Yantai Changyu Pioneer Wine Co. Ltd. 2012 Annual Report
Yantai Changyu Pioneer Wine Co. Ltd.
2012 Annual Report
2013-Ding01
April 19, 2013
1
Yantai Changyu Pioneer Wine Co. Ltd. 2012 Annual Report
I. Important Notice, Contents and Definition
The Board of Directors ， the Board of Supervisors ， directors, supervisors & senior
management of the Company collectively and individually accept full responsibility for the
truthfulness，accuracy and completeness of the information contained in this report and
confirm that to the best of their knowledge and belief there are no unfaithful facts, significant
omissions or misleading statements.
Mr. Sun Liqiang (Chairman of the Company), Mr. Leng Bin (Chief Financial Officer) and Mr.
Jiang Jianxun (Financial Manager) assure the truthfulness, accuracy and completeness of the
financial report in the annual report.
No director, supervisor or senior manager declares to have dissidence or to be unable to
guarantee the truthfulness, accuracy and completeness of the information contained in this
report.
All the directors have personally attended the Board of Directors’ meeting for this report.
The Company’s preliminary scheme of profit distribution deliberated and passed by the
board of the directors is as following: “ Based on the Company’s total shares in Dec 31,
2012，we plan to pay CNY 11.00 in cash as dividends for every 10 shares (including tax) to
the Company’s all stockholders, present 0 share and capital reserve will not be transferred to
equity. ”
The prospective statements mentioned in the report like those in relation to the future plan
are made out mostly on the basis of the Company’s general comprehension of Chinese
economic development trend and discretion of the sector’ situation by the Company’s
accumulated experience in the past years. Although there are quite a lot of uncertainties in
the statements, they don’t affect the Company’ substantial promises to the investors who are
requested to pay attention to risks and make decisions prudently.
This report is worked out in bilingual version in two sets: Chinese and English, In case of
understanding discrepancy, the original version in Chinese shall prevail.
2
Yantai Changyu Pioneer Wine Co. Ltd. 2012 Annual Report
Contents
2012 Annual Report ..........................................................................................................................1
I、Important Notice, Contents and Definition ...............................................................................2
II、Brief Introduction for the Company ........................................................................................6
III、Summary of Financial Datas and Indicators .........................................................................8
IV、Board of Directors’Report .....................................................................................................10
V、Major Issues ..............................................................................................................................31
VI、Changes in Shares and the Shareholders’ Situation ...........................................................38
VII、Situation for Directors, Supervisors, Senior Management and Staffs .............................45
VIII、Corporate Governance ........................................................................................................53
IX、Internal Control ......................................................................................................................61
X、Financial Report .......................................................................................................................64
XI、Reference Documents ...........................................................................................................179
3
Yantai Changyu Pioneer Wine Co. Ltd. 2012 Annual Report
Definition
Definition Item Refers to Definition Content
Company/The Company Refers to Yantai Changyu Pioneer Wine Co. Ltd.
Changyu Group/Controlling Refers to
Yantai Changyu Group Co. Ltd.
Shareholder
CSRC Refers to China Securities Regulatory Commission
SSE Refers to Shenzhen Stock Exchange
CNY Refers to Chinese Yuan
4
Yantai Changyu Pioneer Wine Co. Ltd. 2012 Annual Report
Significant Risk Warning
Companies may face significant risks in production and operation, please refer to “expectation
for the Company’s future development” sector of “5. Risks likely to occur” part in the chapter
four named “Board of Directors’ Report”. We advise investors to read those carefully, please
pay attention to the investment risks.
5
Yantai Changyu Pioneer Wine Co. Ltd. 2012 Annual Report
II、Brief Introduction for the Company
1. Company’s information
Abbreviation of the Code number of the
Changyu A、Changyu B 000869、200869
Shares: Shares
Abbreviation of the
Shares after alteration
(if have)
Place of listing of the
Shenzhen Stock Exchange
Shares
Legal Name in
烟台张裕葡萄酿酒股份有限公司
Chinese
Abbreviation of
张裕
Chinese name
Legal Name in English YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
Abbreviation of
CHANGYU
English name
Legal Representative Mr. Sun Liqiang
Registered Address 56 Dama Road, Yantai, Shandong, China
Postal Code 264000
Office Address 56 Dama Road, Yantai, Shandong, China
Postal Code 264000
Website http://www.changyu.com.cn
E-mail webmaster@changyu.com.cn
2. Contact person and information
Secretary to the Board of Authorized Representative of
Directors the Securities Affairs
Name Mr. Qu Weimin Mr. Li Tingguo
56 Dama Road, Yantai, 56 Dama Road, Yantai,
Address
Shandong, China Shandong, China
Tel 0086-535-6633658 0086-535-6633656
Fax 0086-535-6633639 0086-535-6633639
E-mail quwm@changyu.com.cn stock@changyu.com.cn
3、Information disclosure and filing Location
The newspapers in which the “China Securities Newspaper” , “Securities Times” and
Company’s information is disclosed “Hong Kong Commercial Daily”
Web Site assigned by CSRC to carry
http://www.cninfo.com.cn
the annual report
Filing Location BOD Office of the Company
6
Yantai Changyu Pioneer Wine Co. Ltd. 2012 Annual Report
4、Registration changes
Registration Registration Business Organizatio
Tax No.
Date Place License No. n Code
State Taxation
the Business Bureau
Administration
First September 18th, 37060216500338- 26710003－
Bureau of 3700001806012
registration 1997 1；Local Taxation 5
Shandong
Bureau
Province
370601267100035
State Taxation
the Business Bureau
Registration at st Administration
1 August, 3700000180601 37060216500338- 26710003－
the end of the Bureau of
2012 22 1；Local Taxation 5
report period Shandong
Bureau
Province
370601267100035
On 18th September 1997 the Company’s operating scope was the
production, processing and sale of wine, spirits, medicated wine,
fruit wine, non-alcohol beverages, fruit jam, packing materials and
products and winemaking machines.
On 17th April 2008, after the deliberation of 2007 shareholders’
Changes for the main business meeting, the Company’s operating scope is amended to “the
Company, legally registered, is in business of production,
of the Company since it was processing and sale of wine, spirits, medicated wine, fruit wine,
listed non-alcohol beverages, fruit jam, packing materials and products
and winemaking machines; licensed import and export.”
(if have)
On 12th May 2010, after the deliberation of 2009 shareholders’ meeting, the Company
revised its operating scope to “the Company, legally registered, is in business of
production, processing and sale of wine, spirits, medicated wine, fruit wine, non-alcohol
beverages, fruit jam, packing materials and products and winemaking machines; licensed
import and export; external investments according to governmental policies.
Changes for all previous
No.
controlling shareholders
5、Other documents
The accountant appointed by the Company
Name Ernst & Young Hua Ming Certified Public Accounts Co. Ltd.
Address Floor 17, Ernst & Young Tower, Oriental Plaza, Beijing, the PRC
Name of signatory
Zhang Mingyi, Ma Yue
Accountants
The sponsor agency the Company appointed to perform the duty of continuous supervision during the
report period
□Available V Not available
The financial adviser the Company appointed to perform the duty of continuous supervision during the
report period
□Available V Not available
7
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
III、Summary of Financial Datas and Indicators
1、Key accounting data and financial indicators
Whether the Company makes retroactive adjustments or restates the accounting data of previous
fiscal years because of changes of accounting policy and/or accounting errors.
□ Yes V No
Unit：CNY
More or less than
Item 2012 2011 2010
last year(%)
Business revenue 5,643,530,553.00 6,027,549,212.00 -6.37% 4,982,943,397.00
Net profit attributed to the
shareholders of the listed 1,700,928,117.00 1,907,208,732.00 -10.82% 1,434,218,328.00
company
Net profit attributed to the
shareholders of the listed
company after deducting 1,675,956,428.00 1,835,054,874.00 -8.67% 1,375,218,809.00
the irregular profit and loss
Net cash flows from the
1,302,041,322.00 1,505,722,107.00 -13.53% 1,289,922,042.00
operating activities
Basic earnings per share 2.48 2.78 -10.79% 2.09
Diluted earnings per share 2.48 2.78 -10.79% 2.09
Return on net assets 31.13% 43.18% -12.05% 41.57%
More or less than
Dec. 31th 2012 Dec. 31th 2011 Dec. 31th 2010
last year(%)
Total assets 8,123,134,580.00 7,295,944,221.00 11.34% 5,983,377,253.00
Net Assets attributed to the
shareholders of the listed
company
5,913,104,178.00 5,013,641,661.00 17.94% 3,839,708,341.00
(Equity attributed to the
shareholders of the listed
company
2. Details of irregular profit and loss
Unit：CNY
Amount in Amount in Amount in
Item Explaination
2012 2011 2010
Gain on disposal of non-current
assets, including the reversal of -1,940,260.00 2,735,871.00 -436,922.00
accrued impairment provision
Tax refund or exemption that is
either non-recurring or without 10,038,943.00 5,354,701.00
proper approval
Government grants credited in
23,393,756.00 4,701,553.00 17,289,537.00
profit and loss (except for those
8
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
recurring government grants that
are closely related to the entity's
operation, in line with related
regulations and have proper basis
of calculation)
Gains on fair value change and
disposal of trading financial
assets and financial liabilities,
52,122.00 900,000.00
except for those from hedgings
that are closely related to the
entity's principal operations
Other non-recurring gains and
losses defined in gains and loss 10,953,355.00 4,282,169.00 201,044.00
items
Reversal of unpaid advertising
74,072,580.00 55,718,673.00
fee
Income tax effect 7,435,162.00 23,729,380.00 19,756,758.00
Minority interest impact (after
270,756.00
tax)
Total 24,971,689.00 72,153,858.00 58,999,519.00 --
The reasons shall be made clear and definitely as to the non-recurring profit and loss that the Company
has defined by virtue of the Explanatory Announcement on Public Company’s Information Disclosure
No.1 - Non-recurring Profit and Loss and as to regarding the non-recurring profit and loss as recurrent
profit and loss as specified in the Explanatory Announcement on Public Company’s Information
Disclosure No.1 - Non-recurring Profit and Loss.
□Available V Not availabl
9
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
IV、Board of Directors’ Report
1、Summarization
In 2012, the cumulative effects of slowdown of domestic economic growth and overwhelming flow of
foreign wine into the Chinese market in the previous years as well as the worse competition in the
domestic wine sector brought about strong pressure on the company’s sustainable growth. Facing quite a
lot of external disadvantages, the company consistently aimed at the market, timely adjusted the
marketing tactics, perfected the marketing channels and optimized the product structure so that the
company’s operating result didn’t fluctuate obviously. In the year, the company realized business
revenue of CNY 5643.53 million, 6.37% down over the previous year, and realized a net profit of CNY
1700.93 million, 10.82% down over the previous year.
2、Analysis to main business
(1) Summarization
Description Increase or Cause of major changes
decrease of the
end of the period
over the end of
last year
Operating revenue -6.37%Mainly because of decline of sales volume
Operating cost -2.66%Mainly because of decline of sales volume
Sales expense -3.61%Mainly because of reduction of advertising expense in 2012
Management expense 8.32%Mainly because of increase of landscaping expense in 2012
over the year before
R&D investment 8.28%Mainly because of increase of expenses on research and
development in2012
Financial expense 55.24%Mainly because of reduction of interest income due to
decrease of time deposit balance and decline of interest rate
Net amount of cash flow -13.53%Mainly because of year-on-year decline of operating income
generated in operating activities that makes inflow of cash in operating activities decrease。
Net amount of cash flow 58.80%Mainly because of year-on-year increase of recovering the
generated in investment activities time deposits of over three months that makes inflow of cash
in investment activities rise。
Net amount of cash flow -6.52%Mainly because of year-on-year increase of cash paid for
generated in capital-raising 2011 profit distribution。
activities
During the report period, the Company went on with carrying out the strategy of taking wine as pillar
product while developing all kinds of products, giving priority to middle and high-grade products in the
course of mass production, while trying to hold on the favorable position in self-produced wine, extended the
brandy market and sped up the import of foreign wine to make them become the Company’s new sources of
revenue growth. But under the critical circumstances of slowdown of inland economic growth, overall
10
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
restriction of consumption with public funds as well as increase of sales of imported wine, fiercely
competitive Chinese wine market and media’s negative reports, the business revenue the Company realized
in 2012 was CNY 5643.53 million, not reaching the lowest goal of CNY 6600 million the company initially
set for 2012. Facing the severe market challenges, the Company mainly fulfilled the following tasks:
Firstly, in adaptation to the changes of market environment, the Company adjusted and improved the
marketing system and corresponding measures, established Wine Sales Company and Brandy Sales
Company, which, together with Changyu International Pioneer Company, form a setup of subdivided
and systematic sales, rationally set up a channel system, strengthened management of marketing
channels, established a mart direct supply management company responsible to promote direct supply to
big emporiums all over the country. In order to find efficacious solutions to the market changes as soon
as possible, the Company strengthened market research and study, adjusted the sale incentive policy,
and further defined the measures on acceleration of domestic brandy market exploitation.
Secondly, tighten the product quality control and strengthen the core competitiveness of the Company’s
products. By means of first-hand investigation into and study on the world top wine brands, the
Company found out the differences through comparison, set the quality improvement target and worked
out corresponding measures. The Company successfully fulfilled the plan of grape purchase in the year,
paid more attention to control and test of all quality indicators on all links from grape purchase to
product delivery, making product quality increasingly improved. The Company’s 2 select products or
KoYac XO brandy and KoYac VSOP brandy were awarded Silver Best in Class and Silver Medal
respectively in 2011 London International Wine and Liquor Contest, becoming only award-winning
products from Asia, and the Company’s KoYac XO brandy was awarded Silver Medal in 2012 Brussels
Wine-tasting Contest, also the only award-winning product from Asia.
Thirdly, steadily push forward construction of the investment projects and properly enlarge the
production capacity of fast-sellers. In the light of market trend, the Company readjusted the investment
schedule in time, steadily push forward construction of 13 investment projects that had been confirmed
at the beginning of the year, stabilized the vineyard area, decided to enlarge production capacity
gradually in the future 3-5 years, optimized the product structure and adapted itself to market changes all
the time.
Fourthly, improve financial management, beef up in-house auditing and prevent operating risks. The
Company has bettered the financial accounting and supervisory system of bulk wine and vineyards,
standardized the analytic processes of financial examination, economic operation, budget compilation and
management system by wine assortments and grades, finished the financial accounting of bulk wine
management and bulk wine cost of the production system and the auditing of the economic responsibilities
of all units in the production and sales systems and punished related blamable persons.
Fifthly, improve the level of scientific research and increase innovation to promote the development of
the Company. During the report period, the company finished the topics such as application for setting
up a laboratory jointly sponsored by the central and local governments, the projects of “Study on
Modern Viniculture of Wine Grapes and Compilation of Related Standards” and “Study on
Characteristic Comparison of Yeast Community in Chinese Quality Wine Grape Areas” that are
financially supported by the Department of Finance of Shandong Province with special innovation fund,
totally acquiring a financial aid of CNY 3.35 million, applied for 3 invention patents and attained 1
invention patent authorization, which further strengthened the Company’s technical innovation ability
and spread the Company’s branding influence both at home and abroad. On the ranking list of World’s
11
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
Most Admired Wine Brand released by UK’s Drinks International in March 2013, Changyu became one
of 50 biggest wine brands for the first time, being one and only selected brand in the Asian Region.
The cause of difference that the company’s actual operating result is 20% lower or higher than the
already disclosed annual profiting estimates.
□ available √ Not available
(2)、Incomes
Explanation
During the report period, the business revenue from the Company’s self-produced wine is CNY4551.39
million, that from brandy is CNY 859.01 million and that from imported wine is CNY 68.90 million,
accounting for 81.91%, 15.46% and 1.24% respectively in 2012.
Whether the Company’s revenue from sales of physical goods is more than labor income
√ Yes □ No
Sector Description 2012(ton) 2011(ton) Increase or decrease (%)
Wine Sales volume 81,677 89,541 -8.78%
Brandy Sales volume 40,659 42,414 -4.13%
Explanation on the causes of over 30% changes of the related comparison data.
□ available √ Not available
The company’s big orders in hand
□ available √ Not available
Major changes or adjustments of the Company’s products or services during the report period.
□ available √ Not available
The Company’s important customers
The total sales amount of the top five customers（CNY） 141,406,556
Total sales of the top five customers accounting for the 2.51%
proportion in total sales for the year（%）
Information on the Company’s 5 biggest customers
√available □Not available
Sales Amount Proportion in Total Sales for
No. Customer Name
（CNY） the year（%）
1 Kangcheng Investment (China) Co., Ltd. 35,801,700 0.63%
2 Jinan Guidunyimou trading Co., Ltd. 30,283,948 0.54%
3 Nanjing Xiyuhong trading Co., Ltd 26,283,531 0.47%
4 Songzhou Huimingxin bottle shop Co., Ltd. 24,706,004 0.44%
5 Huian County Chongwulongxing Co., Ltd. 24,331,373 0.43%
Total — 141,406,556 2.51%
12
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
(3) Costs
Sector category
Unit: CNY
2012 2011
Proportion in Proportion in
Sector Description Increase or
Amount the operating Amount the operating decrease(%)
cost (%) cost (%)
Finished
690,952,316 51.02% 682,193,238 49.61% 1.41%
liquor
Wine and
Packing
alcoholic 504,132,271 37.22% 525,064,769 38.18% -0.96%
material
beverages
Wages 58,407,065 4.31% 60,190,704 4.38% -0.07%
Production 100,877,948 7.45% 107,643,380 7.83% -0.38%
Product category
Unit: CNY
2012 2011
Proportion
Proportion in
in the Increase or
Product Description Amount Amount the operating decrease(%)
operating
cost (%)
cost (%)
Finished
478,009,218 50.37% 500,309,233 48.55% 1.82%
wine
Packing
347,191,316 36.58% 401,224,019 38.94% -2.36%
Wine material
Wages 42,493,417 4.48% 40,241,381 3.91% 0.57%
Production
81,393,397 8.58% 88,708,905 8.61% -0.03%
cost
Finished
175,239,406 54.23% 160,018,216 55.80% -1.57%
wine
Packing
119,144,258 36.87% 98,781,708 34.44% 2.43%
Brandy material
Wages 12,990,167 4.02% 12,660,896 4.41% -0.39%
Production
15,768,958 4.88% 15,332,426 5.35% -0.47%
cost
13
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
Note:
The cost of the wine that the company has imported is not included in the cost disclosure scope because
there is no way to obtain the data of cost structure from suppliers.
The company’s important suppliers
Information on the company’s 5 biggest suppliers
√available □Not available
Purchase Amount Proportion in Total Purchase
No. Supplier Name for the year
(CNY) （%）
1 Yantai Shenma Packaging Co.,Ltd 206,438,932 11.52%
2 Yantai Changyu Glass Co.,Ltd 161,503,568 9.01%
Xinjiang Tianyu Pioneer Wine
3 57,790,735 3.22%
Co.,Ltd
4 Yantai Changyu Printing Co.,Ltd 49,419,958 2.76%
Liquan sales of Shandong Yantai
5 38,960,000 2.17%
Winery Co.,Ltd
(4) Expenses
Finance costs，the financial income reduced 55.24% in 2012, due to the decrease in time deposits
and deposit interest rate.
(5) R&D expenditure
R&D expenditure has year-on-year growth of 8.28%, due to the increase expenses on technology
research and development in 2012
14
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
(6) Cash flow
Unit: CNY
Year-on-year
Item 2012 2011 increase or
decrease (%)
Subtotal of cash inflow in
6,830,238,129 8,143,461,018 -16.13%
operating activities
Subtotal of cash outflow in
5,528,196,807 6,637,738,911 -16.72%
operating activities
Net amount of cash flow
1,302,041,322 1,505,722,107 -13.53%
generated in operating activities
Subtotal of cash inflow in
1,322,520,366 276,587,627 378.16%
investment activities
Subtotal of cash outflow in
1,532,689,645 786,725,056 94.82%
investment activities
Net amount of cash flow
-210,169,279 -510,137,429 58.80%
generated in investment activities
Subtotal of cash inflow in capital-
100,062,522 190,371 52461.85%
raising activities
Subtotal of cash outflow in
886,158,412 738,192,000 20.04%
capital-raising activities
Net amount of cash flow
generated in capital-raising -786,095,890 -738,001,629 -6.52%
activities
Net increase of cash and cash
305,776,153 257,583,049 18.71%
equivalents
Explanation on the causes of over 30% year-on-year change of the related data.
√ Available □Not available
1)The 378.16% minor total increase of the cash inflow in the investment activities is mainly because of
significant increase of recovering the time deposits of over three months.
2)The 94.82% minor total increase of the cash outflow in the investment activities is mainly because of
significant increase of buying the time deposits of over three months.
15
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
3)The 52461.85% minor total increase of the cash inflow in the capital-raising activities is mainly
because of significant increase of receiving the other cash relating to the capital-raising activities.
Explanation on the causes of the major differences in between the cash inflow in the company’s
operating activities and the years’ net profit during the report period.
√ Available □Not available
The main cause of the obvious differences CNY-398,886,795 between the net amount of cash flow CNY
1,302,041,322 generated in the Company’s operating activities and the company’s current net profit
CNY 1,700,928,117 is because of more cash the Company defrayed as expenses of taxation during the
report period.
3、Structure of main businesses
The table below sets out the details of the business operations which take up over 10% of the main
business income or operating profit, and its industry , main product, region situation:
Unit: CNY
Increase or Increase or
Increase or
decrease of decrease of
decrease of
Operating Operating Gross profit operating operating
gross profit
revenue cost (%) revenue over cost over the
over the year
the year year before
before (%)
before (%) (%)
Sector
Wine and
alcoholic 5,556,442,502 1,359,873,644 75.53% -6.46% -2.66% -0.96%
beverages
Product
Wine 4,551,386,761 949,087,383 79.15% -8.37% -7.90% -0.11%
Brandy 859,005,714 323,142,789 62.38% 13.40% 12.67% 0.24%
Region
Domestic 5,539,069,119 135,021,8367 75.62% -6.45% -2.67% -0.95%
In case the Company’s statistical calibre of main business data is adjusted during the report period, the
main business data adjusted at the end of the report period will be taken for the recent one year.
16
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
□ Avaliable √ Not avaliable
4、Analysis to assets and liabilities
(1)、Major changes of assets
Unit: CNY
At the end of 2012 At the end of 2011
Proportio Proportio Proporti
on
n in the n in the increase Explanation on major changes
Amount Amount
total total or
decrease
assets (%) assets (%)
Mainly because of increase of
cash outflow for 2011 profit
Monetary funds 2,227,470,828 27.42% 2,532,967,197 34.72% -7.30% distribution and capital
expenditure。
Receivables 135,217,384 1.66% 126,906,526 1.74% -0.08% No major change
Mainly because the stock up
prepared at the end of 2012 for
Stock 2,268,621,441 27.93% 1,755,964,582 24.07% 3.86% 2013 Spring Festival which
comes later than usual years has
not been sent out。
Long-term
equity 5,000,000 0.06% 5,000,000 0.07% -0.01% No major change
investments
Fixed assets 1,823,983,721 22.45% 1,609,111,868 22.05% 0.40% No major change
Mainly because of increase of
investments in 2011 new
Construction in
832,828,689 10.25% 406,353,081 5.57% 4.68% chateau projects and renovation
progress
of production lines。
17
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
(2)、Major changes of liabilities
Unit: CNY
2012 2011 Proportio
Proportio Proportio n
Explanation on major
n in the n in the increase
Amount Amount changes
total total or
assets (%) assets (%) decrease
Short-term
0 0% 0 0% 0% 0
borrowings
Long-term
0 0% 0 0% 0% 0
borrowings
(3)、Assets and liabilities calculated by fair value
Unit: CNY
Gain or Changes of
Amount at
loss from accumulat Purchase
the Impairme Sale amount Amount at
fair value ed fair amount
Description beginning nt during during the end of the
change value during the
of the the period theperiod period
during the calculated period
period
period in equity
Financial assets
1. Financial
assets at fair
value through
profit or loss 0 0 0 0 0 0 0
(excluding
derivative
financial assets)
2. Derivative
0 0 0 0 0 0 0
financial assets
3. Available-
for-sale 0 0 0 0 0 0 0
financial assets
Subtotal of
0 0 0 0 0 0 0
financial assets
Investment
0 0 0 0 0 0 0
property
Productive
biological 42,355,441 0 0 795,539 18,573,749 20,452,071 39,681,580
assets
Others 0 0
Total for the
42,355,441 0 0 795,539 18,573,749 20,452,071 39,681,580
above
Financial
0 0
liabilities
Whether the measurement attribute of the company’s main assets changes greatly.
□ Yes √ No
18
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
5. Analysis to core competitiveness
Compared with the participants in the arena of the Chinese wine sector, we believe that the company is
provided with the following advantages:
Firstly, the Company has been enjoying a well-known wine brand since 130-odd years, both “Changyu”
and “Jiebaina” are Chinese famous trademarks that have strong influence and good reputation.
Secondly, the Company has set up a nationwide marketing network, formed a “three-level” marketing
network system mainly composed of the company’s salesmen and dealers, possessed the strong
marketing ability and market exploitation ability.
Thirdly, the Company has already had strong research strength and a product R&D system, owned a one
and only “State-level Wine R&D Center”, made mastery of advanced winemaking technology and
production processes, been powerful enough in product innovation and established a perfect quality
control system.
Fourthly, the Company is in possession of a lot of grape-growing bases to meet its future development,
having developed a great deal of vineyards in the most suitable areas for wine grape growing such as in
Shandong, Ningxia, Xinjiang, Liaoning, Hebei and Sha’anxi, whose scales and structures have generally
met the company’s needs for development.
Fifthly, the Company has a great variety of products composed of all grades, its wine and brandy of over
100 sorts can meet different consumers’ demands. The Company has taken the lead in the domestic wine
sector through rapid development in the past 10-odd years and has possessed comparative superiority in
the future competition.
All in all, the Company has built up a strong core competitive edge and obtained and maintained a
relatively dominant position in the long-term market competition.
19
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
6、Analysis to investments
(1) Use of raised capital
The Company made a public offering of 32 million A Shares for capital increase in October of 2000, and received net proceeds of CNY 613.46
million. By end of report period, the Company actually invested all proceeds in same projects as disclosed in the Prospectus, and there was no
any change on investment project. Except those projects for improvement of intermediate procedures on production and sales which were
difficult to rationally confirm the benefit, other productive projects all made good benefits.
(2) Analysis to the major subsidiaries and joint stock companies
Information about the major subsidiaries and joint stock companies
Business Operating
Company Main products or Registered Total assets Net asset Net profit
Company name Industry revenue profit
type services capital (CNY) (CNY) (CNY)
(CNY) (CNY)
Yantai Changyu-Castle To research, produce
Wine Chateau Co. LTD. Wine and
and sell wine and USD 5
Subsidiary alcoholic 258,210,665 91,483,111 161,160,742 16,855,216 12,405,610
sparkling wine as well million
beverages industry
as the tourism service
Langfang Castel- Wine and
Changyu Wine Co. LTD. Joint stock To produce and sell USD
alcoholic wine 64,066,550 46,826,404 5,702,842 -2,883,512 -3,031,521
company 6,108,818
beverages industry
Yantai Kylin Packaging Subsidiary To produce and sell CNY 15.41
Co. LTD. Packaging industry 72,942,826 46,102,666 90,841,717 8,883,395 6,813,161
packaging material million
Chateau Changyu AFIP Subsidiary Wine and To research, produce
Global CNY 110
alcoholic and sell brandy and 226,642,016 150,708,626 230,430,743 9,459,188 9,579,524
million
beverages industry wine
Chateau Liaoning Subsidiary Wine and
Changyu Ice Wine Co., CNY 26.30
alcoholic To produce ice wine 87,695,376 38,110,795 37,988,809 1,443,315 1,100,051
Ltd. million
beverages industry
Xinjiang Tianzhu Winery Subsidiary Wine and To plant grape,
Co., Ltd. produce and sell grape CNY 75
alcoholic juice, bulk wine and 190,782,029 162,261,994 117,233,903 7,020,380 6,823,069
million
beverages industry fruit wine
20
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
Explanation on the major subsidiaries and joint stock companies (comparing with the same period of last year)
The total asset of Yantai Changyu Castel Chateau Co. Ltd. is increased 27.93%, mainly because it was drawn from the headquarters floating capital,
fixed asset and the growth of inventory; the net asset is decreased 15.66%, mainly because of the profit distribution for 2011; net profit is decreased
70.19%, mainly because the decline of sales quantity and the growth of operation cost,.
The total asset, net asset and net profit of Langfang Castel-Changyu Wine Co. is increased seperately 82.73%, 55.41% and -566.39%, mainly because
its original bottling line was stopped for reformation which influenced the production and operation.
The net profit of Yantai Kylin Packaging Co. Ltd. is increased 612.27%, mainly because of the reduction of operation cost and growth of gross profit
margin.
The net profit of Chateau Beijing Changyu Afip Global is decreased 59.20%, mainly because of the growth on operation cost influenced by the
development of service on hotel accommodation and catering.
The net profit of Chateau Liaoning Changyu Ice Wine Co., Ltd. is decreased 68.02%, mainly because of the reduction of operating income and the
growth of operation cost.
The net profit of Xinjiang Tianzhu Winery Co., Ltd. is decreased 55.14%, mainly because of the reduction of operating income and gross profit
margin.
Acquisition and disposal of subsidiaries during the report period
□ Available √ Not available
21
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
(3)、Important projects financed with non-raised capital
Unit: CNY’0000
Actual
Total investment
Investment Project Project
Project Name Investmen until the end
in the year progress benefits
t of the report
period
Construction of Tinlot Chateau 15,240 3,200 7,800 50% 0
Construction of Changyu Reina Chateau
31,074 9,500 25,500 95% 0
Sha'anxi
Construction of Chateau Moser XV 24,415 5,774 23,000 95% 0
Ningxia
Construction of Changyu Baron Balboa 23,343 7,200 23,990 95% 0
Chateau XinJiang
Already be in
Expansion of Langfang Changyu
1,973 1,744 1,744 100% operation
Wine Company’s Production Capacity and generate
revenue
Procurement of Oak Barrels 11,333 9,679 9,679 98% 0
Construction of Changyu International 65,331 3,600 3,600 5% 0
Wine City blending and cooling Center
Construction of Changyu International 46,736 1,600 1,600 3% 0
Wine City Bottling Center
Construction of Changyu International
12,095 1,100 1,100 9% 0
Wine City Logistics Center
Construction of Changyu Vine and
20,000 0 0 0% 0
Wine Research Institute
Construction of Treasure Wine Chateau 14,545 345 345 2% 0
Construction of Vineyards 9,140 908 908 10% 0
Investment in landscaping 5,000 0 0 0% 0
Total 280,225 44,650 99,266 -- --
22
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
Explanation on the major projects with non-raised capital
The investment amount in the table is the actually paid amount while the completed work quantity is
used in the “projects under construction” in the annex to the financial statement of this report. So, there
may be differences between the two. The progress of the projects is as follows:
1. The project of Construction of Tinlot Chateau has not been completed as scheduled because of
adjustments to the design proposal of the interior layout.
2. The main building and supporting facilities of the project of Construction of Changyu Reina Chateau
Sha'anxi have almost come to an end, the production equipment has been installed and tested and the
chateau will be soon put into operation.
3. The project of Construction of Chateau Moser XV Ningxia have been completed and put into
operation.
4. The main building and supporting facilities of the project of Construction of Changyu Baron Balboa
Chateau XinJiang have almost come to an end, the production equipment has been installed and tested
and the chateau will be soon put into operation.
5.The whole renovation and construction of Expansion of Langfang Changyu Wine Company’s
Production Capacity have been completed and the production license renewed. The production has come
into operation.
6. In the barrel procurement plan 13,800 barrels have been purchased, satisfactorily meeting the
company’s needs for production.
7. Both the commencement date and the engineering progress of the project of Construction of Changyu
International Wine City blending and cooling Center are affected because of postponement of the design
proposals and more administrative examinations. The project has now formally started, the site leveling
and some masonry of retaining walls have been finished.
8. Both the commencement date and the engineering progress of the project of Construction of Changyu
International Wine City Bottling Center are affected because of more administrative examinations. The
project has now started; the site leveling and some masonry of retaining walls have been finished.
9. Both the commencement date and the engineering progress of the project of Construction of Changyu
International Wine City Logistics Center are affected because of more administrative examinations. The
project has now started, the site leveling; backfilling and compacting have been finished.
10. The project of Construction of Changyu Vine and Wine Research Institute
has not been started yet because of adjustments to the design plan that makes the approval processes
delayed and the shop drawings not finished on schedule. The project has not started yet.
11. The project of Construction of Treasure Wine Chateau
is affected because of postponement of land requisition. The project has now started, the site leveling
and some infrastructures have been finished.
12. The project of Construction of Vineyards is affected because of postponement of land requisition.
So, 2012 planting plan has not been finished.
13. The landscaping investment is affected because of postponement of land requisition. So, 2012
landscaping plan has not been finished.
23
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
7. Expectation for the Company’s future development
On the basis of our limited experience and special skills, we make the following estimation of the
wine sector and the Company’s future development.
(1) The sector competition setup and development trend
Affected by swift flow of main winemaking countries’ products into Chinese market and change of
consumption environment and consumption main structure, the Chinese wine sector began its
structural adjustment in 2012 and the market competition will evolve from domestic competition to
global competition, from individual competition to whole industry chain competition, and the market
competition will be severer and severer. But in the long run, people’s pursuits to health and fashion
life thanks to increase of their incomes will ceaselessly stimulate their demand for quality wine,
that’s to say, the Chinese wine sector still has huge potential to tap. In such a case of long-term
coexistence of opportunities and challenges, only those enterprises that possess strong branding
influence and marketing competence, can timely get the run of the consumers’ demands and provide
products of high performance-to-price ratio will be the final winners of competition and form a new
structure of the future Chinese wine market.
(2) The Company’s development strategy
The Company will continue to adhere to the strategy of taking wine as pillar product while developing
all kinds of products, giving priority to middle and high-grade products in the course of mass production,
and make efforts to provide consumers with a rich variety of products in a competitive price.
(3) Management plan in a new year
In 2013, the Company will try its best to realize a business revenue of not less than CNY 6 billion and
curb the main operating costs and three period charges below CNY 3.4 billion.
(4) The measures the company will take
The Company will emphasize the following aspects:
Firstly, continue to reinforce construction of distribution channels and outlets and ensure overall
development of all sorts of alcoholic liquors. The Company will go on with its efforts in promotion
of its self-produced wine, accelerate the product positioning in three chateaus in the west so as
finally to form a market scale as early as possible, further rationalize the structures of middle and
low-grade products, vigorously develop backbone assortments, enlarge sales volume, substantially
push forward construction of three kinds of marketing channels respectively leading to middle and
high-grade market, middle and low-grade market and county market, make better use of all resources
in terms of brandy and imported wine, perfect the sales system of all sorts of alcoholic liquors,
extend market coverage and product popularity, and realize harmonious development of all sorts of
alcoholic liquors.
Secondly, adapt to the changes in terms of market demand and actively develop new marketing
channels. The Company will, on the basis of doing better in two traditional marketing channels
respectively leading to marts and hotels, make great efforts to build new channels connecting to
electronic business, Pioneer International, monopoly shops and group consumers, and activate a new
market growth source.
Thirdly, tighten control of expenses and reduce operating cost. The Company will tighten
supervision and control of bulk wine cost, packing cost, wages, fuel and power cost, production loss,
fund use cost, advertising cost, warehousing cost, transport cost and other outlays, further specify the
assessment details, perfect the pricing mechanism of main raw materials, simplify product packing,
accelerate fund turnover, try to save energy and reduce consumption, and cut down all costs and
24
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
expenses. Besides, the Company will speed up construction of SAP project in order to upgrade the
Company’s management level and strengthen its governance ability.
Fourthly, steadily push forward construction of investment projects, optimize the Company’s
production structure and enlarge production capacity. The Company will, in the light of future
development requirements, plan and actualize investment projects, optimize production structure in
time, enrich product assortments, perfect production supporting facilities, enlarge production
capacity and improve product quality to meet the market requirements.
Fifthly, reinforce development of vineyards and grape quality supervision and control, successfully
fulfill grape procurement in the year, enhance technological level and improve product quality all the
time. The Company will adopt the classified management means at the vineyards, substantially put
the mode of winemakers’ vineyard follow-up management into practice, ensure the winemakers to
fulfill the course management and quality control all along from grape growing to bulk wine
production, generalize the mode of mechanized farming, further reduce grape-growing cost, increase
growers’ earnings, conscientiously do well in construction of self-run vineyards and chateau-owned
vineyards in Yantai, take the lead in mechanized farming in the self-run vineyards in Yantai in order
to lower labor cost, perfect the full-course management and pricing mechanism of grape
procurement, incessantly improve the key technologies like aging in oak barrel, use of oak products
and bottle storing, and better product’s inherent quality.
(5) Risks likely to occur
A) Risks in price fluctuation of raw materials
Grapes are the Company’s main raw materials. The grape’s yield and quality are affected to a certain
extent by the natural factors such as drought, wind, rain, frost and snow. These force majeure factors
greatly influence the quantity and price of the grapes this Company orders and add the uncertainty to
the Company’s production and operation. Therefore, the Company will lower the risks that are likely
to affect grape quality and result in price fluctuation by means of expanding the self-run vineyards,
strengthening the vineyard management and optimizing the layout of vineyards.
B) Risks in uncertainty of market input and output
To cope with the cutthroat market competition and to meet the needs for market development, the
Company has input more and more capital in the market and the sales expense has taken up a higher
percentage point in the business revenue. The input-output ratio will affect the Company’s operating
results to a great extent and the risk that some investments may not reach the expectations is likely to
occur. Therefore, the Company will strengthen market research and analysis, enhance market
forecast accuracy and continue to perfect the input-output evaluation system to ensure the
investments in market to be satisfactory as expected.
C) Risks in product transport
The Company’s products are fragile and sent to different places all over the world, mostly by sea,
railway and expressway. The peak season of sales is usually in cold winter and close to the spring
festival when market has a great demand. At that time, the natural and human factors such as serious
shortage of transport capacity resulting from busy flow of people and goods, wind, snow, freezing as
well as traffic accidents make the transport departments difficult to send products to markets in time
and safely. As a result, it makes this Company have to face the risks of missing the peak season of
sales. Therefore, the Company will adopt all methods possible like making precise sales prediction and
well designed connection of production and sales, reasonably arranging production and transport
means and making use of more available warehouses in different places to lower these kinds of risks.
25
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
D) Risks in investment faults
According to the Company’s plan, the company has a lot of investment projects in a couple of years, the
investment amount is big, the construction period of some projects is long and there are more unpredictable
factors. Although the Company’s decision makers have made full study and scientific decisions strictly in
accordance with the Company’s regulations, some projects may still be affected by various uncertainties
that consequently make the investment amount exceed the budget or make the projects fail to realize the
desired earnings on investment.
8、Compared with the previous year’s financial report, explaination for the changes of the
consolidated statements scope.
The consolidated statements scope is in consistency with the previous year, except the new set-up
companies in 2012 Ning Xia Changyu Trade Company, Shanxi Changyu Reina Wine Sales
Company and Penglai Changyu Wine Sales Company, which has been included in the scope of
consolidation.
9. The Company’s profit and dividend distribution
1) Promulgation, implementation or adjustment of profit distribution policies, especially the cash
dividend policy during the report period.
According to the auditing result made by Ernst & Young Hua Ming Certified Public Accounts Co.
Ltd., the net profit that the Company made in 2011 was CNY 1,907.21 million. After deducting the
minority shareholders’ profit and loss, the net profit belong to the Company’s shareholders is
CNY1,907.21 million.
After the deliberation of the Company’s Board of Directors and the Shareholders’ Meeting, the
profit plan of 2011 is as following: Because the left amount of legal earned surplus reserve exceeds
50% of registered capital, while making profit distribution, the legal earned surplus reserve will be
not drawn. Based on the Company’s 527.28 million shares at total up to December 31, 2011, we plan
to pay CNY 1.52 in cash as dividends for every one share (including tax) to the Company’s all
stockholders, totaling up to CNY 801.4656 million and we plan to give three shares as stock
dividends for every ten shares or 158.184 million shares totally to the Company’s all stockholders.
This plan is in line with the provisions of the Company’s Articles of Association in 2011.
On June 9, 2012, the Company released the Implementation Announcement of 2011 Annual Equity
Distribution, determining that the share registration day of A Stock was on June 15, 2012 and the ex-
dividend day was on June 18, 2012, the last trading day of B Stock was on June 15, 2012, the share
registration day was on June 20, 2012 and the ex-dividend day was on June 18, 2012. The company
also distributed equity before June 30, 2012 to the Company’s all A Stock holders registered after
closing of Shenzhen Stock Exchange on the afternoon of June 15, 2012 at China Securities
Depository and Clearing Corporation Limited Shenzhen Company and the Company’s all B Stock
holders registered after closing of Shenzhen Stock Exchange on the afternoon of June 20, 2012 at
China Securities Depository and Clearing Corporation Limited Shenzhen Company.
After the deliberation of 2011 Shareholders’ Meeting dated on 15th May 2012, the Clause 1 of
Article 157 in the Articles of Association reads that “the Company can distribute dividends either in
cash or by stock . The profit to be distributed each year is not less than 50% of the distributable
profit realized in the same year and the accumulated sum of profit to be distributed in cash in the
26
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
next three years is not less than 30% of the yearly average distributable profit to be realized in the
next three years”, which will be revised to: “the Company can distribute dividends either in cash or
by stock . The profit to be distributed each year is not less than 25% of the distributable profit
realized in the same year and the accumulated sum of profit to be distributed in cash in the next three
years is not less than 30% of the yearly average distributable profit to be realized in the next three
years.”
The Company has clearly defined the dividend distribution standard and proportion, the conditions
and procedures of adjustment or change of profit distribution policy were legal and transparent, the
promulgation, implementation or adjustment of profit distribution policies, especially the cash
dividend policy were in accordance with the Company’s articles of association and rule of
examination procedures, and the middle and small investors’ interests were fully protected.
The Company’s preliminary scheme of profit distribution and preliminary scheme of increasing
equity with capital reserve during the report period conformed with relevant provisions including the
Company’s articles of association.
2) The Company’s preliminary scheme of profit distribution and preliminary scheme of increasing
equity with capital reserve in the recent three years (including the report period).
The profit distribution plan of 2010 is as following: Because the left amount of legal earned surplus
reserve exceeds 50% of registered capital, while making profit distribution, the legal earned surplus
reserve will be not drawn. Based on the Company’s 527.28 million shares at total up to December 31,
2010, we plan to pay CNY 1.4 in cash as dividends for every one share (including tax, which means
that the actual cash after deduction of the tax for Stock A’s individual stockholders and investment
funds is CNY 1.26 for every one share) to the Company’s all stockholders, totaling up to CNY
738.19 million accounted for 51.47% of net profits CNY 1434.22 milion attributable to shareholders
of parent company in the consolidated statements. The retained and undistributed profit of CNY
696.03 million will be reserved for distribution in the next year.
The profit distribution plan of 2011 is as following: Because the left amount of legal earned surplus
reserve exceeds 50% of registered capital, while making profit distribution, the legal earned surplus
reserve will be not drawn. Based on the Company’s 527.28 million shares at total up to December 31,
2011, we plan to pay CNY 1.52 in cash as dividends for every one share (including tax) to the
Company’s all stockholders, totaling up to CNY 801.4656 million, and we plan to give three shares
as stock dividends for every ten shares or 158.184 million shares totally to the Company’s all
stockholders. According to this plan, in the year of 2011 totally CNY959.65 million of profit was
distributed, accounting for 50.32% of net profits CNY 1907.21 milion attributable to shareholders of
parent company in the consolidated statements. The retained and undistributed profit of CNY
947.56 million will be reserved for distribution in the next year.
The Company’s preliminary scheme of profit distribution and preliminary scheme of increasing
equity with capital reserve in 2012 is as following:
Because the left amount of legal earned surplus reserve is less than 50% of registered capital, while
making profit distribution, the legal earned surplus reserve of CNY46,789,370.00 will be drawn.
Based on the Company’s 685,464,000 shares at total up to December 31, 2012, we plan to pay CNY
11.00 in cash as dividends for every 10 shares (including tax)to the Company’s all stockholders,
totaling up to CNY 754,010,400, accounting for 44.33% of net profits CNY 1,700,928,117.00
attributable to shareholders of parent company in the consolidated statements. The retained and
undistributed profit of CNY 900,128,347.00 will be reserved for distribution in the next year.
The Company’s cash dividend record in recent three years
27
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
Unit: CNY
Net profit belonging to Proportion in the net profit
the listed company’s belonging to the listed
Amount of cash
Year of distribution stockholders in the company’s stockholders in
dividend (including tax)
consolidated statement the consolidated statement
of the distribution year (%)
2012 754,010,400 1,700,928,117 44.33%
2011 801,465,600 1,907,208,732 42.02%
2010 738,192,000 1,434,218,328 51.47%
During the report period the Company earned profit, the undistributed profit of the parent company
was positive but withouting proposing cash dividend distribution.
Available V not available
10、Social Responsibility
During the report period, considering the fulfillment of the Company’s social responsibility, please
see 2012 social responsibility report disclosed on www.cninfo.com.cn on 19th April 2013.
11、The Company’s Receptions, Studies and Visits
Meeting room Field survey East security, Hengtai
2012.01.10 of the Securities
Company
Meeting room Field survey Yuren Xinchuang
2012.01.16 of the investment
Company
Meeting room Field survey PIMCO
2012.02.09 of the
Company
Meeting room Field survey CSC,
2012.02.15 of the China Reinsurance
Company (Group) Corporation
Meeting room Field survey UBS Securities,Qilu
2012.02.17 of the Securities, Prudential
Company Fund
Meeting room Field survey Qilu Securities, GF fund
2012.02.20 of the
Company
Meeting room Field survey Haitong Securities
2012.04.18 of the
Company
2012.04.27 Meeting room Field survey Taiwan life
28
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
of the
Company
2012.05.03 Meeting room Field survey GouplandCardiff
of the current
Company business
Meeting room Field survey Value Partners operation
2012.05.10 of the situation and
Company other issues
Meeting room Field survey Changjiang pension
2012.05.14 of the insurance
Company
2012.05.15 Meeting room Field survey Citic Securities，
of the Haitong Securities，
Company First Capital Securities，
BOCI Securities，
Taiwan Life, Heying
investment, China
Universal Asset
Management, CSC
Da Cheng Fund, fortune
securities,GF securities
2012.05.16 Meeting room Field survey Taiwan Life,CICC, Fuh
of the Hwa Securities
Company
Meeting room Field survey BOCI Securities
2012.05.29 of the
Company
Meeting room Field survey Shanghai International
2012.08.16 of the Trust & Investment
Company
Meeting room Field survey Zhonghai Fund
2012.08.22 of the
Company
Meeting room Field survey General investment,
2012.08.28 of the Huatai securities
Company
Meeting room Field survey Guosen Securities，
of the Credit Suisse
Company Securities，Hongta
2012.08.30 securities，baishan
venture investment,
Lombarda China Fund,
China Reinsurance
(Group) Corporation
Meeting room Field survey Qianyang Investment
2012.09.07 of the
Company
Meeting room Field survey Norges Bank, Fortis
2012.09.19 of the Haitong
29
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
Company Investment,OWL
GREEK,Taiping asset
management,shanghai
rightshare investment,
Orient Securities, SMC
China Fund
Meeting room Field survey Franklin Templeton
2012.10.18 of the Sealand Fund
Company
Meeting room Field survey Shenzhen river asset
2012.10.26 of the management company
Company
Meeting room Field survey Great Wall Fund
2012.11.08 of the
Company
Meeting room Field survey Morgan Stanley Huaxin
2012.11.12 of the Funds
Company
Meeting room Guangda Yongming
of the Field survey asset management
2012.11.15
Company company, Aeon Life
insurance company
Meeting room Field survey Newburgh Asia
2012.11.16 of the
Company
Meeting room Field survey Shanghai Jiayou
2012.11.21 of the investment
Company
Schroder Investment
Meeting room Field survey Management (Hong
2012.11.27 of the Kong) Limited，
Company Goldman Sachs(Asia)
co.,LTD
Meeting room Field survey Founder securities
2012.11.28 of the
Company
Meeting room Field survey Kaixinlong Fund,
2012.12.07 of the Hanlun ivestment
Company Consultant
30
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
V、Major Issues
1、Material litigation and arbitration
□ available √not available
There are no material litigation and arbitration in the year.
Media’s doubts
□ available √not available
31
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
2、Important related transactions
(1)、Related transactions in relation to routine operations
Amount of
Pricing Proportion in Settlement
Type of Content of Price of related
Interrelation principle of the same kind method of Market Date of Disclosure
Related party related related related transaction
ship related of transaction related price disclosure index
transaction transaction transaction (CNY
transaction (%) transaction
‘0000)
(http://www.cni
Procurement nfo.com.cn)
of Announcement
Related
commodity No.2012-L005,
Yantai Shenma Under the party’s
and Agreement title of
Packing Co., same parent commodity － 20,643.9 11.19% Check －
acceptance price announcement:
Ltd. company and labor
of labor Announcement
transaction
from related on 2012
party Routine Related
Deals
Total -- -- 20,643.9 11.19% -- -- -- --
Details of rejection of big sales No
The company will sign a processing contract with and purchase packing materials from Yantai
Necessity and continuity as well as cause to transact
Shenma Packing Materials Co., Ltd. under Changyu Group, which is helpful for the Company, as a
with related party (but not with other dealer in the
prerequisite of fair price, to acquire sustainable, quality and stable supply of packing materials and to
market)
save the Company’s procurement and transport costs of packing materials so as to strengthen its
32
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
product competitiveness.
The Company’s independency will not be affected by related transactions because the Company has
Influence of related transaction on listed company’s
lower requirements for production technology of packing materials and there are too many qualified
independency
producers ready for selection.
The level of Company’s dependency on related party as
No
well as solutions (if any)
If a prediction is made to the total amount of routine
related transactions to occur during this period by type, The Company predicts that the procurement amount paid to Yantai Shenma Packing Co., Ltd. is CNY
what is the actual implementation result during the 250 million and the actual trading price is CNY206.439 million.
report period (if any).
Cause of bigger differences in between transaction price
The transaction price is fixed in reference to market price, no obvious difference.
and market reference price.
(2) Related transactions in asset procurement and sale
There were no related transactions in asset procurement and sale in the report period.
(3) Important related transactions in joint external investment
There were no important related transactions in joint external investment in the report period.
33
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
(4) Record of related credits and liabilities
Whether there is a record of non-operating related credits and liabilities.
□ Yes √ No
Balance at the
Use of non- Amount occurred Balance at the
Type of credits Cause of beginning of the
Related party Interrelationship operating fund or during this period end of the period
and liabilities existence period (CNY
not (CNY ‘0000) (CNY ‘0000)
‘0000)
Liabilities Use of the
Yantai Changyu The Company’s
payable to trademarks like No 10,891 9,994 9,994
Pioneer Wine Co., Ltd. parent company
related party “Changyu”
Influence of the related credits and
The related credits and liabilities produce a minor influence on the Company’s operating results and financial
liabilities on the Company’s operating
condition as they account for a small proportion in the Company’s total assets.
results and financial condition.
(5) Other important related transactions
For other important related transactions, please see Annex 6 “Relations among the Related Parties and Their Transactions” to Financial
Statement of the report.
Interim reports disclosure website’s related queries about the significant related party transactions
Disclosure date of interim
Name of Interim announcement Website of disclosure of interim announcement
announcement
Yantai Changyu Pioneer Wine Co., Ltd.
Announcement on 2012 Routine Related April 20, 2012 http://www.cninfo.com.cn
Transactions
34
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
3、Major and important contracts and execution results
(1) Trusteeship, contract and leasehold issues
A) Trusteeship situation
There are no trusteeships happened in the report period.
Project in gains and losses for the Company to achieve more than 10% of the total profit in the
report period.
□ available √ not available
B) Contract situation
During the report period, the contract for the operation of the Company, please see the part of
“Subsidiary” in the consolidation scope of consolidated financial statements which is in the report’s
financial report.
Project in gains and losses for the Company to achieve more than 10% of the total profit in the
report period.
□ available √ not available
C) Leasehold situation
On 1st January 2012, the Company renewed the “space lease agreement” with the controlling
shareholder Changyu Group, the Company leased the space with 57749.77 square meters located at
174 Shihuiyao Road, Zhifu District,Yantai City and the space with 3038 square meters located at 56
Dama Road, Zhifu District, Yantai City, which are all under the name of controlling shareholder.
The rent of the above spaces per year is CNY 5.858 million with a period of 5 year from 1st January
2012 to 31st December 2016.
Project in gains and losses for the Company to achieve more than 10% of the total profit in the
report period.
□ available √ not available
(2) Other importanct contracts
Other important contracts, please see 24 part of “Other non-current liabilities” and 22 part of “Non-
current liabilities due within one year” in the notes to the consolidated financial statements of the
report’s financial report.
4、Implementation of commitments
(1)、The commitments of the Company or shareholders of the Company holding more than 5% in
the report period or until the report period
Commitment Commitment Commitment Commitment
Commitments Implementation
party content time period
－ － － － Has been
Commitments at share reform
fulfilled
Commitments made in － － － － －
acquisition report or equity
changes report
Commitments at asset － － － － －
restructuring
Commitments at the initial － － － － －
public offering or refinancing
Commitments made to the Yantai Intra-industry 18th May Has been
Forever
minority shareholders of the Changyu competition 1997 performing
35
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
Company Group Co.
Ltd.
Commitment under timely
Yes
implementation or not
Specific reasons of not
completing the implementation －
and the next step
Whether or not to have
commitments at leading to intra-
NO
industry competition and related
party transaction
Solution period for the －
commitments
Solution method －
Fulfillment of the commitments －
(2)、The Company makes an explanation of the assets or projects that have reached the profiting
predictions and of the causes if the Company’s assets or projects are likely to generate profits and
are still optimistic as expected during the report period.
The Company did not make any profit forcast for the assets or projects.
5、The appointment and dismissal of certified public accountants
Currently appointed accounting firm
Domestic accounting firm name Ernest & Yong Huaming Accounting Firm
Reward for domestic accounting firm
168
(CNY‘0000)
Consecutive period for the audit
6
services of domestic accounting Firm
Foreign accounting firm Ernest & Yong Huaming Accounting Firm
Consecutive period for the audit
6
services of foreign accounting Firm
Whether or not to dismiss the accounting firm during the report period
□ Yes √ NO
To employ internal control audit accounting firms, financial adviser or sponsor.
□ available √ not available
6．Explaination for the other major issues
Explanation on the Company’s Interrelationship with Yantai Zhongya Pharmaceutical and
Medicated Wine Co., Ltd.
Before November 25, 2010, Mr. Li Jianjun was legal representative of both Yantai Yusheng
Investment and Development Co., Ltd. (hereinafter referred to as Yusheng Investment) and Yantai
Yuyuan Investment and Development Co., Ltd. (hereinafter referred to as Yuyuan Investment) and
held 46.5% of Yuyuan Investment’s total equity. Yusheng Investment was, at that time, indirectly
36
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
holding this company’s equity. For the shareholding details, please see “Block Diagram of Property
Rights and Control Relations between the Company and Actual Controlling Party” in Section Six
“Record of Share Changes and Stockholders” of this Report. Yuyuan Investment held 50% of the
total equity of Yantai Zhongya Pharmaceutical Co., Ltd. (hereinafter referred to as Zhongya
Pharmaceutical). It can be confirmed by virtue of the abovementioned equity structure that Zhongya
Pharmaceutical was one of the Company’ interrelated parties. To sever this relationship, Yushang
Investment replaced the legal representative Li Jianjun with Sun Jian (currently acting as this
company’s vice general manger) on November 25, 2010, thereby terminating the Company’s
interrelationship with Zhongya Pharmaceutical.
On December 26, 2011, Zhongya Pharmaceutical was renamed to Yantai Zhongya Pharmaceutical
and Medicated Wine Co., Ltd. Or “Zhongya Pharmaceutical” for short.
On September 10，2012, Changyu Group acquired 36% of Zhongya Pharmaceutical’s total equity
by investing in it, making the shareholding proportions of Zhongya Pharmaceutical’s former
stockholder Yuyuan Investment and Zhongya Pharmaceutical’workers both reduced from 50% to
32% and the legal representative changed from Li Jianjun to Leng Bin (currently acting as director
of Changyu Group and this company’s director and vice general manager).
The anticipated routine related transactions between the Company and Zhongya Pharmaceutical in
2012 have already been disclosed in the Announcement of 2012 Routine Related Transactions. The
actually occurred related transactions between the Company and Zhongya Pharmaceutical during
the report period were stated in Annex Six “Interrelationship and Deals” to Financial Statement of
this Report.
37
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
VI、Changes in Shares and the Shareholders’ Situation
1、Changes in shares
Amount after this
Amount before this change Change (+, -) change
Transfe
Percent Allot r other Percenta
age Distribute
Amount new capital others Sub total Amount ge
bonus share
% share to share %
capital
2、Unrestricted shares 527,280,000 100% 158,184,000 158,184,000 685,464,000 100%
(1)、A shares 348,816,000 66.15% 104,644,800 104,644,800 453,460,800 66.15%
(2)、B shares 178,464,000 33.85% 53,539,200 53,539,200 232,003,200 33.85%
3、Total shares 527,280,000 100% 158,184,000 158,184,000 685,464,000 100%
Cause of share change
During the report period, the Company brought its 2011 equity allocation scheme into effect and taking the total capital stock of 527,280,000 shares
as cardinal number, distributed 3 shares for every 10 shares to all stockholders.
Approval of stock change
□ available √ not available
Transfer of changed shares
Transfer is completed.
The influence of stock change on the financial indicators such as basic earnings per share, diluted earnings per share of the latest year and the latest
period, net asset per share belonging to the company’s common stock holders, etc..
38
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
√available □ not available
Because the stock capital had an increase of 30%, the Company’s financial indicators such as basic earnings per share, diluted earnings per share and
net asset per share belonging to the Company’s common stock holders all decreased accordingly.
Other contents this company thinks necessary or securities regulatory departments ask to make public.
No.
2、Information about the Issuance and Listing of Stocks
(1)Issuance of stocks in recent three years by the end of the report period
Description of the stocks issued in recent three years
The Company did not issue any new stocks within recent three years by the end of report period.
(2)Changes situation in the Company’s total shares, structure of shareholders, the Company’s assets and liabilities.
During the report period, the Company brought its 2011 equity allocation scheme into effect and taking the total capital stock of 527,280,000 shares
as cardinal number, distributed 3 shares for every 10 shares to all stockholders, which increased the total share capital of the Company from
527,280,000 shares to 685,464,000 shares. There are no any changes for the shareholders’ structure of the Company and no big changes for the
structure of assets and liabilities.
(3)Existing internal employee shares
The Company has not issued internal employee shares.
39
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
3、Situation for shareholders and the acutal controllers
(1)、The number of shareholders of the Company and the shareholdings
Unit：share
th
Total number of shareholders until the end of the 5 trading days
Total shareholders in the report period 37,300 46,745
before the disclosure day of the annual report
Shareholders holding more than 5%
Shares held Number Pledged or frozen
Changes Number of
Character of Percentage until the end of
Name of Shareholders shareholders (%) of the report during the restricted unrestricted Share status Amount
period report period shares
shares
Domestic non-
YANTAI CHANGYU GROUP CO.
state-owned legal 50.4% 345,473,856 79,724,736 0 345,473,856 - 0
LTD.
person
Foreign
GAOLING FUND,L.P. shareholder 3.54% 24,279,731 5,881,837 0 24,279,731 - 0
HTHK/CMG FSGUFP-CMG FIRST Foreign
3.46% 23,731,144 7,248,301 0 23,731,144 -
STATE CHINA GROWTH FD shareholder
GOVERNMENT OF SINGAPORE INV. Foreign
2.45% 16,802,658 9,210,284 0 16,802,658 - 0
CORP.- A/C "C" shareholder
BBH BOS S/A FIDELITY FD - CHINA Foreign
2.21% 15,123,476 4,749,879 0 15,123,476 - 0
FOCUS FD shareholder
DACHENG WEALTH MANAGEMENT Domestic non-
2020 LIFE CYCLE SECURITIES state-owned legal 0.95% 6,529,779 3,925,327 0 6,529,779 - 0
INVESTMENT FUND person
Foreign
VALUE PARTNERS CLASSIC FUND 0.82% 5,628,804 3,755,970 0 5,628,804 - 0
shareholder
GSIC A/C MONETARY AUTHORITY Foreign
0.81% 5,561,447 3,127,836 0 5,561,447 - 0
OF SINGAPORE shareholder
Foreign
UBS (LUXEMBOURG) S.A. 0.73% 5,002,999 718,763 0 5,002,999 - 0
shareholder
HTHK-MANULIFE CHINA VALUE Foreign
0.66% 4,540,765 984,382 0 4,540,765 - 0
FUND shareholder
40
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
Strategic investors or legal result of the placement of new
No.
shares to become a top 10 shareholders
Among the top 10 shareholders, Yantai Changyu Group Company Limited has no
The explanation for the associated relationship and
associated relationship or accordant action relationship with the other 9 listed shareholders,
accordant action of the top 10 shareholders
and the relationship among the other shareholders is unknown.
The top 10 shareholders with unrestricted shares
Number of unrestricted Type of share
Name of Shareholders shares held until the
Type of share Amount
end of the year
YANTAI CHANGYU GROUP CO. LTD. 345,473,856 A share 345,473,856
GAOLING FUND,L.P. 24,279,731 B share 24,279,731
HTHK/CMG FSGUFP-CMG FIRST STATE CHINA GROWTH FD 23,731,144 B share 23,731,144
GOVERNMENT OF SINGAPORE INV. CORP.- A/C "C" 16,802,658 B share 16,802,658
BBH BOS S/A FIDELITY FD - CHINA FOCUS FD 15,123,476 B share 15,123,476
BANK OF CHINA－DACHENG WEALTH MANAGEMENT 2020 LIFE CYCLE
6,529,779 A share 6,529,779
SECURITIES INVESTMENT FUND
VALUE PARTNERS CLASSIC FUND 5,628,804 B share 5,628,804
GSIC A/C MONETARY AUTHORITY OF SINGAPORE 5,561,447 B share 5,561,447
UBS (LUXEMBOURG) S.A. 5,002,999 B share 5,002,999
HTHK-MANULIFE CHINA VALUE FUND 4,540,765 B share 4,540,765
Among the top 10 shareholders with unrestricted shares, Yantai
The explanation for the associated relationship and accordant action of the top 10
Changyu Group Company Limited has no associated
shareholders with unrestricted shares, the the associated relationship and accordant
relationship or accordant action relationship with the other 9
action between the top 10 shareholders with unrestricted shares and the top 10
listed shareholders, and the relationship among the other
shareholders
shareholders is unknown.
Yantai Changyu Group Company Limited is not involved in
Explanation for the shareholders who involved in financing activities and stock
financing activities and stock trading business, and it is unknown
trading business
for the other shareholders.
41
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
(2)、Situation for the controlling shareholders of the Company
Legal Establishment Organization
Name of controlling shareholder Registered capital Main business
representative date code
Production and distribution of wine,
healthy liquor, spirits and
Yantai Changyu Group Co. Ltd. Sun Liqiang 1997.04.27 26564582－4 CNY 50 million beverages,cultivation of agricultural
products and export business within
permission.
Operating results, financial condition, cash
No.
flow and future development strategy etc.
Equity situation for the other domestic listed
companies controlled or shared by the
No.
controlling shareholders during the report
period
Changes of the controlling shareholder during the report period
□ available √ not available
(3)、Situation for the actual controllers of the company
Name of actual Legal Establishment Organization Registered
Main business
controllers representative date code capital
Under state permission, property investment, tenancy of machine and facility,
Yantai Yuhua Investment CNY wholesale and retail of construction material, chemical products (chemical
Jiang Hua 2004.10.28 76779294－7
& Development Co. Ltd 387,995,000 hazard products excluded), hardware and electronical products, grape
planting.
ILLVA Saronno Augusto 2005.01.24 － EUR Receiving the investments and dividends that Italian or overseas businesses
42
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
Investment Italy Reina 5,160,000 provide or distributed to other companies; controlling the use of and dealing
with and buying or selling and disposing the corporate stocks, public stocks
and individual stocks; providing capital and technical coordination to the
company’s joint ventures and performing the duties of a controlling party;
engaging in the activities in terms of providing financial assistance, technical
and R&D and occupational training, shareholding affairs, organizing the
storage of raw materials and warehousing of final products upon the
precondition that it is helpful for the joint ventures and in order to realize the
final operation goals; production and sales of food products, alcoholic and
nonalcoholic products as well as any other related industrial, commercial,
financial and tertiary activities via subsidiary companies and joint ventures or
directly by itself; conducting business activities in the fields of acid food and
agriculture.
International Finance Corporation is one of the members of World Bank,
mainly dedicated to investment in private sectors of developing countries
International Finance while providing technical support and consultation service. The corporation
USD 2.36
Corporation Cai Jinyong 1956.07.25 － is a multilateral financial institution that ranks first in the world in terms of
billion
providing capital stock and loans to developing countries. Its purpose is to
promote sustainable investments of private sectors of developing countries in
order to alleviate poverty and improve people’s life.
State-owned Assets
Supervision and
According to the municipal government authorization, to perform the
Administration Wei Jing 2005.02.01 004260686 －
investor’s responsibility on behalf of state asset.
Commission of Yantai
Municipal Government
Operating results, financial
condition, cash flow and
No.
future development strategy
etc.
Equity situation for the
other domestic listed
companies controlled by No.
the actual controller
during the report period
43
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
Changes of the actual controllers during the report period
□ available √ not available
Introduction for property right and control relations between the Company and its actual controllers
Changyu Group and 27 persons for medium-level of the
Company
100%
Yantai Yusheng Investment & Changyu Group and 46 common staff of
O
U J F G U T
H
S A R E . E
62.22% 37.78%
R
A P A R K
A N M
5% .
C
O REINA REINA REINA REINA
N C A U
AUGUSTO RICCARDO MARINA LODOVICO
E N N
T
24% 6% 5% 5% 5% R
I 25% 25% 25% 25%
E
S
IFC 55% Yantai Yuhua Investment & Development Illva Saronno Investment SASAC
10% 45% 33% 12%
current shareholders for A Changyu Group current shareholders for B
15.75% 50.40% 33.85%
the Company
Actual controller control the Company through a trust or other asset management
□ available √ not available
44
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
VII、Situation for Directors, Supervisors, Senior Management and Staffs
1、Changes in shareholdings of directors, supervisors and senior management
Shares
Shares
hold at
Increased Decreased hold at
the
Beginning date Ending date of shares shares the
Name Post Status Gender Age beginni
of the post the post during the during the ending
ng of
period period of the
the
period
period
Sun Liqiang Chairman to the Board present M
of Directors 65 2010.05.13. 2013.05.12 0 0 0 0
incumbent
Zhou Hongjiang Vice-chairman to the present M
Board of Directors and 48 2010.05.13 2013.05.12 0 0 0 0
general manager incumbent
Leng Bin Director and vice- present M
general manager 50 2010.05.13 2013.05.12 0 0 0 0
incumbent
Qu Weimin Director, Vice-general M
manager and Secretary present
to the Board of 55 2010.05.13 2013.05.12 0 0 0 0
incumbent
Directors
Chen Jizong Director present M
37 2010.05.13 2013.05.12 0 0 0 0
incumbent
Augusto Reina Director present M
72 2010.05.13 2013.05.12 0 0 0 0
incumbent
Aldino Marzorati Director present M
60 2010.05.13 2013.05.12 0 0 0 0
incumbent
Antonio Appignani Director present M
74 2010.05.13 2013.05.12 0 0 0 0
incumbent
Jean Paul Pinard Director present M 63 2010.05.13 2013.05.12 0 0 0 0
45
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
incumbent
Geng Zhaolin Independent director present M
70 2006.12.07 2009.12.06 0 0 0 0
incumbent
Xiao Wei Independent director present M
52 2010.09.01 2013..05.12 0 0 0 0
incumbent
Wang Zhuquan Independent director present M
48 2010.05.13 2013.05.12 0 0 0 0
incumbent
Wang Shigang Independent director present M
47 2011.05.10 2013.05.12 0 0 0 0
incumbent
Fu Mingzhi Chairman for the Board present M
of Supervisors 59 2010.05.13 2013.05.12 0 0 0 0
incumbent
Zhang Hongxia Supervisor present
F 56 2010.05.13 2013.05.12 0 0 0 0
incumbent
Jiang Jinqiang Supervisor present M
40 2010.05.13 2013.05.12 0 0 0 0
incumbent
Yang Ming Vice-general manager present M
54 － － 0 0 0 0
incumbent
Li Jiming Chief engineer present M
46 － － 0 0 0 0
incumbent
Jiang Hua Vice-general manager present M
49 － － 0 0 0 0
incumbent
Sun Jian Vice-general manager present M
46 － － 0 0 0 0
incumbent
Jiang Jianxun Finance manager present M
46 － － 0 0 0 0
incumbent
Total － － － － － － 0 0 0 0
46
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
2、Situation for the work experience
The main work experiences of the Company’s directors, supervisors and senior managementin the
recent 5 years.
(1)、Members of board of directors
Mr. Sun Liqiang, Chairman, is a college graduate and senior economist. Now he is the representative
of 11th National People’s Congress, Party Secretary, Chairman and General Manager of Changyu
Group. He began serving as chairman of the Company on September 18th , 1997 and has held the
position ever since.
Mr. Zhou Hongjiang, is a mastership graduate and senior engineer, the vice chairman of Changyu
Group. Now he is the representative of 12th National People’s Congress. He began serving as general
manager of the Company on December 28th , 2001 and as Director, Vice Chairman and General
Manager of the Company on May 20th , 2002.
Mr. Leng Bin, is a postgraduate and senior accountant and now is the Director of Changyu Group.
He began serving as a director of the Company on June 15th, 2000.
Mr. Qu Weimin, holds a bachelor of engineering and is a senior economist. He began serving as
Director, Deputy General Manager and concurrently as Secretary to the board of directors of the
Company on September 18th , 1997.
Mr. Chen Jizong, is a university graduate, holds the qualifications of statistician and accountant,
now is the Trade union director of property management department of SASAC Yantai and the
director of Changyu Group. He began serving as a director of the Company on May 13th 2010.
Mr. Augusto Reina is serving as chief executive officer of several companies including Illva
Saronno Holding SpA and Illva Saronno Investment SRL, member of the board of directors of
Barberini Spa, director of Federvini (Italian Alcohols Production and Export Association), director
of Istituto Del Liquore (Wine Research Institute), director of Assovini (Sicily Viniculture and Wine
Production Association) and director of Changyu Group. He has been director of the Company since
April 27th, 2006.
Mr. Aldino Marzorati, a university graduate, is the General Manager of Illva Saronno Holding SpA
and director of the board of directors of some branches under the group company and the director of
Changyu Group. He has been director of the Company since April 27th, 2006.
Mr. Antonio Appignani, a university graduate, is vice chairman of Italian Business Consultation
Committee, chief of Professional Ethics Committee, teacher of vocational training course of
Industrial and Commercial Consultation Committee, member of Economic and Commercial
Committee of the public university “G. D Annunzio” and concurrently serving as member of the
board of directors of different companies and member of the board of directors of several companies
under Illva Group and the director of Changyu Group. He has been director of the Company since
April 27th, 2006.
Mr. Jean-Paul Pinard, a doctor in economics and finance, began to serve as director of the Bureau of
Agriculture of International Finance Corporation under World Bank from 2001, and retired in 2007,
now is the director of Changyu Group. He has been director of the Company since December 7th,
2006.
Mr. Geng Zhaolin, is a postgraduate and senior engineer, now is the Vice Director of the China
Foods Standardization Technology Committee, executive director of China Foods Science &
47
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
Technology Institute, counselor of China Association of Wine Industry. He began serving as an
independent director of the Company on May 20th, 2002.
Mr. Wang Zhuquan, is the doctor for administration (accountancy), holds the qualifications of China
Certified Public Accountant and China Certified Public Valuer , now is the professor, master and
PhD Supervisor, vice dean of Administration Institute, dean of Accountancy Department under
Ocean University of China. He began serving as independent director of the Company on September
7th, 2007.
Mr. Xiao Wei, is a postgraduate and lawyer, and now is the partner of Jun He Law Offices. He
began serving as independent director of the Company on September 1st, 2010.
Mr. Wang Shigang holds an MBA and also qualification of China Certified Public Accountant, now
is the boardchairman of Shandong Tianhengxin Construction Cost Consultion Co. Ltd., independent
director of Shandong Jinling Chemical Industry Co.,Ltd. He previously served as independent
director of the Company from May 20th , 2002 till May 13th, 2010.
(2). 、 Members of board of supervisors
Mr. Fu Mingzhi, is a university graduate and senior economist. Currently he is the Director and
Deputy General Manager of Changyu Group. He began serving as a Chairman to Board of
Supervisors of the Company on April 27th, 2006.
Ms. Zhang Hongxia, is a college graduate and senior accountant. She began serving as supervisor of
the Company on September 18th, 1997.
Mr. Jiang Jinqiang, is a university graduate, holds the qualifications of China Certified Public
Accountant and China Certified Public Valuer, now is the full-time supervisor of SASAC Yantai and
once was the director of Changyu Group and also this company before. He began serving as
supervisor of the Company on May 13th, 2010.
(3)、Other senior managers
Mr. Yang Ming, is a university graduate and applied researcher. He began serving as Deputy
General Manager of the Company on August 12th, 1998.
Mr. Li Jiming, is a doctoratoral graduate and applied researcher. He began serving as Chief Engineer
of the Company on September 14th, 2001.
Mr. Jiang Hua, is a postgraduate and senior engineer. He began serving as Deputy General Manager
of the Company on September 14th, 2001.
Mr. Sun Jian, holds an MBA and is an assistant engineer. He began serving as Deputy General
Manager of the Company on March 22nd, 2006.
Mr. Jiang Jianxun, holds an MBA and is an accredited accountant. He began serving as Financial
Manager of the Company on May 20th, 2002.
48
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
Post in the shareholder’s company √ available □ not available
Paid by
Beginning date Ending date of
Name Shareholder’s Company Post shareholder’s
of the post the post
company or not
Sun Liqiang Yantai Changyu Group Co. Ltd. Chairman and 2009.10.28 2013.10.27 No
general manager
Zhou Hongjiang Yantai Changyu Group Co. Ltd. Vice chairman 2009.10.28 2013.10.27 No
Fu Mingzhi Yantai Changyu Group Co. Ltd. Director and vice 2009.10.28 2013.10.27 No
general manager
Leng Bin Yantai Changyu Group Co. Ltd. Director 2009.10.28 2013.10.27 No
Chen Jizong Yantai Changyu Group Co. Ltd. Director 2009.10.28 2013.10.27 No
Augusto Reina Yantai Changyu Group Co. Ltd. Director 2009.10.28 2013.10.27 No
Aldino Marzorati Yantai Changyu Group Co. Ltd. Director 2009.10.28 2013.10.27 No
Antonio Appignani Yantai Changyu Group Co. Ltd. Director 2009.10.28 2013.10.27 No
Jean Paul Pinard Yantai Changyu Group Co. Ltd. Director 2009.10.28 2013.10.27 No
Explaination for the post in the
No.
shareholder’s company
Post at other companies √ available □ not available
Mr. Leng Bin has been the director and legal representative of Yantai Zhongya Pharmaceutical and Medicated Wine Co., Ltd. since 10th
September 2012.
49
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
3、Salary of directors, supervisors and senior management
Decision-making process, the basis for determining the actual payments of directors, supervisors and senior management
The salary for the independent directors is paid according to the resolution of shareholders’ meeting. The salary for the chairman, directors with
administration duty, supervisors, managers and other senior management should be paid on basis of the evaluation result according to the
Evaluation and Incentives Scheme for Senior Management of the Company which is passed during the Board of Directors’ meeting.
Salary of directors, supervisors and senior management during the report period
Unit: CNY’0000
Total reward Actual reward
Total reward
from the at the end of
Name Post Gender Age Status from the
shareholder’s the report
company
company period
Sun Liqiang Chairman to the Board of M 65 present 0
Directors 108.70 108.70
incumbent
Zhou Hongjiang Vice-chairman to the M
Board of Directors and 48 present 108.70 0 108.70
general manager incumbent
Leng Bin Director and vice-general M 50 present 0
manager 76.59 76.59
incumbent
Qu Weimin Director, Vice-general M
manager and Secretary to 55 present 77.11 0 77.11
the Board of Directors incumbent
Chen Jizong Director M 37 present 0
0 0
incumbent
Augusto Reina Director M 72 present 0
0 0
incumbent
Aldino Marzorati Director M 60 present 0
0 0
incumbent
Antonio Appignani Director M 74 present 0
0 0
incumbent
Jean Paul Pinard Director M 63 present 0
0 0
incumbent
Geng Zhaolin Independent Director M 70 present 0
5 5
incumbent
50
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
Xiao Wei Independent Director M 52 present 0
5 5
incumbent
Wang Zhuquan Independent Director M 48 present 0
5 5
incumbent
Wang Shigang Independent Director M 47 present 0
5 5
incumbent
Fu Mingzhi Chairman for the Board M 59 present 0
of supervisors 81.21 81.21
incumbent
Zhang Hongxia supervisor 56 present 0
F 14.43 14.43
incumbent
Jiang Jinqiang Supervisor M 40 present 0
0 0
incumbent
Yang Ming Vice-general manager M 54 present 0
77.12 77.12
incumbent
Li Jiming Chief Engineer M 46 present 0
72.01 72.01
incumbent
Jiang Hua Vice-general manager M 49 present 0
71.48 71.48
incumbent
Sun Jian Vice-general manager M 46 present 0
68.74 68.74
incumbent
Jiang Jianxun Finance manager M 46 present 0
47.36 47.36
incumbent
Total -- -- -- -- 823.45 0 823.45
The awarded equity incentives for the directors, supervisors and senior management of the Company during the report period
□available √ not available
51
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
4、Changes for core technical team or key technical personnel during the report period (non-
directors, supervisors and senior management)
During the report period, there are no changes for core technical team or key technical personnel.
5、Staff of the Company
(1) Staff of the Company
As to December 31st 2012, the total registered staff number of the Company (including the
headquarter and main controlling subsidiary companies) was 5,268, consisting of:
Classification Category Number Percentage of total staff
Speciality Production staff 1,983 37.64%
Sales staff 2,866 54.40%
Technical staff 134 2.54%
Financial and administrative staff 267 5.41%
Education degree Bachelor or above 1,322 25.09%
College graduate 2,231 42.35%
Vocational school 662 12.57%
Senior high school diploma or below 1,053 19.99%
(2)、The Company implemented the social security system of Yantai city, all the retired staff’s
expenses were arranged by Yantai social security department, not by the Company.
52
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
VIII、Corporate Governance
1. Current Corporate Governance 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” , “Guidelines on
Corporate Governance of Listed Companies”, “Listing Guidelines at Shenzhen Stock Exchange” and
also other laws and rules issued by CSRC and Shenzhen Stock Exchange, and combining the own
actual situation, established Articles of Associations and other internal governance regulations,
constantly improved its legal entity structure and internal management rules, legally conducted its
activities and strengthened the information disclosure. The Company’s governance structure is in
accord with requirements of relevant regulatory documents on listing company’s governance issued by
CSRC.
(1) About shareholders and shareholders’ meeting
The Company has already set up the Deliberation Rules of Shareholders’ Meeting, and convened the
shareholders’ meetings in strict accordance with requirements of standard opinion of shareholders’
meeting, made the great effort to provide convenient conditions for more shareholders to participate
the shareholders’ meeting, and ensured all shareholders to enjoy same equity and well exercised their
rights. The Company drew great attention to the communication and exchange with shareholders,
actively responded the shareholders’ inquiry and questions, and widely listened to the suggestions and
comments from shareholders.
(2) About the Company and holding shareholder
The Company has independent power on business and self-management, and also be independent of its
holding shareholder on business, staff, assets, organization and finance. The Board of Directors, Board
of Supervisors, management team and also internal organizations operated independently in the
Company. The holding shareholder of the Company could regulate its activities, no other behavior was
found that surpassed the shareholders’ meeting to directly or indirectly interfere with the decision-
making and business activities of the Company, or occupied any assets of the Company which
damaged the Company’s and medium & small shareholders’ interests.
(3) About the director and board of directors
The Company strictly appoints all directors in light of Company Law and Articles of Associations. The
qualifications of all directors are in line with the requirements of laws and regulations. In accordance
with the requirements of Corporate Governance Guidelines, the Company has already carried out the
cumulative voting system. At present, the Company has four independent directors accounting for one
third of all directors, and the number and composition of board of directors was basically in accord
with requirements of regulations and also Articles and Associations. All directors of the Company
could work in the light of regulations including Rules of Board of Directors’ Procedure and Working
Rules for Independent Directors, punctually attended board of directors’ and shareholders’ meetings,
actively took part in relevant knowledge training, knew very well about the laws and regulations
concerned, had a deep knowledge and long experience of practitioners, and performed their duties
according to the law and regulations. The Board of Directors convened the meetings in accordance
with related rules and regulations.
53
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
(4) About supervisor and board of supervisors
The Company strictly elected all supervisors in light of Company Laws and Articles of Associations. At
present, board of supervisors has three people among which one supervisor is representative for staff, the
number and composition of board of supervisor was in accord with requirements of regulations and rules.
All supervisors of the Company could follow the requirement of Rules of Board of Supervisors’ Procedure,
insist the principle of responsibility to all shareholders, seriously perform their duties, effectively supervise
and present their independent opinion on important issues, interrelated deals, financial status, the duty
performance of directors and managers of the Company.
(5) About performance evaluation and incentive system
The engagement of managers was open and transparent, and accorded with laws and regulations. The
Company has established and gradually improved the performance evaluation standard and formed efficient
incentive system, so as to ensure the salary of staff to be linked with job performance.
(6) About the party with relevant benefit
The Company could fully respect and safeguard the legal rights of the party with relevant benefit, cooperate
actively with the stakeholders, jointly drive the Company to develop continually and stably, pay great
attention to the issues such as local environmental protection and public utilities etc., and assume full
responsibilities for the social responsibility.
(7) About the information disclosure and transparency
The Company has appointed the secretary to Board of Directors to be responsible for investor relation
management including information disclosure, investor relations management and reception of
shareholders’ visit and consultation. The Company has also assigned China Securities Newspaper,
Securities Times, Honking Commercial Daily and web site http://www.cninfo.com.cn/ to disclose
information, punctually, accurately and truly disclosed any information in the light of requirement of
relevant laws and rules, and also ensured all shareholders to have same opportunity to acquire any
information.
(8) Progress of the Company’s special activities in terms of corporate governance as well as formulation
and implementation of inside information source registration and management rules
In order to strengthen management of inside information source and prevent occurrence of backstage deals,
the Company’s fifth board of directors’ 10th session deliberated and passed the Inside Information Source
Registration and Management Rule on April 18, 2012. The founding of the system standardized the
approval process of inside information reporting, defined the scope of inside information source, and set up
a prevention and punishment mechanism of inside information. During the report period, there were no in
the Company the information insiders’ transactions of the Company’s shares by taking advantage of the
sensitive inside information that affects the Company’s share price before it was disclosed and no
supervisory departments’ punishment records, either.
Whether the Company’s corporate governance is in compliance with the Company Law and the relevant
provisions of China Securities Regulatory Commission
□ Yes √ No
54
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
2、Information for the shareholders’ meeting and temporary shareholders’ meeting held during
the report period
(1)、Information for the shareholders’ meeting during the report period
Disclosure
Session Date Proposals name Resolution Disclosure Index
date
The Board of Directors Announcement NO.:
Working Report 2011,
2012-Lin006,
The Board of Supervisors
Working Report 2011, Announcement Name:
2011Annual Report, Resolution for 2011
2011 th
All th
15 May 2011 Profit Distribution 16 May Shareholders’ meeting,
Shareholders’ Scheme, deliberated an
2012 2012 Disclosure media:
meeting Proposal on Amendment of passed
“China Securities
Articles of Association, Newspaper” ,
Proposal on Renewal of “Securities Times” ,
Contract with the Present “Hong Kong
Certified Public Commercial Daily” and
www.cninfo.com.cn
Accountants Firm
(2)、Information for the temporary shareholders’ meeting during the report period
No temporary shareholders’ meeting was held in the report period.
3、Performance of independent directors during the report period
(1)Attendance of independent directors for the board of directors and the shareholders’ meeting
Attendance of independent directors for the board of directors
Whether or not to
Required Personal Communication Authorized attend the meetings
Name Absence
attendance time attendance attendance attendance personally for
successive twice
Geng Zhaolin 5 2 3 0 0 No.
Wang Zhuquan 5 2 3 0 0 No.
Xiao Wei 5 2 3 0 0 No.
Wang Shigang 5 2 3 0 0 No.
Attendance time of independent
directors for the shareholders’ 1
meeting
Explaination for not attending personally the board of directors’ meetings for successive twice. No.
(2) Any objections for the Company’s projects from the independent directors
55
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
Whether or not the independent directors raised any objections for the company’s projects.
□Yes √No.
During the report period, the independent directors did not raise any objections for the Company’s
projects.
(3) Other explanations on independent directors’ performance
The independent directors’ propositions are accepted by the Company or not
√ Yes □ No
Explanation on acceptance or refusal of the independent directors’ propositions
The independent directors inspected the Company’s investment projects in person, proposed that the
Company should properly control the progress of engineering, reinforce engineering audits and try to
reduce project investment. The Company adopted the relevant propositions, took effective measures,
ensured the progress of all investment projects and reduced the amount of investment in some of the
projects.
4、Performance of the special committees under the board of directors during the report period
(1) Summary report of the board of directors’ auditing committee
A) On March 30, 2012, after the certified public accountants responsible for annual audits had introduced
their preliminary opinions, the independent directors on behalf of the auditing committee communicated
with them and made written comments which read that “we communicated in detail with the certified
public accountants responsible for auditing of the Company’s 2011 annual report who expounded the
problems and the matters necessary to adjust that were found during the auditing as well as the risks we
had to pay attention to. We’ve noticed that the Company has adjusted the matters as the accountants
suggested. On the basis of our communication with the accountants, the production and operation results
that the Company’s management reported to us as well as the progress of important events, we believe
that we have no objection to the Company’s 2011 financial statement preliminarily examined by Ernst &
Young Hua Ming Assurance & Advisory Business Services and the preliminary audit opinions of that
Services.”
(B)On 18th April 2012, the board of directors’ auditing committee deliberated and passed 2011 Auditing
report issued by Ernst&Young Hua Ming Certified Public Accounts Co., Ltd., Draft Proposal on 2011
Profit Distribution, Proposal on Renewal of Contract with the Present Certified Public Accountants Firm,
2011 Self Assessment Report on the Company's Internal Control and Proposal on Deliberation about the
Annual Report Working System of the Auditing Committee under the Board of Directors.
56
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
All of Committee members unanimously agree that the above proposals should be supplied for the fifth
Session Board of Directors’ 10th Meeting of the Company to make deliberation.
The meeting reached the following consensus:
①Ernst&Young Hua Ming Certified Public Accounts Co., Ltd. issued a clean-opinion auditing report on
the Company’s 2011 financial statements, which reflected the Company’s financial condition, operating
results and cash flow truly, objectively and correctly. In 2011, the Company maintained the satisfied
financial condition and faster developing momentum.
② The profit distribution scheme the Company formulated is relatively acceptable, taking the
stockholders’ interest into account while paying attention to the Company’s long-term development .
③The Company’s “2011 Self Assessment Report on the Company's Internal Control” has truly and
objectively mirrored out the present standing of the company’s internal control and can basically ensure
the effective implementation of its policies and realization of its strategic goals. But in order to better
respond to possible changes in the business environment, the Company 's internal control system should
still base on the requirement of the General Standards of Company’s Internal Control and the supplementary
guidelines jointly promulgated by five authorities including the Ministry of Finance and China Securities
Regulatory Commission as well as the Circular on Supervision of Implementation of the Internal Control
Rules of Shandong Region’s Listed Companies in the Main-board Market formulated by China Securities
Regulatory Commission Shandong Regulatory Bureau so as to Standardize and improve the Company's
existing internal control system.
④During the period of Ernst & Young Hua Ming Certified Public Accounts Co. Ltd making audit to
2011 the Company’s financial statements, Ernst & Young Hua Ming Certified Public Accounts Co. Ltd
carefully perform the audit responsibilities, strictly implement the audit plan, have full audit evidence and
timely issuing the appropriate audit opinion, so, the meeting proposed that in 2012 the company plans to
continually appoint Ernst & Young Hua Ming Certified Public Accounts Co. Ltd. to be the Company’s
auditor for a period of one year and the auditing fee of financial report be CNY 1.7 million.
⑤The Annual Report Working System of the Auditing Committee under the Board of Directors meets
the provisions of the relevant state laws and regulations and departmental rules and regulations, which is
helpful to standardize and strengthen the work of the Audit Committee’s Annual Report and also to
improve the quality of information disclosure.
(C) On 3rd August 2012, the board of directors’ auditing committee deliberated and passed 2012
Semiannual Report and Semiannual Profit Distribution 2012. The meeting reached the following
consensus:
57
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
①The Company’s 2012 semiannual financial statements reflected the Company’s financial condition,
operating results and cash flow truly, objectively and correctly.
②As the Company just realized 2011 annual profit distribution scheme in early June 2012, we propose
neither to distribute profits for the first half of 2012 nor to increase the Company’s capital stock with
accumulated public fund. The net profit made in the first half of this year will be reserved and distributed
at the end of the year. Our Auditing Committee considers the suggestion to be reasonable .
③All of Committee members unanimously agree that the above proposals should be supplied for the fifth
Session Board of Directors’ 12th Meeting of the Company to make deliberation.
D) On December 30, 2012, the auditing committee and the certified public accountants responsible for
annual audits together discussed the Company’s 2012 Auditing Plan and determined the schedule of 2012
financial statement audits. The auditing committee urged the accountants to carry out the audits strictly in
accordance to 2012 auditing plan and submit an auditing report within the agreed time frame.
(2) Summary report of the board of directors’ emolument committee
The board of directors’ emolument committee is responsible for assessment of the economic
responsibilities of the directors and the senior managers who receive salaries from the Company and
examination of the salary policy and scheme designed for the Company’s directors and senior mangers.
“2011 Assessment Results of the Company’s Senior Officers’ Performance”was deliberated and passed
by the board of directors’ emolument committee on 18th April 2012, who thought that “Proposal on 2011
Assessment Results of the Company’s Senior Officers’ Performance” was in compliance with assessment
methods stipulated in the“proposal on Incentive Scheme on the Company’s Senior Officers ”approved
during the 4th Session Board of Directors 20th Meeting of the company. All of committee members
unanimously agree that the above proposal should be submitted to the fifth Session Board of Directors’
10th Meeting of the Company for making deliberation.
During the report period, the board of directors’ emolument committee also examined the payroll records
of the directors and the senior managers who receive salaries from the Company. The committee believes
that the Company’s directors, supervisors and senior managers got paid completely in line with the
processes of the Company’s economic responsibility assessment system and the salaries the Company
made public were in conformity with the actually paid amount.
5、The work of the Board of Supervisors
During the report period, whether the board of supervisors found any existence of risk for the Company
during their oversight activities.
58
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
□Yes √No
6、Relative to the controlling shareholder, independence and completeness of the Company on
business, personnel, assets, organization and finance
(1) Personnel arrangement: the Company’s general manager, deputy general managers and other senior
officers, all of whom were paid by the Company did not hold any post in the controlling parties. The
Company was entirely independent in personnel arrangement, conclusion and adjustment of labor
contracts thanks to its sound and independent system for labor, personal and salary management.
(2) Assets: Tangible assets and Intangible assets including trademark, industrial property right and non-
patent technologies were all clearly divided between the Company and the controlling shareholder, and
all legal formalities were completed. The Company being a legal independent entity consistently
conducted business activities legally and provided no guarantee in any form with its assets for its
shareholders or individuals’ liabilities or any other legal persons or natural persons. During the report
period, Yantai Changyu Group Co., Ltd., the controlling shareholder, has already transferred free the
trademarks to the Company including 黄金冰谷，爱斐堡，爱菲堡，爱斐 and AFIP which were once
owned by the controlling shareholder, and the transfer has been approved by Trademark Office of the
State Administrative For Industry & Commerce of PRC. However, due to some issues from the past, the
Company’s assets are as yet incomplete, the intangible assets such as part of trademark ownership and
patent still held by the controlling shareholders, and the Company will actively negotiate with the
controlling shareholder to rectify those long-standing problems step by step upon the precondition of no
infringement on the Company and shareholders’ interests.
(3) Finance: the Company has independent finance department, chief account and financial staff, and also
complete, independent and standardized accounting system. The Company has also established its own
bank accounts, duly and legally paying taxes, workers insurance fund. All financial individuals do not
hold any concurrent posts in associated companies and are able to make financial decisions independently.
The Company has its own audit department, which is especially responsible for the internal audit work of
the Company.
(4) Offices: the Company has set up a sound organizational framework, in which the Board of Directors
and Board of Supervisors operate independently, no superior and subordinate relationship exists between
the functional departments of the controlling shareholder. The Company has its own independent
production & business offices, all functional departments are independent to exercise their powers and
carry out the production and business activities independently.
59
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
(5) Operations: the operations of the Company are independent of the controlling shareholder, the
Company owns itself completely independent systems covering research and development, accounting,
workforce and labor, quality control, raw materials purchase, production and sales, and is possessed of
self-run capabilities, and has neither relationship with the controlling shareholder in terms of supply and
sales by proxy nor competition with the other.
7、Situation for industry competition
It is not happened to break the industry competition promise among the company, the controlling
shareholders and the actual controllers.
8、Performance Evaluation and Incentive to Senior Management
The Company has already established a sound system for evaluation of achievement of senior
management and the related incentive system, which linked the reward with the Company’s benefit and
personal achievement. The Emolument Committee under Board of Directors assumed the responsibility
of stipulating the policy and appraising the scheme for salaries and rewards. Based on the Company’s
annual production and business goals, this committee examined senior personals and also their
responsible subsidiaries or departments according to their management achievement and index, and took
these as basis for awards or penalties. During the report period, because of not finishing the annual
business plan deliberated and passed in the board of directors meeting at the beginning of the year, the
total salaries and rewards of the senior management will be reduced 3.63% than last year.
60
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
IX、Internal Control
1、 Internal control construction
During the report period, the Company followed the the relevant provisions of the “Fundamental Norms for
Company’s Internal Control” and the “Guidelines on Company’s Internal Control” promulgated by the
Ministry of Finance to start construction of its internal control system and according to the changes of
external environment and the in-house control requirements, drew up and brought the implementation plan
of the internal control rules into effect. The details are as follows:
(1)The Company called the board of directors’ 2012 first interim meeting on March 27, 2012, deliberating
and approving the “Implementation Plan of Internal Control Rules”, which was then disclosed in China
Securities News, Securities Times and the website www.cninfo.com.cn.
(2) On April 25, 2012, the Company set up a leading group of internal control construction led by
chairman Sun Liqiang, a working group of internal control construction led by general manager Zhou
Hongjiang, an executing group of internal control construction led by financial supervisor Jiang Jianxun and
a supervising and reviewing group of internal control construction led by supervisor Zhang Hongxia, each
and every group’s duties were defined, since when the Company formally stepped into the organizing and
implementing phase of its internal control rules.
(3) From May 4 to May 7, 2012, the Company convened an internal control mobilization meeting and
arranged training courses in various forms such as discussion, lecture and demonstration for concerned
leaders, accountants and other managerial staff of functional departments, subsidiaries and subordinates.
With the engaged internal control professionals’ assistance, the Company stressed on importance of internal
control implementation, opened systematic training classes on internal control evaluation, corporate risk
evaluation and so on, gave detailed lectures on the implementation plan and working program to make the
Company’s management team and backbones fully realize the importance, necessity and urgency of
construction of a standard internal control system, and determined the participants from different units and
departments in this work.
(4) From May 17 to June 20, 2012, in the light of the general rules of internal control and other related
documents, in 8 aspects or the Company’s governance structure, strategic management, risk evaluation
system, anti-malpractice, human resources management, budget management system, performance result
assessment and report, supervision and control as well as emphasizing on 10 procedures or sales process,
61
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
purchasing process, inventory management process, funds management process, cost management process,
tax management process, human resources management process, fixed asset and intangible asset
management process, financial accounting and settlement reporting process, IT system control and
automatic control process, and by means of the methods like questionnaire on internal control, interview,
description of technological process, walk-through test and designing the risk control matrix, the company
thoroughly checked its current internal control rules and implementation results, determined the priority
control risk points, found 13 management-related control defects and 27 process-related ones, formulated
the testing documents of internal control validity including the summary statement of internal control
defects, and worked out the improving measures accordingly.
(5) From June 20 to August 31, 2012, the Company launched a corrective activity in the light of the actual
situation and in reference to the related suggestions. The functional departments, subsidiaries and
subordinates, according to the correction scheme, revised and amended the internal control rules and made
an adjustment to departments, workers and posts. The leading group of internal control construction gave
direct and clear instructions to the relevant units and workers.
(6) Inspection of correction results. From September 1, to December 31, 2012, the in-house auditing department
organized the members from the working group of internal control construction and the workers from the
functional departments to check the defect-correction results and effects.
(7) Implementation effects of internal control. Since the start of the internal control system construction in
2012, the Company has all the time carried out the standardized construction of internal control system in a
planned and intended way. In order to eliminate the problems and strengthen the weak links in the internal
control system, the Company drew up a series of new rules and regulations including the Managerial System
of the Internal Information Insiders’ Registration, the Managerial System of the External Information User,
the Opinions on Assignments and Duties in the Company Officer-supervised Cities, the Key Points in
Appraisal of Chateau General Manager’s Responsibility System of Landscaping, Self-run Vineyards and
Contract-based Vineyards, the Opinions on Duty Fulfillment of Expansionary Policy of Yantai Base, the
Incentive Policy on Big Professional Growers and Major Villages’ Grape Growing at Yantai Contract-based
Vineyards, the Opinions on Changyu Company’s Support to Big Professional Growers and Major Villages’
Development of Vineyards, the Opinions on Construction Scheme Compilation of Self-run Vineyards, the
Main Work for This Winter and Next Spring, Changyu Company’s Decision on Management of
Winemakers’ Follow-up Vineyards and the Decision on Carrying out Overall Innovation in the Whole
62
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
Group Company, which as a result, made the company’s internal control system better meet the production
operation needs.
2、The board of directors’ statement on the internal control responsibilities
The corporate internal control is a long-term, complex and systematic project and is likely to result in
inapplicability or deviation of the control measures in force due to inherent limitations and unexpected
changes in both internal and external environments as well as policies and statutes. The Company’s board
of directors will, in accordance with the national laws and rules and the requirements of securities
regulatory departments, duly revise the internal control rules, push forward the deepening of
implementation of all regulations so as to provide reliable security for realization of trueness and
completeness of the financial reports as well as the Company’s strategy and operation objectives. The
company’s board of directors bears main responsibilities for integrity and rationality of the Company’s all
internal control rules and the Company’s management team takes main responsibilities for implementation
of the internal control rules.
3、Basis of establishing internal control for financial report
In accordance with the requirements of the relevant regulatory documents of the "Accounting Law",
the "Accounting Standards for Enterprises” and “Internal Control System”, the Company established
“Financial Report Internal Control System”, there are no significant deficiencies in the Company’s
financial report internal control system of the year.
4、Self-assessment report on internal control
The specific circumstances for the obvious defects of the internal control found during the report
period in the internal control self assessment report.
The Company’s board of directors believes that although the Company’s internal control rules still
need revising and amending due to the Company’s business expansion, Changes in the internal and
external environment and laws and regulations as well as the higher requirements for internal
management, the Company has already formed the relatively reliable internal control systems which
have run well and ensured the business activities carried on in the normal and efficient ways,
protected the asset safety and completeness, can effectively prevent, find and correct major mistakes
and malpractices, and have ensured the authenticity, accuracy, legality and completeness of financial
documents. As a whole, the Company’s present rules are designed reasonably and work effectively.
63
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
In 2012, the Company didn’t have obvious defects in major control activities and realized the
intended targets.
Disclosure date for the full text of the
19th April 2013
internal control self assessment report
Disclosure index for the full text of the
www.cninfo.com.cn
internal control self assessment report
5、Audit report for internal control
□ available √ not available
Whether or not the certified public accountants issued a non-standard advice for the audit report of
internal control
□Yes √ No.
Whether the audit report of internal control issued by the certified public accountants is in consistency
with the self-assesment report of the board of directors.
√ Yes □ No.
6 、 The establishment and implementation of responsibility ascertainment rules for the
significant errors in the annual report
“The responsibility ascertainment rules for the significant errors in the annual report” of the Company
has already been deliberated and passed by the 4th meeting of 5th session of borad of directors and also
been in strict performance. During the report period, there are no big errors in 2011 annual report and
2012 semi-annual report issued and disclosed by the Company.
X、Financial Report
1、Audit Report
Type of audit opinion Standard unqualified audit opinion
Date of the audit report signed 2013.04.19
Audit agency name Ernst & Young Hua Ming Accounting Firm
Ernst & Young Hua Ming (2013) Shenzi
Audit reports Symbol
60652799_A01
64
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
INDEPENDENT AUDITORS’ REPORT
To shareholders of Yantai Changyu Pioneer Wine Company Limited
(A joint stock limited company incorporated in the People’s Republic of China)
We have audited the accompanying financial statements of Yantai Changyu Pioneer Wine
Company Limited (the “Company”) and its subsidiaries (collectively the “Group”) set out on
pages 3 to 110, which comprise the consolidated and company balance sheets as at 31 December
2012, and the consolidated and company income statements, statements of changes in equity and
cash flow statement for the year then ended, and the notes to the financial statements.
Management’ responsibility for the financial statements
The management of the Company is responsible for the preparation and the true and fair
presentation of these financial statements. This responsibility includes (1) preparing and fairly
presenting the financial statements in accordance with Accounting Standards for Business
Enterprises; (2) designing, implementing, maintaining internal control as management determines
is necessary to enable the preparation of the financial statements that are free from material
misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with Chinese Standards on Auditing. Those standards require
that we comply with Code of Ethics for Chinese Certified Public Accountants and plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditors’ judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditors consider internal control
relevant to the entity’s preparation and presentation of the financial statements in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
65
2012 Annual Report of Yantai Changyu Pioneer Wine Co. Ltd.
INDEPENDENT AUDITORS’ REPORT (continued)
Opinion
In our opinion, the aforementioned financial statements give a true and fair view of the financial
position of the Company and of the Group as at 31 December 2012 and its performance and cash
flows for the year then ended in accordance with Accounting Standards for Business Enterprises.
Ernst & Young Hua Ming LLP
Beijing, the People’s Republic of China 17 April 2013
66
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED BALANCE SHEET
31 December 2012
(All amounts in RMB Yuan unless otherwise stated)
ASSETS Notes 5 2012 2011
CURRENT ASSETS
Cash and bank (1) 2,227,470,828 2,532,967,197
Bills receivable (2) 92,635,701 56,268,482
Trade receivables (3) 135,217,384 126,906,526
Advances to suppliers (4) 44,294,482 77,252,611
Interest receivable (5) 7,215,854 15,763,431
Other receivables (6) 28,462,945 75,423,614
Inventories (7) 2,268,621,441 1,755,964,582
Total current assets 4,803,918,635 4,640,546,443
NON-CURRENT ASSETS
Long-term equity investments (8) 5,000,000 5,000,000
Property, plant and equipment (9) 1,823,983,721 1,609,111,868
Construction in progress (10) 832,828,689 406,353,081
Intangible assets (11) 278,293,922 263,838,087
Biological assets (12) 39,681,580 42,355,441
Long-term prepaid expenses (13) 160,871,860 148,429,436
Deferred tax assets (14) 150,376,138 175,528,938
Other non-current assets 28,180,035 4,780,927
Total non-current assets 错误！未指定
3,319,215,945 书签。
Total assets 8,123,134,580 7,295,944,221
67
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED BALANCE SHEET (CONTINUED)
31 December 2012
LIABILITIES AND EQUITY Notes 5 2012 2011
CURRENT LIABILITIES
Trade payables (16) 324,881,168 229,920,729
Advances from customers (17) 450,172,253 293,655,222
Employee benefits (18) 140,484,927 188,274,937
Taxes payable (19) 444,084,576 698,459,857
Other payables (20) 470,650,111 536,059,000
Non-current liability due within 1 year (21) 150,945,000 81,081,000
Other current liabilities (22) 8,090,382 4,744,074
Total current liabilities 1,989,308,417 2,032,194,819
NON-CURRENT LIABILITIES
Deferred tax liability (14) 5,336,115 5,336,115
Other non-current liabilities (23) 69,004,861 108,453,139
Total non-current liabilities 74,340,976 113,789,254
Total liabilities 2,063,649,393 2,145,984,073
EQUITY
Share capital (24) 685,464,000 527,280,000
Capital surplus (25) 562,139,042 562,139,042
Surplus reserve (26) 342,732,000 295,942,630
Retained earnings (27) 4,322,769,136 3,628,279,989
Equity attributable to shareholders of
the Company 5,913,104,178 5,013,641,661
Non-controlling interests 146,381,009 136,318,487
Total equity 6,059,485,187 5,149,960,148
Total liabilities and equity 8,123,134,580 7,295,944,221
68
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED INCOME STATEMENT
Year ended 31 December 2012
Notes 5 2012 2011
Revenue (29) 5,643,530,553 6,027,549,212
Less: Cost of sales (29) 1,401,088,983 1,439,417,134
Taxes and surcharges (30) 318,214,304 362,103,767
Selling expenses (31) 1,449,224,163 1,503,492,226
Administrative expenses (32) 254,374,809 234,832,194
Impairment loss of assets (33) 2,777,648 14,364,887
Add: Financial income (34) 19,918,261 44,503,581
Investment income (35) - 52,122
Operating profit 2,237,768,907 2,517,894,707
Add: Non-operating income (36) 35,378,260 26,578,054
Less: Non-operating expenses (37) 2,971,409 4,819,518
Including: losses on disposal
of non-current assets 2,581,199 775,064
Profit before tax 2,270,175,758 2,539,653,243
Less: Income tax (38) 569,247,641 632,444,511
Profit for the year 1,700,928,117 1,907,208,732
Attributable to shareholders of the
Company 1,700,928,117 1,907,208,732
Earnings per share
Basic and diluted earnings per share (39) 2.48 2.78
Comprehensive income 1,700,928,117 1,907,208,732
Attributable to shareholders of the
Company 1,700,928,117 1,907,208,732
69
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED SATATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2012
2012
Attributable to shareholders of the Company
Non-
Issued Capital Surplus Retained controlling
capital surplus reserve earnings Subtotal interests Total
1January 2012 527,280,000 562,139,042 295,942,630 3,628,279,989 5,013,641,661 136,318,487 5,149,960,148
Profit for the year - - - 1,700,928,117 1,700,928,117 - 1,700,928,117
Total comprehensive
income - - - 1,700,928,117 1,700,928,117 - 1,700,928,117
Shareholders’ injection
Injection of non-controlling
interest - - - - - 10,062,522 10,062,522
Proposed final dividend
( Notes 5 (27) ) - - - ( 801,465,600) ( 801,465,600) - ( 801,465,600 )
Withdrawal of surplus
reserve - - 46,789,370 ( 46,789,370 ) - - -
Internal carry forward
- - - - - - -
Others ( Notes 5 (24) ) 158,184,000 - - ( 158,184,000) - - -
31 December 2012 685,464,000 562,139,042 342,732,000 4,322,769,136 5,913,104,178 146,381,009 6,059,485,187
2011
Attributable to shareholders of the Company
Non-
Issued Capital Surplus Retained controlling
capital surplus reserve earnings Subtotal interests Total
1January 2011 527,280,000 557,222,454 295,942,630 2,459,263,257 3,839,708,341 156,436,954 3,996,145,295
Profit for the year - - - 1,907,208,732 1,907,208,732 - 1,907,208,732
Total comprehensive
income - - - 1,907,208,732 1,907,208,732 - 1,907,208,732
Proposed final dividend
( Notes 5 (27) ) - - - ( 738,192,000 ) ( 738,192,000 ) - ( 738,192,000 )
Injection of non-controlling
interest - - - - - 190,371 190,371
Acquisition of
Non-controlling interest - 4,916,588 - - 4,916,588 ( 20,308,838 ) ( 15,392,250 )
31 December 2011 527,280,000 562,139,042 295,942,630 3,628,279,989 5,013,641,661 136,318,487 5,149,960,148
70
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 December 2012
Notes 5 2012 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from sales of goods or rendering
of service 6,775,549,780 8,020,168,162
Cash received form tax refund 14,636,437 14,835,943
Cash received relating to other operating
activities (40) 40,051,912 108,456,913
Cash inflows from operating activities 6,830,238,129 8,143,461,018
Cash paid for goods and services (1,997,334,346 ) (3,165,478,308 )
Cash paid to and on behalf of employees ( 409,261,052 ) ( 389,160,880 )
Cash paid for all types of taxes (1,768,277,184 ) (1,683,046,968 )
Cash paid relating to other operating activities (40) (1,353,324,225 ) (1,400,052,755 )
Cash outflows from operating activities (5,528,196,807 ) (6,637,738,911 )
Net cash flows from operating activities (41) 1,302,041,322 1,505,722,107
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in term deposits over 3 months 1,273,844,720 219,562,493
Proceeds from return on investments 38,087,324 45,126,875
Proceeds from disposal of property, plant and
equipment 2,094,333 11,898,259
Cash inflows from investing activities 1,314,026,377 276,587,627
Cash paid for acquisition of properties, plants
and equipments, intangible assets and other
long-term assets ( 870,164,926 ) ( 766,332,806 )
Cash paid for term deposits over 3 months ( 662,524,719 ) ( 5,000,000 )
Other cash paid for the purchase of
non-controlling interest - ( 15,392,250 )
Cash outflows from investing activities (1,532,689,645 ) ( 786,725,056 )
Net cash flows from investing activities ( 218,663,268 ) ( 510,137,429 )
71
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
Year ended 31 December 2012
Notes 5 2012 2011
CASH FLOWS FROM FINANCING
ACTIVITIES
Cash received from Non-controlling interest 10,062,522 190,371
Cash received from other financing activities 90,000,000 -
Cash inflows from financing activities 100,062,522 190,371
Dividends paid and interest paid ( 805,660,589 ) ( 738,192,000 )
Cash paid from other financing activities ( 80,497,823 ) -
Cash outflows from financing activities ( 886,158,412 ) ( 738,192,000 )
Net cash flows from financing activities ( 786,095,890 ) ( 738,001,629 )
NET INCREASE OF CASH AND CASH
EQUIVALENTS 305,776,153 257,583,049
ADD: CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 1,256,517,873 998,934,824
CASH AND CASH EQUIVALENTS AT END (42)
OF YEAR 1,562,294,026 1,256,517,873
72
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
BALANCE SHEET
Year ended 31 December 2012
ASSETS Notes 11 2012 2011
CURRENT ASSETS
Cash and bank 1,090,260,851 1,568,184,564
Bills receivables 1,450,000 25,779,768
Trade receivables (1) 710,080 20,977,065
Advances to suppliers 26,131,908 45,090,601
Interest receivable 7,215,854 15,763,431
Dividend receivable 993,614,383 1,866,646,179
Other receivables (2) 2,194,219,753 1,685,950,766
Inventories 893,442,758 579,452,383
Total current assets 5,207,045,587 5,807,844,757
NON-CURRENT ASSETS
Long-term equity investments (3) 1,006,492,893 598,299,363
Property, plant and equipment 354,789,743 365,152,521
Construction in progress 24,640,660 42,040,898
Intangible assets 81,512,908 89,684,756
Biological assets 16,866,437 9,683,931
Deferred tax assets 19,517,202 31,337,829
Other non-current assets 2,502,630 3,854,796
Total non-current assets 1,506,322,473 1,140,054,094
Total assets 6,713,368,060 6,947,898,851
73
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
BALANCE SHEET (CONTINUED)
Year ended 31 December 2012
LIABILITIES AND EQUITY 2012 2011
CURRENT LIABILITIES
Trade payables 164,815,117 134,893,846
Employee benefits 80,144,533 97,418,899
Taxes payable 17,995,089 115,489,659
Other payables 1,432,464,297 1,918,592,985
Other current liabilities 1,856,337 828,000
Total current liabilities 1,697,275,373 2,267,223,389
NON-CURRENT LIABILITIES
Other non-current liabilities 19,905,019 13,918,000
Total non-current liabilities 19,905,019 13,918,000
Total liability 1,717,180,392 2,281,141,389
EQUITY
Share capital Notes 5 (24) 685,464,000 527,280,000
Capital surplus Notes 11 (4) 557,222,454 557,222,454
Surplus reserve Notes 5 (26) 342,732,000 295,942,630
Retained earnings 3,410,769,214 3,286,312,378
Total equity 4,996,187,668 4,666,757,462
Total liabilities and equity 6,713,368,060 6,947,898,851
74
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
INCOME STATEMENT
Year ended 31 December 2012
Notes 11 2012 2011
Revenue (5) 1,776,979,032 1,864,033,002
Less: Cost of sales (5) 1,444,948,143 1,516,393,443
Taxes and surcharges 175,240,595 203,595,724
Administrative expenses 126,120,749 103,293,450
Impairment loss of assets - 3,120,600
Add: Financial income 24,834,687 42,257,079
Investment income (6) 1,091,018,499 1,340,842,685
Operating Profit 1,146,522,731 1,420,729,549
Add: Non-operating income 2,141,698 6,853,437
Less: Non-operating expenses 2,434,516 757,865
Profit before tax 1,146,229,913 1,426,825,121
Less: Income tax 15,334,107 17,734,345
Profit for the year 1,130,895,806 1,409,090,776
Total comprehensive income 1,130,895,806 1,409,090,776
75
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2012
2012
Capital Surplus Retained
Issued capital surplus reserve earnings Total
1 January 2012 527,280,000 557,222,454 295,942,630 3,286,312,378 4,666,757,462
Profit for the year - - - 1,130,895,806 1,130,895,806
Total comprehensive
income - - - 1,130,895,806 1,130,895,806
Withdrawal of surplus
reserve - - 46,789,370 ( 46,789,370 ) -
Proposed final dividend
(Notes 5 (27)) - - - ( 801,465,600) ( 801,465,600)
Shareholder equity internal
carry forward
Others(Notes 5 (24)) 158,184,000 - - ( 158,184,000 ) -
31 December 2012 685,464,000 557,222,454 342,732,000 3,410,769,214 4,996,187,668
2011
Capital Surplus Retained
Issued capital surplus reserve earnings Total
1 January 2011 527,280,000 557,222,454 295,942,630 2,615,413,602 3,995,858,686
Profit for the year - - - 1,409,090,776 1,409,090,776
Total comprehensive
income - - - 1,409,090,776 1,409,090,776
Proposed final dividend - - - ( 738,192,000) ( 738,192,000)
31 December 2011 527,280,000 557,222,454 295,942,630 3,286,312,378 4,666,757,462
76
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CASH FLOW STATEMENT
Year ended 31 December 2012
Notes 11 2012 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from sales of goods or rendering of
service 2,190,406,491 2,204,885,626
Cash received relating to other operating activities 8,085,071 3,414,003
Cash inflows from operating activities 2,198,491,562 2,208,299,629
Cash paid for goods and services ( 1,930,252,146) (1,889,029,729 )
Cash paid to and on behalf of employees ( 147,607,346) ( 106,908,222 )
Cash paid for all types of taxes ( 335,467,847) ( 285,074,377 )
Cash paid relating to other operating activities ( 1,026,816,523) ( 423,823,656 )
Cash outflows from operating activities (3,440,143,862) (2,704,835,984 )
Net cash flows from operating activities (7) (1,241,652,300) ( 496,536,355 )
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in term deposits over 3 months 1,268,844,720 219,562,493
Proceeds from return on investments 2,003,196,895 1,278,509,420
Proceeds from disposals of property, plant and
equipment 6,647,026 6,856,964
Cash inflows from investing activities 3,278,688,641 1,504,928,877
Cash paid for acquisition of property, plant and
equipment, intangible assets and other long-
term assets ( 36,503,683) ( 114,692,238 )
Cash paid for term deposits over 3 months ( 662,524,719) -
Cash paid for purchase of non-controlling
interest - ( 15,392,250 )
Cash paid for subsidiary investment ( 408,193,530) ( 251,000,000 )
Cash outflows from investing activities (1,107,221,932) ( 381,084,488 )
Net cash flows from investing activities 2,171,466,709 1,123,844,389
77
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CASH FLOW STATEMENT (CONTINUED)
Year ended 31 December 2012
Notes 11 2012 2011
CASH FLOWS FROM FINANCING ACTIVITIES
Cash paid for distribution of dividends or profits
and for interest expenses ( 801,465,600 ) ( 738,192,000)
Cash outflows from financing activities ( 801,465,600) ( 738,192,000 )
Net cash flows from financing activities ( 801,465,600) ( 738,192,000)
INCREASE/(DECREASE) OF CASH AND CASH
EQUIVALENTS 128,348,809 ( 110,883,966)
ADD: CASH AND CASH EQUIVALENTS AT (8)
BEGINNING OF THE YEAR 296,735,240 407,619,206
CASH AND CASH EQUIVALENTS AT END OF (8)
THE YEAR 425,084,049 296,735,240
78
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS
Year ended 31 December 2012
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, and sparkling 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 June 2012, the board of directors proposed an allotment to all shareholders by 3 shares
every 10 shares based on the issued shares of 527,280,000, the aggregate number of share
dividend is 158,184,000 shares. The total shares issued by the Company amounts to
685,464,000 shares. Please refer to Notes 5 (24) in detail.
The holding company of the Group is Changyu Group Company, which is jointly
controlled by Yantai SASAC, ILLVA Saronno Investment Italy, International Finance
Corporation and Yantai Yuhua Investment and Development Company Limited.
The financial statements have been authorized by the board of directors on 17 April 2012.
According to the Company’s articles of association, the financial statements will be
reviewed by shareholders on the shareholder’s meeting.
79
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
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 Chinese Accounting Standards or “CAS”).
The financial statements are prepared on a going concern basis.
Except for certain financial instrument, all other financial instruments are recognized at historical
cost. If there is objective evidence that an impairment loss has incurred, the impairment loss are
recognized in accordance with related regulations.
(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 31 December 2011, financial performance and cash flow in 2011 of the
Company and the Group.
(3) Accounting year
The accounting year of the Group is from 1 January to 31 December of each calendar year.
(4) Reporting currency
The Group reporting and presentation currency is the Renminbi (“RMB”). Unless otherwise stated,
the unit of the currency is Yuan.
80
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
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 acquirees. The
combination date is when the acquirer effectively obtains the control of the acquirees.
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.
81
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
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 year ended 31 December 2012. 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 Non-controlling interest even if that results in a
deficit balance. Any changes of Non-controlling 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.
82
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(8) Accounts receivable
(i) Individually significant and provision
The Group assesses at each balance sheet date whether there is any objective evidence that the
accounts receivable and other receivables, whose individual carrying amount is greater than
RMB4,800,000 is impaired. If there is any evidence indicates that the carrying amount of the
individual asset is lower than the present value of future cash flows, the impairment will be
recognized.
(ii) Individually insignificant and provision
The Group made assessment on whether or not there is any indication of potential asset
impairment. If there is any evidence indicates that the carrying amount of the individual
insignificant accounts receivable is lower than the present value of future cash flows, the
impairment will be recognized.
(9) 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 differences arisen from the transaction are dealt with
in the income statement for the year.
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.
83
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(10) Inventories
Inventories comprise raw materials, work in progress and finished goods.
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 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.
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 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.
84
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(11) Long term equity investments
Long-term equity investments include investments in subsidiaries, jointly controlled
enterprises and associates, and investments where the Group does not have control, joint
control or significant influence over the investees and which are not quoted in an active
market and the fair values of which cannot be reliably measured.
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. Control means having direct or indirect ability through voting rights
or similar rights to make decisions about a legal entity’s financial and operating activities,
and right to receive benefits from operating activities of the legal entity.
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.
When using 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.
85
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(11) Long term equity investments (continued)
When using 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 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 (19). 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 (18).
(12) 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.
86
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(12) Biological assets (continued)
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:
Category Estimated useful life Estimated residual Annual depreciation
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.
When biological assets are sold, lost, dead, or damaged, the carrying amount is recognized in the
income statement after deduction of relevant taxes.
87
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(13) 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 equipment are 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 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 (19).
88
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(14) 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 (19).
(15) 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.
89
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(15) 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.
90
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(16) 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:
Useful life
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 (19).
91
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(17) Long term prepaid expenses
Long term prepaid expenses are amortized over the useful economic life on a straight line
basis.
Amortization period:
Land requisition fee 50 years
Land lease prepayment 50 years
Greening fee 5 years
Others 50 years
(18) 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.
92
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(18) 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, loans and receivables. 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 loan
and receivables, 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.
93
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(18) Financial instruments (continued)
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.
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:
For 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.
94
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(18) 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.
95
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(18) Financial instruments (continued)
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.
96
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(19) 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.
97
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(19) 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.
(20) 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.
98
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(21) 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.
(22) 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.
99
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(23) 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.
(24) Profit distribution
The cash dividend is recognized as liability after the approval of shareholders’ meeting.
(25) 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.
100
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(25) 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.
101
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(26) 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.
(27) 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.
(28) 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.
102
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(28) 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 (13), 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.
103
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(28) Significant Accounting Judgments and Accounting Estimates (continued)
Estimation uncertainty (continued)
Impairment of biological assets
As set out in Note 2 (12), 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 (19), 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.
104
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND
ACCOUNTING ESTIMATES (CONTINUED)
(28) 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 The consumption tax of the group 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.
105
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
3. TAXES (CONTINUED)
(2) Tax incentives and relative permit
A subsidiary of the Company, Xinjiang Tianzhu Co., Ltd which is a wine production enterprise
incorporated in Xinjiang Weizu Autonomous. In accordance with (Caishui [2011] No.60) and
(Xinzhengfa [2010] No.105), from the first profit-making year, which is from 2012 to 2015, the
company enjoys a favorable corporate income tax rate of 15% besides the exemption of corporate
income tax which belongs to local government. The corporate income tax applicable for 2012 is 9%
A subsidiary of the Company, Xinjiang Babao Baron Chateau Co., Ltd. which is a wine production
enterprise incorporated in Xinjiang Weizu Autonomous. In accordance with (Caishui [2011] No.60)
and (Xinzhengfa [2010] No.105), from the first profit-making year, which is from 2011 to 2015, the
company enjoys a favorable corporate income tax rate of 15% besides the exemption of corporate
income tax which belongs to local government. The corporate income tax applicable for 2012 is 9%
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.
106
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
4. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS
(1) Particulars of the subsidiaries
Name Place and date of Legal Business Registered Principle Incorporate
registration representative nature capital activities code
Subsidiary acquired from a business combination: under non-common control
Xinjiang Tianzhu Wine Co.,Ltd. 11 April 2006 Zhou Manufacturing RMB Production and 787 604 261
(“Xinjiang Tianzhu”) (a) 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 Co., Ltd. (“Vehicular Yantai, Shandong, Lixian 300,000 service
Transportation”) China
Beijing Changyu Sales and 14 July 1998 Sun Sales RMB Sales of wine 634 377 029
Distribution Co., Ltd. (“Beijing Beijing, China Jian 1,000,000
Sales”)
Yantai Kylin Packaging Co., Ltd. 29 September 1999 Yang Manufacturing RMB Production of 863 052 455
(“Kylin Packaging”) (b) Yantai, Shandong, Ming 15,410,000 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”) (c) China
Changyu (Jingyang) Wine Co., 5 December 2001 Wei Manufacturing RMB Production and 732 663 643
Ltd. (“Jingyang Wine”) Jingyang, Shanxi, Bingsheng 1,000,000 sales of 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 Alan Manufacturing USD Production and 735 624 56X
Castel-Changyu Wine Co., Ltd. Lanfang , Hebei, Castel 6,108,808 sales of wine
(“Langfang Castel”) (d) China
Changyu (Jingyang) Wine Sales 8 April 2002 Wei Sales RMB Sales of 735 379 154
Co., Ltd. (“Jingyang Sales”) Jingyang, Shanxi, Binsheng 1,000,000 wine
China
Langfang Changyu Pioneer Wine 19 April 2002 Liu Sales RMB Sales of wine 737 388 150
Sales Co.,Ltd. (“Langfang Langfang, Hebei, Wanqiang 1,000,000
Sales”). China
107
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
4. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (continued)
(1) Particulars of the subsidiaries (continued)
Name Place and date of Legal Business nature Registered Principle Incorporate
registration represe- capital activities code
ntative
Shanghai Changyu Sales and 28 April 2003 Zhou Sales RMB Sales of wine 749 571 075
Distribution Co., Ltd. (“Shanghai Shanghai, China Hongjiang 1,000,000
Sales”)
Beijing Changyu AFIP Agriculture 8 November 2011 Sun Sales RMB Planting and 585 851 395
Development Co., Ltd. Beijing, China Liqiang 1,000,000 tourism
(“Agriculture Development”)
Beijing Changyu AFIP Wine 27 October 2005 Sun Manufacturing RMB Production and 780 953 469
Chateau Co., Ltd. (“Beijing Beijing, China Liqiang 110,000,000 sales of wine
Chateau”) (e)
Yantai Changyu Wine Sales Co., 9 January 2006 Jiang Sales RMB Sales of wine 783 487 627
Ltd.( “Wines Sales”) Yantai, Shandong, Hua 5,000,000
China
Yantai Changyu Pioneer 29 September 2005 Zhou Sales RMB Import and 780 766 161
International Co., Ltd. (“Pioneer Yantai, Shandong, Hongjiang 5,000,000 export of wine
International”) China and technology
Hangzhou Changyu Wine Sales 14 June 2006 Jiang Sales RMB Whole-sale and 788 283 631
Co., Ltd.(“Hangzhou Changyu”) Hangzhou, Hua 500,000 retail of packaged
Zhejiang, China food
Ningxia Changyu Grape-Growing 28 April 2006 Shao Planting RMB Plant and 788 200 410
Co., Ltd.(“Ningxia Growing”) Yinchuang, Chunsheng 1,000,000 purchase of
Ningxia, China grape
Huanren Changyu National Wines 16 November 2006 Leng Sales RMB Whole-sale and 794 822 179
Sales Co., Ltd. (“National Wines”) Huanren, Liaoning, Bin 2,000,000 retail of wine
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”) (f) China
Yantai Development Zone 4 December 2006 Zhou Sales RMB Whole-sale and 796 183 411
Changyu Trading Co., Yantai, Shandong, Hongjiang 5,000,000 retail of wine
Ltd.(“Development Zone China
Trading”)
Shenzhen Changyu Wine 17 July 2007 Lin Sales RMB Whole-sale and 664 195 20X
Marketing Ltd.(“Shenzhen Futian, Shenzhen, Pu 500,000 retail of wine
Marketing”) China
108
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
4. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (continued)
(1) Particulars of the subsidiaries (continued)
Name Place and Legal Business Registered Principle Incorporate
date of represe nature capital activities code
registration -ntative
Yantai Changyu 27 March 2007 Zhou Sales RMB Whole-sale and 660 176 044
FushanTrading Yantai, Hongjiang 5,000,000 retail of wine
Company (“Fushan Shandong,
Trading”) China
Beijing AFIP 4 December Sun Services RMB Meeting service, 669 926 612
Meeting Center 2007 Hongbo 500,000 foods,
(“Meeting Center”) Miyun, accommodation,
(g) Beijing , China tourism and sales
of souvenir
Beijing AFIP 4 June 2008 Liu Tourism RMB Tourism and 676 627 372
Tourism and Culture Miyun, Shilu 500,000 culture
Company (“AFIP Beijing , China communication,
Tourism”) (h) development of
tourist resources,
meeting service
Ningxia Changyu 25 April 2008 Li Manufacturing RMB Manufacturing 670 408 275
Pioneer Wine Co., Yinchuan, Jiming 1,000,000 and sales of wine,
Ltd. (“Ningxia Ningxia, China packing material,
Wine”) plant, process and
purchase of grapes
Yantai Changyu 26 November Liu Quan Sales RMB Packaging of 683 222 859
DingLuoTe Chateau. 2008 Yantai, 80,000,000 foods
(“Ding Luo Te Shandong
China
Chateau”)
Qing Tong Xia 17 November Liu Sales RMB Whole-sale and 694 334 151
Changyu Wine 2009 Yuquan 500,000 retail of wine
Qing Tong
Marketing Ltd. Xia , Ningxia,
(“Qing Tong Xia China
Sales”)
XinJiang BaBao 2 April 2010 Sun Manufacturing RMB Manufacturing 552 414 949
Baron Changyu Wine Shihezi, Liqiang 150,000,000 and sales of wine
Chateau Co., Xinjiang,
China
Ltd.(“Shi He Zi
Chateau”)
109
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
4. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (continued)
(1) Particulars of the subsidiaries (continued)
Name Place and Legal Business Registered Principle Incorporate
date of representative nature capital activities code
registration
Ningxia Moser 15th 26 April 2010 Zhou Manufacturing RMB Wine / packaging 694 349 740
Changyu Wine Chateau Yinchuan, Hongjiang 2,000,000 manufacturing,
Co., Ltd. (“ Ningxia Ningxia, tourism
Chateau”) China
Shanxi Changyu Rina 12 April 2010 Sun Manufacturing RMB Tourism and wine 552 180 142
Castle Chateau Co., Xianyang, Liqiang 20,000,000 manufacturing
Ltd.(“ Chang’an Shanxi, China
Chateau”)
Yantai Changyu Wine 29 March Sun Manufacturing RMB Wine 555 235 76X
Research and 2010 Liqiang 500,000,000 manufacturing
Development Co., Ltd. Yantai,
(“R&D Centre”) (i) Shandong
China
Changyu (HuanRen) 2 December Zhou Hong Jiang Manufacturing RMB Fermatition 587 310 365
Wine Co., Ltd. (“Huan 2011 5,000,000 project preparation
Ren Wine”) Benxi
LiaoNing
China
Xinjiang Changyu Sales 8 August 2011 Lin Sales RMB Foods wholesales 580 208 296
Co., Ltd (“Xinjiang Shihezi Pu 10,000,000
Sales”) Xinjiang
China
Xinjiang Changyu 25 August Lin Sales RMB Red wine and fruit 280 222 610
Winery Co., Ltd 2011 Pu 10,000,000 wine
(“Xinjiang Winery”) Shihezi
Xinjiang
China
Ningxia Changyu 8 November Zhou Sales RMB Whole sale of 054 609 428
Trading Co., Ltd 2012 Hongjiang 1,000,000 pre-packed foods
(“Ningxia Trading”) Yinchuan
（j） Ningxia
China
Shanxi Changyu Rina 29 October Sun Sales RMB Tourism and wine 056 906 215
Wine Sales Co., Ltd 2012 Liqiang 3,000,000 manufacturing
(“Shanxi Sales”)(k) Xianyang
Shanxi
China
Penglai Changyu Wine 7 September Leng Sales RMB Sales of red wine 053 429 070
Sales Co., Ltd (“Penglai 2012 Bin 5,000,000
Sales”)(l) Penglai
Shandong
China
110
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
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-
at 31 December power financial controlling
2012 statements interest
Subsidiary acquired in business combination :under non-common control
Xinjiang Tianzhu (a) RMB 60% - 100% Yes RMB
60,000,000 56,093,912
Subsidiaries acquired by establishment:
Vehicular Transportation RMB 100% - 100% Yes -
300,000
Beijing Sales RMB 100% - 100% Yes -
1,000,000
Kylin Packaging (b) RMB 100% - 100% Yes -
23,176,063
Changyu Chateau (c) RMB 70% - 100% Yes RMB
28,968,100 12,365,016
Jingyang Wine RMB 90% - 10% Yes -
1,000,000
Sales Company RMB 90% 10% 100% Yes -
8,000,000
Langfang Castel (d) RMB 39% 10% 100% Yes RMB
12,142,200 22,702,522
Jingyang Sales RMB 10% - 90% Yes -
1,000,000
Langfang Sales RMB 10% - 90% Yes -
1,000,000
Shanghai Sales RMB 30% 70% 100% Yes -
1,000,000
Agriculture Development RMB -- 100% 100% Yes --
1,000,000
Beijing Chateau (e) RMB 70% - 100% Yes RMB
77,000,000 35,293,868
111
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
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
2012 statements
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 (f) 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
Fushan Trading RMB - 100% 100% Yes -
5,000,000
Meeting Center (g) RMB - 100% 100% Yes -
500,000
AFIP Tourism(h) RMB 70% - 100% Yes RMB
350,000 2,966,399
Ningxia Wine RMB 100% - 100% Yes -
1,000,000
Ding Luo Te Chateau RMB 100% - 100% Yes -
80,000,000
112
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
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-
capital as of power financial controlling
12/31/2012 statements interest
Qing Tong Xia Sales RMB 100% 100% Yes -
500,000
Shi He Zi Chateau RMB 100% - 100% Yes -
150,000,000
Ningxia Chateau RMB 100% - 100% Yes -
2,000,000
Chang’an Chateau RMB 100% - 100% Yes -
20,000,000
Research and Development RMB 100% - 100% Yes -
Centre (i) 500,000,000
Huan Ren Wine RMB 100% - 100% Yes -
5,000,000
Xinjiang Sales RMB - 100% 100% Yes -
10,000,000
Xinjiang Winery RMB - 100% 100% Yes -
10,000,000
Ningxia Trading (j) RMB - 100% 100% Yes -
1,000,000
Shanxi Sales (k) RMB - 100% 100% Yes -
3,000,000
Penglai Wine Sales (l) RMB - 100% 100% Yes -
5,000,000
113
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
4. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (continued)
(1) Particulars of the subsidiaries (continued)
(a) Xinjiang Tianzhu was acquired by the Company in 2009, accounting for 60% of Tianzhu’s
equity interest. Pursuant to the operation contract signed by the Company, the Company is
entrusted to manage Tianzhu and therefore has the full power to control its strategic operating,
investing and financing policies by paying the non-controlling party contract fee. The
operation agreement will be terminated on 31 December 2018.
(b) Kylin Packaging is a sino-foreign joint venture founded in 29 September 1999. On 4 July
2011, the Company has purchased the 50% share of Kylin Packaging held by the foreign
investor at the price of RMB15,392,250. By 23 August 2011, the Company has become the
parent company of Kylin Packaging by fully paid the valuable consideration. The change
procedure of Kylin Packaging has been done by 31 December 2012.
(c) 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, 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
be terminated on 31 December 2012.
(d) 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 consolidated
financial statements. The operation agreement will be terminated on 31 December 2012.
(e) Beijing Chateau is a joint venture established by the Company and two investors. Pursuant to
an operation contract signed by the Company and the investors, the Company is entrusted to
manage Beijing Chateau and therefore has the full power to control its strategic operating,
investing and financing policies. The operation agreement will be terminated on 2 September
2019.
(f) 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 be
terminated on 31 December 2016.
114
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
4. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (continued)
(1) Particulars of the subsidiaries (continued)
(g) Meeting Centre is a joint venture established by the Company and two investors. Pursuant to
an operation contract signed by the Company and the investors, the Company is entrusted to
manage Meeting Centre and therefore has the full power to control its strategic operating,
investing and financing policies. The operation agreement will be terminated on 2 September
2019.
(h) AFIP Tourism is a joint venture established by the Company and two investors. Pursuant to
an operation contract signed by the Company and the investors, the Company is entrusted to
manage AFIP Tourism and therefore has the full power to control its strategic operating,
investing and financing policies. The operation agreement will be terminated on 2 September
2019.
(i) R&D Centre is a joint venture established by the Company in 2010. The registered capital is
RMB500,000,000. Up to 31 December 2012, all capital injection of RMB 500,000,000 has
been remitted
(j) Ningxia trading is a limited liability company solely founded by the Company in 2012. The
registered capital is RMB1,000,000. Up to 31 December 2012, all capital injection of RMB
1,000,000 has been remitted.
(k). Shanxi sales is a limited liability company solely founded by the Company in 2012. Its paid
capital is RMB3, 000,000 which has been fully paid by the end of 2012.
(l). Penglai sales is a limited liability company solely founded by the Company 2012. Its paid
capital is RMB5, 000,000 which has been fully paid by the end of 2012.
(2) Changes in the scope of consolidated financial statement
Except for those newly established subsidiaries, the scope of consolidated financial statements was
same with last year.
(3) The entity newly included in the consolidation and the entity no longer in the consolidation
The newly included subsidiary is as following:
Net Asset Net profit/(loss) up to date
as at 2012.12.31
Ningxia Trading 1,000,000 -
Shanxi Sales 2,994,271 ( 5,729)
Penglai Sales 5,000,000 83,849,580
115
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Cash and bank
2012 2011
Cash on hand 48,894 74,859
Cash at bank 2,227,421,934 2,508,587,182
Other monetary assets - 24,305,156
2,227,470,828 2,532,967,197
As at 31 December 2012, the balance of restricted cash of the Group is RMB 2,652,083, which is
the Group’s housing fund (31 December 2011：RMB 2,604,604).
As at 31 December 2012, the Group has no overseas cash and bank deposit (31 December 2011：
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.
As at 31 December 2012, The Group’s term deposits with original maturity of more than three
months when acquired is 662,524,719.31 (31 December 2011: RMB1,273,844,720) with interest
rates ranging from 2.86%-3.50%, which will mature from 3 months to 1 year.
(2) Bills receivable
2012 2011
Bank acceptance bills 92,635,701 56,268,482
As of 31 December 2012, there was no pledged bills receivable (31 December 2011: Nil), and no
bills receivable were reclassified as accounts receivable due to the default of drawer (31
December 2011: Nil).
As at 31 December 2012, the top four bills receivable endorsed to third parties but not yet matured
is as follows:
2012
Drawer Issuing date Maturity date Amount
Fuzhou Shengshihanggang trading 11/30/2012 2/28/2013 500,000
Co.,Ltd.
Fuzhou Shengshihanggang trading 11/30/2012 2/28/2013 500,000
Co.,Ltd.
Fuzhou Shengshihanggang trading 11/30/2012 2/28/2013 500,000
Co.,Ltd.
Jinba Men’s clothing Co.,Ltd. 11/16/2012 2/16/2013 100,000
1,600,000
116
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(2) Bills receivable (continued)
As at 31 December 2011, the top five bills receivable endorsed to third parties but not yet matured
is as follows:
Drawer Issuing date Maturity date Amount
Weifang Hongda Co.,Ltd. 5/8/2011 5/2/2012 500,000
Anqing Hailin electronic Co.,Ltd. 4/7/2011 4/1/2012 200,000
Qingzhou Longxing cloth Co.,Ltd. 1/7/2011 1/1/2012 200,000
Changzhou Changlai metallic 11/7/2011 11/1/2012 200,000
materials Co.,Ltd.
Huabei Zhiyao Hebei Minyao
Co.,Ltd. 14/10/2011 14/4/2012 115,000
1,215,000
As at 31 December 2012, there was no notes receivable discounted to obtain short-term loan (31
December 2011: 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 aging analysis is as follows:
2012 2011
Within 1 year 135,217,384 126,906,526
As at 31 December 2012, there was no bad debt provision for trade receivables (31 December
2011: Nil). There was no bad debt provision made, reversed or written-off by management in
2012 (2011: Nil).
2012 2011
Balance Provision Balance Provision
Amount % Amount % Amount % Amount %
Individually
significant 73,711,433 54.5 - 63,712,485 50.2 -
Individually
insignificant 61,505,951 45.5 - 63,194,041 49.8 -
135,217,384 100.0 - 126,906,526 100.0 -
As at 31 December 2012, there was no trade receivable due from shareholders with voting rights
of 5% or above (31 December 2011: Nil).
117
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3) Trade receivables (continued)
As at 31 December 2012, the top 5 of trade receivables are as follows:
Relationship Percentage
with the of total
Group receivables
Amount Aging %
Kangcheng Investment（China）Co.,
Ltd Third party 27,942,717 Within 1 year 20.7
Nonggongshang supermarket (group)
Co., Ltd Third party 11,439,282 Within 1 year 8.5
Jiangsu Hengxing wine Co., Ltd Third party 7,512,422 Within 1 year 5.6
Linhua supermarket (group) Co., Ltd Third party 4,428,464 Within 1 year 3.3
Beijing Wumei Commercial (group)
Co., Ltd Third party 4,415,473 Within 1 year 3.3
55,738,358 41.4
As at 31 December 2011, the top 5 of trade receivables are as follows:
Relationship Percentage
with the of total
Group receivables
Amount Aging %
Yantai Zhongya Sales Co., Ltd Third party 13,667,157 Within 1 year 10.8
Nonggongshang supermarket (group)
Co., Ltd Third party 13,261,917 Within 1 year 10.5
Yantai Zhongya pharmacy Co., Ltd Third party 7,309,907 Within 1 year 5.8
Suguo Supermarket Co., Ltd Third party 6,895,232 Within 1 year 5.4
Jiangsu Hengxing wine Co., Ltd Third party 6,651,512 Within 1 year 5.2
47,785,725 37.7
118
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3) Trade receivables (continued)
As at 31 December 2012, trade receivables due from related parties are as following:
Relationship with the Percentage of total
Group Amount receivables %
Yantai Changyu Under the control of
Tourism Co.,Ltd the same parent
company 311,220 0.2
Yantai Zhongya Under the control of
Phamaceutical tonic the same parent
wine Co.,Ltd company 1,820,376 1.3
2,131,596 1.5
As of 31 December 2011, trade receivables from related parties are as following:
Relationship with the Percentage of total
Group Amount receivables %
Yantai Changyu
International Window
of the Wine City Under the control of the
Co.,Ltd same parent company 218,690 0.2
Yantai Changyu Under the control of the
Tourism Co.,Ltd same parent company 358,020 0.3
Yantai ShenMa Under the control of the
Packing Co.,Ltd same parent company 968,136 0.8
1,544,846 1.3
119
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(4) Advances to suppliers
As at 31 December 2012 and 2011, the aging of advances to suppliers are all within 1 year.
As at 31 December 2012, the top 5 of advances to suppliers are as follows:
Percentage of
Relationship Reason total advances
with the for being to suppliers
Group Amount Aging outstanding %
Shandong Yantai Brewing goods not
Sales Co.,Ltd. Third party 17,714,762 Within 1 year received 40.0
Zhuhai Quanda Industrial goods not
Co.,Ltd Third party 10,590,809 Within 1 year received 23.9
Jialidatong Logistics goods not
Co.,Ltd Yantai Branch Third party 2,678,178 Within 1 year received 6.0
goods not
Custom of Yantai Third party 1,082,298 Within 1 year received 2.4
Austria Lawrence Fine goods not
Wines V Co. Ltd Third party 955,301 Within 1 year received 2.2
33,021,348 74.5
As at 31 December 2011, the top 5 of advances to suppliers are as follows:
Percentage of
Relationship Reason total advances
with the for being to suppliers
Group Amount Aging outstanding %
Shandong Yantai Brewing goods not
Sales Co.,Ltd. Third party 17,874,715 Within 1 year received 23.1
goods not
Yantai Custom Third party 6,160,448 Within 1 year received 8.0
goods not
Qingdao Xiangu Co., Ltd. Third party 5,863,346 Within 1 year received 7.6
goods not
Seguin Morean Co., Ltd. Third party 5,838,421 Within 1 year received 7.6
Yantai Zhongya Sales goods not
Co., Ltd. Third party 5,686,206 Within 1 year received 7.4
41,423,136 53.7
As at 31 December 2012, there was no advance paid to shareholders with voting rights of 5% or
above (31 December 2011: Nil).
120
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(5) Interest receivable
2012
Opening Closing
balance Increase Decrease balance
Interests of term
deposits 15,763,431 27,146,293 (35,693,870) 7,215,854
2011
Opening Closing
balance Increase Decrease balance
Interests of term
deposits 9,519,721 34,027,807 (27,784,097) 15,763,431
As at 31 December 2012, there was no overdue interest receivable (31 December 2011: Nil).
(6) Other receivables
The aging analysis is as follows:
2012 2011
Within 1 year 26,741,541 71,196,465
1 to 2 years 943,410 3,480,623
2 to 3 years 376,038 7,394,855
Over 3 years 11,522,556 8,006,463
39,583,545 90,078,406
Less: bad debts provision (11,120,600 ) ( 14,654,792 )
28,462,945 75,423,614
121
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOT ES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(6) Other receivables (continued)
The movement of provision for other receivables is as follows:
Opening Accrued Write-off Closing
2012 14,654,792 - (3,534,192) 11,120,600
2011 8,000,000 6,654,792 - 14,654,792
2012 2011
Bad debts Bad debts
Balance provision Balance provision
Amount % Amount % Amount % Amount %
Individually
significant
and Provision 11,120,600 28.1 11,120,600 100 8,000,000 8.9 8,000,000 100
Individually
insignificant
and Provision - - - 6,654,792 7.4 6,654,792 100
Not overdue
and not
impaired 28,462,945 71.9 - 75,423,614 83.7 -
39,583,545 100.0 11,120,600 90,078,406 100.0 14,654,792
As at 31 December 2012 and 2011, the bad debt provision for individually significant balance is as
follows:
Bad debts Reason for provision
Balance provision Percentage
Tiantong
Security Co., The debtor is in the
Ltd. 8,000,000 8,000,000 100% process of liquidation
Finance Bureau The aging is more than
of Jingyang three years and not likely
County 3,120,600 3,120,600 100% to be recovered
11,120,600 11,120,600
122
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(6) Other receivables (continued)
As at 31 December 2011, the bad debt provision for individually insignificant balances is as
follows:
Bad debts Reason for provision
Balance provision Percentage
Jingyang Finance Aging over 2 years and
Bureau 3,120,600 3,120,600 100.0% unlikely to recover
Penglai
Daliuhang
Vineyard 4,451,936 3,534,192 79.4% Unlikely to recover
7,572,536 6,654,792
As at 31 December 2012, there was no other receivable due from shareholders with voting rights of
5% or above (31 December 2011: Nil).
Write off of other receivables in 2012
Nature Write-off Reason of Whether are
amount write-off related party
transaction
Penglai
Daliuhang Payment of Unable to
Vineyard grape 3,534,192 recover No
As at 31 December 2012, the top 5 of other receivables are as follows:
Percentage of
Relationship total other
with the receivables
Group Amount Aging %
Tiantong Security Co., Ltd. Third party 8,000,000 Over 3 years 20.2
Penglai Daliuhang Vineyard Third party 4,970,684 Within 1 year 12.6
Finance Bureau of Jingyang
County Third party 3,120,600 Over 3 years 7.9
Tax Bureau of Shihezi Third party 2,228,821 Within 1 year 5.6
Land Bureau of Longkou Third party 1,500,000 Within 1 year 3.8
19,820,105 50.1
123
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(6) Other receivables (continued)
As at 31 December 2011, the top 5 of other receivables are as follows:
Percentage of
Relationship total other
with the receivables
Group Amount Aging %
Yantai Development Zone
Management Committee Third party 49,410,000 Within 1 year 54.9
Tiantong Security Co., Ltd. Third party 8,000,000 Over 3 years 8.9
Yantai Zhifu State Taxation
Bureau Third party 6,213,946 Within 1 year 6.9
Penglai Daliuhang Vineyard Third party 4,451,936 Within 1 year 4.9
Jingyang Finance Bureau Third party 3,120,600 2 years-3 years 3.5
71,196,482 79.0
As at 31 December 2012, there was no other receivable due from related parties (31 December 2011:
Nil).
(7) Inventories
2012 2011
Net carrying Net carrying
Balance Provision amount Balance Provision amount
Raw material 61,041,026 - 61,041,026 55,439,304 - 55,439,304
Finished
goods 1,051,981,303 15,378,581 1,036,602,722 783,191,752 12,600,933 770,590,819
Work in
progress 1,170,977,693 - 1,170,977,693 929,934,459 - 929,934,459
2,284,000,022 15,378,581 2,268,621,441 1,768,565,515 12,600,933 1,755,964,582
Movement of inventory provision is as follows:
Opening Closing
2012 balance Increase Decrease balance
Finished goods 12,600,933 2,777,648 - 15,378,581
124
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(7) Inventories (continued)
Opening Increase Decrease Closing
2011 Balance Balance
Finished goods 10,077,620 7,710,095 (5,186,782) 12,600,933
As at 31 December 2012, the carrying amount of inventory with restrictions in ownership is
RMB25,726,686 (31 December 2011: RMB18,030,733), which was due to the Group has
transferred the related right of profit to a specialized trust fund established by Zhong Hai Trust
Co.,Ltd. Please also refer to Notes 5 (21).
In 2012 and 2011, no provision was reversed.
(8) Long-term equity investment
2012
Opening Current
and closing Equity Voting year
Initial cost balance interest Power Provision provision
% %
Cost method:
Yantai Dingtao Construction
and Development Co., Ltd.
(“Yantai Dingtao”) 10,000,000 5,000,000 18 18 5,000,000 -
2011
Opening Current
and closing Equity Voting year
Initial cost balance interest Power Provision provision
% %
Cost method:
Yantai Dingtao Construction
and Development Co., Ltd.
(“Yantai Dingtao”) 10,000,000 5,000,000 18 18 5,000,000 -
The initial investment in Yantai Dingtao is RMB10, 000,000, as at 31 December 2012 and 2011,
and the Group holds 18% of its equity interests.
125
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(9) Property, plant and equipment
2012 Opening Closing
balance Increase Decrease balance
Cost:
Buildings 1,192,249,068 192,548,295 ( 7,978,626) 1,376,818,737
Machineries and
equipment 972,547,932 150,214,730 (12,071,710) 1,110,690,952
Motor vehicles 21,461,978 1,404,931 ( 588,777) 22,278,132
2,186,258,978 344,167,956 (20,639,113) 2,509,787,821
Accumulated
depreciation:
Buildings 156,943,676 32,451,878 ( 4,985,981) 184,409,573
Machineries and
equipment 404,851,382 90,357,482 (11,081,000) 484,127,864
Motor vehicles 15,352,052 2,452,150 ( 537,539) 17,266,663
577,147,110 125,261,510 (16,604,520) 685,804,100
Net carrying
amount:
Buildings 1,035,305,392 1,192,409,164
Machineries and
equipment 567,696,550 626,563,088
Motor vehicles 6,109,926 5,011,469
1,609,111,868 1,823,983,721
126
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(9) Property, plant and equipment (continued)
2011 Opening Closing
balance Increase Decrease balance
Cost:
Buildings 812,780,815 385,469,087 ( 6,000,834) 1,192,249,068
Machineries and
equipment 875,907,151 132,641,281 (36,000,500) 972,547,932
Motor vehicles 19,819,539 1,954,011 ( 311,572) 21,461,978
1,708,507,505 520,064,379 (42,312,906) 2,186,258,978
Accumulated
depreciation:
Buildings 129,641,538 30,498,848 ( 3,196,710) 156,943,676
Machineries and
equipment 377,433,760 57,068,617 (29,650,995) 404,851,382
Motor vehicles 13,350,962 2,303,904 ( 302,814) 15,352,052
520,426,260 89,871,369 (33,150,519) 577,147,110
Net carrying
amount:
Buildings 683,139,277 1,035,305,392
Machineries and
equipment 498,473,391 567,696,550
Motor vehicles 6,468,577 6,109,926
1,188,081,245 1,609,111,868
The increase of accumulated depreciation for 2012 and 2011 are all depreciation accrued for
the year. In 2012, the value of property, plant and equipment transferred from construction in
progress is RMB 208,080,554 (2011: RMB486, 899,261).
As at 31 December 2012, there was no property, plant and equipment with ownership
restricted (31 December 2011：Nil).
As at 31 December 2012, there was no property, plant and equipment is idle, held for disposal
or under finance or operating lease (31 December 2011: Nil).
127
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(9) Property, plant and equipment (continued)
As at 31 December 2012, buildings without property certificate are as follows:
Reason for not receiving
property certificates
Fermentation/Experiment centre and workshop Waiting for completion report
Xinjiang Tianzhu fermentations and storage warehouse Waiting for completion report
Kylin Packaging finished goods warehouse and workshop Waiting for completion report
Ice Wine Chateau office building and packing workshop Waiting for completion report
Beijing Chateau European town Processing
Beijing Chateau office town Processing
Beijing Chateau main, service, reception building Processing
Sales Company office buildings Processing
Ning Xia Wine production factory and office building Waiting for completion report
Jingyang factory Fermentation building Waiting for completion report
Shihezi Chateau main building and warehouse Waiting for completion report
128
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(10) Construction in progress
2012 2011
West mountain factory project 5,791,292 30,878,151
Brandy capacity enlargement project - 152,609
Cabernet centre project - 5,581,283
Cabernet wine cellar project 18,552,775 4,491,463
Sparkling wine reconstruction project 261,663 902,463
Fermentation centre reconstruction project 34,930 34,930
Xinjiang Tianzhu workshop reconstruction project 4,479,084 5,999,376
Kylin Packing production line project - 1,674,302
Yantai Chateau vineyard project 3,300,000 -
Beijing Chateau construction project 11,731 200,512
Sales Company construction project 62,842,601 34,221,669
Langfang Castor workshop project 7,633,319 -
Jingyang ferment project - 505,520
Ningxia united workshop 1,556,490 1,743,526
Shi He Zi Chateau construction project 156,451,724 47,662,677
Ningxia Chateau construction project 41,367,789 102,421,590
Xianyang Chateau construction project 261,525,502 118,802,003
R&D Centre construction 169,912,227 1,804,810
project
Ding Luo Te Chateau Project 91,790,388 49,276,197
Huanren factory construction project 7,317,174 -
832,828,689 406,353,081
129
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(10) Construction in progress (continued)
2012 Budget Opening Addition Transfer to Closing Financed Accumulated
Balance PPE Balance by expenditure
/budget
%
West Mountain factory project 63,000,000 30,878,151 10,193,695 ( 35,280,554) 5,791,292 Self-raised 99.6%
Brandy Capacity enlargement 12,690,000 152,609 4,751,881 ( 4,904,490) - Self-raised 95.7%
project
Cabernet Centre project 11,000,000 5,581,283 - ( 5,581,283) - Self-raised 36.3%
Cabernet Wine cellar project 32,000,000 4,491,463 15,143,399 ( 1,082,087) 18,552,775 Self-raised 61.4%
Sparkling Wine reconstruction 59,850,000 902,463 43,200 ( 684,000) 261,663 Self-raised 100.0%
project
Fermentation Centre 5,000,000 34,930 12,906 ( 12,906) 34,930 Self-raised 92.9%
reconstruction project
Xinjiang Tianzhu Workshop 37,570,000 5,999,376 5,557,297 ( 7,077,589) 4,479,084 Self-raised 110.9%
Reconstruction Project
Kylin Packing production line 6,200,000 1,674,302 2,666,078 ( 4,340,380) - Self-raised 84.9%
project
Yantai Chateau vineyard 30,000,000 - 3,300,000 - 3,300,000 Self-raised 11.0%
project
Beijing Chateau construction 548,250,000 200,512 21,906,756 ( 22,095,537) 11,731 Self-raised 87.6%
project
Sales Company construction 106,350,000 34,221,669 46,038,312 ( 17,417,380) 62,842,601 Self-raised 112.8%
project
Langfang Castor workshop 8,000,000 - 7,633,319 - 7,633,319 Self-raised 95.4%
project
Jingyang ferment project 26,000,000 505,520 153,984 ( 659,504) - Self-raised 72.1%
Ningxia United Workshop 58,700,000 1,743,526 100,467 ( 287,503) 1,556,490 Self-raised 97.7%
Shihezi Chateau Construction 540,000,000 47,662,677 155,672,330 ( 46,883,283) 156,451,724 Self-raised 86.9%
Project
Ningxia Chateau Construction 244,150,000 102,421,590 720,257 ( 61,774,058) 41,367,789 Self-raised 100.7%
Project
Xianyang Chateau 310,740,000 118,802,003 142,723,499 - 261,525,502 Self-raised 84.6%
Construction Project
R&D Centre Construction 1,693,970,000 1,804,810 168,107,417 - 169,912,227 Self-raised 10.0%
Project
Ding Luo Te Chateau project 152,400,000 49,276,197 42,514,191 - 91,790,388 Self-raised 60.2%
Huanren factory construction
project 15,000,000 - 7,317,174 - 7,317,174 Self-raised 48.8%
406,353,081 634,556,162 (208,080,554) 832,828,689
130
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(10) Construction in progress (continued)
2011 Budget Opening Addition Transfer to Closing Financed Accumulated
Balance PPE Balance by expenditure
/budget
%
West Mountain factory project 40,000,000 2,985,201 49,562,462 ( 21,669,512) 30,878,151 Self-raised 131.4%
Brandy Capacity enlargement 7,690,000 - 7,388,722 ( 7,236,113) 152,609 Self-raised 96.1%
project
Sparkling Wine reconstruction 45,000,000 - 1,466,146 ( 563,683) 902,463 Self-raised 132.9%
project
Cabernet Centre project 21,000,000 7,619,532 - ( 2,038,249) 5,581,283 Self-raised 36.3%
Cabernet Wine cellar project 50,000,000 - 4,491,463 - 4,491,463 Self-raised 9.0%
Carbernet container project 36,480,000 - 25,000,000 ( 25,000,000) - Self-raised 68.5%
Cabernet Centre project 22,000,000 - 10,000,000 ( 10,000,000) - Self-raised 45.5%
Cabernet Packing warehouse 36,000,000 - 22,000,000 ( 22,000,000) - Self-raised 61.1%
project
Fermentation Centre 5,000,000 2,998,926 1,465,580 ( 4,429,576) 34,930 Self-raised 92.6%
reconstruction project
Kylin Packing production line 6,200,000 - 2,599,241 ( 924,939) 1,674,302 Self-raised 41.9%
project
Beijing Chateau 3000 Ton 92,500,000 30,000,000 22,257,726 ( 52,257,726) - Self-raised 56.5%
Production Line Project
Beijing Chateau construction 455,750,000 19,468,392 30,330,610 ( 49,598,490) 200,512 Self-raised 100.6%
project
Ningxia United Workshop 58,700,000 3,380,801 1,298,927 ( 2,936,202) 1,743,526 Self-raised 97.5%
Xinjiang Tianzhu Workshop 37,570,000 17,878,259 6,672,094 ( 18,550,977) 5,999,376 Self-raised 96.2%
Reconstruction Project
Jingyang ferment project 26,000,000 15,048,365 2,583,383 ( 17,126,228) 505,520 Self-raised 71.5%
Sales Company construction 53,000,000 33,737,780 14,881,068 ( 14,397,179) 34,221,669 Self-raised 139.6%
project
Shihezi Chateau Construction 540,000,000 85,455,488 200,377,57 (238,170,387) 47,662,677 Self-raised 58.2%
Project 6
Ningxia Chateau Construction 196,000,000 11,271,515 91,150,075 - 102,421,590 Self-raised 52.3%
Project
Xianyang Chateau 250,000,000 10,458,506 108,343,49 - 118,802,003 Self-raised 47.5%
Construction Project 7
R&D Centre Construction 165,000,000 1,804,810 - - 1,804,810 Self-raised 1.1%
Project
Ding Luo Te Chateau project 152,400,000 - 49,276,197 - 49,276,197 Self-raised 32.3%
242,107,575 651,144,767 (486,899,261) 406,353,081
There was no interest capitalized in construction in progress in 2012 (2011: Nil).
As at 31 December 2012, there was no provision was made for the construction in process (31
December 2011: Nil).
131
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(11) Intangible assets
2012 Opening Closing
balance Increase balance
Cost:
Land use right 280,441,211 19,269,751 299,710,962
Software use right 3,480,000 300,000 3,780,000
283,921,211 19,569,751 303,490,962
Accumulated amortization
Land use right 17,299,124 4,417,916 21,717,040
Software use right 2,784,000 696,000 3,480,000
20,083,124 5,113,916 25,197,040
Net carrying amount:
Land use right 263,142,087 277,993,922
Software use right 696,000 300,000
263,838,087 278,293,922
2011 Opening Closing
balance Increase balance
Cost:
Land use right 220,872,498 59,568,713 280,441,211
Software use right 3,480,000 - 3,480,000
224,352,498 59,568,713 283,921,211
Accumulated amortization
Land use right 13,416,651 3,882,473 17,299,124
Software use right 2,088,000 696,000 2,784,000
15,504,651 4,578,473 20,083,124
Net carrying amount:
Land use right 207,455,847 263,142,087
Software use right 1,392,000 696,000
208,847,847 263,838,087
The increase of accumulated amortization in 2012 and 2011 are all amortization accrued for the
year.
As at 31 December 2012, there was no intangible asset with restricted ownership (31 December
2011: Nil).
132
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(12) Biological assets
2012 2011
Opening balance 42,355,441 37,773,638
Addition 18,573,749 6,615,603
Disposal (20,452,071 ) -
Amortization ( 795,539 ) ( 2,033,800)
Closing balance 39,681,580 42,355,441
As at 31 December 2012, there is no biological asset with ownership restricted (31 December 2011:
Nil).
The biological assets are vines. The risks, such as disasters, plant diseases and insect pests,
fluctuation in market demand and other risk factors, may lead to impairment on biological assets.
The Group will take effective procedures and controls to prevent plant diseases and insect pests,
and strengthen the management of vines and soils to protect the biological assets.
Except for the new biological assets in 2012 and 2011, the remaining biological assets had reached
production status and thus had been amortized from 2009.
As at 31 December 2012, there is no indication that biological assets may be impaired, and no
provision was made (31 December 2011: Nil).
(13) Long-term prepaid expenses
2012 Opening Closing
balance Increase Amortization balance
Land lease prepayments 64,873,456 - ( 1,331,989) 63,541,467
Land requisition fee 38,340,026 13,072,577 ( 562,655) 50,849,948
Greening fee 43,445,077 13,500,000 (12,197,371) 44,747,706
Others 1,770,877 - ( 38,138) 1,732,739
148,429,436 26,572,577 (14,130,153) 160,871,860
133
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(13) Long-term prepaid expenses (continued)
2011 Opening Closing
balance Increase Amortization balance
Land lease prepayments 65,299,233 1,069,596 ( 1,495,373) 64,873,456
Land requisition fee 38,484,280 236,514 ( 380,768) 38,340,026
Greening fee - 51,111,856 ( 7,666,779) 43,445,077
Others 2,450,160 - ( 679,283) 1,770,877
106,233,673 52,417,966 (10,222,203) 148,429,436
(14) Deferred tax assets/liabilities
Deferred tax assets and liabilities are presented separately:
Deferred tax assets and liabilities recognized are as follows:
2012 2011
Deferred tax assets
Unrealized profit from intra-company transactions 98,817,513 107,340,177
Unpaid bonus 20,873,113 39,118,917
Retirement benefit 6,178,176 7,873,591
Asset impairment provision 7,874,795 8,063,931
Deductable losses 10,064,437 4,572,888
Deferred income 6,568,104 8,559,434
150,376,138 175,528,938
Deferred tax liabilities
Fair value adjustment in business combination under
non-common control 5,336,115 5,336,115
Deferred tax assets and liabilities not recognized:
2012 2011
Deductable losses 20,505,913 20,591,253
134
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(14) Deferred tax assets/liabilities (continued)
Deductable losses not recognized as deferred tax assets will expire in:
2012 2011
2012 - 85,340
2013 64,997 64,997
2014 19,077,494 19,077,494
2016 1,363,422 1,363,422
20,505,913 20,591,253
Temporary differences from assets and liabilities that resulting in such differences are as follows:
2012 2011
Deductible temporary difference
Unrealized profit from intra-company
transactions 395,270,055 429,360,708
Unpaid bonus 83,492,454 156,475,668
Early retirement benefit 24,712,704 31,494,364
Provision for impairment 31,499,181 32,255,725
Deductible losses 40,257,750 18,291,552
Deferred income 40,465,889 47,440,738
615,698,033 715,318,755
2012 2011
Taxable temporary difference
Fair value adjustment in business
combination under non-common control 21,344,460 21,344,460
135
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(15) Provision for impairment of assets
2012
Opening Closing
balance Accrual Written off balance
Bad debt provision 14,654,792 - (3,534,192 ) 11,120,600
Inventory provision 12,600,933 2,777,648 - 15,378,581
Impairment of long-
term investment 5,000,000 - - 5,000,000
32,255,725 2,777,648 (3,534,192) 31,499,181
2011
Opening Accrual Reversal Closing
balance balance
Bad debt provision 8,000,000 6,654,792 - 14,654,792
Inventory provision 10,077,620 7,710,095 (5,186,782) 12,600,933
Impairment of long-
term investment 5,000,000 - - 5,000,000
23,077,620 14,364,887 (5,186,782) 32,255,725
136
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(16) Trade payables
The trade payables are interest free with a credit period no more than three months from its suppliers
normally.
2012 2011
Within 1 year 324,881,168 229,920,729
As at 31 December 2012, the Group had no significant outstanding balance aged more than one
year (31 December 2011: Nil).
As at 31 December 2012, there are no payables to the shareholders with voting rights of 5%, the
Group’s outstanding balance payable to related parties are as following:
2012 2011
Accounts payables to related party
Yantai ShenMa Packing Co., Ltd. 43,366,087 6,213,337
Yantai Zhongya Pharmaceutical Tonic
Wine Co., Ltd. 7,972,184 -
51,338,271 6,213,337
(17) Advances from customers
2012 2011
Within 1 year 450,172,253 293,655,222
As at 31 December 2012, the Group had no outstanding balance payable to the related parties or
shareholders with voting rights of 5% or above (31 December 2011: Nil).
137
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(18) Employee benefit
31 December 2012
Opening Closing
balance Increase Decrease balance
Salaries and bonus 125,038,715 315,939,854 (353,380,353 ) 87,598,216
Staff benefit - 12,039,050 ( 12,039,050 ) -
Staff welfare 338,880 27,360,435 ( 27,437,022 ) 262,293
Includes:
Medical insurance 74,012 5,169,057 ( 5,185,553 ) 57,516
Pension 254,394 18,999,205 ( 19,051,112 ) 202,487
Unemployment
insurance 7,152 1,075,043 ( 1,080,047 ) 2,148
Injury insurance 1,734 1,810,188 ( 1,811,780 ) 142
Maternity insurance 1,588 306,942 ( 308,530 ) -
Housing fund 489,288 2,311,105 ( 2,505,479 ) 294,914
Union fee and education fee 3,786,479 617,964 ( 2,386,053 ) 2,018,390
Termination benefits 36,275,292 704,058 ( 8,985,519 ) 27,993,831
Other allowances 22,346,283 124,630 ( 153,630 ) 22,317,283
188,274,937 359,097,096 (406,887,106 ) 140,484,927
31 December 2011
Opening Closing
balance Increase Decrease balance
Salaries and bonus 122,804,887 289,613,276 (287,379,448 ) 125,038,715
Staff benefit - 8,590,306 ( 8,590,306 ) -
Staff welfare 3,022,339 32,131,473 ( 34,814,932 ) 338,880
Includes:
Medical insurance 598,887 7,695,132 ( 8,220,007 ) 74,012
Pension 2,199,409 20,613,939 ( 22,558,954 ) 254,394
Unemployment
insurance 81,668 1,791,145 ( 1,865,661 ) 7,152
Injury insurance 137,764 1,120,452 ( 1,256,482 ) 1,734
Maternity insurance 4,611 910,805 ( 913,828 ) 1,588
Housing fund 430,600 5,654,408 ( 5,595,720 ) 489,288
Union fee and education fee 5,644,688 1,383,090 ( 3,241,299 ) 3,786,479
Termination benefits 31,252,497 15,456,078 ( 10,433,283 ) 36,275,292
Other allowances 23,760,801 - ( 1,414,518 ) 22,346,283
186,915,812 352,828,631 (351,469,506 ) 188,274,937
138
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(18) Employee benefit (continued)
As at 31 December 2012, the Group had no overdue employee benefit payable (31 December
2011: Nil).
In 2012, the Group paid union fee and education fee of RMB2,386,053 (2011: RMB3,241,299),
termination payment of RMB8,985,519 (2011 RMB10,433,283). There is no non-monetary
welfare in 2012 (2011: Nil).
(19) Taxes payable
2012 2011
Value added tax ( 21,005,478 ) 22,405,920
Consumption tax 33,478,543 48,064,764
Business tax 1,041,384 372,616
Corporation income tax 405,075,954 596,777,047
Urban land use tax 1,180,572 709,120
Individual income tax 6,091,205 6,968,982
City construction tax 8,872,888 11,907,032
Property tax 1,904,752 1,774,578
Others 7,444,756 9,479,798
444,084,576 698,459,857
139
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(20) Other payables
2012 2011
Advertising costs 20,434,958 89,115,832
Deposit from distributors 210,775,654 152,184,670
Payables for equipment and construction 51,846,156 86,651,441
Royalty fee 99,943,588 108,911,034
Deposits from suppliers 2,370,702 10,377,751
Others 85,279,053 88,818,272
470,650,111 536,059,000
The balance due to the shareholders with voting right of 5% or above is as follows:
2012 2011
Royalty fee 99,943,588 108,911,034
As at 31 December 2012, significant outstanding balance aged over than one year is as follows:
Amount payable Reasons for
outstanding
Deposits payables from distributors 115,660,324 Deposits
There was no repayment of the above balances after the balance sheet date.
140
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(21) Non-current liabilities due within one year
2012 2011
Trust scheme due within one year 142,785,000 77,220,000
Interest payable 8,160,000 3,861,000
150,945,000 81,081,000
In July 2011, the Company and Zhonghai Trust Co., Ltd. entered into a profit transfer
agreement, pursuant to which the Company agreed to transfer its right to the profit generated by
certain type of wine to a special trust fund established by Zhonghai International Trust Co., Ltd.
and received RMB52,785,000 with annual interest rate of 7%. The trust scheme would be
expired in February. 2013.
In October 2012, the Company and Shangdong Province International Trust Co., Ltd. entered
into a profit transfer agreement, pursuant to which the Company agreed to transfer its right to
the profit generated by certain type of wine to a special trust fund established by Shangdong
Province International Trust Co., Ltd. and received RMB90,000,000 with annual interest rate of
8.5%. The trust scheme would be expired in November. 2013.
(22) Other current liabilities
2012 2011
Deferred income 8,090,382 4,744,074
Details of deferred income:
2012 2011
Government grant related with assets
Fund to support major constructing projects 2,404,874 1,334,874
Fund to support emerging and key industries 2,300,808 828,000
Others 3,384,700 2,581,200
8,090,382 4,744,074
141
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(23) Other non-current liabilities
2012 2011
Employee benefit (1) 7,856,000 11,424,000
Trust scheme - 52,785,000
Interest payable - 1,847,475
Deferred income (2) 61,148,861 42,696,664
69,004,861 108,453,139
(1) Employee benefit represents bonus accrued for management. According to the bonus
payment schedule of 2011, the bonus is expected to be paid during 2013 to 2015.
(2) Details of deferred income:
2012 2011
Government grant related with assets
Fund to support major constructing projects 20,148,990 12,013,864
Fund to support emerging and key industries 20,707,271 7,452,000
Others 20,292,600 23,230,800
61,148,861 42,696,664
142
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(24) Share capital
2012 Opening balance Unrestricted in 2011 Closing balance
Restricted shares
Shares held by domestic
investors
Including：
Shares held by non-state
owned legal persons - - -
Total of restricted shares - - -
Unrestricted shares
A Shares 348,816,000 104,644,800 453,460,800
B Shares 178,464,000 53,539,200 232,003,200
Total of unrestricted shares 527,280,000 158,184,000 685,464,000
Total shares 527,280,000 158,184,000 685,464,000
2011 Opening balance Unrestricted in 2011 Closing balance
Restricted shares
Shares held by domestic
investors
Including：
Shares held by non-state
owned legal persons 213,021,120 (213,021,120) -
Total of restricted shares 213,021,120 (213,021,120) -
Unrestricted shares
A Shares 135,794,880 213,021,120 348,816,000
B Shares 178,464,000 - 178,464,000
Total of unrestricted shares 314,258,880 213,021,120 527,280,000
Total shares 527,280,000 - 527,280,000
For the current year movement of paid-in capital, please refer to Note.5 (27)
Restricted shares of 213,021,120 held by Yantai Changyu Group Co.,Ltd., representing 40% of total
shares issued, were released from restriction since 25 March 2011.
143
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(25) Capital surplus
Opening Closing
2012 Balance Addition Balance
Share premium 557,222,454 - 557,222,454
Other 4,916,588 - 4,916,588
562,139,042 - 562,139,042
2011
Share premium 557,222,454 - 557,222,454
Other - 4,916,588 4,916,588
557,222,454 4,916,588 562,139,042
(26) 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.
144
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(27) Retained earnings
2012 2011
Retained earnings brought forward 3,628,279,989 2,459,263,257
Add: profit attributable to
shareholders of the Company 1,700,928,117 1,907,208,732
Less: Dividends paid in respect prior
year’s profit ( 801,465,600) ( 738,192,000)
Withdrawal of legal surplus ( 46,789,370) -
Convertion of ordinary share
dividends ( 158,184,000) -
Retained earnings carried forward 4,322,769,136 3,628,279,989
On 15 May 2012, the board of the directors of the Company proposed a cash dividend of
RMB15.2 every 10 shares in respect of 2011 based on the issued shares of 527,280,000. The
aggregate amount of cash dividend is RMB 801,465,600. (2011: RMB738,192,000) Meanwhile,
the board of the directors proposed an allotment to all shareholders by 3 shares every 10 shares
based on the issued shares of 527,280,000. The aggregate number of share dividend is
158,184,000 shares. (2011:Nil)
On 17 April 2013, the board of the directors of the Company proposed a cash dividend of RMB11
(tax inclusive) every 10 shares in respect of 2012 based on the issued shares of 685,464,000. The
aggregate amount of cash dividend is RMB 754,010,400. The aforementioned proposal is still
pending for the approval of General Meeting of Shareholders
145
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(28) Assets with restriction of ownership
Opening Closing
2012 Balance Increase Decrease balance
Cash at bank 2,604,604 47,479 - 2,652,083(i)
Inventory 18,030,733 20,688,000 (12,992,047) 25,726,686(ii)
20,635,337 20,735,479 (12,992,047) 28,378,769
Opening Closing
2011 Balance Increase Decrease balance
Cash at bank 2,462,124 170,923 ( 28,443) 2,604,604(i)
Inventory 13,524,960 4,968,469 ( 462,696) 18,030,733(ii)
15,987,084 5,139,392 ( 491,139) 20,635,337
(i) As at 31 December 2012 and 2011, the restricted deposit is the Group’s housing fund.
(ii) As at 31 December 2012, inventory with restriction in ownership was due to the trust scheme
with Zhonghai Trust Co., Ltd and Shandong International trust Co., Ltd. （As at 31 December
2011, inventory with restriction in ownership was due to the trust scheme with Zhongrong
International Trust Co., Ltd, Zhonghai Trust Co., Ltd ） Please also refer to Note 5 (21) for
details.
146
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(29) Operating income and costs
Operating income is as follows:
2012 2011
Revenue 5,556,442,502 5,939,875,597
Other operating income 87,088,051 87,673,615
5,643,530,553 6,027,549,212
2012 2011
Cost of sales 1,359,873,644 1,396,984,223
Other operating expenses 41,215,339 42,432,911
1,401,088,983 1,439,417,134
The operating income for the group is mainly from the sales of wine, brandy and sparkling wine.
Over 99% of the sales generated in PRC.
Operating income from top five customers in 2012 is as follows:
Amount Percentage of total
operating incomes
%
Kangcheng Investment (China) Co., Ltd. 35,801,700 0.6
Jinan Guidunyimou trading Co., Ltd. 30,283,948 0.5
Nanjing Xiyuhong trading Co., Ltd 26,283,531 0.5
Songzhou Huimingxin bottle shop Co., Ltd. 24,706,004 0.5
Huian County Chongwulongxing Co., Ltd. 24,331,373 0.4
141,406,556 2.5
Operating income from top five customers in 2011 is as follows:
Amount Percentage of total
operating incomes
%
Putian Baicheng trading Co., Ltd. 34,363,944 0.6
Zhuhai Huahaipengcheng wine Co., Ltd. 27,566,277 0.5
Fuzhou Bainianhanggang trading Co., Ltd. 27,258,001 0.5
Shaoguan Zhenjiang Youhui Co., Ltd. 24,414,643 0.4
Foushan Nanhai Lizhi Store 24,109,304 0.4
137,712,169 2.4
147
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(29) Operating income and costs (continued)
Operating income is analyzed as follows:
2012 2011
Sales of goods 5,556,442,502 5,939,875,597
Rendering services 87,088,051 87,673,615
5,643,530,553 6,027,549,212
(30) Taxes and surcharges
2012 2011
Consumption tax 198,061,661 243,150,036
Business Tax 4,490,563 4,583,506
City construction tax 61,248,671 62,942,415
Education fee and surcharges 45,595,614 46,167,761
Others 8,817,794 5,260,049
318,214,304 362,103,767
For detail standards of tax rate please refer to Notes.3 Tax.
(31) Selling expenses
2012 2011
Advertising costs 832,290,075 863,774,831
Freight 136,710,184 162,039,548
Salary and employee benefit 191,099,359 211,834,772
Trademark fee 99,943,588 108,911,034
Warehouse leasing expenses 36,959,537 35,763,374
Travelling expenses 23,177,961 20,298,868
Commission 12,314,338 11,319,425
Expenses incurred for Wine
festival 29,711,497 2,720,426
Others 87,017,624 86,829,948
1,449,224,163 1,503,492,226
148
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(32) General and administrative expense
2012 2011
Salary and employee benefit 55,908,211 50,482,485
Insurance fee 30,024,891 30,171,410
Leasing expenses 8,943,367 10,258,411
Depreciation 23,715,321 20,468,648
Amortization 5,793,090 7,655,556
Administrative expenses 14,546,769 13,584,278
Travelling expenses 6,379,358 7,058,152
Entertainment fee 5,296,737 4,079,211
Property tax, stamp duty and other taxes 13,619,934 10,898,973
Maintenance fee 14,716,086 5,178,210
Management fee 11,745,536 12,531,670
Others 63,685,509 62,465,190
254,374,809 234,832,194
(33) Loss on impairment of assets
2012 2011
Inventory provision 2,777,648 7,710,095
Bad debts provision - 6,654,792
2,777,648 14,364,887
(34) Financial income
2012 2011
Interest income 38,033,736 51,747,843
Less: interest expenses ( 8,493,989) ( 5,708,475)
Bank charges ( 9,621,486 ) ( 1,535,787)
19,918,261 44,503,581
149
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(35) Investment income
2012 2011
Investment income gained from disposal
of financial assets held for trading - 52,122
(36) Non-operation income
2012 2011
Gains on disposal of non-current assets 4,379,454 3,510,935
Including: gain on disposal of plant property and
equipments 640,939 3,510,935
Government grants 23,393,756 14,740,496
Penalty income 373,987 1,150,934
Others 7,231,063 7,175,689
35,378,260 26,578,054
Government grants recognized in the income statement is as follows:
2012 2011
Major projects support fund 1,483,193 1,483,193
Small and medium enterprises support fund 646,646 1,425,000
Tax refund 14,636,437 10,038,943
Others 6,627,480 1,793,360
23,393,756 14,740,496
150
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(37) Non-operation expenses
2012 2011
Loss on disposal of non-current assets 2,581,199 775,064
Including: loss on disposal of property, plant
and equipment 2,581,199 775,064
Donation 221,106 412,662
Others 169,104 3,631,792
2,971,409 4,819,518
(38) Income tax
2012 2011
Current income tax 554,519,329 647,698,083
Deferred income tax 14,728,312 ( 15,253,572 )
569,247,641 632,444,511
Reconciliation between income tax expenses and profits is as follows:
2012 2011
Profit before tax 2,270,175,758 2,539,653,243
Income tax expense at statutory tax rate 25% 567,543,940 634,913,311
Effect of different tax rates applied by certain
subsidiaries ( 2,746,040 ) ( 4,543,795 )
Tax losses not recognized - 340,856
Non-taxable income ( 380,412 ) -
Non-deductable expenses 4,830,153 1,734,139
Income tax expenses at the Group’s
effective tax rate 569,247,641 632,444,511
151
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(39) Earnings per share
The calculation of basic earnings per share is based on the consolidated profit attributable to ordinary
shareholders of the Company during the year and the weighted average number of outstanding
ordinary shares.
2012 2011
Earnings
Consolidated profit attributable to
ordinary shareholders of the
Company 1,700,928,117 1,907,208,732
Shares
Weighted average number of outstanding
ordinary shares (i) 685,464,000 685,464,000
Basic earnings per share 2.48 2.78
The company does not have potential dilutive ordinary shares.
Note1: In June 2012, the Company allotted share dividend of 158,184,000 shares, after
which the issued ordinary share became 685,464,000. Thus, the basic earnings per
share is based on the adjusted number of 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 outstanding of ordinary
shares.
(40) Notes to consolidated cash flow statement
Cash received relating to other operating activities:
2012 2011
Government grants 30,555,824 47,345,289
Others 9,496,088 61,111,624
40,051,912 108,456,913
Cash paid relating to other operating activities:
2012 2011
Selling expenses 1,233,262,732 1,259,544,184
General and administrative expenses 110,485,877 105,976,203
Others 9,575,616 34,532,368
1,353,324,225 1,400,052,755
152
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(41) 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:
2012 2011
Net profit 1,700,928,117 1,907,208,732
Add: Loss for impairment of assets 2,777,648 14,364,887
Depreciation 125,261,510 89,871,369
Amortization of intangible assets 5,113,916 4,578,473
Amortization of Biological assets 795,539 2,033,800
Amortization of long-term prepaid
expenses 14,130,153 10,222,203
Losses/(gain) on disposal of property,
plant and equipment 1,940,260 ( 2,735,871 )
Finance income ( 26,261,924) ( 46,039,368 )
Investment income - ( 52,122 )
Decrease/(increase) in deferred tax assets 25,152,800 ( 15,253,572 )
Decrease/(increase) in inventories ( 515,434,507) ( 469,268,271 )
Decrease/(increase) in operating
receivables 32,246,207 ( 105,672,433 )
Increase/(decrease) in operating
payables ( 64,608,397) 116,464,280
Net cash flows from operating activities 1,302,041,322 1,505,722,107
(ii) Cash and cash equivalents
2012 2011
Cash 1,562,294,026 1,256,517,873
Including：
Cash on hand 48,894 74,859
Bank deposits on demand 1,562,245,132 1,234,742,462
Other monetary capital on demand - 21,700,552
Closing balance of cash and
cash equivalents 1,562,294,026 1,256,517,873
153
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
6. RELATED PARTY AND RELATED PARTY TRANSACTIONS
(1) Parent company
Name of Type of Place of Legal Scope of Registered Percentage Percentage Incorporate
parent enterprise registration representative business capital of shares of voting Code
company rights
Cotrolling Limited Yantai Sun Manufacturing 50,000,000 50.4% 50.4% 265 645 824
Company Company Liqiang
During the year ended 31 December 2012, there is no change in parent company’s registered capital,
shares holding or voting power.
(2) Subsidiaries: Please refer to Note 4 (1).
(3) Other related parties
Nature of related parties Incorporate code
Controlled by the same
Yantai Changyu Travelling Co., Ltd. parent company 258 258 654
Yantai Changyu International Controlled by the same
Window of the Wine City Co., Ltd. parent company 672 208 146
Controlled by the
same parent
Yantai ShenMa Packing Co., Ltd. company 553 393 350
Yantai Zhongya Pharmaceutical Tonic Controlled by the same
Wine Co., Ltd. parent company 726 203 923
(4) Significant related party transactions
(i) Purchases from and sales to related parties
Purchase from related parties
2012 2011
Yantai Changyu Travelling Co. Ltd. 118,886 425,193
Yantai Changyu International Window of the
Wine City Co., Ltd 725,996 65,508
Yantai ShenMa Packing Co., Ltd 206,438,932 78,774,219
Yantai Zhongya Pharmaceutical tonic Wine Co.,
Ltd. 7,821,383 -
215,105,197 79,264,920
All related party transactions are based on the negotiated price.
In 2012, purchases from related parties accounted for less than 12% of the Group’s total purchase
(2011: less than 3%)
154
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
6. RELATED PARTY AND RELATED PARTY TRANSACTIONS (CONTINUED)
(4) Significant related party transactions (continued)
(i) Purchases from and sales to related parties (continued)
Sales to related parties
2012 2011
Yantai Changyu Travelling Co. Ltd. 4,382,547 6,791,363
Yantai Changyu International Window of the
Wine City Co., Ltd. 4,450,553 5,354,827
Yantai Zhongya Pharmaceutical tonic Wine
Co., Ltd. 512,551 -
Yantai ShenMa Packing Co., Ltd. - 1,515,455
9,345,651 13,661,645
All related party transactions are based on the negotiated price.
In 2012, sales to related parties accounted for less than 1% of the Group’s total sales (2011: less
than 1%).
(ii) Property leased from a related party
2012 Note Assets leased Beginning date Ending date Rental expense
Changyu Group (a) Warehouse and office
Company building 2012/1/1 2016/12/31 5,858,000
2011 Note Assets leased Beginning date Ending date Rental expense
Changyu Group (a) Warehouse and office
Company building 2007/1/1 2011/12/31 6,383,000
(a) Pursuant to the lease agreement entered into between the Company and Changyu Group
Company on 1 January 2012, starting from 1 January 2012, the Company rented properties
from Changyu Group Company for operation purposes at a basic annual rental of
RMB5,858,000, and till 31 December 2016. For the year ended 31 December 2012, the
rental payable to Changyu Group Company amounted to RMB5, 858, 000 (2011
RMB6,383,000).
During 2011, leasing expenses paid to related company accounted for 12.8% of the Group
(during 2011: 13.9%).
155
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
6. RELATED PARTY AND RELATED PARTY TRANSACTIONS (CONTINUED)
(4) Significant related party transactions (continued)
(iii) Other significant related party transactions
Note 2012 2011
Royalty fee (a) 99,943,588 108,911,034
Patents fee (b) 50,000 50,000
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 2012, royalty fee paid to related company accounted for 100% of the Group (2011:
100%).
(b) 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 the year ended 31 December 2012, the patents usage fee
payable to Changyu Group Company amounted to RMB 50,000 (2011: RMB50,000).
During 2012, patent fee paid to related company accounted for 100% of the Group (2011:
100%).
(iv) Remuneration of the management
2012 2011
Remuneration of the management 10,804,108 11,341,529
156
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
6. RELATED PARTY AND RELATED PARTY TRANSACTIONS (CONTINUED)
(4) Significant related party transactions (continued)
(v) Guarantee provided by a related party
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 Yes
(a) In 2011, Changyu Group Company has provided guarantee to the Company for the full
responsibility under the trust scheme amounting to RMB88,236,000 (2011: RMB 88,236,000).
(5) Balance due from related parties
2012 2011
Trade receivables Balance Provision Balance Provision
Yantai Changyu Travelling Co.
Ltd. 311,220 - 358,020 -
Yantai Changyu International
Window of the Wine City Co.,
Ltd. - - 218,690 -
Yantai Shen Ma Packing Co.Ltd. - 968,136 -
Yantai Zhongya Pharmaceutical
tonic Wine Co., Ltd. 1,820,376 - - -
2,131,596 - 1,544,846 -
The above amounts due from related parties are unsecured, interest-free and have no fixed terms of
repayment.
157
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
6. RELATED PARTY AND RELATED PARTY TRANSACTIONS (CONTINUED)
(6) Balance due to related parties
2012 2011
Trade payable
Yantai Shen Ma Packing Co, Ltd. 43,366,087 6,213,337
Yantai Zhongya Pharmaceutical tonic
Wine Co., Ltd. 7,972,184 -
51,338,271 6,213,337
Other payable
Royalty fee payable to parent company 99,943,588 108,911,034
Total 151,281,859 115,124,371
The above amounts due to related parties are unsecured, interest-free and have no fixed terms of
repayment.
7. CONTINGENT LIABILITIES
The Group and the Company did not have any significant contingent liabilities as at balance sheet
date.
8. COMMITMENT
2012 2011
Capital commitments
Authorized, but not contracted 1,605,664,161 626,590,498
Investment commitments
Contracted, but not provided for - 395,000,000
As at 31 December 2012, all capital commitments in 2011 have been fulfilled.
9. POST BALANCE SHEET DATE EVENT
On 17 April 2013, the board of the directors of the Company proposed a cash dividend of RMB11
(tax inclusive) every 10 shares in respect of 2012 based on the issued shares of 685,464,000. The
aggregate amount of cash dividend is RMB 754,010,400. The proposed profit distribution plan is
subject to the approval from the Annual General Meeting.
158
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
10. OTHER SIGNIFICANT EVENTS
(1) Lease
As lessee
Significant operating lease: the Company has total future minimal lease payments under non-
cancelable contract with lessor are as follow:
2012 2011
Within one year 14,334,416 23,814,036
One year to two years 8,560,300 5,908,103
Two years to three years 6,511,570 2,852,650
Three years and above 20,278,532 15,262,627
49,684,818 47,837,416
(2) Segment report
Over 99% of the Group’s revenue is generated within the PRC, and 100% assets of the Group
are located in the PRC. As all the major customers and operating activities are within the PRC,
it is not necessary to disclose detailed geographical segment information. Since all of the
businesses of the Group are related to the manufacturing and sales of wines, it is not necessary
to disclose business segment information.
159
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
10. OTHER SIGNIFICANT EVENTS (continued)
(3) Financial instrument and risk management
The Group's principal financial instruments comprise cash and bank and trust scheme. The
main purpose of these financial instruments is to raise funds for the Group's operations. The
Group has various other financial assets and liabilities such as accounts receivables, bill
receivables, other receivables, trade payables and other payables which arise directly from its
operations. The main risks arising from the Group's financial instruments are credit risk,
liquidity risk and market risk.
CLASSIFICATION FOR FINANCIAL INSTRUMENT
The carrying amounts of each category of financial instruments as at the balance sheet date are
as follows:
2012 2011
Financial assets
Loans and receivables Loans and receivables
Cash and bank 2,227,470,828 2,532,967,197
Bills receivable 92,635,701 56,268,482
Trade receivables 135,217,384 126,906,526
Other receivables 28,462,945 75,423,614
Interests receivable 7,215,854 15,763,431
2,491,002,712 2,807,329,250
160
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
10. OTHER SIGNIFICANT EVENTS (CONTINUED)
(3) Financial instrument and risk management (continued)
Financial liabilities
2012 2011
Other financial liabilities Other financial liabilities
Trade payables 324,881,168 229,920,729
Other payables 470,650,111 536,059,000
Non-current liabilities due
within one year 150,945,000 81,081,000
Other non-current liability - 54,632,475
946,476,279 901,693,204
CREDIT RISK
Credit risk is the risk of financial loss on one party of a financial instrument due to the failure of
another party to meet its obligations.
The Group trades only with recognized and creditworthy third parties. It is the Group's policy that
all customers who wish to trade on credit terms are subject to credit verification procedures. In
addition, receivable balances are monitored on an ongoing basis to ensure that the Group's
exposure to bad debts is not significant. For transactions that are not denominated in the functional
currency of the relevant operating unit, the Group does not offer credit terms without the specific
approval of the Department of Credit Control in the Group.
The credit risk of the Group's other financial assets, which comprise cash and bank, bills
receivable, interests receivable and other receivables,, arises from default of the counterparty, with
a maximum exposure equal to the carrying amounts of these instruments.
Since the Group trades only with recognized and creditworthy third parties, there is no
requirement for collateral. Concentrations of credit risk are managed by customer/counterparty, by
geographical region and by industry sector. As at 31 December 2012, 41.4% of trade receivables
of the Group are due from the top 5 customers (31 December 2011: 37.7%). There is no collateral
or other credit enhancement on the balance of the trade receivables of the Group.
Further quantitative data in respect of the Group’s exposure to credit risk arising from trade
receivable and other receivables are disclosed in Note 5, (3) and (6) to the financial statements.
161
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
10. OTHER SIGNIFICANT EVENTS (CONTINUED)
(3) Financial instrument and risk management (continued)
As at 31 December 2012, the financial assets which are regarded as no impairment has been
incurred are analyzed as follows:
2012 2011
Trade receivables 135,217,384 126,906,526
Other receivables 28,462,945 74,505,870
Bills receivable 92,635,701 56,268,482
Interests receivable 7,215,854 15,763,431
263,531,884 273,444,309
LIQUIDITY RISK
Liquidity risk is the risk that an enterprise may encounter deficiency of funds in meeting
obligations associated with financial liabilities.
The Group monitors its risk of deficiency of funds using a recurring liquidity planning tool. This
tool considers the maturity of both its financial instruments and expected cash flows from the
Group’s operations.
The Group’s financial liabilities mainly consist of trade payables and other payables (except for
deposits) arose from principal activities and amount received from trust scheme. The fair value of
the financial liabilities is equal to their book value. The Group is of the view that the cash flow
from the above financial assets is adequate to cover all financial liabilities whereby the Group has
no significant liquidity risk.
The table below summarizes the maturity profile of the Group's financial assets and liabilities as
at the balance sheet date, based on the undiscounted contractual cash flows:
2012
Financial assets
1 to 3 months 3 to 12 months Total
Cash and bank 1,564,946,109 662,524,719 2,227,470,828
Bill receivables 57,819,130 34,816,571 92,635,701
Trade receivable 135,217,384 - 135,217,384
Other receivables 28,462,945 - 28,462,945
Interest receivables 7,215,854 - 7,215,854
1,793,661,422 697,341,290 2,491,002,712
162
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
10. OTHER SIGNIFICANT EVENTS (CONTINUED)
(3) Financial instrument and risk management (continued)
LIQUIDITY RISK
2012
Financial liabilities
1 to 3 Months 3 to 12 Months Total
Trade payables 324,881,168 - 324,881,168
Other payables 318,738,101 151,912,010 470,650,111
Non-Current
Liabilities due within
one year - 150,945,000 150,945,000
643,619,269 302,857,010 946,476,279
2011
Financial assets
1 to 3 months 3 to 12 months Total
Cash and bank 1,259,122,477 1,273,844,720 2,532,967,197
Trade receivables 32,864,335 23,404,147 56,268,482
Bills receivable 126,906,526 - 126,906,526
Other receivables 75,423,614 - 75,423,614
Interest receivables 15,763,431 - 15,763,431
1,510,080,383 1,297,248,867 2,807,329,250
Financial liabilities
1 to 3 Months 3 to 12 Months Total
Trade payables 229,920,729 - 229,920,729
Other payables 455,899,312 80,159,688 536,059,000
Non-Current
Liabilities due within
one year - 83,011,500 83,011,500
Other non-current
liabilities - - 58,327,425
685,820,041 163,171,188 907,318,654
163
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
10. OTHER SIGNIFICANT EVENTS (CONTINUED)
(3) Financial instrument and risk management (continued)
MARKET RISK
Market risk represents the fair value or future cash flows of financial instruments may vary
with the change of market price. Market risk includes interest rate risk and foreign currency.
INTEREST RATE RISK
Interest rate risk represents the fair value of financial instruments of the present value cash flows may
vary with the change of interest rate.
The income and the cash flow from operating activities are generally independent with fluctuation of
market interest rate, and there was no significant interest bearing assets and liabilities except for cash
in bank and other non-current liabilities. The Company is of the view that the Group has no
significant interest rate risks, and no interest rate swaps are designated to hedge against interest rate
risks.
FOREIGN CURRENCY RISK
Foreign currency risk represents the risks on fluctuation of fair value of financial instruments or the
future cash flow as a result of the fluctuation in foreign exchange.
The Group has no significant concentration of foreign currency risk because its business is
principally conducted in the PRC and all transactions are denominated in RMB.
FAIR VALUE
Fair value refers to the value that two parties would voluntarily accept in an arm length transaction.
The following methods and hypothesizes are used for the calculation of fair value.
Since the remaining period for cash and bank, trade receivables, bills receivables, other receivables,
trade payables and other payables is not long, their fair value are deemed to be the same as the book
value.
The fair value of non-current liabilities due within one year and other non-current liabilities are
calculated by discounting the expected future cash flows with the effective interest rate currently
available for the instruments on similar terms.
On 31 December 2012, except for the restricted bank deposit (Note 5 (1)), there was no significant
restrictions on the Group’s financial assets. Except for the balance in other receivables that have been
provided for, no provision of the Group’s financial assets is needed.
164
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
11. 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.
As at 31 December 2012, there was no provision provided for trade receivables (31 December 2011:
Nil). The Company did not provide, reverse or write off any provision during 2012 (31 December 2011:
Nil)
2012 2011
Carrying Amount Provision Carrying Amount Provision
Amount % Amount % Amount % Provision %
Individually significant - - - - 19,185,460 91.0 - -
Individually insignificant 710,080 100.0 - - 1,791,605 9.0 - -
710,080 100.0 - 20,977,065 100.0 -
As at 31 December 2012, there was no account receivable due from the Company’s shareholders
with voting rights of 5% or above (31 December 2011: Nil).
As at 31 December 2012, the particulars of top 1 account receivables amount are as follows:
Relationship Ratio of total
with the receivables %
Company Amount Aging
Yantai Zhongya Co., Ltd. Third party 710,080 Within 1 year 100
As at 31 December 2011, the particulars of top 2 account receivable amount are as follows:
Relationship Ratio of total
with the receivables %
Company Amount Aging
Yantai Zhongya Co., Ltd. Third party 15,458,760 Within 1 year 73.7
Yantai Zhongya Sales Co., Ltd. Third party 5,518,305 Within 1 year 26.3
20,977,065 100.0
As at 31 December 2012, no outstanding balance was due from related parties (31 December 2011:
Nil).
165
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
11. NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
(2) Other receivables
The aging analysis is as follows:
2012 2011
Bad debt Account Book Bad debt Account
Book Value Provision Balance Value Provision Balance
Within 1 year 2,194,000,959 - 2,194,000,959 1,550,839,490 - 1,550,839,490
1 to 2 years 191,603 - 191,603 134,263,466 - 134,263,466
2 to 3 years 27,191 - 27,191 3,961,947 3,120,600 841,347
Over 3 years 11,120,600 11,120,600 - 8,006,463 8,000,000 6,463
2,205,340,353 11,120,600 2,194,219,753 1,697,071,366 11,120,600 1,685,950,766
2012 2011
Amount % Bed debt % Amount % Bed debt %
provision provision
Individually significant
and provided for 11,120,600 0.5 11,120,600100.0 11,120,600 0.7 11,120,600 100.0
Individually insignificant
and provided for 2,194,219,753 99.5 - 1,685,950,766 99.3 -
2,205,340,353 100.0 11,120,600 1,697,071,366 100.0 11,120,600
166
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
11. NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
(2) Other receivables (continued)
As at 31 December 2012, there was no other receivable due from the shareholders with voting rights
of 5% or above. (31 December 2011: Nil)
As at 31 December 2012, the particulars of top 5 other receivables are as follows:
Relationship with Amount Aging Percentage of
the Group total advances
to suppliers %
Beijing Chateau Subsidiary 525,969,790 Within 1 year 23.8
Shihezi Chateau Subsidiary 523,244,636 Within 1 year 23.7
Changan Chateau Subsidiary 356,096,158 Within 1 year 16.1
Ningxia Wine Subsidiary 249,196,746 Within 1 year 11.3
Changan Chateau Subsidiary 244,813,400 Within 1 year 11.1
1,899,320,730 86.0
As at 31 December 2011, the particulars of top 5 other receivables amount are as follows:
Relationship with Amount Aging Percentage of
the Group total advances
to suppliers %
Beijing Chateau Subsidiary 469,605,240 Within 1 year 27.7
Shihezi Chateau Subsidiary 359,412,913 Within 1 year 21.2
Ningxia Wine Subsidiary 263,080,539 Within 1 year 15.5
Changan Chateau Subsidiary 203,848,400 Within 1 year 12.0
Ningxia Chateau Subsidiary 146,072,400 Within 1 year 8.6
1,442,019,492 85.0
At 31 December 2012, the balance of other receivables from related parties is RMB 2,163,251,044,
approximately 98.1% of total other receivables. These were all from subsidiaries of the Company
(2011: the balance of other receivable from related parties is RMB 1,442,019,492, approximately
85.0% of total other receivables.).
167
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
11. NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
(3) Long-term equity investments
2012 Share Voting Cash
Opening Movement Closing holding power Dividends for
Cost balance for the year balance % % the year
Cost Method:
Xinjiang Tianzhu (a) 60,000,000 60,000,000 60,000,000 60 100 -
Vehicular 300,000 300,000 - 300,000 100 100 -
Transportation
Kylin Packaging 23,176,063 23,176,063 23,176,063 100 100 -
Changyu Chateau (a) 28,968,100 28,968,100 - 28,968,100 70 100 42,091,942
AFIP Tourism (a) 350,000 350,000 - 350,000 70 100 -
Pioneer International 3,500,000 3,500,000 - 3,500,000 70 100 3,747,021
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 44,868,620
Ice Chateau (a) 13,413,000 13,413,000 - 13,413,000 51 100 -
Beijing Chateau (a) 77,000,000 77,000,000 - 77,000,000 70 100 -
Sales Company 7,200,000 7,200,000 - 7,200,000 90 100 1,200,000,000
Langfang Sales (b) 100,000 100,000 - 100,000 10 100 2,894,035
Langfang Castel (a) 19,835,730 12,142,200 7,693,530 19,835,730 39 100 445,206
Wines Sales 4,500,000 4,500,000 - 4,500,000 90 100 -
Shanghai Sales (b) 300,000 300,000 - 300,000 30 100 -
Beijing Sales 850,000 350,000 500,000 8500,000 100 100 -
Jingyang Sales (b) 100,000 100,000 - 100,000 10 100 35,929,376
Jingyang Wine 900,000 900,000 - 900,000 90 100 10,814,363
Ningxia Wine 1,000,000 1,000,000 - 1,000,000 100 100 -
Yantai Dingtao 5,000,000 5,000,000 - 5,000,000 18 18 -
Ningxia Chateau 2,000,000 2,000,000 - 2,000,000 100 100 -
Dingluote Chateau 80,000,000 80,000,000 - 80,000,000 100 100 -
Shihezi Chateau 150,000,000 150,000,000 - 150,000,000 100 100 -
Xianyang Chateau 20,000,000 20,000,000 - 20,000,000 100 100 -
Development Centre 500,000,000 100,000,000 400,000,000 500,000,000 100 100 -
Huanren Wine 5,000,000 5,000,000 - 5,000,000 100 100 -
1,006,492,893 598,449,363 408,193,530 1,006,492,893 1,006,642,893
168
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
11. NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
(3) Long-term equity investments
2011 Share Voting Cash
Opening Movement Closing holding power Dividends for
Cost balance for the year balance % % the year
Cost Method:
Xinjiang Tianzhu (a) 60,000,000 60,000,000 60,000,000 100 100 -
Vehicular 300,000 300,000 - 300,000 100 100 -
Transportation
Kylin Packaging 23,176,063 7,783,813 15,392,250 23,176,063 100 100 -
Changyu Chateau (a) 28,968,100 28,968,100 - 28,968,100 70 100 42,091,942
AFIP Tourism (a) 350,000 350,000 - 350,000 70 100 -
Pioneer International 3,500,000 3,500,000 - 3,500,000 70 100 3,747,021
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 44,868,620
Ice Chateau (a) 13,413,000 13,413,000 - 13,413,000 51 100 -
Beijing Chateau (a) 77,000,000 77,000,000 - 77,000,000 70 100 -
Sales Company 7,200,000 7,200,000 - 7,200,000 90 100 1,200,000,000
Langfang Sales 100,000 100,000 - 100,000 10 100 2,894,035
Langfang Castel (a) 12,142,200 12,142,200 - 12,142,200 49 100 445,206
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 35,929,376
Jingyang Wine 900,000 900,000 - 900,000 90 100 10,814,363
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 2,000,000 100 100 -
Dingluote Chateau 80,000,000 - 80,000,000 80,000,000 100 100 -
Shihezi Chateau 150,000,000 2,000,000 148,000,000 150,000,000 100 100 -
Xianyang Chateau 20,000,000 2,000,000 18,000,000 20,000,000 100 100 -
Development Centre 100,000,000 100,000,000 100,000,000 99 99 -
Huanren Wine 5,000,000 - 5,000,000 5,000,000 100 100 -
603,299,363 331,907,113 266,392,250 598,299,363 1,340,790,563
169
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
11. NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
(3) Long-term equity investment (continued.)
(a) The Group is entrusted to manage these non-wholly owned subsidiaries whereby the Group
owned the entire operating results of these subsidiaries deducting fixed fees paid to the non-
controlling holders. Please refer to Note 4 (1) for details.
(b)The Group has 100% voting power of those subsidiaries by the way of indirect controlling.
During 2012and 2011, there was no significant restriction on the remittance of fund from the
investees to the Company.
As at 31 December 2012, the impairment provision of RMB5, 000,000 was provided for Yantai
Dingtao (31 December 2011: RMB5,000,000).
(4) Capital reserve
As at 31 December 2012 and 31 December 2011, the balance of capital reserve represented capital
premium.
(5) Revenue and cost of sales
Revenue is as follows:
2012 2011
Income from principal activities 1,776,979,032 1,864,033,002
Cost of sales is as follows:
2012 2011
Cost from principal activities 1,444,948,143 1,516,393,443
170
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
11. NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
(5) Revenue and cost of sales (continued)
In 2012, revenue derived from top 5 customers is as follows:
Amount Percentage of total
revenue
%
Sales Company 1,508,463,434 84.9
Penglai wine sales 88,927,036 5.0
Yantai wine sales 43,236,192 2.4
Pioneer International 14,775,600 0.8
Jingyang Winery 3,955,609 0.2
1,659,357,871 93.3
In 2012, top 5 customers of the Company are all subsidiaries.
In 2011, revenue derived from top 5 customers is as follows:
Amount Percentage of total
revenue
%
Sales Company 1,615,286,672 86.7
Changyu Chateau 42,508,100 5.4
Qing tong xia Sales 22,799,202 2.8
Beijing Chateau 4,273,366 2.1
Langfang Castel 2,293,668 1.2
1,687,161,008 98.2
In 2011, top 5 customers of the Company are all subsidiaries.
Revenue is analyzed as follows:
2012 2011
Sales of goods 1,776,979,032 1,864,033,002
171
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
11. NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
(6) Investment income
2012 2011
Long-term equity investment income
accounted for by using the cost method 1,091,018,499 1,340,790,563
Investment income from disposal
of held for trading financial assets - 52,122
1,091,018,499 1,340,842,685
Among the long-term equity investment income accounted for by using cost method, the investees
with investment income accounting for more than 5% of the Company’s total profit before tax are as
follows:
Investees 2012 2011
Sales Company 980,000,000 1,200,000,000
As at 31 December 2012 and at 31 December 2011, there was no significant restriction on the
remittance of investment income to the Company.
172
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
11. NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
(7) Supplement to cash flow statement
Cash flows from operating activities calculated by adjusting the net profit:
2012 2011
Net profit 1,130,895,806 1,409,090,776
Add: Impairment provision - 3,120,600
Depreciation 47,318,392 37,104,808
Amortization of intangible assets 4,291,247 3,069,076
Amortization of Biological assets 586,905 586,905
Losses/(gains) on disposal of property, 2,354,433 ( 2,694,891 )
plant and equipments
Finance costs ( 30,599,023 ) ( 44,235,900 )
Investment income (1,091,018,499 ) (1,340,842,685 )
Increase/(decrease) in deferred tax 11,820,627 ( 4,318,060 )
assets
Increase in inventories ( 313,990,373 ) ( 98,403,068 )
Increase in trade receivables ( 475,386,959 ) ( 560,525,865 )
Increase/(decrease) in trade payables ( 527,924,856 ) 101,511,949
Net cash flows from operating activities (1,241,652,300 ) ( 496,536,355 )
(8) Cash and cash equivalents
2012 2011
Cash and bank 425,084,049 296,735,240
Including: Cash on hand 11,916 26,472
Bank deposits on demand 425,072,133 275,011,335
Other monetary capital on demand - 21,697,433
425,084,049 296,735,240
173
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
1. DETAILS OF EXTRAORDINARY PROFIT AND LOSS
2012
Loss on disposal of non-current assets, including
reversal of accrued impairment provision ( 1,940,260)
Government grants credited in profit and loss
(except for those recurring government grants that are
closely related to the Group's operation, in line with related regulations
and have proper basis of calculation) 23,393,756
Other non-operating income and expense 10,953,355
32,406,851
Corporate income tax effect ( 7,435,162)
24,971,689
The Group’s extraordinary profit and loss 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).
All non-operation income and non-operation expenses are non-operating profit in 2012.Please
refer to Note 5 (36) and (37).
174
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION TO THE FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
2. RETRUN ON EQUITY (“ROE”) AND EARNINGS PRE SHARE (“EPS”)
2012 Weighted average ROE Basic EPS
(%) (RMB)
Net profit attributable to shareholders of the
Company 31.13 2.48
Net profit attributable to shareholders of the
Company deducting extraordinary profit and
loss 30.68 2.44
The Company did not have any potential dilutive shares.
2011 Weighted average ROE Basic EPS
(%) (RMB)
Net profit attributable to shareholders of the
Company 43.18 2.78
Net profit attributable to shareholders of the
Company deducting extraordinary profit and
loss 41.55 2.68
The Company did not have any potential dilutive shares.
175
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION TO THE FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
3. VARIANCE ANALYSIS
Analysis on items with fluctuation more than 30% (inclusive) in consolidated financial
statements or balance greater than 5% (inclusive) of the total assets at the balance sheet
date or amount greater than 10% (inclusive ) of gross profit of the reporting period.
(1) The balance of cash and bank as at 31 December 2012 was RMB 2,227,470,828,
decreasing by 12% compared with 2011. The decrease is mainly due to the cash
outflow of the financing activities.
(2) The balance of bills receivable and account receivable as at 31 December 2012 was
RMB 92,635,702 and RMB 135,217,384, increasing by 65% and 7% compared with
2011, which is in mainly because of the aggregate increasing of sales near the end of
the year.
(3) The balance of advance to supplier as at 31 December 2012 was RMB 47,822,482,
decreasing by 38% compared with 2011. The decrease was mainly due to the
decreasing sales resulted in decrease of purchase of raw material.
(4) The balance of interest receivable as at 31 December 2012 was RMB 7,215,854,
decreasing by 54% compared with 2011. The decrease was mainly due to the combined
effect of decreasing of interest rate and amount of term deposits in 2012.
(5) The balance of other receivables at 31 December 2012 is RMB 28,462,945, decreasing
by 62% compared with 2011, which was due to the decrease of deposits made for bid
of land.
(6) The balance of inventory as at 31 December 2012 was RMB 2,268,621,441, increasing
by 29% compared with 2011, which is mainly due to the lunar new year is relatively
late in 2013, all the stocks prepared for lunar new year haven’t been ship out yet.
(7) The balance of property, plant and equipment as at 31 December 2012 was RMB
1,823,983,721, increasing by 13% compared with 2011, which was mainly due to the
transfers from construction in process to property, plant and equipment and purchased
new equipment.
(8) The balance of construction in progress as at 31 December 2012 was RMB 832,828,689,
increasing by 105% compared with 2011, which was mainly due to the construction of
newly established chateau. Meanwhile improvement project on the production lines
also contributed to the increase of construction in progress.
(9) The balance of intangible asset was RMB 278,293,922 as at 31 December 2012,
increasing by 5% compared with 2011, which mainly due to the increasing land use
rights of newly established chateau and winery factory.
(10) The balance of deferred tax asset was RMB 150,376,138 as at 31 December 2012,
decreasing by 14% compared with 2011, which was mainly due to the decrease of the
unpaid bonus of the group.
(11) The balance of other non-current asset was RMB 28,180,035 as at 31 December 2012,
increasing by 489% compared with 2011, which was mainly due to the accounts
receivables resulting from the disposing of biological asset.
(12) The balance of accounts payables as at 31 December 2012 was RMB 324,881,168,
increasing by 41% compared with 2011, which is in line with the increase of
procurement of grape and bulk wine in2012.
176
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION TO THE FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
3. VARIANCE ANALYSIS (CONTINUED)
(13) The balance of advance from customer was RMB 450,172,253 as at 31 December 2012,
increasing by 53% compared with 2011. The increase was mainly due to the lunar new
year is relatively late in 2013, all the stocks prepared for lunar new year haven’t been
ship out yet
(14) The balance of tax payables as at 31 December 2012 was RMB 444,084,576,
decreasing by 26% compared with 2011 due to the decreasing of sales.
(15) The balance of other payables as at 31 December 2012 was RMB 470,650,111,
decreasing by 12% compared with 2011 which was mainly due to the decreasing
advertisement expense and faster processing time of reimbursement.
(16) The balance of other non-current liabilities within one year was RMB 150,945,000 as at
31 December 2012, increasing by 86% compared with 2011, the balance represents the
wine future that would be mature within one year.
(17) The balance of other current liabilities was RMB 8,090,382 as at 31 December 2012,
increasing by 71% compared with 2011, the balance represents the deferred income for
the group which would be recognized in next year.
(18) The balance of other non-current liabilities was RMB 69,004,862 as at 31 December
2012 decreasing by 36% compared with 2011 which was mainly due to the deferred
income would be recognized in one year been reclassified to other current liabilities.
(19) The balance of issued capital was RMB 685,464,000 as at 31 December 2012
increasing by 30% compared with 2011 which was mainly due to the convertion of
ordinary share dividend.
.
(20) The balance of capital surplus was RMB 562,139,042 as at 31 December 2012, no
fluctuation compared to 2011.
(21) The balance of reserved surplus was RMB 342,732,000 as at 31 December 2012,
increasing by 16% compared with 2011, which was due to the increasing legal reserved
surplus.
(22) The balance of retained earnings was RMB 4,322,769,136 as at 31 December 2012,
increasing by 19% compared with 2011, which was due to the Group’s profit in 2012
and the distribution of profit for the year 2011.
(23) The revenue of 2012 was RMB 5,643,530,553, decreasing by 6% compared with 2011.
The decrease was mainly contributed by the poor market condition of wine, champagne
and brandy. The cost of sales of 2011 was RMB 1,401,088,983, decreasing by 3%
compared with 2011. The decrease was in line with the decrease of sales.
(24) The taxes and surcharges for 2012 was RMB 318,214,304, decreasing 12% compared
with 2011. The decrease is in line with the decrease of sales.
(25) The selling expense for 2012 was RMB 1,449,224,163, decreasing by 4% compared
with 2011.The decrease was mainly due to the decrease of promotion and advertisement
expenses.
(26) The G&A expense for the year ended 31 December 2012 was RMB 254,374,809,
increasing by 8% compared with that of the year 2011. The increase was mainly due to
the increase of forestation fee.
177
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION TO THE FINANCIAL STATEMENTS(CONTINUED)
Year ended 31 December 2012
3. VARIANCE ANALYSIS (CONTINUED)
(27) The assets impairment loss for the year ended 31 December 2012 was RMB 2,777,648,
decreasing by 81% compared with that of the year 2011. The decrease was mainly due
to there was no new provision for bad debts.
(28) The financial income for 2012 was RMB 19,918,261, decreasing by 55% compared
with year 2011. The decrease was mainly due to the decreasing balance and interest rate
of term deposits.
(29) The investment income for 2012 was nil, decreasing by 100% compared with 2011. The
decrease was mainly due to the Group didn’t have any income from disposing any hold
for sales financial assets.
(30) The other revenue was RMB 35,378,260 in 2012, increasing by 33% compared with
2011. The increase was mainly due to government grant. The other expense was RMB
2,971,409 in 2012, decreasing by 38% compared with 2011 which was mainly due to
the loss of disposal of non-current asset.
(31) The income tax expense for 2012 was RMB 569,247,641, decreasing by 10% compared
with 2011. The decrease was in line with the decrease of taxable income of the Group
caused by the decrease of revenue.
178
XI、Reference Documents
(1)The original of annual report autographed by the chairman.
(2)The financial statements autographed and signed by the chairman, chief accountant
and accountants in charge.
(3)The Prospectus and Public Offering Announcement for Stock B in 1997, the
Prospectus and The Shares’ Change & Public Offering Announcement for Stock A in
2000.
(4) The originals of all documents and announcements that the Company made public
during the report period in the newspapers designated by China Securities Regulatory
Commission.
Yantai Changyu Pioneer Wine Co. Ltd.
Board of Directors
19th April 2013
179
