIES INVESTMENT FUND
CHINA UNIVERSAL GROWTH FOCUS
SECURITIES-ORIENTED A share 0.72% 0 0
CAPITAL FUND 3,814,835
BANK OF CHINA SUSTAINABLE GROWTH
A share 0.64% 3,349,024 0 0
EQUITY SECURITIES INVESTMENT FUND
The share holding of top 10 unlimited shareholders
shareholders Number of unlimited shares Share Type
YANTAI CHANGYU GROUP CO.,LTD. 265,749,120 A share
HTHK/CMG FSGUFP-CMG FIRST STATE CHINA GROWTH FD 19,154,622 B share
GAO-LING FUND,L.P. 18,102,298 B share
BBH BOS S/A FIDELITY FD - CHINA FOCUS FD 10,373,597 B share
GOVERNMENT OF SINGAPORE INV. CORP.- A/C "C" 6,324,903 B share
UBS (LUXEMBOURG) S.A. 4,543,836 B share
BBH LUX-FIDELITY FUNDS-EMERGING MARKETS FUND 4,499,786 B share
GREAT WALL EASE RETURN HYBRID SECURITIES INVESTMENT FUND 4,100,582 A share
CHINA UNIVERSAL GROWTH FOCUS SECURITIES-ORIENTED
A share
CAPITAL FUND 3,814,835
BANK OF CHINA SUSTAINABLE GROWTH EQUITY SECURITIES INVESTMENT
3,349,024 A share
FUND
The explanation for the relationship and action of There is no relationship or concerted action between
the top 10 shareholders Changyu and the other 9 circulating shareholders. The
information about relationship or concerted action among
other circulating shareholders is unknown.
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2.3 The top 10 shareholders for limited shares and limited conditions
On March 25, 2011, the Company’s limited shares of 213,021,120 held by its
controlling shareholder-Yantai Changyu Group Co., Ltd was released to be
available for transaction, thus all of the Company’s shares were released, and
there is no shareholder with any limited condition.
2.4 The changes of the controlling shareholder and actual controller
During the report period, there is no any change for the controlling
shareholder and actual controller. The controlling shareholder is still Yantai
Changyu Group Company Limited, and the Company is still controlled
together by Yantai State-owned Assets Supervison and Administration
Commission, Italy Illva Saronno Investments S.r.l, USA International Finance
Corporation and Yantai Yuhua Investment & Development Company Limited.
Changyu Group and 27 persons for medium -level of the Company
100%
Yantai Yusheng Investment & Development Co.,ltd. Changyu Group and 46 common staff of the Company
O
U J F G U T
S A R E . H
E 62.22% 37.78%
A P A R K R
A N M . C
N C 5% O REINA REINA REINA REINA
U
E N N AUGUSTO RICCARDO MARINA LODOVICO
Y T
24% 6% 5% 5% 5% 55% 25% 25% 25% 25%
IFC Yantai Yuhua Investment & Illva Saronno Investment SASAC Yantai
10% 45% 33% 12%
current shareholders for A share Changyu Group current shareholders for B share
15.75% 50.40% 33.85%
the Company
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Remark: There is no single shareholder holding over 5% shares for Yantai
Yusheng Investment & Development Co.,ltd. Mr. Reina Augusto is the director
of the Company, while Mr. Reina Riccardo, Mr. Reina Marina and Mr. Reina
Lodovico are all family members of Mr. Reina Augusto.
3. INFORMATION OF THE DIRECTORS, SUPERVISORS AND
SENIOR MANAGEMENT TEAM
3.1 The shareholding changes of the directors, supervisors and senior
management team
Unit: Share
Name Post Shares hold Shares Shares Shares hold Reason
at the increased decreased at the end of for
beginning of during report during report this year change
this year period period
Sun Liqiang Chairman to the Board 0 0 0 0 -
of Directors
Zhou Hongjiang Vice-chairman to the 0 0 0 0 -
Board of Directors and
general manager
Leng Bin Director, vice- general 0 0 0 0 -
manager
Qu Weimin Director, Vice-general 0 0 0 0 -
manager and Secretary to
the Board of Directors
Chen Jizong Director 0 0 0 0 -
Augusto Reina Director 0 0 0 -
Aldino Marzorati Director 0 0 0 0 -
Antonio Director 0 0 0 0 -
Appignanni
Jean-Paul Pinard Director 0 0 0 0 -
Geng Zhaolin Independent director 0 0 0 0 -
Wang Shigang Independent director 0 0 0 0 -
Xiao Wei Independent director 0 0 0 0 -
Wang Zhuquan Independent director 0 0 0 0 -
Fu Mingzhi Chairman to 0 0 0 0 -
the Board of
Supervisors
Zhang Hongxia supervisor 0 0 0 0 -
Jiang Jinqiang supervisor 0 0 0 0 -
Yang Ming Vice general manager 0 0 0 0 -
Li Jiming Chief Engineer 0 0 0 0 -
Jiang Hua Vice general manager 0 0 0 0 -
Sun Jian Vice general manager 0 0 0 0 -
Jiang Jianxun Finance principal 0 0 0 0 -
3.2 The appointment information of the directors, supervisors and
senior management team during the report period
During the report period, approved by 2010 shareholders’ meeting, Mr. Wang
Shigang was appointed to be the independent director of 5th session of Board
of Directors of the Company. And there is no any other change in directors,
supervisors or senior managers during report period.
4. BOARD OF DIRECTOR’S REPORT
4.1 The analysis and discussion on the business situation
During the report period, the Company’s main operations have consistently
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kept sustainable growth, the sales revenue of main products for wine, brandy,
healthy liquor and sparkling wine all increased by different margins, making
the Company’s principal sales CNY3090.02 million and net profit CNY876.96
million attributed to the Company’s shareholders, or 24.50% and 49.73% up
over the same period of last year respectively, the growth of middle to high
quality wine was especially significant, and the price for part of products was
also increased, which contributed 3.87% more to consolidated gross profit
margin so as to help the Company realized gross profit 75.75% . During the
report period, the Company made efforts mostly in the following aspects:
Firstly, more efforts will be made to promote the influence of the brands such as
the leading brands “Changyu-AFIP”, “Jiebaina” and “Changyu Golden Ice Valley”
and to maintain the fast growth momentum of the middle-range and high-end
products including Changyu-Afip Chateau Wine, Jiebaina, ice wine and
Changy-Castel Chateau Wine. During the report period, the increase of the sales
of the abovementioned products exceeded 25% over the same period of the
previous year.
Secondly, remarkable achievements were made in subdivision of six channels
all over the country and in construction of town markets, and the abilities in
controlling the sales terminals and holding the product competitiveness were
strengthened. The wholesale marketing departments were established in 45
provincial cities and major cities, forming a wholesale network that covers all
important regions of China while perfecting the company’s marketing system.
Thirdly, the responsibility system for each and every salesman was further
perfected, the competitive mechanism in personnel arrangement was emphasized,
the stricter assessments were made of the salesmen in terms of their routine
performance and basic management and the more effective training courses were
opened to the salesmen making their comprehensive ability further strengthened.
By means of tightening the market supervision, many fake product dens were
cracked down and forbidden behaviors in goods distribution punished, which
effectively prevented the market from being adversely impacted and ensured the
stability of the price system and the distribution channels.
Fourthly, the vineyard management system was further standardized, the
responsibilities of the workers at different levels of the vineyards were clearly
defined, the vineyard management standards and technical specifications were
drawn up and updated, the system of grape output and quality and assessment
indicators was improved, an organizational structure of systematic management
of the six domestic producing areas was built up, which strengthened in all
aspects the vineyard management and control ability as well as the security
ability of high-grade grape supply.
Fifthly, the company did a good job at the new projects and technical
innovation, and also strengthened the management on projects’ investment
amounts and progress, the engineering quality was secured, the production
capacity and quality of high-end and middle-range products were both
improved, which cast a solid foundation for the company’s mid/long-term
9
development. Please find the details in section 4.3 Investment Information.
4.2 The Main Business Situation during the Report Period
4.2.1 General information of operation
Unit: CNY
Item Amount of this year Amount of last year More or less (%)
Principal sales 3,090,021,567 2,481,885,134 24.50
Principal profit 1,159,441,095 774,791,010 49.65
Net profit attributed
to the Company’s 876,955,116 585,674,479 49.73
shareholders
The reason for such change is as following:
During report period, the Company’s principal sales increased by 24.50% over
the same period of last year, mainly resulting from stable demand for the
Company’s products and also sales increase, especially because of remarkable
increase of high-end wine led by Chateau wine and Jiebaina wine, so as to
scale up the average selling price over same period of last year. The principal
profit increased by 49.65% over the same period of last year, mainly
contributed by principal sales growth, and effective control on sales expenses
and operating costs. The net profit attributed to the Company’s shareholders
increased by 49.73% over the same period of last year, mainly due to the
increase of principal profit.
4.2.2 The Scope and Condition of Principal Business
The Company is a light industrial manufacturer of which the principal business
is the distilling, producing and distributing of wine, brandy, sparkling wine and
healthy liquor, and its major products include dry red wine, dry white wine,
XO brandy, VSOP brandy, VO brandy, VS brandy, Tzepao Sanpien Jiu, Special
Quality Sanpien Jiu, Vermouth and sparkling wine. The Key products taking
over 10% of the Company’s sales and profit was as following:
Unit: CNY
Product Principal Principal Gross More or less More or less More or less
sales Cost Profit than last year than last year than last of
Ratio(%) of the principal of the principal the profit
sales(%) cost(%) ratio(%)
Wine 256,795 54,347 78.84 25.71% 2.25% 4.86
Brandy 38,938 15,099 61.22 16.43% 18.03% -0.53
Total 295,733 69,446 76.52 24.40% 5.31% 4.26
Among which, Related
465 - - - - -
party transaction
4.2.3 Explanations of significant changes in principal business and/or
structure of the Company
During report period, no great change occurred for the profit structure,
principal business and its structure, profit earning capability from principal
business.
4.2.4 Other Business with Great Influence on Net Profit
10
During report period, there was no other business with great influence on net
profit.
4.2.5 Management of Major Shareholding Companies
Unit: CNY’0000
Registered Total Net Net
Sharing Major Products or
Company Name Business Scope Capital Assets assets Profit
Ratio Services
Yantai Dry red wine, dry
Changyu-Castle To research, produce white wine and
Chateau Co. LTD. and sell wine and sparking wine of USD5
70% 22,905 8,394 1,757
sparkling wine, Changyu-Castle, million
tourism services and industrial
tourism
Langfang
To produce Dry red wine, USD3
Castel-Changyu 49% 3,485 2,932 3
and sell wine Dry white wine million
Wine Co. LTD.
Yantai Kylin Cork, aluminum
To produce and sell USD1.4
Packaging Co. 50% cap, PVC capsule 5,435 3,700 -362
packaging material million
LTD. and so on.
Chateau To research, produce Brandy, premium
Changyu AFIP 70% and sell brandy and dry red wine and 11,000 20,500 12,398 633
Global wine white wine
Chateau Liaoning
Changyu Ice 51% To produce ice wine Ice wine 2,630 7,800 2,798 -68
Wine Co., Ltd.
Xinjiang Tianzhu To plant grape, and to
Winery Co. Ltd. produce and sell grape Grape and bulk
60% 3,000 23,708 15,681 1,658
juice, bulk wine and wine
fruit liquors
4.2.6 Problems and Difficulties in Operation
During report period, in despite of rather successful operation and good
achievements, the Company still had some problems as following:
Firstly, the progress of the terminal expansion in part of districts was not so fast
and the sales terminals should have been developed better.
Secondly, the phenomenon of imbalance in wine assortment was not
fundamentally improved. Compared with the same period of last year, during the
report period, the sales of the company’s wine and brandy increased faster but
that of sparkling wine was unchanged and that of healthy liquor even declined.
Thirdly, some rules and measures were not duly and well implemented because
of various causes.
Fourthly, some projects lagged behind the schedule.
Facing the above problems and difficulties, the Company will set practical
measures, try to get over those difficulties and ensure to realize all the
budgetary targets.
4.3 Investment Information
4.3.1 The Uses of the Collected Proceeds
The Company did not make any proceeds collection from 2001 till now. And
the proceeds from a public offering of 32 million A Shares for capital
increase in October of 2000 were all put into projects as promised in the
Prospectus and obtained better yield. There is no any change for projects
invested. .
4.3.2 Investment Situations of Non-collected Capital
In 2011 the total capital expenditure of the Company plans to be CNY
11
1003.12 million. During the report period, the Company totally invested CNY
281.79 million. The investment information for each project is as following:
1) Procurement of offices for sales companies. The budget for this project in
2011 is CNY 82.44 million to buy and decorate 35 houses and the actual
expense up to now is CNY 16.66 million which was spent on buying 14 houses
and decorating 2 houses.
2) Project of the indoor logistics center at Yantai Xishan Production Area. The
budget of 2011 for this project is CNY 39.25 million and the actual investment
up to now is CNY 3.2 million in completing the scheme design and
examination, shop drawing design and examination as well as environmental
protection appraisal, obtaining the planning permit and construction permit,
completing the construction bidding invitation and starting the civil work.
3) Expansion of the production scale of Beijing Changyu-AFIP Chateau. The
budget for this project in 2011 is CNY 10 million and the actual expense up to
now is CNY 6.7 million in completing the decoration of the chateau’s grand cellar,
upgrading the residential buildings as well as for monitoring and firefighting
systems, wastewater treatment, road engineering and necessary facilities.
4) Construction of Changyu Chateau in Xianyang City, Sha’anxi Province. The
project has been formally named Chateau Changyu Rena Co. Ltd. Shanxi. The
budget for this project in 2011 is CNY 100 million and the actual expense up to
now is CNY 29.73 million in completing the concrete skeleton of the reception
building which is in decoration now. The principal part of the project and related
engineering are in progress.
5) Project of purchasing a 60 hectare lot and building a high-end wine
production base in Shihezi City, Xinjiang. The project has been formally
named Chateau Changyu Baron Balboa Co. Ltd. Xinjiang. The budget for this
project in 2011 is CNY 144.43 million and the actual expense up to now is
CNY 89.38 million in completing the construction of the principal part of the
project, environmental protection facilities, 70% roads and pipelines as well
as invitation for bidding for some production equipment.
6) Project of purchasing a 110 hectare lot in Yantai Development Zone. The
budget for this project in 2011 is CNY 150 million and the actual expense up
to now is CNY 78.76 million in completing the conceptual design and
demonstration, and in obtaining the use right of part lots. Now, the project is
in a preparatory phase of overall start.
7) Project of Changyu Ningxia Wine Company. The project has been finally
named Chateau Changyu Laurenz XV Co. Ltd. Ningxia. The budget of 2011 for
this project is CNY 158.36 million and the actual investment up to now is CNY
38.98 million in completing most of the civil work and part equipment
installation. Now, the project is in the stage of decoration, remaining
equipment procurement and installation.
8) Project of oak barrel procurement. The budget for this project in 2011 is CNY
94.52 million, now, the value and price comparison and analysis have finished,
the barrels for Yantai Production Area has been ordered and the producers for
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three distant chateaus have been selected. There is no expenditure so far.
9) Project of construction of a 10,000m2 underground cellar at Xishan Production
Area. The budget of 2011 for this project is CNY 49.91 million and the actual
investment up to now is CNY 3.5 million in completing all necessary preparations
and starting the foundation engineering.
10) Project of construction of a 15,000t wine tank area at Yantai Xishan
Production Area. The budget of 2011 for this project is CNY 26.6 million and the
actual investment up to now is CNY 6.08 million in completing the demolition of
the old facilities and tank foundation engineering. The civil work will come to an
end soon and the tanks are under manufacturing and erection. The project is
expected to come into use at the end of August.
11) Project of construction of a 15,000m2 cellar and a business club at Yantai
Changyu-Castel Chateau. The budget for this project is CNY 147.61 million and
the actual investment up to now is CNY 8.8 million in completing the selection of
engineering teams and 80% earthwork excavation.
4.4 The Adjustment for The Business Plan
During the report period, the Company did not make any adjustment in the
business plan.
4.5 The Audit of the Financial Report
The Financial Report for first half of 2011 has not been audited.
5. MATERIAL EVENTS
5.1 The Administration and Rectifying Situation of The Company
The Company has, according to relevant national laws and rules including the
“Company Law of the People’s Republic of China”, “Securities Law of the
People’s Republic of China” and “Guidelines on Listed Companies Internal
Control”, established and improved its legal entity structure and legally
conducted its activities within the scope of that structure. At present, there is
almost no difference between the corporate governance of the Company and
the normative documents about the governance of the listed company issued
by China Securities Regulatory Commission, which could better meet the
development requirement.
5.2 The execution of the scheme on the Company’s profit
distribution
The scheme on profit distribution for 2010 deliberated and passed by “2010
Shareholders’ Meeting” was as following:
The Company’s total 527.28 million shares on Dec. 31rt, 2010 were taken
as cardinal number to distribute CNY14.00 in cash for every 10 shares to all
the shareholders (tax included, the actual after-tax dividend distributed to
the individual shareholders for A share, investment fund, qualified foreign
institution investors is CNY12.60 per 10 shares, and to the individual
13
shareholders and the non-resident enterprises shareholders for B share is
CNY12.60 per 10 shares). According to the Articles of Associations, the
dividends in favor of the foreign-currency shareholders was paid in HKD at
the middle exchange rate of RMB to HKD (1HKD = CNY0.8357) listed by
the People’s Bank of China on the first working day after the day ( May 11th,
2011) when the resolutions of 2010 Shareholders’ Meeting were made.
The execution announcement of the profit distribution was made public in
“China Securities News” and “Securities Times” on June 7th , 2011. The
registration date of Share A ownership was June 13th, 2011 and the ex
dividend date was June 14th, 2011, and the last trading date of Share B
was June 13th, 2011, the ex dividend date was June 14th, 2011 and the
registration date of Share B ownership was June 16th, 2011. The said profit
distribution was completed in the first ten-day period of June 2011.
The Company did not make any plan to transfer public accumulation fund
to share capital in 2010 profit distribution plan.
5.3 The Preliminary Plan on Profit Distribution for first half of 2011
According to the resolution of 7th Meeting of the 5th Board of Directors, the
Company did not distribute profit or convert public funds of capital to
equivalent shares for first half of 2011.
5.4 Material Litigation and arbitration
The Company did not make any major lawsuit and arbitration, and had no
major remaining lawsuit and arbitration during the report period.
5.5 Important asset acquisition, selling and recombination
There was neither important asset acquisition or selling or recombination
during the report period nor that that had taken place before the report
period but lasted to it.
5.6 Material Related Party Transactions
5.6.1 Products Transaction and Service Supply
During the report period, the amount on products sales is separately CNY
2.504 million and CNY 2.15 million, and the amount on products purchase is
separately CNY 139 thousand and CNY 7 thousand from the Company to the
controlling shareholder’s subsidiary company-Yantai Changyu Tour Co.,Ltd.
and Yantai Changyu Window of International Wine City Co. Ltd.. The Company
purchased packaging materials from Yantai Shenma Packaging Co. Ltd. with
amount of CNY 75.48 million. There is no service supply between the
Company and any related parties.
5.6.2 The Related Creditor’s Right and Liability
During the report period, as per the relevant agreement made by and between the
Company and the controlling stockholder Yantai Changyu Group Co., Ltd., the
Company must pay service charge, patent use charge, house and site rents every
year to the group company in addition to paying 2% of its sales revenue realized in
14
the current period as trademark use fee, which resulted in an accumulated amount
of CNY 58.899 million during the report period. Besides, there are no other related
creditor’s right and liability.
5.7 Material contract and its execution
5.7.1 Material transaction, trusting, contracting and assets leasing
During the report period, according to the Buildings and Ground Lease, the
Company leased buildings and ground from the controlling shareholder with
lease fee of CNY6.383 million every year.
Besides, during the report period, the Company had no other significant
property trust, contract, leasing, nor any activity which occurred before and
lasted to the report period.
5.7.2 Material Cash Assets Management
The Company did not entrust any others to manage the cash assets, nor
remaining entrusting on cash assets during the report period.
5.8 Material Warranty
During the report period, there was no any material warranty or guarantee
occurred before and lasted to the report period for the Company.
5.9 Undertaking Events by the Company and Any Shareholder
Holding 5% or More Shares of the Company
5.9.1 The Company or the shareholders who held more than 5% (including
5%) of the Company’s total shares didn’t make any promises that may
generate deep impact on the Company’s operating result and financial
condition.
5.9.2 The controlling party Yantai Changyu Group Co., Ltd. has kept its promise
made during the company’s reform of stock ownership, and voted for the annual
profit distribution scheme at 2005 Shareholders meeting, 2006 shareholders
meeting and 2007 shareholders meeting.
5.9.3 Yantai Changyu Group Co., Ltd. released the limit condition to 26.364
million shares of the Company on 25th March,2010, released the limit condition to
26.364 million shares of the Company on 1st April, 2010, and released the limit
condition to 213,021,120 shares of the Company on 25th March, 2011. Meanwhile
it made the promise that Group company will issue the suggestive announcement
through the Company within two transaction days before the first decreasing of
shares by Group Company, disclosed information will include but not only limit to
the planned transaction quantity, transaction time, transaction price range and
reason for share decreasing as required by Shenzhen Stock Exchange, if Group
company intends to sell the current shares of the Company after releasing the
limit condition and the total quantity for share decreasing is up to 5% within 6
months from the first transaction. During the report period, Yantai Changyu
Group Co., Ltd. did not decrease the shares of the Company.
15
5.10 Punishment Records
During the report period, none of the Company, the Board of Directors,
directors was checked by CSRC, or punished and criticized by CSRC, or
punished by other administrative departments, or openly criticized by the
Stock Exchange.
5.11 The Analysis and Explanation on Other Major Issues, Related
Influence and Solutions
5.11.1 Securities Investment
During the report period, the company participated in new shares
subscription and got the investment returns of CNY 52 thousand.
5.11.2 Share Holding of Other Listed Company
The Company did not hold any share of other listed company.
5.11.3 Independent Directors’ Specific Statement and Independent
Opinions on The Company’s Controlling Stockholder and/or Other
Related Parties’ Occupation of Capital and on The Company’s External
Guarantees
According to relevant regulations of China Securities Regulatory Commission,
we the independent directors, holding a conscientious and duty-bound attitude,
made an investigation of the controlling stockholder and/or other related
parties’ occupation of capital and the Company’s guarantees for any other
party. Now, we state as follows:
By June 30th, 2011, the capital flow between the Company and the controlling
stockholder was entirely for operating activities and the capital was duly
settled. Neither occupation of capital for non-operating purpose nor influence
of the Company’s independency and illegal use of capital in any other form or
in a disguised form was found. The Company and its subsidiaries or affiliates
didn’t provide guarantees for any other individuals and/or units.
We believe that the capital flow between the Company and the controlling
stockholder was only for necessary marketing and there was no phenomenon
of occupation of capital for non-operating purposes. Moreover, the Company
has strictly followed relevant regulations and requirements, never provided
guarantees to any units (including its subsidiaries) and individuals, and not
infringed upon the interests of the company itself and its stockholders,
especially the medium/small-sized stockholders.
Independent director: Geng Zhaolin,Wang Shigang, Wang Zhuquan, Xiao Wei
5.12 The proposal or execution of share increase by shareholders
holding 30% or more shares during report period
During report period, the shareholder with 30% more shares of the Company,
or Yantai Changyu Group Co., Ltd. did not propose or carry out any plan for
share increasing.
16
5.13 Compensation from related party for the proceeds promised by
the Company on share reform and major merger on assets
It is not applicable for the Company.
5.14 The Reception of Investigation, Visit and Communication
Reception date Reception place Reception way Visitor Main topic and
material provided
Meeting room of Field survey Wells Fargo Funds
2011.01.11
the Company
Meeting room of Field survey Wanlifuda Investment
2011.01.20
the Company
Meeting room of Field survey Industrial Securities
2011.01.27
the Company
Meeting room of Field survey Ping An asset
2011.02.10
the Company management
Meeting room of Field survey ChinaAMC Principal
2011.02.15
the Company operation and the
Meeting room of Field survey Xinhua assets future
2011.02.23
the Company development of
Meeting room of Field survey Soochow Fund the company
2011.02.28 the Company
2011.03.05 Meeting room of Field survey Hua An Fund
the Company Management
2011.03.08 Meeting room of Field survey Shenyin Wanguo
the Company Securities
Meeting room of Field survey CLSA Limited
2011.04.15
the Company
2011.04.18 Meeting room of Field survey China Jianyin
the Company Investment Securities
2011.04.19 Meeting room of Field survey Shangya Fund
the Company
Meeting room of Field survey Global Industrial Fund
2011.04.20
the Company Management
Meeting room of Field survey Bank of China Fund
2011.04.26
the Company Management
Meeting room of Field survey Heqi Investment
2011.05.09
the Company
Meeting room of Field survey Zhongding Investment
2011.05.13
the Company
Meeting room of Field survey Bangde Investment
2011.05.16
the Company Management
Meeting room of Field survey Bosera Funds
2011.05.17
the Company
Meeting room of Field survey Hong Yuan Securities
2011.05.20
the Company
Meeting room of Field survey Leading Funds
2011.05.25
the Company
Meeting room of Field survey Guofu Property
2011.06.02
the Company Investment Fund
Meeting room of Field survey Da Cheng Fund
2011.06.07
the Company Management
Meeting room of Field survey Changjiang Securities
2011.06.15
the Company
Meeting room of Field survey Jinyuan Securities
2011.06.17
the Company
Meeting room of Field survey Citic China Securities
2011.06.22
the Company
Meeting room of Field survey Penghua Funds
2011.06.28
the Company
17
5.15 The Index on Information Disclosure of the Company
Announcement Title Publication Date Publication address
number
2011-lin 001 Announcement on Litigation and 2011.01.18 “China Securities News”,
Examining & Appraising on “Securities Times”
Jiebaina trademark.
2011-lin 002 Indicative Announcement on 2011.03.24 “China Securities News”,
Limited Shares Release “Securities Times”
2011-lin 003 Announcement on Resolution of 2011.04.09 “China Securities News”,
4th meeting of 5th Session of “Securities Times”
Board of Directors
2011-lin 004 Announcement on Resolution of 2011.04.09 “China Securities News”,
4th meeting of 4th Session of “Securities Times”
Board of Supervisors
2011-lin 005 Announcement on the related 2011.04.09 “China Securities News”,
transaction 2011 “Securities Times”
2011-lin006 Nominee Statement for 2011.04.09 “China Securities News”,
Independent Director “Securities Times”
2011-lin007 Candidate Statement for 2011.04.09 “China Securities News”,
Independent Director “Securities Times”
2011-lin008 Notice of opening 2010 2011.04.09 “China Securities News”,
shareholders’ meeting “Securities Times”
2011-Ding 001 2010 Annual report and its 2011.04.09 “China Securities News”,
summary “Securities Times” and “Hong
Kong Commercial Daily”
2011-Ding 002 2011 First-quarter report 2011.04.25 “China Securities News”,
“Securities Times”
2011-Lin 009 Announcement on the resolution 2011.05.11 “China Securities News”,
of 2010 shareholders’ meeting “Securities Times” □
2011-Lin 010 Announcement on the 2011.06.07 “China Securities News”,
implementation of rights “Securities Times”
distribution in 2010
2011-Lin 011 Announcement on Resolution of 2011.07.05 “China Securities News”,
6th meeting of 5th Session of “Securities Times”
Board of Directors
All above-mentioned information has also been disclosed in web site
http://www.cninfo.com.cn
5.16 Other Major Issues with Great Influence to the Company during
the Report Period
During the report period, there is no other major issues with great influence
to the Company.
6. FINANCE REPORT
18
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
30 June 2011 RMB YUAN
6.1 Consolidated And Parent Company’s Balance Sheet （1）
30/6/2011 31/12/2010
Assets Note Consolidated Parent company Consolidated Parent company
CURRENT ASSETS
Cash and bank 5.1 2,575,302,305 1,937,453,170 2,489,804,162 1,898,488,544
Trading financial assets 21,200,000 21,200,000
Bills receivable 5.2 56,026,700 24,607,165 31,447,207 12,871,415
Trade receivables 5.3 10.1 95,255,224 10,357,520 100,113,271 11,708,820
Advances to suppliers 5.4 70,742,936 61,392,268 74,728,756 40,352,558
Interest receivable 5.5 18,216,011 18,094,085 9,519,721 9,519,721
Dividends receivable 1,765,637,074 1,765,637,075
Other receivables 5.6 10.2 62,383,999 1,613,571,335 30,686,838 1,155,602,622
Inventories 5.7 1,079,415,696 383,689,771 1,294,406,406 481,049,315
Non-current asset expire in a
year
Other current assets
Total current assets 3,978,542,871 5,836,002,387 4,030,706,362 5,375,230,070
NON-CURRENT ASSETS
Available for sale financial
assets
Held-to-maturity investment
Long-term receivables
Long-term equity investments 5.8 10.3 5,000,000 712,783,083 5,000,000 331,907,113
Investment Real Estate
Property, plant and equipment 5.9 1,222,721,665 321,960,105 1,188,081,245 325,016,812
Construction in progress 5.10 353,576,695 25,326,123 242,107,575 13,603,659
Construction materials
Fixed assets disposal
Biological assets 5.12 38,539,812 9,683,931 37,773,638 10,270,836
Oil and gas assets
Intangible assets 5.11 274,070,448 91,219,294 208,847,847 87,521,064
Development expenditure
Goodwill
Long-term prepaid expense 5.13 104,839,398 106,233,673
Deferred tax assets 5.14 143,853,616 28,462,210 160,275,366 27,019,769
Other non-current assets 4,070,510 4,257,410 4,351,547 4,538,447
Total non-current assets 2,146,672,143 1,193,692,156 1,952,670,890 799,877,700
Total assets 6,125,215,014 7,029,694,543 5,983,377,253 6,175,107,770
19
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
30 June 2011 RMB YUAN
Consolidated And Parent Company’s Balance Sheet （2）
LIABILITIES AND 30/6/2011 31/12/2010
EQUITY Note Consolidated Parent company Consolidated Parent company
CURRENT LIABILITIES
Short-term loan
Trading of financial liabilities
Bills payable
Trade payables 5.16 234,251,383 152,527,756 259,022,075 165,884,293
Advances from customers 5.17 290,340,844 309,481,976
Employee benefits 5.18 165,097,207 117,825,347 186,915,812 114,351,323
Taxes payable 5.19 486,594,616 126,920,299 649,365,259 122,920,579
Interest payable
Dividends payable 0 0
Other payables 5.20 689,337,237 2,598,527,785 476,897,721 1,768,065,889
Total current liabilities 1,865,621,287 2,995,801,187 1,881,682,843 2,171,222,084
NON-CURRENT LIABILITIES
Deferred tax liabilities 5.14 5,316,436 5,336,115
Other non-current liabilities 5.21 120,110,000 8,027,000 100,213,000 8,027,000
Total non-current liabilities 125,426,436 8,027,000 105,549,115 8,027,000
Total liabilities 1,991,047,723 3,003,828,187 1,987,231,958 2,179,249,084
EQUITY
Share capital 5.22 527,280,000 527,280,000 527,280,000 527,280,000
Capital surplus 5.23 557,242,133 557,222,454 557,222,454 557,222,454
Less treasury stock
Surplus reserve 5.24 295,942,630 295,942,630 295,942,630 295,942,630
Retained earnings 5.25 2,598,026,373 2,645,421,272 2,459,263,257 2,615,413,602
Equity attributable to equity
holders of the company 3,978,491,136 4,025,866,356 3,839,708,341 3,995,858,686
Minority interests 155,676,154 156,436,954
Total equity 4,134,167,291 4,025,866,356 3,996,145,295 3,995,858,686
Total liabilities and equity 6,125,215,014 7,029,694,543 5,983,377,253 6,175,107,770
Financial statements have been signed by
The legal representative: Sun Liqiang Accounting Supervisor: Leng Bin Accounting Department Manager: Jiang Jianxun
20
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
30 JUNE 2011 RMB YUAN
6.2 Consolidated And Parent Company’s Profit Statement
Six months ended 30 June 2011 Six months ended 30 June 2010
Item Note Consolidated Parent company Consolidated Parent company
Revenue 5.27
10.4 3,090,021,567 881,120,226 2,481,885,134 746,408,137
Less Cost of sales 5.27
10.4 749,237,629 681,420,169 697,904,404 554,127,550
Taxes and surcharges 5.28 175,702,733 99,160,797 143,954,547 84,288,354
Selling expenses 869,894,366 760,912,413
Administrative expenses
157,485,167 66,569,261 110,222,160 75,329,206
Financial expenses 5.29 -21,687,300 -23,747,128 -5,470,293 -9,672,089
Loss for impairment of assets
Add: fair value charge profit (loss is
listed with "-")
Investment profit ((loss is listed with 5.30
"-") 10.5 52,122 723,374,683 429,107 429,107
Including: investment profit for
joint-run business and joint venture
Operating profit
1,159,441,095 781,091,810 774,791,010 42,764,223
Add: Non-operating income 5.31 4,062,176 1,574,281 5,023,942 209,453
Less: Non-operating expenses 5.32 988,331 245,922 572,190 5,231
Including: losses on disposal
of non-current assets
Profit before tax 1,162,514,940 782,420,169 779,242,762 42,968,445
Less: Income tax 5.33 286,320,623 14,220,498 186,395,367 21,926,577
Profit for the year 876,194,317 768,199,671 592,847,395 21,041,868
Attributable to equity holders of
the company 876,955,116 768,199,671 585,674,479 21,041,868
Minority interests -760,800 7,172,916
Earnings per share
Basic earnings per share 5.34 1.66 1.46 1.11 0.04
Diluted earnings per share 5.34 1.66 1.46 1.11 0.04
Other Comprehensive Income 19,679.11
Comprehensive Income 876,213,996 768,199,671 592,847,395 21,041,868
Attributable to equity holders of
the company 876,974,795 768,199,671 585,674,479 21,041,868
Attributable to minority interests -760,800 7,172,916
Financial statements have been signed by
The legal representative: Sun Liqiang Accounting Supervisor: Leng Bin Accounting Department Manager: Jiang Jianxun
21
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
30 JUNE 2011 RMB YUAN
6.3 Consolidated and Parent Company’s Cash Flow Statement
Six months ended 30 June 2011 Six months ended 30 June 2010
Item Parent company Consolidated Parent company
Consolidated amount amount amount
amount
1. Cash flows from operating
activities:
Cash received from sales of goods
and rending of services
3,615,239,260 1,023,172,610 2,871,056,257 876,676,704
Tax refund received
31,895,583 17,931,445 4,117,244
Other cash received related to
operating activities 74,339,353 78,314,429 17,298,076 506,068,946
Subtotal of cash flows of operating
activities 3,721,474,196 1,119,418,484 2,892,471,577 1,382,745,650
Cash paid for goods and services
782,258,636 662,332,168 733,563,534 637,851,952
Cash paid to and on behalf of
employees 199,782,598 74,164,408 174,512,763 85,341,019
Cash paid for taxes and expenses
1,141,618,275 245,261,179 764,530,299 176,043,602
Other cash paid related to
operating activities 578,927,423 51,618,902 580,158,139 20,391,456
Sub-total of cash outflows of
operating activities 2,702,586,931 1,033,376,657 2,252,764,735 919,628,029
Net cash flow from operating
activities 1,018,887,265 86,041,827 639,706,842 463,117,621
2. Cash flow from investing
activities:
Cash received from return of
investment 64,671,946 59,671,946
Fixed deposit with the term of over
3 months
Cash received from obtaining
investment profit 52,122 723,374,683 7,943,364 455,372,638
Cash received from interest income
21,630,697 21,630,697
Net cash received from disposal of
fixed assets, intangible assets and
other long-term assets 519,304 519,204
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
22,202,123 745,524,584 72,615,310 515,044,584
Cash paid to acquire fixed assets,
intangible assets and other long-term
assets 217,541,724 23,390,203 189,217,153 9,221,963
Fixed deposit with the term of
over 3 months 71,437,507 71,437,507
Cash for investment
199,688,120 106,000,000
Net cash paid to acquire branch and
other business unit
Other cash paid related to
investment activities
22
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
30 JUNE 2011 RMB YUAN
Subtotal of cash outflows of
investment activities 288,979,231 294,515,830 189,217,153 115,221,963
Net cash flow from investing
activities -266,777,108 451,008,754 -116,601,843 399,822,621
3.Cash flow from financing
activities
Cash received from acquiring
investment
Including: cash received from
acquiring minority shareholders
investment by branch
Cash received from acquiring
loans 256,026,059
Other cash received related to
financing activities 0
Subtotal cash flows of financing
activities 256,026,059
Cash paid to pay debts
87,500,000 224,500,000 220,000,000
Cash paid to distribute dividend,
profit or pay interest
738,192,000 738,192,000 153,384,471 151,778,850
Including: dividend and profit paid
to minority shareholders by branch
Other cash paid related to
financing activities
Subtotal of cash outflows of
financing activities 738,192,000 825,692,000 377,884,471 371,778,850
Net cash flow from financing
activities -738,192,000 -569,665,941 -377,884,471 -371,778,850
4. Influences of exchange rate
fluctuation on cash and cash
equivalents
5. Net Increase in cash and cash
equivalents 13,918,157 -32,615,360 145,220,528 491,161,392
Add: balance at the beginning of
the period of cash and cash
equivalents 998,934,824 407,619,206 1,998,681,278 1,159,666,918
6.Balance at the end of the period
of cash and cash equivalents
1,012,852,981 375,003,846 2,143,901,806 1,650,828,310
Financial statements have been signed by
The legal representative: Sun Liqiang Accounting Supervisor: Leng Bin Accounting Department Manager: Jiang Jianxun
23
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
30 June 2011 RMB YUAN
6.4 Consolidated Statement of Shareholders’ Equity Changes
Item
Six months ended 30 June 2011
Total
Minority shareholders'
Shareholders' equity of parent company stockholders' Equity equity
Capital stock Capital Less: Treasury Surplus Undistributed Others
reserves stock reserves profits
1.Banlance at the end of last year
527,280,000 557,222,454 295,942,630 2,459,263,257 156,436,954 3,996,145,295
Plus: Accounting policies changing
Previous error correction
2.Banlance at the beginning of this year 527,280,000 557,222,454 295,942,630 2,459,263,257 156,436,954 3,996,145,295
3.Increasing or reducing amount of this year
(reducing amount is listed with "-") 19,679 138,763,116 -760,800 138,021,996
3.1 Net profits 876,955,116 -760,800 876,194,317
3.2 Other Comprehensive Income 19,679 19,679
Subtotal of above 3.1 and 3.2 19,679 876,955,116 -760,800 876,213,996
3.3 Owners' invested and reduced capital
3.3.1 Owners' invested capital
3.3.2 Amount of shares paid and reckoned in
owners' equity
3.3.3 Others
3.4 Profit distribution -738,192,000 -738,192,000
3.4.1Drew surplus reserves
3.4.2 Distribution to owners (or shareholders) -738,192,000 -738,192,000
3.4.3 Others
3.5 Internal transfer of owners' equity
3.5.1 Capital reserves transferred and increased
capital (or capital stock)
3.5.2 Surplus reserves transferred and increased
capital (or capital stock)
3.5.3 Surplus reserves covering deficit
3.5.4 Others
4.Banlance at the end of this year 527,280,000 557,242,133 295,942,630 2,598,026,373 155,676,154 4,134,167,291
24
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
30 June 2011 RMB YUAN
Item Year 2010
Total
Minority shareholders'
Shareholders' equity of parent company stockholders' Equity equity
Capital stock Capital Less: Surplus Undistributed Others
reserves Treasury reserves profits
stock
1.Banlance at the end of last year 527,280,000 557,222,454 295,942,630 1,657,780,929 136,455,048 3,174,681,061
Plus: Accounting policies changing
Previous error correction
2.Banlance at the beginning of this year 527,280,000 557,222,454 295,942,630 1,657,780,929 136,455,048 3,174,681,061
3.Increasing or reducing amount of this year
(reducing amount is listed with "-") 801,482,328 19,981,906 821,464,234
3.1 Net profits 1,434,218,328 19,981,906 1,454,200,234
3.2 Other Comprehensive Income
Subtotal of above 3.1 and 3.2 1,434,218,328 19,981,906 1,454,200,234
3.3 Owners' invested and reduced capital
3.3.1 Owners' invested capital
3.3.2 Amount of shares paid and reckoned in
owners' equity
3.3.3 Others
3.4 Profit distribution -632,736,000 -632,736,000
3.4.1Drew surplus reserves
3.4.2 Distribution to owners (or shareholders) -632,736,000 -632,736,000
3.4.3 Others
3.5 Internal transfer of owners' equity
3.5.1 Capital reserves transferred and increased
capital (or capital stock)
3.5.2 Surplus reserves transferred and increased
capital (or capital stock)
3.5.3 Surplus reserves covering deficit
3.5.4 Others
4.Banlance at the end of this year 527,280,000 557,222,454 295,942,630 2,459,263,257 156,436,954 3,996,145,295
Financial statements have been signed by The legal representative: Sun Liqiang Accounting Supervisor: Leng Bin Accounting Department Manager: Jiang Jianxun
25
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
30 June 2011 RMB YUAN
6.5 Statement of Equity Changes for Parent Company’s Shareholders
Item
Six months ended 30 June 2011
Total shareholders'
Shareholders' equity of parent company equity
Capital stock Capital Less: Treasury Surplus reserves Undistributed Others
reserves stock profits
1.Banlance at the end of last year
527,280,000 557,222,454 295,942,630 2,615,413,602 3,995,858,686
Plus: Accounting policies changing
Previous error correction
2.Banlance at the beginning of this year 527,280,000 557,222,454 295,942,630 2,615,413,602 3,995,858,686
3.Increasing or reducing amount of this year
(reducing amount is listed with "-") 30,007,670 30,007,670
3.1 Net profits 768,199,670 768,199,670
3.2 Other Comprehensive Income
Subtotal of above 3.1 and 3.2 768,199,670 768,199,670
3.3 Owners' invested and reduced capital
3.3.1 Owners' invested capital
3.3.2 Amount of shares paid and reckoned in
owners' equity
3.3.3 Others
3.4 Profit distribution -738,192,000 -738,192,000
3.4.1Drew surplus reserves
3.4.2 Distribution to owners (or shareholders)
-738,192,000 -738,192,000
3.4.3 Others
3.5 Internal transfer of owners' equity
3.5.1 Capital reserves transferred and increased
capital (or capital stock)
3.5.2 Surplus reserves transferred and increased
capital (or capital stock)
3.5.3 Surplus reserves covering deficit
3.5.4 Others
4.Banlance at the end of this year 527,280,000 557,222,454 295,942,630 2,645,421,272 4,025,866,356
Year 2010
26
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
30 June 2011 RMB YUAN
Item
Total shareholders'
Shareholders' equity of parent company equity
Capital stock Capital Less: Treasury Surplus reserves Undistributed Others
reserves stock profits
1.Banlance at the end of last year 527,280,000 557,222,454 295,942,630 1,705,057,969 3,085,503,053
Plus: Accounting policies changing
Previous error correction
2.Banlance at the beginning of this year 527,280,000 557,222,454 295,942,630 1,705,057,969 3,085,503,053
3.Increasing or reducing amount of this year
(reducing amount is listed with "-") 910,355,633 910,355,633
3.1 Net profits 1,543,091,633 1,543,091,633
3.2 Other Comprehensive Income
Subtotal of above 3.1 and 3.2 1,543,091,633 1,543,091,633
3.3 Owners' invested and reduced capital
3.3.1 Owners' invested capital
3.3.2 Amount of shares paid and reckoned in
owners' equity
3.3.3 Others
3.4 Profit distribution -632,736,000 -632,736,000
3.4.1Drew surplus reserves
3.4.2 Distribution to owners (or shareholders) -632,736,000 -632,736,000
3.4.3 Others
3.5 Internal transfer of owners' equity
3.5.1 Capital reserves transferred and increased
capital (or capital stock)
3.5.2 Surplus reserves transferred and increased
capital (or capital stock)
3.5.3 Surplus reserves covering deficit
3.5.4 Others
4.Banlance at the end of this year
527,280,000 557,222,454 295,942,630 2,615,413,602 3,995,858,686
Financial statements have been signed by The legal representative: Sun Liqiang Accounting Supervisor: Leng Bin Accounting Department Manager: Jiang Jianxun
27
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS
Ended 30 June 2011
1. CORPORATE INFORMATION
Yantai Changyu Pioneer Wine Co., Ltd. (the “Company”) was incorporated as a joint stock
limited company in accordance with the Company Law of the People’s Republic of China
(the “PRC”) in a reorganization carried out by Yantai Changyu Group Co., Ltd. (“Changyu
Group Company”), in which Changyu Group Company injected certain assets and
liabilities in relation to the brandy, wine, sparkling wine, and tonic wine production and
sales businesses to the Company. The Company and its subsidiaries (the “Group”) are
principally engaged in the production and sales of wine, brandy, sparkling wine and tonic
wine.
Pursuant to the approval from the Government of Shandong Province (Luzheng [1997]119),
the Company was reorganized as a joint stock limited company on 10 April 1997. On 23
September 1997, the Company was approved by China Securities Regulatory Commission
(the “CSRC”) ([1997] No. 52) to issue 88,000,000 domestically listed foreign investment
shares (“B shares”) on Shenzhen Stock Exchange. On 18 September 1997, the Company
obtained the business license with the registered number No. 26718011-9.
In October 2000, the Company was approved by CSRC to issue 32,000,000 domestically
listed Shares (“A Shares”). The A shares were listed on Shenzhen Stock Exchange on 26
October 2000.
Pursuant to the share reform notices issued by the Company in February 2006, Changyu
Group Company transferred its 13,977,600 shares to the shareholders of A share of the
Company. After the reform, percentage of equity attributable to Changyu Group Company
decreased from 53.8% to 50.4%. At 31 December 2010, the total shares issued by the
Company amounts to 527,280,000 shares. Please refer to No.22 of Notes 5 in detail.
The holding company of the Group is Changyu Group Company, which was jointly
controlled by Yantai SASAC, ILLVA Saronno Investment Italy, International Finance
Corporation and Yantai Yuhua Investment and Development Company Limited.
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SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES
(1) Preparation of financial statements
The financial statements are prepared in according with “Corporate Accounting Standards –
The Principles” which was published by Ministry of Finance in February 2006, and “the 38
specific accounting standards”, its application guide, interpretations for accounting
standards, and other relevant regulations (collectively “CAS”).
The financial statements are prepared on a going concern basis.
Except for certain financial instrument, the measurement basis adopted by the group in
preparing its financial statement is historical cost. Subsequently, if the assets are impaired,
impairment provisions are made in accordance with the relevant accounting standards.
(2) Declaration for implementing CAS
The financial statements are prepared in accordance with CAS, which showing a true and
fair view of the financial position on 30 June 2011, financial performance and cash flow for
six months ended 30 June 2011 of the Company and the Group.
(3) Accounting year
The accounting year of the Group is from 1 January to 31 December.
(4) Reporting currency
The Group reporting and presentation currency is the Renminbi (“RMB”). Unless
otherwise stated, the unit of the currency is Yuan.
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Ended 30 June 2011
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(5) Business combination
A business combination is the bringing together of separate entities or businesses into one
reporting entity, classified into the business combination under common control and business
combination under non common control.
Business combination under common control
A business combination involving entities or businesses under common control is a business
combination in which all of the combining entities or businesses are ultimately controlled by the
same party or parties both before and after the business combination, and that control is not
transitory. The combining entity that obtains control of other combining entities or businesses is
the acquirer, and the other entities involved are the acquires. The combination date is when the
acquirer effectively obtains the control of the acquires.
The assets and liabilities obtained by the acquirer shall be measured at carrying amount in the
acquiree's accounts as at the date of combination. Where there is a difference between the
carrying amount of the net assets of the acquiree and the cost of combination, capital surplus
shall be adjusted. Where the capital surplus is not sufficient to offset the value of the net assets
acquired, retained earnings shall be adjusted.
Business combination under non-common control
A business combination involving entities or businesses under non-common control is a
business combination in which all of the combining entities or businesses are not ultimately
controlled by the same party or parties both before and after the business combination. The
combining entity that obtains control of other combining entities or businesses is the acquirer,
and the other entities involved are the acquirees. The acquisition date is when the acquirer
effectively obtains the control of the acquirees.
For business combination under non-common control, the assets and liabilities and contingent
liabilities obtained by the acquirer shall be measured at fair value as at the date of combination.
Where the cost of combination is greater than the fair value of assets and liabilities and
contingent liabilities, the difference should be recognized as goodwill. Where the cost of
combination is smaller than the fair value of acquiree’s assets and liabilities and contingent
liabilities, and cost of combination should be reevaluated. Where cost of combination is still
smaller than fair value of acquiree’s net assets, the difference should be recognized in income
statement.
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Ended 30 June 2011
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(6) Consolidated financial statements
The consolidation scope of consolidated financial statements is determined on the basis of
control. The consolidated financial statements include the financial statements of the
Company and its subsidiaries for the end of 30 June 2011. The subsidiaries are entities that
are controlled by the Company.
The subsidiaries adopt the same accounting year and accounting policies as the Company
adopted. All intercompany balances, transactions, unrealized gain and loss and dividends
within the Group are eliminated in full on consolidation.
Losses within a subsidiary are attributed to the minority interest even if that results in a
deficit balance. Any changes of minority interest that do not result loss of control is
accounted for as equity transaction.
For the subsidiaries acquired through business combination under non-common control,
their financial performance and cash flow shall be included in the consolidated financial
statements from the combination date, as long as they are under control by the Company. In
preparation of the consolidated financial statements, the subsidiaries’ identifiable assets,
liabilities and contingent liabilities are adjusted by their fair value on the acquisition date.
For the subsidiaries acquired through business combination under common control, their
financial performance and cash flow shall be included in the consolidated financial
statements. When preparing comparative consolidated financial statements, the
pre-combination adjustment of the subsidiary’s financial statements is considered as it has
existed before the business combination from the beginning of the reporting period.
(7) Cash and cash equivalents
Cash comprises cash on hand and demand deposit. Cash equivalents refers to short-term,
highly liquid investments that are readily convertible into known amounts of cash and
which are subject to an insignificant risk of changes in value.
(8) Foreign currency transactions and foreign currencies reporting
For any foreign currency transactions, they are recorded in functional currency.
Transactions in currencies other than the reporting currency are translated into the reporting
currency at the exchange rates prevailing on the transaction dates. Monetary assets and
liabilities denominated in foreign currencies are restated into the reporting currency using
the rates of exchange ruling at the balance sheet date. The exchange gains or losses are
dealt with in the income statement for the year.
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Ended 30 June 2011
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(8) Foreign currency transactions and foreign currencies reporting (continued)
The exchange gains or losses arising from foreign currency borrowings in relation to the
acquisition or construction of a fixed asset are accounted for according to the requirements
relating to the capitalization of borrowing costs. Non-monetary items denominated in foreign
currencies which are measured at historical cost are translated using the exchange rates on their
transaction dates. Non-monetary foreign items denominated in foreign currencies which are
measured at fair value are translated using the exchange rates on balance sheet date, and any
difference is recognized in income statement or other comprehensive income.
Foreign currency cash flows are translated using the spot exchange rate prevailing on the date
that the cash flows occur. The effect of exchange rate changes on cash is separately presented as
an adjustment item in the cash flow statement.
(9) Inventories
Inventories comprise raw materials, work in progress, finished goods and transitory materials.
The inventories are initially measured at cost. The cost of inventories comprises all costs of
purchase, cost of conversion and other costs. When inventories are sold, the cost of sale is
calculated on a weighted-average basis.
Agricultural products harvested from the company’s biological assets are measured on a
weighted-average basis, which comprises all material, labor and other indirect expense
incurred in producing and gathering the agricultural assets.
Agricultural products harvested are reported in accordance with the CAS 1 Inventories.
The Company adopts perpetual inventory system.
Inventories are measured at the lower of cost and net realizable value at the balance sheet
date. If the cost of inventories is higher than the net realizable value, the impairment of
inventories is accrued and recognized in income statement. If the factors causing any
impairment of the inventories do not exist, where the net realizable value is higher than the
cost, the amount of impairment is reversed and the reversed amount is recognized in the
income statement.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(9) Inventories (continued)
The net realizable value is estimated selling prices in ordinary course of business less the
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SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
estimated costs of completion and the estimated costs necessary to make the sale. The net
realizable value is estimated selling prices in ordinary course of business less the estimated
costs of completion and the estimated costs necessary to make the sale.
The inventory provision for raw materials is assessed by categories of inventories, where
finished goods are assessed by items. For the homogeneous products which are produced and
sold in the same region and are inseparable from other inventories, the inventory provision is
accrued collectively.
(10) Long term equity investments
Long term equity investments comprise investments in subsidiaries, joint ventures, associates
and any investment whose fair value cannot be reliably measured, with which the Company
cannot exert control, joint control or significant influence over the investee.
The investment is initially measured at cost. For business combination under common control,
the investment cost is recorded at the book value of the acquiree’s equity acquired. For business
combination under non-common control, the investment cost is recorded at combination cost.
Long term equity investments other than business combination, the investment cost is recorded
at cash paid plus any direct expense, tax or other expenditures associate with the investment, or
the fair value of the equity instruments issued, or value agreed in the investment contract,
except for the value agreed in the investment contract is not a fair market value.
Cost method is adopted for the investments whose fair value cannot be reliably measured, with
which the Group does not exert control, joint control or significant influence over the investees.
Cost method is also adopted for the investments in subsidiaries in the Company’s balance sheet.
When cost method is adopted, the long term equity investments are measured at its initial
investment cost, except that the initial investment cost contains declared dividend. The
dividend declared by the investee is recorded as investment income in income statement.
Impairment is assessed according to relevant policies.
The invested entities over which the Group has joint control or significant influence are
measured by equity method. Joint control is the contractually agreed sharing of control over an
economic activity, and exists only when the strategic financial and operating decisions relating
to the activity require the unanimous consent of the parties sharing control. Significant
influences refers to the power to participate in making decisions on the
Financial and operating of an enterprise but not to control or joint control together with other
parties over the formulation of the policies.
By equity method, where initial cost of investment excesses the fair value of identifiable net
assets of investee, the difference should be recognized in initial investment cost. Where initial
cost of investment is smaller than the fair value of identifiable net assets of investee, the
difference should be recognized in income statement and the investment cost should be adjusted
accordingly.
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Ended 30 June 2011
By equity method, after investment, the Group recognizes the investment profits or losses and
adjusts the book value of the long term equity investment based on the share of the net profits or
losses of the investee. The share of the net profits and losses of the investee should be
recognized at fair value of all identifiable assets in accordance with the accounting policy and
accounting period of the Group, and the inter-company transactions between the investees and
the Group shall be eliminated in proportion to the Group’s equity interest in the investees after
making adjustments on the net profits of the investees’(the loss shall be recognized in full in
case impairment is recognized from the inter-company transactions). For the investment in
associate and joint ventures before the first time adoption of CAS, the debit balance of the
investment differences, if any, also should be deducted from the investment income. The Group
will reduce the book value of the long term equity investment in accordance with the share of
profits or cash dividends declared to distribute by the invested entities.
The net losses of the invested entity should be recognized until the book value of the long term
equity investment and other long term rights and interests which substantially from the net
investment made to the invested entities are reduced to zero, unless the Group has the obligation
to assume extra losses. Where any change is made to the owner's equity other than the net
profits and losses of the invested entity, the book value of the long term equity investment are
adjusted and be included in the owner's equity. When disposing of a long term equity
investment, the difference between its book value and the proceeds is recognized in the income
statement in the corresponding period.
Details for the impairment test and impairment loss recognition for the long term equity
investments in subsidiaries, associates and joint ventures, please refer to Note 2 (18).
Details for the impairment test and impairment loss recognition for other long term equity
investment, which fair value not available in active market and cannot be reliably measured,
please refer to Note 2 (17).
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(11) Biological assets
The biological assets of the Group are vines.
Biological assets should be recognized when and only when:
(i) The Group controls the asset as a result of past events;
(ii) It is probable that future economic benefits associate with the asset will flow to the
entity; and
(iii) The cost of the asset can be measured reliably.
Biological assets comprise consumptive biological assets, productive biological assets, and
not for profit biological assets. Biological assets are initially measured at its cost.
The Group charge deprecation for productive biological assets which satisfy expected
production, and record the deprecation in balance sheet and income statement. The Group
uses straight line method to calculate the deprecation, and details as follows:
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
Category Estimated useful Estimated residual Annual depreciation
life rate rate
Vines 20 years - 5%
Consumptive biological assets and productive biological assets are measured as at each
balance sheet date. Where reliable evidence shows there is natural disaster, plant diseases,
insect pests, animal disease or change of market demand that make the realizable net value
of any consumptive biological asset or the recoverable amount of any productive biological
asset is lower than its book value, provision or impairment should be recognized in income
statement in according to the difference. Where the factors which cause any provision of a
consumptive biological asset are not exist, the amount of provision are reversed limited to
the provision which has been made. The reversed amounts are recognized in the income
statement of the current period. Impairment on productive biological assets cannot be
reversed.
No provision is made for not for profit biological assets.
The Group evaluates the useful life, expected net salvage value, and the depreciation
method of the property, plant and equipment at the end of each year.
Agricultural produce harvested from the entity’s biological assets are measured at its
weighted-average book value. The book value comprises all material, labor and other
indirect expense occurred in producing and gathering the agricultural assets. Agricultural
produce harvested are reported in accordance with the CAS 1 Inventories.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(11) Biological assets（continued）
When biological assets are sold, lost, dead, or damaged, the carrying amount is recognized
in the income statement after deduction of relevant taxes.
(12) Property, plant and equipment
Property, plant and equipment should be recognized as an asset if, and only if:
(i) It is probable that future economic benefits associated with the item will flow to the
entity; and
(ii) The cost of the item can be measured reliably.
Property, plant and equipments is initially measured at cost. The cost of an item of property,
plant and equipment comprises its purchase price, including import duties and
non-refundable purchase taxes, after deducting trade discounts and rebates; and any costs
directly attributable to bringing the asset to the location and condition necessary for it to be
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SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
capable of operating in the manner intended by management.
Depreciation is calculated on a straight line basis. The estimated useful life and residual
value rate are as follows:
Estimated useful Estimated residual Annual depreciation
life rate rate
Buildings 30-40years 5%-40% 2%-3.2%
Machinery 10-20years 5% 4.8%-9.5%
Motor Vehicles 6-12years 5% 7.9%-15.8%
A variety of depreciation rate can be used for different components of an item of property,
plant and equipment according to its different useful lives or nature.
The Group evaluates the useful life, expected net residual value, and the depreciation
method of the property, plant and equipment every year, and makes adjustment where
necessary.
For details of the impairment test and impairment loss recognition for property, plant and
equipment, please refer to Note 2 (18).
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Ended 30 June 2011
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(13) Construction in progress
Construction in progress are measured on actual construction costs, including the direct
costs of construction, capitalized borrowing costs during the period of construction and
other expenditures.
Construction in progress is reclassified to the property, plant and equipment when
completed and ready for use.
Details for the impairment test and impairment loss recognition for construction in progress,
please refer to Note 2 (18).
(14) Borrowing costs
Borrowing costs are interest and other costs incurred by the Group in connection with the
borrowing of funds, which includes interests, amortization of discounts or premiums,
ancillary costs, and exchange differences arising from foreign currency borrowings.
Borrowing costs that are directly attributable to the acquisition, construction or production
of a qualifying asset shall be capitalized as part of the cost of that asset. A qualifying asset
is an asset that necessarily takes a substantial period of time to get ready for its intended use
or sale.
The capitalization of borrowing costs as part of the cost of a qualifying asset shall
commence when:
(i) Expenditures of the asset are being incurred;
(ii) Borrowing costs are being incurred; and
(iii) Activities that are necessary to prepare the asset for its intended use of sale are in
progress.
Capitalization of borrowing costs shall cease when all the activities necessary to prepare
the qualifying asset for its intended use of sale are substantially complete. Any borrowing
costs incurred after this should be recognized in income statement.
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SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(14) Borrowing costs (continued)
During the capitalization period, the amount of borrowing costs eligible for capitalization
on a qualifying asset for each accounting period shall be determined by:
(i) The actual borrowing costs incurred on that borrowing during the period less any
investment income on the temporary investment of those borrowing for specifically
purpose borrowing; or
(ii) Applying a capitalization rate to the expenditures on that asset. The capitalization
rate shall be the weighted average of the borrowing coasts applicable to the
borrowings of the entity for general purpose borrowing.
When the acquisition, construction or production of a qualifying asset is abnormally
interrupted before it necessarily takes a substantial period of time to get ready for its
intended use or sale, and the interruption period exceed three months, the capitalization of
borrowing coasts shall be temporally ceased. During the cessation of capitalization, the
borrowing costs should be recognized in income statement, until the construction resume.
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Ended 30 June 2011
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(15) Intangible assets
Intangible assets would only be recognized when it can bring economic benefits to the
group and its cost could be reliably measured. The opening balance of such intangible
assets is measured at its cost. For those intangible assets that acquired by merger and
acquisition and its fair value could be reliably measured, their book value would be
measured by its fair value.
The estimated useful lives are determined on the periods during which it can bring
economic benefits to the Group. If the periods cannot be reliably determined, the intangible
assets are classified as intangible assets with indefinite useful life.
The useful lives of the intangible assets are as follows:
Land use rights 50 years
Software use rights 5 years
The land use rights obtained by purchase or payment of land lease prepayment are recorded
as intangible assets. For self-constructed buildings, the land use rights and plants are
recorded as intangible assets and property, plant and equipment, respectively. Purchased
buildings are allocated between land use rights and buildings based on actual payments,
and are totally recorded as property, plant and equipment when it is difficult to allocate.
Intangible assets with finite lives are amortized over the useful life on the straight line basis.
The amortization period and amortization method for an intangible asset with a finite useful life
are reevaluated at each year end.
Intangible assets with indefinite lives are assed for impairment every year whenever there is an
indication that the intangible asset may be impaired. If there is evidence that the useful lives of
the intangible assets are finite, the change in the useful life assessment from infinite to finite is
accounted for on a prospective basis.
For details for the impairment test and impairment loss recognition for intangible assets,
please refer to Note 2 (18).
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
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Ended 30 June 2011
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(16) Long term prepaid expenses
Long term prepaid expenses are mortized over the useful economic life on a straight line basis.
Amortization period:
Land requisition fee 50 years
Land Lease prepayment 50 years
Others 50 years
(17) Financial instruments
Financial instruments refer to the contracts whereby the financial assets of an enterprise are
formed, and whereby the financial liabilities or right instruments of any other entity are formed.
Recognition and derecognizing of financial instruments
The Group recognizes the financial assets or financial liabilities as it contracted in financial
instruments agreements.
If a financial asset meets any of the following requirements, it is derecognized:
(i) If the contractual rights for collecting the cash flow of the said financial asset are
terminated; or
(ii) Transferred the ownership of receive the cash flow form financial assets, or with the
responsibility of transferred all cash flow received form financial assets to the third
parties; And (a) actually transferred out all the risk and reward related to the
financial assets, or (b) actually neither remained nor transferred out almost of the
risk and reward of financial assets, but lost the control of the financial assets.
A financial liability is derecognized when the obligation under the liability is discharged or
cancelled or expires. When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as a derecognizing of the original liability
and a recognition of a new liability, and the difference between the respective carrying amounts
is recognized in the income statement.
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Ended 30 June 2011
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(17) Financial instruments (continued)
In a regular way purchase or sale financial instrument, the financial instrument should be
recognized or derecognized on transaction date. A regular way purchase or sale is a purchase or
sale of a financial asset under a contract whose terms require delivery of the asset within the
time frame established generally by regulation of convention in the marketplace concerned.
Transaction date is the date that the Group commits to purchase or disposal a financial
instrument.
Classification and measurement of financial assets
Financial assets are classified when they are initially recognized, including financial assets at
fair through profits or losses, held to maturity investments, loans and receivables and available
for sale financial assets, and hedging instrument. Financial assets initially recognized at fair
value. For financial assets measured at fair value through profits or losses, the transaction
expenses thereof are directly included in the current profits or losses; for other categories of
financial assets and financial liabilities, the transaction expenses thereof are included in the
initial costs.
Subsequent measurement of financial assets depends on its classification:
Financial assets at fair value through profits and losses
Financial assets at fair value through profit or loss include financial assets held for trading and
financial assets designated upon initial recognition as at fair value through profit or loss.
Financial assets are classified as held for trading if they meet any of the following requirements:
(i) The financial assets being acquired mainly for the purpose of selling or repurchase in the
near future; (ii) Forming a part of the identifiable combination of financial instruments, which
are managed in a centralized way, and for which there is objective evidence that the enterprise
will manage the combination by way of short term profit making in the near future; (iii) Being
a derivative instrument. Theses financial assets are subsequently measured at fair value, and all
the realized and unrealized profits and losses are included in profits and losses of the current
year. Gains or losses on these financial assets are recognized in the income statement whenever
they are realized or not realized. Dividend or interest associate with financial instrument which
measured at fair value and changes recorded in income statement, should be recorded in income
statement.
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Ended 30 June 2011
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(17) Financial instruments (continued)
Held to maturity investments
Non derivative financial assets with fixed or determinable payments and fixed maturity are
classified as held to maturity when the Group has the positive intention and ability to hold to
maturity. Held to maturity investments are subsequently measured at carried amortized cost
using the effective interest method. Gains and losses are recognized in the income statement
when the investments are derecognized or impaired, as well as through the amortization.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. Such assets are subsequently carried at amortized cost
using the effective interest method. Gains and losses are recognized in the income statement
when the loans and receivables are derecognized or impaired, as well as through the
amortization process.
Available for sale financial assets
Available for sale financial assets are non-derivative financial that are initially designated as
available for sale or are not classified into any of the other three categories. After initial
recognition, available for sale financial assets are measured at fair value, with gains or losses
recognized as capital surplus reserve until the investment is derecognized or until the
investment is determined to be impaired, at which time the cumulative gain or loss previously
reported in equity are recognized in the income statement. Amortized cost is calculated taking
into account any discount or premium on acquisition and includes fees that are an integral part
of the effective interest rate and transaction costs. Interest and dividends earned are recoded as
interest income and dividend income, respectively and are recognized in the income statement.
Available for sale financial assets which have no quoted price and fair value cannot be reliably
measured are measured at cost.
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Ended 30 June 2011
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(17) Financial instruments (continued)
Classification and measurement of financial liabilities
Financial liabilities are classified into financial liabilities at fair through profits and losses, other
financial liabilities and hedging instrument when they are initially recognized. For financial
liabilities at fair through profits and losses, the transaction expenses thereof are directly
included in the current profits or losses, while the transaction expenses of other financial
liabilities are include in the initially recognized amounts.
Subsequent measurement of financial liability depends on its classification:
Financial liabilities at fair value through profits and losses
Financial liabilities at fair through profits and losses include transaction financial liabilities, and
the designated financial liabilities measured at fair value upon initial recognition, and whose
variation is recognized in the income statement of the current year. Financial liabilities that
meet any of the following requirements are classified as transaction financial liabilities: (i) The
financial liability being undertaken mainly for the purpose of selling or repurchase in the near
future; (ii) Forming a part of the identifiable combination of financial instruments, which are
managed in a centralized way, and for which there is objective evidence that the enterprise will
manage the combination by way of short term profit making in the near future; (iii) Being a
derivative instrument. Theses financial liabilities are subsequently measured at fair value, and
all the realized and unrealized profits and losses are recognized in the income statement of the
current year.
Other financial liabilities
The financial liabilities are subsequently measured at amortized cost by adopting effective
interest rate method.
Fair value of financial instruments
The fair value of investments that are actively traded in organized financial markets is
determined by reference to quoted market prices. For investments where there is no active
market, fair value is determined using valuation techniques. Such techniques include using
recent arm’s length market transactions; reference to the current market value of another
instrument, which is substantially the same; a discounted cash flow analysis; option pricing
models and other valuation models.
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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(17) Financial instruments (continued)
Impairment of financial assets
The Group assesses at each balance sheet date whether there is any objective evidence that a
financial asset or a group of financial assets is impaired. Positive evidences refer to those
occurred after the initial recognition, have effect on estimated future cash flows of the financial
assets, and can be measured reliably.
Assets carried at amortized cost
If there is objective evidence that an impairment loss on financial assets carried at amortized
cost has been incurred, the amount of the loss is measured as the difference between the assets’
carrying amount and the present value of estimated future cash flows (excluding future credit
losses that have not been incurred) discounted at the financial asset’s original effective interest
rate after taking into account of the collateral over these balances.
The Group first assesses whether objective evidence of impairment exists individually for
financial assets that are individually significant. If it is determined that objective evidence of
impairment exists for an individually assessed financial asset, the impairment losses are
recognized in the income statement of the current year. Not individually significant financial
assets are assessed individually or collectively included in a group of financial assets with
similar credit risk characteristics. Assets that are individually assessed for impairment and for
which an impairment loss is or continues to be recognized are not included in a collective
assessment of impairment.
If, in a subsequent period, the amount of impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognized, the previously
recognized impairment loss is reversed. Any subsequent reversal of an impairment loss is
recognized in the income statement, to the extent that the carrying value of asset does not
exceed its amortized cost at the reversal date.
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(17) Financial instruments (continued)
Available for sale financial assets
When a decline in the fair value of an available for sale financial asset has been recognized
directly in equity and there is objective evidence that the asset is impaired the accumulative loss
that had been recognized directly in capital surplus are removed from equity and recognized in
profit or loss of the current period. The amount of the cumulative loss that is removed from
equity and recognized in the income statement is be the difference between the acquisition cost
(net of any principal repayment and amortization) and current fair value, less any impairment
loss on that financial asset previously recognized in the income statement.
Impairment losses on debt instruments are reversed through the profits or losses, if the increase
in fair value of the instrument can be objectively related to an event occurring after the
impairment, loss was recognized in the income statement. Impairment losses on equity
instruments classified as available for sale are not reversed through the income statement. Fair
value increase after impairment is recognized in comprehensive income.
Financial assets carried at cost
If there is objective evidence that the financial assets have been impaired, the amount of the
impairment loss is measured as the difference between the carrying amount of the financial
asset and the present value of estimated future cash flows discounted at the current market rate
of return for a similar financial asset, and recognized in the income statement of the current year.
Such impairment losses are not reversed.
The impairment on long term equity investment which are measured by employing cost method
in accordance with CAS2 Long term equity investments, have no quoted market price in an
active market and the fair value cannot be reliably measured are recorded according to the
aforesaid requirements.
Transfers of financial assets
If the Group has transferred substantially all the risks and rewards of the asset and waived the
control of the asset, the asset is derecognized. If the Group has retained substantially all the
risks and rewards of the asset, the assets are not de recognized.
Where the Group has neither transferred nor retained substantially all the risks and rewards of
the asset, if the Group waived the control of the assets, the financial assets are derecognized and
the assets and liabilities are recognized accordingly; if the Group did not waive the control of
the assets, the financial assets are recognized to the extent of the Group's continuing
involvement in the asset, and the liabilities are recognized accordingly.
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(18) Impairment of assets
Impairments on assets other than inventories, deferred tax, financial assets and long term
equity investments without quoted market price in active market the fair value cannot be
reliably measured are determined according to the following methods:
On each balance sheet date, the Group made assessment on whether or not there is any
indication of potential asset impairment. If there is any evidence that indicates the possibility of
asset impairment, the recoverable amount of the asset is being estimated. Independent of
whether there are indication of potential impairment, the goodwill from an enterprise merger
and intangible assets whose useful lives are indefinite are subjected to impairment testing each
year. Intangible assets which are not ready to use also need perform impairment test every year.
The recoverable amount of an asset is the higher of the asset's or cash generating unit's value in
use and its fair value less costs to sell, and is determined for an individual asset. If it is difficult
to determine the recoverable amount individually, the recoverable amount is determined for the
cash generating unit to which the asset belongs. Cash generating unit is determined as the asset
generate cash inflows that are largely independent of those from other assets or groups of assets.
An impairment loss is recognized only if the carrying amount of an asset exceeds its
recoverable amount. An impairment loss is charged to the income statement and provision is
made accordingly.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group's cash generating units, or groups of cash
generating units, that are expected to benefit from the synergies of the combination, and not
larger than the reportable segment determined by the Group.
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(18) Impairment of assets (continued)
When conducting impairment testing on relevant cash generating units or groups of cash
generating units that have related goodwill, if there is any evidence indicating that impairment
of the cash generating units or groups of units has occurred, the Company first carries out
impairment testing on the cash generating units or groups of units excluding goodwill,
calculating the recoverable amount, comparing it with the corresponding carrying amount and
recognizing any resulting impairment loss. Then impairment testing are conducted on the cash
generating units or groups of units with goodwill included, the carrying amount of these cash
generating units or combinations of cash generating units (including the carrying amount of the
goodwill allocated thereto) compared to the recoverable amount; if the recoverable amount of
said cash generating units or groups of units is below the carrying amount thereof, the
impairment loss are first deducted from the carrying amount of the corporate assets and
goodwill which have been allocated to the cash generating unit or group of units, and then
deducted from the carrying amount of the remaining assets pro rata with goodwill excluded
from consideration.
After a loss of asset impairment has been recognized, it is not be reversed in future accounting
periods.
(19) Contingent liabilities
Besides the contingent consideration or liabilities through merger and acquisition,
contingent liabilities should be recognized when and only when:
(i) The group has a present obligation as a result of a past event;
(ii) It is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation; and
(iii) A reliable evaluation can be made of the obligation.
The contingent liabilities are measured at the best estimate of the expenditure required to
settle the present obligation at the balance sheet date, taking into consideration of the risks,
uncertainties and time value of money. The book value of contingent liabilities is reviewed
at each balance sheet date. Whether there is any objective evidence indicating that the book
value cannot reflect the best estimated amount, adjustments should be make to the book
value.
The acquiree’s contingent liabilities through business combination is initial recognized at fair
value, and its subsequent measurement is recognized at the higher of estimated value and the
initial cost less any accumulated amortization.
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(20) Revenue
Revenue is recognized when it is probable that the economic benefits will flow to the Group
and when the revenue can be measured reliably, on the following bases:
Revenue from the sale of goods
When the significant risks and rewards of ownership have been transferred to the buyer,
provided that the Group maintains neither managerial involvement to the degree usually
associated with ownership, nor effective control over the goods sold, and cost of sales can
be measured reliably. The amount of revenue arising on sale of goods is determined by
agreement between the entity and the buyer or user of the asset. It is measured at the fair
value of the consideration received or receivable.
Rendering of service
When the outcome of a transaction involving the rendering of services can be estimated
reliably, revenue associated with the transaction shall be recognized by reference the stage
of completion of the transaction at the reporting date. The outcome of a transaction can be
estimated reliably when all the following conditions are satisfied:
(i) The amount of revenue can be measured reliably;
(ii)It is probable that the economic benefit associated with the transaction will flow to the
entity;
(iii) The stage of completion of the transaction at the reporting date can be measured
reliably; and
(iv) The costs incurred for the transaction and the costs to complete the transaction can
be measured reliably.
Interest income
Interest income is measured based on the borrowing periods and actual interest rate.
(21) Leases
Leases that substantially transfer all the rewards and risks of ownership of assets are accounted
for as finance leases, otherwise are accounted for as operating leases.
As an operating lessee
Rental expenses under the operating leases are charged to related costs of the assets or the
income statement on a straight line basis over the lease period.
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(22) Employee benefits
Employee benefits refer to all kinds of remunerations and other relevant reimbursements
made by the Group to its employees in exchange for services of employees. During
accounting periods wherein an employee renders services to the Group, the Group
recognized the benefits payable as a liability. The benefits payable which will be matured
over 1 year are discounted when it is material.
Medical insurance, pensions, unemployment insurance, other social insurance and housing
fund are recorded as cost of relevant assets or expenses for the relevant period.
If an Group terminates the labor relationship with any employee prior to the expiration of
the relevant labor contract or makes a severance package proposal with the purpose of
enticing the employees to willingly accept such a termination, the Group recognized the
contingent liabilities to be incurred due to severance pay, and recorded them in income
statement of the current period.
The treatment for the early retirement planning is on the same basis to that of the
termination benefits. The salaries and the social insurance expenses for the periods from the
employee’s termination of service and the normal retirement of these staffs are recognized
as employee benefits payable when meeting the aforesaid retirement benefits recognition
requirements, and recognized to income statement of relevant period.
(23) Profit distribution
The cash dividends would be recognized as liability after General Meeting of stockholders’
meeting‘s approval.
(24) Income tax
Income tax comprises current and deferred tax. Income tax is recognized in the income
statement, except for goodwill arises from business combination, or transactions directly
recorded in equity of which the related income is recorded in equity.
The Group recognizes the income tax assets or liabilities related to current period and prior
period by calculating the expected payable or refundable amount in accordance with the tax
law.
Deferred tax is provided on balances sheet approach on all temporary differences between
tax basis and accounting basis at each balance sheet date.
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(24) Income tax (continued)
Deferred tax liabilities are recognized for all taxable temporary difference, except:
(i) Where the deferred tax liability arises from goodwill or the initial recognition of an
asset or liability in a transaction that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor taxable profit or loss; and
(ii) In respect of taxable temporary differences associated with interests in subsidiaries,
associates and joint ventures, where the timing of the reversal of the temporary
differences can be controlled and it is probable that the temporary differences will not
reverse in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, carry forward
of unused tax credits and unused tax losses, to the extent that it is probable that taxable
profit will be available against which the deductible temporary differences, and the carry
forward of unused tax credits and unused tax losses can be utilized except:
(i) Where the deferred tax asset relating to the deductible temporary differences arises from
the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit
nor taxable profit or loss; and
(ii) In respect of deductible temporary differences associated with interests in subsidiaries,
associates and joint ventures, deferred tax assets are only recognized to the extent
that it is probable that the temporary differences will reverse in the foreseeable future
and taxable profit will be available against which the temporary differences can be
utilized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to
the period when the asset is realized or the liability is settled, based on tax rates (and tax
laws) that have been enacted or substantively enacted at the balance sheet date.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and
reduced to the extent that it is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred tax asset to be utilized. At each reporting date,
the entity re-assesses unrecognized deferred tax assets. The entity recognizes a previously
unrecognized deferred tax asset to the extent that it has become probable that future taxable
profit will allow the deferred tax asset to be recovered.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists
to set off current tax assets against current tax liabilities and the deferred taxes relate to the
same taxable entity and the same taxation authority.
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(25) Government grants
Government grants refers to monetary or non monetary assets received by an enterprise
from the government, but excludes capital invested in the Group by the government that
gives the government ownership rights. Government grants are recognized where there is
reasonable assurance that the grant will be received and all attaching conditions will be
complied with. Monetary grants are measured on the basis of the amount received or the
amount receivable. Non monetary grants are measured based on the fair value of relevant
assets, where fair value cannot be measure reliably, the grants are measured based on
nominal amount. Where the grant relates to an asset, the fair value is credited to a deferred
income account and is released to the income statement over the expected useful life of the
relevant asset by equal annual installments. Grant which measured at nominal amount,
should be recorded in income statement.
(26) Related party relationships
Related party relationships can be defined as the entity is under control, joint control or
significant influence by another entity or two or more than two entities are under the
control, joint control by the same entity.
(27) Significant accounting judgments and accounting estimates
Preparing financial statements requires management make judgment and estimates, which
could affect the amount of revenue, expense, asset, liabilities and the disclosure of
contingent liabilities. However, those uncertainties of estimate may cause significant
adjustment on the book value of assets and liabilities.
Estimation uncertainty
The following are key assumptions for after balance sheet date event and other factors of
uncertain estimation. They may cause material adjustment on balance sheet in following
accounting period.
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ESTIMATES (CONTINUED)
(27) Significant Accounting Judgments and Accounting Estimates (continued)
Estimation uncertainty (continued)
Deferred tax assets
Deferred tax assets are recognized for all unused tax losses to the extent that it is probable
that taxable profit will be available against which the losses can be utilized. Significant
management judgment is required to determine the amount of deferred tax assets that can
be recognized, based upon the likely timing and level of future taxable profits together with
future tax planning strategies.
Depreciation
As set out in Note 2 (12), the depreciation is calculated on the straight line basis to write-off
the cost of each item of fixed assets to its residual value over its estimated useful life. The
Group’s management determines the estimated useful lives for its property, plant and
equipment. This estimate is based on the historical experience of the actual useful lives of
property, plant and equipment of similar nature and functions. If the previous estimates
have significant changes, and depreciation expenses will be adjusted in the future periods.
Useful life of intangible assets
The estimated useful lives of the intangible assets are determined based on the historical
experience of the actual useful lives of intangible assets of similar nature and functions as
well as considering the contractual rights and statutory rights applicable to the intangible
assets.
When the estimated useful lives of finite intangible assets are shortened or extended, the
amortization periods should be adjusted accordingly. When there is evidence indicating the
useful lives of intangible assets with indefinite useful lives becomes finite, the useful lives
should be estimated and the intangible assets should be accounted for in accordance with
the standards for the intangible assets with finite useful lives.
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ESTIMATES (CONTINUED)
(27) Significant Accounting Judgments and Accounting Estimates (continued)
Estimation uncertainty (continued)
Impairment of biological assets
As set out in Note 2 (11), the Group examined the consumptive biological assets and
productive biological assets at each balance sheet date. If any reliable evidence shows that
the realizable net value of any consumptive biological asset or the recoverable amount of
any productive biological asset is lower than its book value due to natural disaster, plant
diseases and insect pests, animal disease or change of market demand, the Group, on the
basis of the difference between the realizable net value or the recoverable amount and the
book value, make provision for the loss on decline in value of or for the impairment of the
biological asset and are recorded it in the profits and losses of the current period. The
aforesaid realizable net value and recoverable amount is determined according to the CAS 1
Inventories and CAS 8 Asset Impairment, respectively.
Impairment of non-current assets
As set out in Note 2 (18), the Group assesses whether the recoverable amount is lower than
the book value. If there are any indicators that the book value of non-current assets cannot
be fully recoverable, impairment losses should be recorded.
The recoverable amount is the higher of an asset’s fair value less costs to sell and the
present value of the future cash flows expected to be derived from an asset. As it is difficult
for the Group to obtain the quoted market price of the assets (or assts group), the fair value
of the assets cannot be reliably estimated. When the management make estimation on the
expected future cash flows from the asset or cash generating unit, estimates should be made
on choosing a suitable production volume, selling price and related operating costs discount
rate in order to calculate the present value of those cash flows. When recoverable
amounts are undertaken, management may use all available for use information, including
the forecast on production volume, selling price and related operating costs in reasonable
and supportable assumptions.
Estimated provision for trade receivables
A provision for impairment of trade receivables is established when there is objective
evidence that the Group will not be able to collect all amounts due according to the original
terms of receivables. Significant financial difficulties of the debtor, probability that the
debtor will enter bankruptcy are considered indicators that the trade receivable is impaired.
The provision is reassessed at the end of each year.
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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND
ACCOUNTING ESTIMATES (CONTINUED)
(27) Significant Accounting Judgments and Accounting Estimates (continued)
Estimation uncertainty (continued)
Inventory provision based on net realizable value
The inventory are measured on the lower of carrying value and net realizable value, and
provision should be made for impairment on obsolete and slow moving inventories. The
group will reassess whether the net realizable value is lower than the carrying cost at the
end of each year.
3. TAXES
(1) The main taxes and tax rate are as follows:
Value added tax VAT is levied at 17% on the invoiced amount after
deduction of eligible input VAT.
Consumption tax Consumption tax of the tonic wine is levied at quantity
and certain tax rate of gross turnover, namely levied at
20% of total turnover and RMB1000 per ton. For all
other product, consumption tax is levied on gross revenue
at rates ranging from 10% to 20%.
Business tax The Group is subject to a business tax of 5% on its
taxable revenue.
City development tax Levied at 7% of total business tax payment.
Corporate income tax The Group is subject to a corporate income tax rate of
25% on its taxable income.
(2) Tax incentives and relative permit
A subsidiary of the Company, Liaoning Changyu Ice Wine Chateau Co., Ltd. which is a
productive foreign-invested enterprise was incorporated in Huanren Manzu Autonomous
County. In accordance with PRC Income Tax of Foreign Investment and Foreign Enterprises
and Notice of the State Council’s Implementation of the Transitionally Preferential Policies
(GuoFa [2007] permit No.39), the productive foreign-invested company, from the first
profit-making year, exempts from corporate income tax in 2007 and 2008, and enjoys a
favorable corporate income tax rate of 12.5% from 2009 to 2011.
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3. TAXES (continued)
(2) Tax incentives and relative permit (continued)
Ningxia Changyu Grape Growing Co., Ltd., a subsidiary of the Group, whose principal
activity is grape growing is incorporated in Ningxia Huizu Autonomous Region. According
to clause 27 of PRC Corporate Income Tax and clause 86 of PRC Corporate Income Tax
Measures for Implementation, Ningxia Changyu Grape Growing Co., Ltd. enjoys an
exemption of corporate income tax.
4. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS
(1) Particulars of the subsidiaries
Name Place and date Legal Business nature Registered Principle Incorporate
of registration represe- capital activities code
ntative
Subsidiary acquired from a business combination: under non-common control
Xinjiang Tianzhu Wine 11 April 2006 Zhou Manufacturing RMB Production and 787 604 261
Co.,Ltd.(Xinjiang Tianzhu) Shihezi , Xinjiang, Hongjiang 75,000,000 sales of wine
China
Subsidiaries acquired by establishment:
Yantai Changyu Pioneer Vehicular 1 December 1992 Zhang Transportation RMB Transportation 165 031 729
Transport Yantai, Shandong, Lixian 300,000 service
Co., Ltd. (“Vehicular China
Transportation”)
Beijing Changyu Sales and 14 July 1998 Sun Sales RMB Sales of wine 634 377 029
Distribution Co., Ltd. (“Beijing Beijing, China Liqiang 500,000
Sales”)
Yantai Kylin Packaging Co., Ltd 29 September 1999 Yang Manufacturing USD Production of 863 052 455
(“Kylin Packaging”) (a) Yantai, Shandong, Ming 1,900,000 packaging
China materials
Yantai Changyu-Castel Wine 3 September 2001 Sun Manufacturing USD Production and 730 682 613
Chateau Co., Ltd. Yantai, Shandong, Liqiang 5,000,000 sales of wine
(“Changyu Chateau”) (b) China
Changyu (Jingyang) Pioneer 5 December 2001 Cai Manufacturing RMB Production and 732 663 643
Wine Co., Ltd. (“Jingyang Jingyang, Shanxi, Jianshe 1,000,000 sales of wine
Wine”) China
Yantai Changyu Pioneer Wine 24 December 2001 Jiang Sales RMB Sales of wine 746 576 380
Sales Co., Ltd. (“Sales Yantai, Shandong, Hua 8,000,000
Company”) China
Langfang Development Zone 1 March 2002 Mige Manufacturing USD Production and 735 624 56X
Castel-Changyu Wine Co., Ltd Lanfang , Hebei, Balu 3,000,000 sales of wine
(“Langfang Castel”) (c) China
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Ended 30 June 2011
4. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (continued)
(1) Particulars of the subsidiaries (continued)
Name Place and date Legal Business nature Registered Principle Incorporate
of registration represe-nta capital activities code
tive
Changyu (Jingyang) 8 April 2002 Zhou Sales RMB Sales of wine 735 379 154
Pioneer Wine Sales Jingyang, Mingqiang 1,000,000
Co., Ltd. (“Jingyang Shanxi, China
Sales”)
Langfang Changyu Pioneer 19 April 2002 Liu Sales RMB Sales of wine 737 388 150
Wine Sales Co.,Ltd. Langfang, Wanqiang 1,000,000
(“Langfang Sales”). Hebei, China
Shanghai Changyu Sales 28 April 2003 Zhou Sales RMB Sales of wine 749 571 075
and Distribution Co. Shanghai, China Hongjiang 1,000,000
Ltd.(“Shanghai Sales”)
Beijing Changyu AFIP 27 October 2005 Sun Manufacturing RMB Production and 780 953 469
Wine Chateau Co., Ltd Beijing, China Liqiang 110,000,000 sales of wine
(“Beijing Chateau”)
Yantai Changyu Wine Sales 9 January 2006 Jiang Sales RMB Sales of wine 783 487 627
Co., Ltd.( “Wines Sales”) Yantai, Hua 5,000,000
Shandong,
China
Yantai Changyu Pioneer 29 September Zhou Sales RMB Import and 780 766 161
International Co. 2005 Yantai, Hongjiang 5,000,000 export of wine and
Ltd.(“Pioneer Shandong, technology
International”) China
Hangzhou Changyu Wine 14 June 2006 Jiang Sales RMB Whole-sale and retail of 788 283 631
Sales Co. Hangzhou, Hua 500,000 packaging food
Ltd.(“Hangzhou Zhejinag, China
Changyu”)
Ningxia Changyu 16 November Shao Planting RMB Plant and 788 200 410
Grape-Growing Co. 2006 Chunsheng 1,000,000 purchase of
Ltd.(“Ningxia Growing”) Yinchuang, grape
Ningxia, China
Huanren Changyu National 16 November Leng Sales RMB Sales of wine, healthy 794 822 179
Wines Sales Co. 2006 Bin 2,000,000 liquor, liqueur ，
Ltd.(“National Wines”) Huanren, non-alcohol beverages
Liaoning, China
Liaoning Changyu Ice Wine 3 April 2003 Zhou Manufacturing RMB Production and 747 128 301
Chateau Co., Ltd.(“Ice Benxi, Liaoning, Hongjiang 26,300,000 sales of ice wine
Chateau”) (d) China
Yantai Development Zone 4 December Zhou Sales RMB Whole-sale and retail of 796 183 411
Changyu Trade Co., 2006 Hongjiang 5,000,000 wine
Ltd.(“Development Zone Yantai,
Trade”) Shandong,
China
Shenzhen Changyu Wine 17 July 2007 Lin Sales RMB Whole-sale and retail of 664 195 20X
Marketing Futian, Pu 500,000 wine
Ltd.(“Shenzhen Shenzhen, China
Marketing”)
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4. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (continued)
(1) Particulars of the subsidiaries (continued)
Name Place and Legal Business Registered Principle activities Incorporate
date of represe-nta nature capital code
registration tive
Yantai Changyu 27 March 2007 Zhou Sales RMB Whole-sale and retail of 660 176 044
Trading Company Yantai, Shandong, Hongjiang 5,000,000 wine
(“Changyu China
Trading”)
Beijing AFIP Meeting 4 December 2007 Sun Services RMB Meeting service, foods, 669 926 612
Center (“Meeting Miyun, Beijing , Hongbo 500,000 accommodation, tourism
Center”) China and sales of souvenir
Beijing AFIP Tourism 4 June 2008 Liu Tourism RMB Tourism and culture 676 627 372
and Culture Miyun, Beijing , Shilu 500,000 communication,
Company (“AFIP China development of tourist
Tourism”) resources, meeting service
Qing Tong Xia 17 November Cai Sales RMB Whole-sale and retail of 694 334 151
Changyu Wine 2009 Jianshe 500,000 wine
Marketing Ltd. Qing Tong Xia ,
(“Qing Tong Xia Ningxia, China
Sales)
Shihezi Changyu 2 April 2010 Sun Manufacturing RMB Manufacturing and sales of 552 414 949
Wine Chateau Co., Shihezi, Xinjiang, Liqiang 2,000,000 wine
Ltd.(“ Shihezi China
Chateau”)
Ningxia Changyu 25 April 2008 Li Manufacturing RMB Manufacturing and sales of 670 408 275
Pioneer Wine Co., Yinchuan, Jiming 1,000,000 wine, packing material,
Ltd. (“Ningxia Ningxia, China plant, process and purchase
Wine”) of grapes
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
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4. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (continued)
(1) Particulars of the subsidiaries (continued)
Name Place and Legal Business Registered Principle Incorporate code
date of representative nature capital activities
registration
Ningxia Changyu 26 April 2010 Zhou Manufacturing RMB Wine / packaging 694 349 740
Wine Chateau Yinchuan, Hongjiang 2,000,000 manufacturing,
Co., Ltd. Ningxia, tourism
(“ Ningxia China
Chateau”)
XianYang Changyu 12April 2010 Sun Manufacturing RMB Tourism and wine 552 180 142
Chateau Co., Xianyang, Liqiang 2,000,000 manufacturing
Ltd.(“ Xianyang Shanxi, China
Chateau”)
Yantai Changyu 29 March Sun Manufacturing RMB Research and 555 235 76X
Wine Research 2010 Liqiang 500,000,000 development of
and Yantai, winery
Development Shandong
Co., Ltd. China
(Development
Centre) (e)
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4. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (continued)
(1) Particulars of the subsidiaries (continued)
Equity interest owned
by the Company
Name Paid in capital Direct Indirect Voting Consolidated Non-controlli
at 31 December power financial ng interest
2010 statements
Subsidiary acquired in business combination :under non-common control
Xinjiang Tianzhu RMB 60% - 60% Yes RMB
60,000,000 56,093,912
Subsidiaries acquired by establishment:
Vehicular Transportation RMB 100% - 100% Yes -
300,000
Beijing Sales RMB 70% 30% 100% Yes -
500,000
Kylin Packaging (a) RMB 50% - 62.5% Yes RMB
7,783,813 18,499,049
Changyu Chateau (b) RMB 70% - 100% Yes RMB
28,968,100 12,174,645
Jingyang Wine RMB 90% 10% 100% Yes -
1,000,000
Sales Company RMB 90% 10% 100% Yes -
8,000,000
Langfang Castel (c) RMB 49% - 100% Yes RMB
12,142,200 12,640,000
Jingyang Sales RMB 10% 90% 100% Yes -
1,000,000
59
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
4. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (continued)
(1) Particulars of the subsidiaries (continued)
Equity interest owned
by the Company
Name Paid in capital Direct Indirect Voting Consolidate Non-controlling
at 31 December power financial interest
2010 statements
Langfang Sales RMB 10% 90% 100% Yes -
1,000,000
Shanghai Sales RMB 30% 70% 100% Yes -
1,000,000
Beijing Chateau RMB 70% - 70% Yes RMB
77,000,000 35,293,868
Wines Sales RMB 90% 10% 100% Yes -
5,000,000
Pioneer International RMB 70% 30% 100% Yes -
5,000,000
Hangzhou Changyu RMB - 100% 100% Yes -
500,000
Ningxia Growing RMB 100% - 100% Yes -
1,000,000
National Wines RMB 100% - 100% Yes -
2,000,000
Ice Chateau (d) RMB 51% - 100% Yes RMB
13,413,000 16,959,292
Development Zone Trade RMB - 100% 100% Yes -
5,000,000
Shenzhen Marketing RMB - 100% 100% Yes -
500,000
60
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
4. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (continued)
(1) Particulars of the subsidiaries (continued)
Equity interest owned
by the Company
Name Paid in Direct Indirect Voting Consolidate Non-controll
capital at 31 power financial ing interest
December statements
2010
Changyu Trading RMB - 100% 100% Yes -
5,000,000
Meeting Center RMB - 100% 100% Yes -
500,000
AFIP Tourism RMB 70% - 70% Yes RMB
350,000 4,015,388
Ningxia Wine RMB 100% - 100% Yes -
1,000,000
Qing tong xia Sales RMB 100% 100% Yes -
500,000
Shihezi Chateau RMB 100% - 100% Yes -
2,000,000
Ningxia Chateau RMB 100% - 100% Yes -
2,000,000
Xianyang Chateau RMB 100% - 100% Yes -
2,000,000
Development Centre (e) RMB 99% - 99% Yes -
100,000,000
61
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
4. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (continued)
(1) Particulars of the subsidiaries (continued)
(a) Kylin Packaging is a Sino-foreign joint venture. Pursuant to the agreement, the
Company has invested USD950,000 (about RMB7,783,813), accounting for 50% of
Kylin’s equity interest. By 30 June 2011, the Company has completed the capital
contribution. For the Company have over half of the voting power and therefore has
the power to control its strategic operating, investing and financing policies, the
financial statements of Kylin Packaging are consolidated in the Group’s financial
statements.
(b) Changyu Chateau is a Sino-foreign joint venture established by the Company and a
foreign investor. Pursuant to an operation contract signed by the Company, Changyu
Chateau and the foreign investor, the Company is entrusted to manage Changyu
Chateau and therefore has the full power to control its strategic operating, investing
and financing policies. The operation agreement will terminate at 31 Dec 2012.
(c) Langfang Castel is a Sino-foreign joint venture established by the Company and a
foreign investor. Pursuant to the agreement signed by the Company, Langfang Castel
and the foreign investor, the Company is entrusted to manage Langfang Castel and
therefore has the full power to control its strategic operating, investing and financing
policies, therefore the financial statements of Langfang Castel are consolidated in the
Group’s financial statements. The operation agreement will terminate at 31 Dec
2012.
(d) Ice Chateau is a Sino-foreign joint venture established by the Company and a foreign
investor. Pursuant to the agreement signed by the Company, Ice Chateau and the
foreign investor, the Company is entrusted to manage Ice Chateau and therefore has
the full power to control its strategic operating, investing and financing policies. The
operation agreement will terminate at 31 Dec 2016.
(e) Development centre is a joint venture established by the Company and Shandong
Yantai Brewing Co., Ltd. The registered capital for development centre is
RMB500,000,000. According to the investment agreement, the company would
contribute RMB495,000,000 while the Shandong Yantai Brewing Co., Ltd would
contribute the rest RMB5,000,000. Up to 30 June 2011, the first stage contribution of
RMB100,000,000 has been contributed solely by the Company.
(2) Changes in the scope of consolidated financial statement
The scope of consolidated financial statements was same with last year.
62
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Cash and bank
At 30 June 2011 At 31 Dec 2010
Cash on hand 140,434 89,425
Cash at bank 2,572,557,268 2,466,052,613
Other monetary assets 2,604,604 23,662,124
2,575,302,305 2,489,804,162
At 30 June 2011, the balance of restricted cash of the Group is RMB2,604,604, which is the
company’s housing fund (31 December 2010：RMB2,462,124).
At 30 June 2011, the Group has no overseas cash and bank deposit (31 December 2010：
Nil).
Cash at banks earns interest at floating rates based on daily bank deposit rates. Short term
time deposits are made for varying periods of between three months to one year, based on
the demands of the Group.
At 30 June 2011, The Group’s term deposits with original maturity of more than three
months when acquired is RMB1,559,844,720 (31 December 2010: RMB1,488,407,214)
with interest rates ranging from 1.91%-2.75%, which will mature from 3 months to 1 year.
(2) Bills receivable
At 30 June 2011 At 31 Dec 2010
Bank acceptance bills 56,026,700 31,447,207
At 30 June 2011, there was no pledged bills receivable (31 December 2010: Nil), and no
bills receivable were reclassified as accounts receivable due to the default of drawer (31
December 2010: Nil).
At 30 June 2011, the top five bills receivable endorsed to the third parties but not yet
matured is as follows:
Drawer Issuing date Maturity date Amount
Shanxi Luan Energy Co.,Ltd 2011.01.11 2011.07.11 500,000.00
Wuhan Quanxing Co.,Ltd 2011.02.14 2011.08.14 500,000.00
Qunshan Jingyuan Co.,Ltd 2011.5.26 2011.8.25 802,500.00
Longyan Ruijie Co.,Ltd 2011.05.05 2011.08.05 1,200,000.00
Longyan Ruijie Co.,Ltd 2011.04.22 2011.07.22 1,000,000.00
63
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(2) Bills receivable (continued)
At 31 December 2010, the bill endorsed but not expired is as follows:
Drawer Issuing date Maturity date Amount
Wuhan Hexiang Co.,Ltd 29/11/2010 28/2/2011 1,500,000
Wuhan Tongchuang Co.,Ltd 24/11/2010 24/2/2011 1,000,000
Wuhu Licheng Co.,Ltd 16/12/2010 16/6/2011 1,000,000
Langfang Anjia Co.,Ltd 23/12/2010 13/6/2011 1,000,000
Tangshan Zhijing Co.,Ltd 23/11/2010 23/2/2011 900,000
5,400,000
At 30 June 2011, there was no notes receivable discounted to obtain short-term loan. (31
December 2010: Nil).
(3) Trade receivables
The normal credit term is one month, which can be extended to three months for certain
major customers. The trade receivables are interest free.
The aged analysis is as follows:
At 30 June 2011 At 31 Dec 2010
Within 1 year 95,255,224 100,113,271
At 30 June 2011, there was no bad debt provision for trade receivables (31 December 2010:
Nil). There was no bad debt provision made or reversed by the management until 30 June
2011 (2010: Nil).
At 30 June 2011 At 31 Dec 2010
Balance Provision Balance Provision
Amount % Amount % Amount % Amount
%
Individually
significant 55,701,242 58.5 37,472,999 37.4 - -
Individually
insignificant 39,553,982 41.5 62,640,272 62.6 - -
95,255,224 100 100,113,271 100.0
At 30 June 2011, there were no trade receivables due from shareholders with voting rights of
5% or above. (31 December 2010: Nil)
64
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3) Trade receivables (continued)
At 30 June 2011, the particulars of top 5 trade receivables are as follows:
Relationship Amount Aging Percentage
with the of total
Group receivables
%
First Third party 13,103,548 Within 1 year 13.8
Second Third party 9,741,178 Within 1 year 10.2
Third Third party 8,114,102 Within 1 year 8.5
Fourth Third party 3,905,690 Within 1 year 4.1
Fifth Third party 2,130,844 Within 1 year 2.2
At 31 December 2010, the particulars of top 5 trade receivables are as follows:
Relationship with Amount Aging Percentage of
the Group total
receivables %
First Third party 9,369,211 Within 1 year 9.4
Second Third party 6,767,820 Within 1 year 6.8
Third Third party 6,434,578 Within 1 year 6.4
Fourth Third party 6,216,172 Within 1 year 6.2
Fifth Third party 4,365,619 Within 1 year 4.4
33,153,400 33.2
65
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3) Trade receivables (continued)
At 30 June 2011, there were no trade receivables due from shareholders with voting rights
of 5% or above.
At 31 December 2010, trade receivables from related parties are as following:
Relationship with Group Amount Percentage of total
receivables %
Yantai Changyu Under the control of the 120,322 0.1
International same parent company
Window of the
Wine City
Company Limited
66
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(4) Advances to suppliers
The aged analysis is as follows:
At 30 June 2011 At 31 Dec 2010
Balance % Balance %
Within 1 year 70,742,936 100.0 74,728,756 100.0
At 30 June 2011, the particulars of top 5 advances to suppliers are as follows:
Relationship Amount Aging Reason for being Percentage of
with the outstanding total advances
Group to suppliers
%
First Third party 26,576,467 Within 1 year goods not received 37.6
Second Third party 8,013,966 Within 1 year goods not received 11.3
Third Third party 6,710,032 Within 1 year goods not received 9.5
Fourth Third party 6,518,395 Within 1 year goods not received 9.2
Fifth Third party 5,977,160 Within 1 year goods not received 8.4
At 31 December 2010, the particulars of top 5 advances to suppliers are as follows:
Relationship Amount Aging Reason for being Percentage
with the outstanding of total
group advances to
suppliers
%
First Third party 22,453,121 Within 1 year goods not received 30.0
Second Third party 5,952,642 Within 1 year goods not received 8.0
Third Third party 5,615,367 Within 1 year goods not received 7.5
Fourth Third party 5,259,570 Within 1 year goods not received 7.0
Fifth Third party 3,528,000 Within 1 year goods not received 4.7
42,808,700 57.2
At 30 June 2011, there were no advances paid to the shareholders with voting rights of 5%
or above (31 December 2010: Nil).
67
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(5) Interest receivable
At 30 June 2011
Opening Increase Decrease Closing
balance balance
Bank fixed deposits
interest 9,519,721 19,391,594 10,695,304 18,216,011
2010
Opening Closing
balance Increase Decrease balance
Bank fixed deposits 8,969,343 12,234,345 11,683,967 9,519,721
interest
At 30 June 2011, there was no overdue interest (31 December 2010: Nil).
68
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(6) Other receivables
The aging analysis is as follows:
At 30 June 2011 At 31 Dec 2010
Within 1 year
56,993,147 20,568,664
1 to 2 years
5,184,388 9,911,712
2 to 3 years
47,524 47,524
Over 3 years
8,158,939 8,158,939
70,383,999 38,686,839
Less: bad debts provision for other receivables 8,000,000 8,000,000
62,383,999 30,686,839
At 30 June 2011 At 31 Dec 2010
Balance Bad debts Balance Bad debts
provision provision
Amount % Amount % Amount % Amount %
Individually
significant
and Provision 58,029,071 82.4 8,000,000 11,048,886 28.6 8,000,000
Individually
insignificant 12,354,928 17.6 27,637,953 71.4 - -
70,383,999 100 8,000,000 38,686,839 100.0 8,000,000
At 30 June 2011 and 31 December 2010, the bad debts provision for individually
significant balances is as follows:
Balance Bad debts Percentage Reason for provision
provision
Tiantong The
Security Co., debtor is in the process of
Ltd. 8,000,000 8,000,000 100% liquidation
At 30 June 2011, there were no other receivables due from shareholders with voting rights
of 5% or above (31 December 2010: Nil).
69
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(6) Other receivables (continued)
At 30 June 2011, the particulars of top 5 other receivables are as follows:
Relationship Amount Percentage of
with the total other
Group receivables
%
First Third party 47,410,000 Within 1 year 67.4
Second Third party 3,120,600 Within 1 year 4.4
Third Third party 2,913,696 Within 1 year 4.1
Fourth Third party 2,334,775 Within 1 year 3.3
Fifth Third party 2,250,000 Within 1 year 3.2
At 31 December 2010, the particulars of top 5 other receivables are as follows:
Relationship Amount Percentage of
with the total other
Group receivables
%
First Third party 3,120,600 1 year-2 years 8.1
Second Third party 1,412,546 Within 1 year 3.6
Third Third party 1,227,280 Within 1 year 3.2
Fourth Third party 1,036,364 Within 1 year 2.7
Fifth Third party 1,000,000 Within 1 year 2.6
7,796,790 20.2
At 30 June 2011, there was no other receivable due from related parties (31 December 2010:
Nil).
70
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(7) Inventories
At 30 June 2011 At 31 Dec 2010
Balance Provision Net carrying Balance Provision Net carrying
amount amount
Raw
material 24,662,383 24,662,383 59,385,786 - 59,385,786
Finished
goods 478,497,207 10,077,620 468,419,587 538,480,066 10,077,620 528,402,446
Work in
progress 586,333,726 586,333,726 706,618,174 - 706,618,174
1,089,493,316 10,077,620 1,079,415,696 1,304,484,026 10,077,620 1,294,406,406
Analysis of inventory provision is as follows:
2011.1-6 Opening Decrease Closing
balance balance
Finished goods 10,077,620 10,077,620
Opening Decrease Closing
2010 Balance Balance
Finished goods 10,274,687 -197,067 10,077,620
At 30 June 2011, the carrying amount of inventory with restrictions in ownership is
RMB13,524,960, which was due to the Company has transferred the related right of profit
to a specialized trust fund established by Zhong Rong International Trust Co., Ltd. Please
also refer to Notes 5 (21).
At 30 June 2011
Proportion of reversal to
closing balance of
Balance Basis for provision Reason for reversal inventory
Calculation based on
Finished Expected damage rate the expected damage rate
Goods from daily handling from daily handling
There was no reversal of inventory provision in 2011.
71
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(8) Long-term equity investment
2011
Initial cost Opening Movement Closing Equity Voting Provision
balance for the year balance interest power
% %
Cost Method:
Yantai Dingtao Construction a
Development Co., Ltd.
(“Yantai Dingtao”) 10,000,000 5,000,000 5,000,000 18 18
10,000,000 5,000,000 5,000,000
2010
Initial Cost Opening Movement Closing Equity Voting
Balance for the year Balance Interest Power Provision
% %
Cost Method:
Yantai Dingtao Construction a
Development Co., Ltd.
10,000,000 10,000,000 -5,000,000 5,000,000 18 18 5,000,000
10,000,000 10,000,000 -5,000,000 5,000,000 5,000,000
At 30 June 2011 and 31 December 2010, the initial investment to Yantai Dingtao is
RMB10,000,000, and the Group holds 18% of its equity interests.
72
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(9) Property, plant and equipment
30 June 2011 Opening Increase Decrease Closing
balance balance
Cost:
Buildings 812,780,815 40,873,739 6,210,557 847,443,997
Machineries an
equipments 875,907,151 40,148,925 7,337,125 908,718,951
Motor vehicles 19,819,539 1,615,506 0 21,435,045
1,708,507,505 82,638,170 13,547,682 1,777,597,992
Accumulated
depreciation:
Buildings 129,641,538 11,631,597 37,987 141,235,148
Machineries an
equipments 377,433,760 28,582,427 6,776,976 399,239,210
Motor vehicles 13,350,962 1,051,008 0 14,401,970
520,426,260 41,265,031 6,814,963 554,876,328
Net carryin
amount:
Buildings 683,139,277 29,242,142 6,172,570 706,208,849
Machineries an
equipments 498,473,391 11,566,498 560,149 509,479,740
Motor vehicles 6,468,577 564,498 0 7,033,075
1,188,081,245 41,373,139 6,732,719 1,222,721,665
73
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(9) Property, plant and equipment (continued)
2010 Opening Increase Decrease Closing
balance balance
Cost:
Buildings 698,714,336 117,389,989 3,323,510 812,780,815
Machineries an
equipments 737,132,083 148,327,144 9,552,076 875,907,151
Motor vehicles 17,488,406 2,331,133 19,819,539
1,453,334,825 268,048,266 12,875,586 1,708,507,505
Accumulated
depreciation:
Buildings 108,526,523 21,550,526 435,511 129,641,538
Machineries an
equipments 336,801,458 49,063,099 8,430,797 377,433,760
Motor vehicles 11,213,979 2,136,983 - 13,350,962
456,541,960 72,750,608 8,866,308 520,426,260
Net carryin
amount:
Buildings 590,187,813 95,839,463 2,887,999 683,139,277
Machineries an
equipments 400,330,625 99,264,045 1,121,279 498,473,391
Motor vehicles 6,274,427 194,150 - 6,468,577
996,792,865 195,297,658 4,009,278 1,188,081,245
Depreciation for Jan-June 2011 is RMB41,265,031 (2010: RMB 72,750,608). In 2011,
the value of property, plant and equipment transferred from construction in progress is
RMB93,003,556 (2010: RMB189,903,490).
At 30 June 2011, the book value of property, plant and equipment with ownership restricted
is nil (31 December 2010: nil).
At 30 June 2011, no property, plant and equipment are idle, held for disposal or under
finance or operating lease (31 December 2010: Nil).
74
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(9) Property, plant and equipment (continued)
At 30 June 2011, buildings without property certificate are as follows:
Reason for not receiving
property certificates
Fermentation Centre Office Tower and Workshop waiting for completion report
Xinjiang Tianzhu Fermentation and Storage Workshop waiting for completion report
Kylin Packaging Finish Goods Warehouse and Workshop waiting for completion report
Ice Wine Chateau Office Building and Packing Workshop waiting for completion report
Beijing Chateau European Town waiting for completion report
Beijing Chateau Office Town waiting for completion report
Beijing Chateau Production Factory waiting for completion report
Sales Company Province Offices Processing
(10) Construction in progress
At 30 June 2011 At 31 Dec 2010
West Mountain Factory Project 5,833,826 2,985,201
Sparkling Wine Reconstruction Project 0 -
Cabernet Centre Project 19,431,597 7,619,532
Fermentation Centre Reconstruction Project 60,700 2,998,926
Beijing Chateau 3000 Ton Production Line Project 31,212,957 30,000,000
Beijing Chateau Project 49,602,154 19,468,392
Ice Wine Chateau Factory Project 0 -
Ningxia United Workshop 3,246,830 3,380,801
Xinjiang Tianzhu Workshop Reconstruction
Project 8,123,185 17,878,259
Jingyang ferment project 0 15,048,365
Plants for Jingyang Sales 25,050,022 33,737,780
Shihezi Chateau Construction Project 134,134,278 85,455,488
Ningxia Chateau Construction Project 37,129,026 11,271,515
Xianyang Chateau Construction Project 31,572,865 10,458,506
Development Centre Construction Project 1,804,810 1,804,810
Others 6,374,446
353,576,695 242,107,575
75
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(10) Construction in progress (continued)
30 June 2011 Budget Opening Addition Transferred Closing Financed
balance to property, balance by
plant and
equipment
Red Wind Club 15,000,000 -
-
West Mountain Factory Project 40,000,000
2,985,201 5,646,525 2,797,899 5,833,826 Self-raised
Sparkling Wine Reconstruction 45,000,000
Project Self-raised
Cabernet Centre Project 21,000,000
7,619,532 11,812,065 0 19,431,597 Self-raised
Fermentation Centre 3,300,000
Reconstruction Project 26,000 0 26,000 Self-raised
Fermentation centre 5,000,000
Machinery 2,998,926 1,336,443 4,300,669 34,700 Self-raised
Beijing Chateau 3000 Ton 92,500,000
Production Line Project 30,000,000 1,212,957 0 31,212,957 Self-raised
Beijing Chateau Display Project 305,750,000.00
19,468,392 30,133,762 0 49,602,154 Self-raised
Beijing Chateau Project 30,000,000
38,001,066 38,001,066 0 Self-raised
Ice Wine Chateau Factory 20,910,000
Project 6,924,520 6,924,520 0 Self-raised
Ningxia United Workshop 58,700,000
3,380,801 3,430,508 3,564,479 3,246,830 Self-raised
Xinjiang Tianzhu Workshop 37,570,000
Reconstruction Project 17,878,259 3,923,725 13,678,800 8,123,185 Self-raised
Jingyang ferment project 26,000,000
15,048,365 0 15,048,365 0 Self-raised
53,000,000
Plants for Jingyang Sales 33,737,780 0 8,687,758 25,050,022 Self-raised
Shihezi Chateau Construction 540,000,000
Project 85,455,488 48,678,790 0 134,134,278 Self-raised
Ningxia Chateau Construction 15,000,000
Project 11,271,515 25,857,511 0 37,129,026 Self-raised
Xianyang Chateau Construction 250,000,000
Project 10,458,506 21,114,359 0 31,572,865 Self-raised
Development Centre 165,000,000
Construction Project 1,804,810 0 0 1,804,810 Self-raised
Others
6,374,446 6,374,446
242,107,575 204,472,676 93,003,556 353,576,695
76
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(10) Construction in progress (continued)
2010 Budget Opening Addition Transferred Closing Financed Accumulated
balance to property, balance by expenditure
plant and /budget
equipment %
Red Wind Club 15,000,000 - 5,307,768 5,307,768 -
Self-raised 35.4%
West Mountain Factory Project 40,000,000 - 2,985,201 - 2,985,201
Self-raised 7.5%
Sparkling Wine Reconstruction 45,000,000 2,234,216 - 2,234,216 -
Project Self-raised 129.6%
Cabernet Centre Project 21,000,000 - 7,619,532 - 7,619,532
Self-raised 36.3%
Fermentation Centre 3,300,000 - 2,863,872 2,863,872 -
Reconstruction Project Self-raised 86.8%
Fermentation centre 5,000,000 - 3,165,682 166,756 2,998,926
Machinery Self-raised 63.3%
Beijing Chateau 3000 Ton 92,500,000 - 30,000,000 - 30,000,000
Production Line Project Self-raised 32.4%
Beijing Chateau Display Project 305,750,000.00 11,714,331 23,410,240 15,656,179 19,468,392
Self-raised 140.1%
Beijing Chateau Project 30,000,000 - 38,001,066 38,001,066 -
Self-raised 126.7%
Ice Wine Chateau Factory 20,910,000 3,119,556 11,708 3,131,264 -
Project Self-raised 102.2%
Ningxia United Workshop 58,700,000 60,394,418 29,216,851 86,230,468 3,380,801
Self-raised 95.3%
Xinjiang Tianzhu Workshop 37,570,000 9,179,267 10,123,072 1,424,080 17,878,259
Reconstruction Project Self-raised 78.5%
Jingyang ferment project 26,000,000 9,271,105 5,777,260 15,048,365
Self-raised 61.6%
53,000,000 13,459,425 20,278,355 33,737,780
Plants for Jingyang Sales Self-raised 111.5%
Shihezi Chateau Construction 540,000,000 - 120,343,309 34,887,821 85,455,488
Project Self-raised 21.1%
Ningxia Chateau Construction 15,000,000 - 11,271,515 - 11,271,515
Project Self-raised 75.1%
Xianyang Chateau Construction 250,000,000 - 10,458,506 - 10,458,506
Project Self-raised 4.2%
Development Centre 165,000,000 1,804,810 1,804,810
- -
Construction Project Self-raised 1.1%
Others
109,372,318 322,638,747 (189,903,490) 242,107,575
There was no capitalized interest from January to June 2011 (in 2010: Nil).
At 30 June 2011, there is no provision was made for the constructions in process (31
December 2010: Nil).
77
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(11) Intangible assets
30 June 2011 Opening Increase Decrease Closing
balance balance
Cost:
Land use right 220,872,498 67,040,675 287,913,173
Software use right 3,480,000 3,480,000
224,352,498 67,040,675 291,393,173
Accumulated
amortization
Land use right 13,416,651 1,470,074 14,886,725
Software use right 2,088,000 348,000 2,436,000
15,504,651 1,818,074 17,322,725
Net carrying
amount:
Land use right 207,455,847 65,570,601 273,026,448
Software use right 1,392,000 -348,000 1,044,000
208,847,847 65,222,601 274,070,448
2010 Opening Increase Decrease Closing
balance balance
Cost:
Land use right 155,444,429 65,428,069 - 220,872,498
Software use right 3,480,000 3,480,000
158,924,429 65,428,069 - 224,352,498
Accumulated
amortization
Land use right 10,022,874 3,393,777 - 13,416,651
Software use right 1,392,000 696,000 - 2,088,000
11,414,874 4,089,777 - 15,504,651
Net carrying
amount:
Land use right 145,421,555 62,034,292 - 207,455,847
Software use right 2,088,000 - 696,000 - 1,392,000
147,509,555 61,338,292 - 208,847,847
The amortization of intangible assets from January to June 2011 is RMB1,818,074 (2010:
RMB4,089,777).
At 30 June 2011, there was no land use right with restricted ownership (31 December 2010:
nil).
78
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(12) Biological assets
At 30 June 2011 At 31 Dec 2010
Opening balance 37,773,638 39,717,396
Addition from self-cultivation 2,899,974 2,156,974
Amortization 2,133,800 4,100,732
Closing balance 38,539,812 37,773,638
At 30 June 2011, no ownership of the biological asset is restricted (31 December 2010:
Nil).
The productive biological assets are vines. The vines may suffer from scourge, plant
diseases and insect pests, market demand and other risk factors, which lead to impairment
on assets. The Group will adopt effective procedures to prevent plant diseases and insect
pests, and strengthen the management of trees and soils to safeguard the biological assets.
Except for the addition during 2010, the rest biological assets of the Group had reached
their intended production status and thus had been amortised from 2009.
At 30 June 2011, there is no indication that biological assets may be impaired, and no
provision was made (31 December 2010: Nil).
(13) Long-term prepaid expenses
30 June 2011 Opening Increase Amortization Closing
balance balance
Land fee 103,783,513 451,324 1,783,619 102,451,217
Others 2,450,160 61,980 2,388,180
106,233,673 451,324 1,845,599 104,839,398
2010 Opening Increase Amortization Closing
Balance balance
Land fee 36,951,118 68,027,349 1,194,954 103,783,513
Others 2,004,904 591,696 146,440 2,450,160
38,956,022 68,619,045 1,341,394 106,233,673
79
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(14) Deferred tax assets/liabilities
Deferred tax assets and liabilities are presented separately:
Deferred tax assets and liabilities recognized:
At 30 June 2011 At 31 Dec 2010
Deferred tax assets
Unrealized profit from intra-company transactions 85,616,373 110,184,929
Unpaid bonus 31,932,922 36,072,822
Retirement benefit 5,892,781 6,725,237
Asset impairment provision 5,769,405 5,769,405
Deductable losses 14,572,125 1,383,138
Start-up costs 70,009 139,835
143,853,616 160,275,366
Deferred tax liabilities
Business combination under non-common control 5,316,436 5,336,115
Deferred tax assets and liabilities not recognized:
Deductable losses 25,982,703 24,719,043
Deductable losses not recognized for deferred tax assets will expire in:
2011 6,754,872 5,491,212
2012 85,340 85,340
2013 64,997 64,997
2014 19,077,494 19,077,494
25,982,703 24,719,043
80
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(14) Deferred tax assets/liabilities (continued)
Temporary differences from assets and liabilities that resulting in such differences are as
follows:
At 30 June 2011 At 31 Dec 2010
Deductible temporary difference
Inter-company sales unrealized profit 342,465,490 440,739,716
Unpaid bonus 127,731,688 144,291,288
Early retirement benefit 23,571,126 26,900,948
Provision for impairment 23,077,620 23,077,620
Deductible loss 58,288,501 5,532,552
Preliminary expense 280,038 559,340
575,414,462 641,101,464
At 30 June 2011 At 31 Dec 2010
Taxable temporary difference
Fair value adjustment in business
combination 21,265,744 21,344,460
81
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(15) Provision for impairment of assets
30 June 2011
Opening Closing
balance Accrual Reversal balance
Bad debt provision 8,000,000 8,000,000
Inventory provision 10,077,620 10,077,620
Impairment of
long-term
investment 5,000,000 5,000,000
23,077,620 23,077,620
2010
Opening Closing
balance Accrual Reversal balance
Bad debt provision 8,000,000 - - 8,000,000
Inventory provision 10,274,687 - 197,067 10,077,620
Impairment of
long-term
investment - 5,000,000 - 5,000,000
18,274,687 5,000,000 197,067 23,077,620
(16) Trade payables
The trade payables are interest free. The Group is normally granted a credit period of no
more than three months from its suppliers.
At 30 June 2011 At 31 Dec 2010
Within 1 year 234,251,383 259,022,075
At 30 June 2011, the Group has no outstanding balance payable to related parties or
shareholders with voting rights of 5% or above (31 December 2010: Nil).
At 30 June 2011, the Group has no significant outstanding balances aged more than one
year (31 December 2010: Nil).
82
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(17) Advances from customers
At 30 June 2011 At 31 Dec 2010
Within 1 year 290,340,844 309,481,976
As at 30 June 2011, the Group has no outstanding balance is payable to the related parties
or shareholders with voting rights of 5% or above (31 December 2010: Nil).
(18) Employee benefit
30 June 2011
Opening Increase Decrease Closing
balance balance
Salaries and bonus 122,804,887 125,945,795 141,534,282 107,216,399
Staff benefit - 2,293,350 2,293,350 0
Staff welfare 3,022,339 15,213,597 14,880,207 3,355,729
Includes: Medical
insurance 598,887 3,642,028 3,460,513 780,402
Pension 2,199,409 9,311,647 9,392,822 2,118,234
Unemployment
insurance 81,668 1,130,022 988,718 222,972
Injury insurance 137,764 528,666 543,795 122,635
Maternity insurance 4,611 601,234 494,359 111,486
Housing fund 430,600 1,368,500 1,569,088 230,012
Union fee and education fee 5,644,688 1,641,131 4,003,557
Termination benefits 31,252,497 3,345,758 27,906,739
Other allowances 23,760,801 1,376,030 22,384,771
186,915,812 144,263,887 166,082,492 165,097,207
83
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(18) Employee benefit (continued)
31 December 2010
Opening Closing
balance Increase Decrease balance
Salaries and bonus 97,044,478 325,313,609 299,553,200 122,804,887
Staff benefit - 6,349,210 6,349,210 -
Staff welfare 2,895,754 18,400,313 18,273,728 3,022,339
Includes: Medical
insurance 588,777 5,167,075 5,156,965 598,887
Pension 2,101,580 12,576,562 12,478,733 2,199,409
Unemployment
insurance 96,560 499,757 514,649 81,668
Injury insurance 105,868 114,667 82,771 137,764
Maternity insurance 2,969 42,252 40,610 4,611
Housing fund 389,545 3,571,417 3,530,362 430,600
Union fee and education fee 2,288,240 4,454,300 1,097,852 5,644,688
Termination benefits 44,771,363 - 13,518,866 31,252,497
Other allowances 29,591,619 17,768 5,848,586 23,760,801
176,980,999 358,106,617 348,171,804 186,915,812
At 30 June 2011, no payment of any employee benefits was delayed (December 2010: Nil).
From January to June 2011, the amount of union fee and education fee paid was RMB
1,641,131 (in 2010: RMB1,097,852). The amount of termination benefit paid was RMB
3,329,824 (in 2010: RMB13,518,866). No non-monetary benefit was distributed in 2011
(2010: Nil).
(19) Taxes payable
At 30 June 2011 At 31 Dec 2010
Value added tax 12,387,377 20,867,507
Consumption tax 18,859,913 36,964,290
Business tax 383,249 346,375
Corporation income tax 438,172,966 567,303,677
Urban land use tax 578,261 744,172
Individual income tax 19,656,048 7,434,054
City construction tax -4,525,167 8,449,064
Property tax 1,727,234 1,715,820
Others -645,264 5,540,300
486,594,616 649,365,259
84
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(20) Other payables
At 30 June 2011 At 31 Dec 2010
Advertising expenses payable 291,926,762 190,122,855
Distributors deposit payable 152,317,484 135,052,781
Equipment and construction payable 54,788,498 50,072,081
Royalty fee 58,899,954 41,640,572
Deposits from suppliers 5,162,374 4,326,760
Others 126,242,164 55,682,672
689,337,237 476,897,721
At 30 June 2011, the balance due to the shareholders with voting right of 5% or above is
as follows:
At 30 June 2011 At 31 Dec 2010
Royalty fee payable to parent company 58,899,954 41,640,572
At 30 June 2011, significant outstanding balances aged over than one year are as follows:
Amount payable Reasons for
outstanding
5,162,374
Deposits from suppliers Deposits
Deposits from distributors 152,317,484 Deposits
There was no repayment of the above balances after the balance sheet date.
85
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(21) Other long-term liabilities
At 30 June 2011 At 31 Dec 2010
Employee benefit
(1) 17,927,000 20,185,000
Trust scheme
(2) 80,028,000 80,028,000
Special subsidies for fixed assets (3) 22,155,000
120,110,000 100,213,000
(1) The other long-term liability represented bonus accrued for management at 30 June
2011. According to the bonus payment schedule, the bonus is expected to be paid from
2012 to 2014.
(2) In September 2010, The Company and Zhong Rong International Trust Co., Ltd.
entered into "Profit transfer agreement on the wine of Changyu AFIP", pursuant to
which the Company has transferred right to the profit generated by certain type of wine
to a specialized trust fund established by Zhong Rong International Trust Co., Ltd and
received RMB80,028,000. This contract was guaranteed by Yantai Changyu Group
Company. The specialized trust fund will end in April 2012.
(3)Xinjiang Shihezi Chateau received special subsidies RMB 22.8 million yuan for fixed
assets purchasing from local government. The assets are under 10-year amortization, it has
been amortized 645,000 yuan in this year and a surplus of 22.155 million yuan.
(22) Share capital
30 June 2011 Opening Movement Closing
balance balance
Issue capital Share Other Total
premium
account
Restricted shares
Shares held by domestic investors
Including：
Shares held by non-state owned legal
persons 213,021,120 - - -213,021,120 -213,021,120
Total of restricted shares
213,021,120 - - -213,021,120 -213,021,120
Unrestricted shares
A Shares 135,794,880 - - 213,021,120 213,021,120 348,816,000
B Shares
178,464,000 - - - - 178,464,000
Total of unrestricted shares
314,258,880 - - 213,021,120 213,021,120 527,280,000
Total shares
527,280,000 - - - - 527,280,000
86
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(22) Share capital(continued)
2010 Opening Movement Closing
balance balance
Issue capital Share Other Total
premium
account
Restricted shares
Shares held by domestic investors
Including：
Shares held by non-state owned legal
persons 239,385,120 - - -26,364,000 -26,364,000 213,021,120
Total of restricted shares
239,385,120 - - -26,364,000 -26,364,000 213,021,120
Unrestricted shares
A Shares 109,430,880 - - 26,364,000 26,364,000 135,794,880
B Shares
178,464,000 - - - - 178,464,000
Total of unrestricted shares
287,894,880 - - 26,364,000 26,364,000 314,258,880
Total shares
527,280,000 - - - - 527,280,000
Restricted shares of 213,021,120 (2010: 26,364,000) held by Yantai Changyu Group Co.,Ltd.,
40.4% of total shares issued, were released since 25 March 2011 (2010: 1 April 2010).
(23) Capital surplus
At 30 June of 2011 and 2010, the balance of capital surplus represented share premium. In
this year, the increasing in capital surplus is due to the decrease in deferred income tax
liabilities which are from Xinjiang subsidiary company accrued assets depreciation and
amortization.
(24) Surplus reserve
In accordance with the Company Law of the People's Republic of China and the Articles of
Association of the Company, the Company is required to appropriate 10% of the net profit to
the statutory surplus reserve until the accumulated balance of the statutory surplus reserve
reaches 50% of the registered share capital.
The Company can appropriate discretionary surplus reserve after appropriation of the
statutory surplus reserve. Discretionary surplus reserve can be utilized to offset the deficit
or increase the share capital after approval.
Since 31 December 2006, the statutory surplus reserve of the Company has reached 50% of
the registered share capital. Pursuant to the resolution of the board of directors of the
Company, no appropriation of statutory surplus reserve since 2007.
87
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(25) Retained earnings
At 30 June 2011 At 31 Dec 2010
Retained earnings brought forward 2,459,263,257 1,657,780,929
Add: profit attributable to
shareholders of the 1,434,218,328
Company 876,955,116
Less: dividends of ordinary shares 738,192,000 632,736,000
Retained earnings carried forward 2,598,026,373 2,459,263,257
Pursuant to the resolution of board of directors held on 7 April 2011, a cash dividend of
RMB1.40 per share (based on the total share of 527,280,000) totaling RMB738,192,000 is
proposed and distributed.
(26) Assets with restriction of ownership
30 June 2011
Restricted assets due to other reasons
Opening Balance Increase Decrease Closing balance Note
Cash at bank 2,462,124 170,923 28,443 2,604,604 (ii)
Inventory 13,524,960 13,524,960 (iii)
15,987,084 170,923 28,443 16,129,564
2010
Opening Balance Decrease Closing balance Note
Assets as collateral
Property, plant
and equipment 1,439,022 1,439,022 - (i)
Intangible assets 8,882,146 8,882,146 - (i)
10,321,168 10,321,168 -
Opening Balance Increase Decrease Closing balance
Restricted assets due to other reasons
Cash at bank 2,449,848 59,974 47,698 2,462,124 (ii)
Inventory - 13,524,960 - 13,524,960 (iii)
2,449,848 13,584,934 47,698 15,987,084
88
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(26) Assets with restriction of ownership (continued)
(i) At 31 December 2009, the book value of Property, Plant and Equipment with ownership
restricted is RMB 1,439,022 , and intangible assets is RMB8,882,146,which was pledged
to obtain a short-term bank loan RMB 4,500,000 for one year and a long term bank loan
BMB 10,500,000 for 2-3 years. All the bank loans have been repaid in 2010.
(ii) At 30 June 2011 and 2010, the restricted deposit is the group’s housing fund.
(iii) At 30 June 2011, inventory with restriction in ownership was due to the group has
transferred the related right of profit to a specialized trust fund established by Zhong Rong
International Trust Co., Ltd. Please also refer to Note 5 (21).
(27) Operating income and costs
Operating income is as follows:
Six months ended 30 Six months ended
June 2011 30 June 2010
Revenue 3,082,709,568 2,474,442,243
Other operating income 7,311,999 7,442,891
3,090,021,567 2,481,885,134
Six months ended 30 Six months ended
June 2011 30 June 2010
Cost of sales 746,406,542 695,022,637
Other operating expenses 2,831,087 2,881,767
749,237,629 697,904,404
The operating income for the group is mainly from the sales of wine, brandy, sparking wine
and tonic wine. Over 99% of the sales generated in PRC.
89
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(27) Operating income and costs (continued)
Operating income from top five customers from 1st Jan to 30th June in 2011 is as follows:
Amount Percentage of
total operating
incomes %
First 22,196,201 0.72
Second 17,958,411 0.58
Third 13,314,359 0.43
Fourth 12,563,524 0.41
Fifth 11,867,762 0.38
77,900,256 2.52
Operating income from top five customers from 1st Jan to 30th June in 2010 is as follows:
Percentage of
Amount total operating
incomes %
First 15,580,071 0.63
Second 13,096,091 0.53
Third 13,039,167 0.53
Fourth 12,813,415 0.52
Fifth 12,391,493 0.50
66,920,237 2.70
90
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(28) Taxes and surcharges
Six months ended 30 Six months ended
June 2011 30 June 2010
Consumption tax 112,022,461 103,452,256
Business Tax 1,951,821 1,430,805
City construction tax 35,639,149 24,877,924
Education fee and surcharges 25,486,893 14,193,562
Others 602,409
175,702,733 143,954,547
(29) Financial income
Six months ended 30 Six months ended
June 2011 30 June 2010
Interest income 26,673,536 10,834,926
Less: interest expenses 3,741,771 6,182,749
Bank charges 1,377,002 337,877
Exchange gains
132,537 1,155,993
21,687,300 5,470,293
91
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(30) Investment income
Six months ended Six months ended
30 June 2011 30 June 2010
Investment income from held-to-maturity
investment
Investment income gained from disposal
of financial assets held for trading 52,122 429,107
52,122 429,107
As of 30 June 2011, there was no significant restriction on the remittance of investment
income to the investor.
(31) Non-operation income
Six months ended Six months ended
30 June 2011 30 June 2010
Gains on disposal of non-current assets 137,072
Including: gain on disposal of plant property
and equipments 137,072
Government grants 2,137,979 4,507,854
Gain on acquisition of subsidiary 593,390
Penalty income 1,193,734 516,088
Others
4,062,176 5,023,942
Government grants recognized in the income statement is as follows:
Six months ended Six months ended
30 June 2011 30 June 2010
Funds to support major projects 645,000
Funds to support Small and Medium
Enterprises 0
Tax refund 1,340,299 4,117,244
Others 152,680 390,610
2,137,979 4,507,854
92
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(32) Non-operation expenses
Six months ended Six months ended
30 June 2011 30 June 2010
Loss on disposal of non-current assets 236,937 283,954
Including: loss on disposal of property, plant
and equipments 236,937 283,954
Donation 0 212,431
Others 751,395 75,805
988,331 572,190
(33) Income tax
Six months ended Six months ended
30 June 2011 30 June 2010
Current income tax 269,898,873 134,528,802
Deferred income tax 16,421,750 51,866,565
286,320,623 186,395,367
(34) Earnings per share
The calculation of basic earnings per share is based on the consolidated profit attributable
to ordinary equity shareholders of the Company during the year and the weighted average
ordinary shares in issue.
Six months ended Six months ended 30
30 June 2011 June 2010
Earnings
Consolidated profit attributable to
ordinary equity shareholders of the
Company 876,955,116 585,674,479
Shares
Weighted average number of ordinary
shares issued 527,280,000 527,280,000
Basic earnings per share 1.66 1.11
Diluted earnings per share N/A N/A
The company does not have dilutive potential ordinary shares. From the balance sheet date
to the date of approval of this report, there are no subsequent events which would affect the
numbers of the weighted average number of ordinary shares issued.
93
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(35) Notes to consolidated cash flow statement
Cash received relating to other operating activities:
Six months ended Six months ended 30
30 June 2011 June 2010
Government grants 24,937,979 390,610
Dealer deposit 8,238,366 12,797,190
Earnest money 30,997,730
Interest income 3,057,524
Others 7,107,754 4,110,276
74,339,353 17,298,076
Cash paid relating to other operating activities:
Six months ended Six months ended 30
30 June 2011 June 2010
Selling expenses 452,579,271 551,486,246
General and administrative expenses 42,909,757 28,383,657
Others 83,438,395 288,236
578,927,423 580,158,139
94
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(36) Supplementary information to consolidated cash flow statement
(i) Supplementary information to consolidated cash flow statement
Cash flows from operating activities calculated by adjusting the net profit:
Six months Six months
ended 30 June ended 30 June
2011 2010
Net profit
876,194,317 592,847,395
Less: Gain on acquisition of a subsidiary
Add: Loss for impairment of assets
Depreciation 41,265,031 34,848,129
Intangible assets amortization 1,818,074 2,516,846
Amortization of long term prepaid
expenses 1,845,599 784,012
Losses/(gain) on disposal of property,
plant and equipment 99,865 283,954
Finance costs 21,630,697 -7,514,257
Investment income -52,122 -429,107
Increase in deferred tax assets
16,421,750 51,866,565
Increase in inventories 214,990,710 208,848,368
Increase in operating receivables -56,129,075 13,633,747
Increase in operating payables -99,197,581 -257,978,810
Net cash flows from operating activities 1,018,887,265 639,706,842
(ii) Cash and cash equivalents
At 30 June 2011 At 31 Dec 2010
Cash 1,012,852,981 998,934,824
Including：Cash on hand 140,434 89,425
Bank deposits on demand 1,012,712,548 977,645,399
Other monetary capital on demand 21,200,000
Closing balance of cash and
1,012,852,981 998,934,824
cash equivalents
95
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
6. RELATED PARTY AND RELATED PARTY TRANSACTIONS
(1) Parent company
Name ofType of Place ofLegal Scope ofRegistered Percentage Percentage incorporate
parent enterprise registration representative business capital of shares of votingCode
company rights
Changyu Limited Yantai Sun Manufacturing 50,000,000 50.4% 50.4% 265 645 824
Group Company Liqiang
Company
During six months ended 30 June 2011, there is no change in parent company’s registered
capital, interest shares or percentage of voting rights.
(2) Subsidiaries
Please refer to Note 4 (1).
(3) Other related parties
Nature of related parties Incorporate code
Yantai Changyu Travelling
Company Limited Fellow subsidiary 258 258 654
Yantai Changyu International
Window of the Wine City
Company Limited Fellow subsidiary 672 208 146
Yantai Shenma Packaging
co.,ltd Fellow subsidiary 553 393 350
(4) Significant related party transactions
(i) Purchases from and sales to related parties
Purchase form related parties Six months ended Six months ended 30
30 June 2011 June 2010
Yantai Changyu Travelling Co. Ltd. 139,111 1,271,103
Yantai Changyu International Window of the
6,533 3,807
Wine City Company Limited
Yantai Shenma Packaging co.,ltd 75,477,030
75,622,674 1,274,910
All related party transactions are based on the negotiated price.
96
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
6. RELATED PARTY AND RELATED PARTY TRANSACTIONS (CONTINUED)
(4) Significant related party transactions (continued)
(i) Purchases from and sales to related parties
Sales to related parties
Six months ended Six months ended 30
30 June 2011 June 2010
Yantai Changyu Travelling Co. Ltd. 2,504,133 2,086,866
Yantai Changyu International Window of the
2,149,862 1,694,723
Wine City Company Limited
4,563,995 3,781,589
All related party transactions are based on the negotiated price.
From 1st Jan to 30th June in 2011, sales to related parties accounted for less than 1% of the
Group’s total sales (2010: less than 1%).
(ii) Property leased from related parties
From 1st Jan to Note Assets leased Leasing assets Beginning date Ending date Rental Expense
30th June 2011
Changyu Group (a) Warehouse and office 6,383,000 2007/1/1 2011/12/31 3,191,500
Company building
From 1st Jan to Note Assets leased Leasing Beginning Date Ending Date Rental Expense
30th June 2010 assets
Changyu Group (a) Warehouse and office 6,383,000 2007/1/1 2011/12/31 3,191,500
Company building
Pursuant to a patents implementation license dated 28 November 2006, starting
from 1 January 2007, the Company may rent properties from Changyu Group
Company for operation purposes at a basic annual rental of RMB6,383,000, and the
expired date is 31 December 2011. For six months ended 30 June 2011, the rental
expenses payable to Changyu Group Company amounted to RMB3,191,500 (From
1st Jan to 30th June 2010: RMB3,191,500).
During six months ended 30 June 2011, leasing expenses paid to related company
accounted for 13.2% of the Group (during six months ended 30 June 2010: 16.63%).
97
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
6. RELATED PARTY AND RELATED PARTY TRANSACTIONS (CONTINUED)
(4) Significant related party transactions (continued)
(i) Other significant related party transactions
Note Six months ended 30 June Six months ended
2011 30 June 2010
Amount Amount
Royalty fee （a） 58,899,954 50,430,025
Patents fee （b） 25,000 25,000
All related party transactions are based on the negotiated price.
(a) Royalty fee
Pursuant to a royalty agreement dated 18 May 1997, starting from 18 September 1997,
the Company may use certain trademarks of Changyu Group Company, which have
been registered with the PRC Trademark Office. An annual royalty fee at 2% of the
Group’s annual sales is payable to Changyu Group Company. The license is effective
until the expiry of the registration of the trademarks.
During six months ended 30 June 2011, royalty fee paid to related company accounted
for 100% of the Group (during six months ended 30 June 2010: 100%).
(a) Patents fee
Pursuant to a patents implementation license dated 18 May 1997, starting from 18
September 1997, the Company may use the patents of Changyu Group Company. The
annual patents usage fee payable by the Company to Changyu Group Company was
RMB 50,000. The contract was expired on 20 December 2005. The Company renewed
the contract on 20 August 2006 for 10 years. The annual patents usage fee payable by
the Company to Changyu Group Company remained RMB50,000. For six months
ended 30 June 2011, the patents usage fee payable to Changyu Group Company
amounted to RMB 25,000 (during six months ended 30 June 2010: RMB25,000).
During six months ended 30 June 2011, patent fee paid to related company accounted
for 100% of the Group (during six months ended 30 June 2010: 100%).
98
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
6. RELATED PARTY AND RELATED PARTY TRANSACTIONS (CONTINUED)
(4) Significant related party transactions (continued)
(v) Guarantee provided by related parties
Acceptance of guarantee provided by related parties
Whether the
Amount guarantee has
Notes guaranteed From To ended
Changyu Group
Company （a） 88,236,000 2010-10-25 2012-4-24 No
Changyu Group Company has provided guarantee to the Company for the full responsibility
under the trust scheme as mentioned in Note 5 (21) (2) amounting to RMB88,236,000.
(5) Balance due from related parties
At 30 June 2011 At 31 Dec 2010
Trade receivables Balance Provision Balance Provision
Yantai Changyu
International Window
of the Wine City
Company Limited 120,322 -
120,322 -
The above balances due from related parties are unsecured, interest-free and
have no fixed terms of repayment.
(6) Balance of other payable of the
related parties
Other payable At 30 June 2011 At 31 Dec 2010
Yantai Shenma Packaging Co., Ltd material payable 13,593,717
Royalty fee payable to parent company 58,899,954 41,640,572
The above balance due to related party is unsecured, interest-free and has no fixed terms
of repayment.
99
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
7. CONTINGENT LIABILITIES
The Group and the Company did not have any significant contingent liabilities as at balance
sheet date.
8. COMMITMENT
At 30 June 2011 At 31 Dec 2010
Capital commitments
Authorized, but not contracted 1,003,120,000 488,000,000
At 31 December 2010, all capital commitments in 2009 have been provided for.
9. POST BALANCE SHEET DATE EVENTS
At July 4 2011, The company sign a share transfer contract with Portugal Guozheng Financial
Investment Co., Ltd which is the original stakeholder of the subsidiary company Yantai Shenma
Packaging co.,ltd. It has been agreed that the company will be transferred Yantai Shenma
Packaging co.,ltd 50% equity which worth 15,392,300 yuan. Stock right transfer is in processing.
After the processing has been completed, Yantai Shenma Packaging co.,ltd will become the
wholly-owned subsidiaries of Yantai Changyu Pioneer Wine Co., Ltd.
100
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
10. NOTES TO COMPANY FINANCIAL STATEMENTS
(1) Trade receivables
The normal credit term of trade receivables is one month, which can be extended to three
months for certain major customers. The trade receivables are interest free.
The ageing analysis is as follows:
At 30 June 2011 At 31 Dec 2010
Within 1 year 10,357,520 11,708,820
At 30 June 2011, there was no account receivable provision (31 December 2010: Nil).
There was no bad debt provision accrued or reversed by the management at 30 June 2011
(during six months ended 30 June 2010: Nil)
At 30 June 2011 At 31 Dec 2010
Amount % Provision Amount % Provision
Individually significant - 10,535,769 90.0 -
Individually insignificant 10,357,520 100 - 1,173,051 10.0 -
10,357,520 100 11,708,820 100.0
As at 30 June 2011, there was no account receivable due from the Company’s shareholders
with voting rights of 5% or above (31 December 2010: Nil).
As at 30 June 2011, the particulars of top 5 account receivables amount are as follows:
Relationship Amount Aging Ratio of total
with the receivables %
group
First Third party 10,357,520 Within 1 year 100
101
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
10. NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
(1) Trade receivables (continued)
As at 31 December 2010, the particulars of top 5 account receivable amount are as follows:
Relationship
with the Ratio of total
group Amount Aging receivables %
First Third party 6,216,172 Within 1 year 53.1
Second Third party 4,319,597 Within 1 year 36.9
Third Third party 996,882 Within 1 year 8.5
Fourth Third party Within 1 year 1.5
176,169
11,708,820 100.0
As at 30 June 2011, no outstanding balance was due from related parties (31 December 2010:
Nil).
(2) Other receivables
The aging analysis is as follows:
At 30 June 2011 At 31 Dec 2010
Bad debt Account Book Bad debt Account
Book Value Provision Balance Value Provision Balance
Within 1 year 1,134,822,763 1,134,822,763 877,461,750 - 877,461,750
1 to 2 years 478,600,000 478,600,000 277,992,300 - 274,992,300
2 to 3 years 46,707 - 46,707
Over 3 years 8,148,572 8,000,000 148,572 8,101,865 8,000,000 101,865
1,621,571,335 8,000,000 1,613,571,335 1,163,602,622 8,000,000 1,155,602,622
At 30 June 2011 At 31 Dec 2010
Amount % Bed debt % Amount % Bed debt %
provision provision
Individually significant
and provision 1,616,051,469 99.7 8,000,000 1,162,026,156 99.9 8,000,000
Individually insignificant 5519865.95 0.3 - 1,576,466 0.1 -
1,621,571,335 100 8,000,000 1,163,602,622 100.0 8,000,000
102
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
10. NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
(2) Other receivables (continued)
The provision of bad debts for other receivable has no change During six months ended 30
June 2011 (2010 Nil).
As at 30 June 2011, there was no other receivable due from the shareholders with voting
rights of 5% or above. (31 December 2010: Nil)
As at 30 June 2011, the particulars of top 5 other receivables amount are as follows:
Relationship Amount Aging Percentage of
with the group total
advances to
suppliers %
First related party 382,035,360 Within 1 year 23.56
Second related party 146,631,870 Within 1 year 9.04
Third related party 65,000,000 Within 1 year 4.01
Fourth related party 39,600,000 Within 1 year 2.44
Fifth related party 37,500,000 Within 1 year 2.31
670,767,230 41.37
As at 31 December 2010, the particulars of top 5 other receivables amount are as follows:
Relationship Amount Aging Percentage of
with the group total
advances to
suppliers %
First related party 414,607,102 Within 1 year 35.6
Second related party 211,345,055 Within 1 year 18.2
Third related party 164,126,000 Within 1 year 14.1
Fourth related party 83,328,400 Within 1 year 7.1
Fifth related party 80,969,908 Within 1 year 7.0
954,376,465 82.0
At 30 June 2011, the balance of other receivables from related parties is RMB670,767,230
approximately 41.37% of total other receivables. These were all from subsidiaries of the
Company (At 31 December 2010: the balance of other receivable from related parties is
RMB954,376,465, 82% of total other receivables).
103
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
10. NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
(3) Long-term equity investment
At 30 June 2011 Cost Opening Movement Closing Share Voting Cash
balance for the year Bbalance holding power Dividends for
% % the year
Cost Method:
Xinjiang Tianzhu
60,000,000 60,000,000 60,000,000 60 60 -936,851
Vehicular
Transportation 300,000 300,000 300,000 100 100
Kylin Packaging 7,783,813 7,783,813 7,783,813 50 62.5
Changyu Chateau 28,968,100 28,968,100 28,968,100 70 100 48,573,146
AFIP Tourism 350,000 350,000 350,000 70 70
Pioneer International 3,500,000 3,500,000 3,500,000 70 100
Ningxia Growing 1,000,000 1,000,000 1,000,000 100 100
National Wines 2,000,000 2,000,000 2,000,000 100 100 53,398,971
Ice Chateau
13,413,000 13,413,000 13,413,000 51 100 4,914,958
Beijing Chateau 77,000,000 77,000,000 77,000,000 70 70
Sales Company 7,200,000 7,200,000 7,200,000 90 100 617,180,727
Langfang Sales 100,000 100,000 100,000 10 100
Langfang Castel 12,142,200 12,142,200 12,142,200 49 100 191,610
Wines Sales 4,500,000 4,500,000 4,500,000 90 100
Shanghai Sales 300,000 300,000 300,000 30 100
Beijing Sales 350,000 350,000 350,000 70 100
Jingyang Sales 100,000 100,000 100,000 10 100
Jingyang Wine 900,000 900,000 900,000 90 100
Ningxia Wine 1,000,000 1,000,000 1,000,000 100 100
Yantai Dingtao 10,000,000 5,000,000 5,000,000 18 18
Ningxia Chateau 2,000,000 2,000,000 37,264,000 39,264,000 100 100
Shihezi Chateau 2,000,000 2,000,000 224,208,570 226,208,570 100 100
Xianyang Chateau 2,000,000 2,000,000 119,403,400 121,403,400 100 100
Development centre 100,000,000 100,000,000 100,000,000 100 100
336,907,113 331,907,113 380,875,970 712,783,083 723,322,561
During six months ended 30 June 2011, there was no significant restriction on the
remittance of fund from the invested entities to the Company.
At 30 June 2011, an impairment provision of RMB5,000,000 was provided for Yantai
Dingtao (31 December 2010：RMB5,000,000).
104
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
10. NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
(4) Revenue and cost of sales
Revenue is as follows:
Six months ended Six months ended 30
30 June 2011 June 2010
Income from principal activities 844,356,340 743,849,060
Other operating income 36,763,886 2,559,077
881,120,226 746,408,137
Cost of sales is as follows:
Six months ended Six months ended 30
30 June 2011 June 2010
Cost from principal activities 648,133,062 552,783,117
Other operating cost 33,287,107 1,344,433
681,420,169 554,127,550
During six months ended 30 June 2011, revenue derived from top 5 customers are as follows:
Amount Percentage of total
revenue
%
First 823,608,524 93.47
Second 33,724,984 3.83
Third 10,015,128 1.14
Fourth 2,538,326 0.29
Fifth 1,338,603 0.15
871,225,566 98.88
During six months ended 30 June 2011, top 5 customers of the Company are all subsidiaries.
105
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
10. NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
(4) Revenue and cost of sales (continued)
During six months ended 30 June 2010, revenue derived from top 5 customers are as follows:
Percentage of total
Amount revenue
%
First 633,479,816 84.87
Second 20,486,604 2.74
Third 9,997,800 1.34
Fourth 5,123,414 0.69
Fifth 1,072,634 0.14
670,160,268 89.78
During six months ended 30 June 2010, top 5 customers of the Company are all subsidiaries.
(5) Investment income
Six months ended 30 Six months ended
June 2011 30 June 2010
Long –term equity investment income
accounted for using the cost method 723,322,561
Investment income gained from disposal of
financial assets held for trading 52,122 429,107
723,374,683 429,107
Among the long-term equity investment income accounted for using the cost method, any
investee with investment income accounting for more than 5% of the Company’s total
profit are as follows:
Subsidiaries Six months ended 30 June Six months ended 30 June
2011 2010
Changyu Chateau 48,573,146
National Wines 53,398,971
Sales Company 617,180,727
719,152,844
At 30 June 2011, there was no significant restriction on the remittance of investment income to
the Company.
106
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
10. NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
(6) Supplement to cash flow statement
Cash flows from operating activities calculated by adjusting the net profit:
Six months ended Six months ended
30 June 2011 30 June 2010
Net profit
768,199,671 21,041,868
Add: Depreciation 17,192,970 14,610,287
Impairment provision
Intangible assets amortization 1,089,963 1,523,705
Biological assets amortization
Losses on disposal of property, plant and
equipments
Finance costs 21,630,697 -7,514,257
Investment income 723,374,683 -429,107
Increase in deferred tax assets -1,442,441 11,257,742
Increase in inventories 97,551,852 51,892,248
Increase in operating receivables -522,152,036 -6,589,973
Increase in operating payables -1,019,403,532 377,325,108
Net cash flows from operating activities 86,041,827 463,117,621
(7) Cash and cash equivalents
At 30 June 2011 At 30 June 2010
Cash and bank 375,003,846 407,619,206
Including: Cash on hand 91,741 46,647
Bank deposits on demand 374,912,105 386,372,559
Other monetary capital on demand 21,200,000
375,003,846 407,619,206
107
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
Appendix I supplementary Information to financial statements
1. Details of non-recurring profit and loss
Six months ended Six months ended
Items 30 June 2011 30 June 2010
Loss on disposal of non-current assets -99,865 -283,954
Tax refund or exemption that is either non-recurring or
without proper approval government grants credited in
profit and loss(except for those recurring government
grants that are closely related to the entity's operation, in
line with related regulations and have proper basis of
calculation) 2,137,979 4,507,854
Gains on fair value change and disposal of trading
financial assets and financial liabilities, except for those
from hedgings that are closely related to the entity's
principal operations 52,122 429,107
Other non-operating income and expense 1,035,730 227,852
subtotal 3,125,967 4,880,859
Corporate income tax 931,274 1,220,215
Attributable to minority interests 6,249 939,584
Total 2,188,444 2,721,061
The Group’s Non-operating profit and loss on non-recurring items are recognized in accordance with the regulations of the "public offering of
securities of the Company Disclosure Explanatory Notice No. 1 - non-recurring profit and losses" (SFC [2008] No. 43).
108
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Ended 30 June 2011
All non-operation income and non-operation expenses are non-operating profit During six months ended 30 June 2011.Please refer to Note 5 (31) and
(32).
Appendix I supplementary Information to financial statements
2. Return on net assets and earnings pre share
Weighted average Basic earnings
return on net assets per share (RMB)
During six months ended 30 June 2011 (%)
Net profit attributable to shareholders of the
Company 21.21 1.66
Net profit attributable to shareholders of the
Company deduct incidental profits 21.16 1.66
There are no potential dilutive shares outstanding.
During six months ended 30 June 2010 Weighted average Basic earnings
return on net assets per share (RMB)
(%)
Net profit attributable to shareholders of the
Company 17.04 1.11
Net profit attributable to shareholders of the
Company deduct incidental profits 16.97 1.11
There is no potential dilutive share outstanding.
109
7. DOCUMENTS AVAILABLE FOR INSPECTION
1. Original copy of the Semi-annual Report signed by the Chairman of the Board of
Directors;
2. Financial Statements signed by and under the seal of the Chairman of the Board
of Directors, Accounting Director and the Chief of the Accounting Department;
3. All the originals of the Company’s documents publicly disclosed in the newspapers
designated by the Securities Supervision Committee of China in the report period;
4. Original copy of the Articles of Association;
5. Other related documents.
Yantai Changyu Pioneer Wine Company Limited
Board of Directors
August 9th, 2011
110
