2013 Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
Shares Code: 000869. 200869 Shares Abbreviation: Changyu A、Changyu B Notice No.:2014-Final01
Yantai Changyu Pioneer Wine Co. Ltd.
2013 Annual Report Abstract
This Annual Report abstract comes from the whole contents of annual report, Investors desire to
comprehend more details，We advise investors to read the Annual Report carefully. The Annual
Report has been published in both the website of Shenzhen Stock Exchange and other websites
stipulated by the China Securities Regulatory Commission.
1. Important Warning
Brief Introduction for the Company
Abbreviation of the Code number of the
Changyu A、Changyu B 000869、200869
Shares: Shares
Place of listing of the
Shenzhen Stock Exchange
Shares
Abbreviation of the
Shares after -
alteration (if have)
Contact person and Authorized Representative of the
Secretary to the Board of Directors
information Securities Affairs
Name Mr. Qu Weimin Mr. Li Tingguo
56 Dama Road, Yantai, Shandong, 56 Dama Road, Yantai, Shandong,
Address
China China
Tel 0086-535-6633656 0086-535-6633656
Fax 0086-535-6633639 0086-535-6633639
E-mail quwm@changyu.com.cn stock@changyu.com.cn
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2013 Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
2. Key financial data and shareholderschanging
(1)Key financial data
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 2013 2012 2011
last year(%)
Business revenue 4,320,948,572 5,643,530,553 -23.44% 6,027,549,212
Net profit attributed to the
shareholders of the listed 1,048,185,927 1,700,928,117 -38.38% 1,907,208,732
company
Net profit attributed to the
shareholders of the listed
1,017,348,285 1,675,956,428 -39.30% 1,835,054,874
company after deducting
the irregular profit and loss
Net cash flows from the
735,074,307 1,302,041,322 -43.54% 1,505,722,107
operating activities
Basic earnings per share 1.53 2.48 -38.31% 2.78
Diluted earnings per share 1.53 2.48 -38.31% 2.78
Weighted average for
earning rate of the net 17.3% 31.13% -13.83% 43.18%
assets
More or less than
Dec. 31st2013 Dec. 31st 2012 Dec. 31st2011
last year(%)
Total assets 8,001,532,444 8,123,134,580 -1.5% 7,295,944,221
Net Assets attributed to the
shareholders of the listed 6,208,279,705 5,913,104,178 4.99% 5,013,641,661
company
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2013 Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
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2013 Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
(2) The top ten shareholders of the Company and the shareholdings.
Total 50,322 Total number of shareholders until the end of the 5th Total 51,106
Total shareholders in the
37511 Shareholders of A share trading days before the disclosure day of the annual 36006 Shareholders of A share
report period 12811 Shareholders of B share report 15100 Shareholders of B share
the top 10 shareholders holding situation
Shares held until Number of Pledged or frozen
Character of Percentage
Name of Shareholders the end of the restricted Share
shareholders (%) Amount
report period shares status
Domestic non-state-
YANTAI CHANGYU GROUP CO. LTD. 50.4% 345,473,856 0 － 0
owned legal person
GAOLING FUND,L.P. Foreign shareholder 3.53% 24,176,997 0 － 0
GIC PRIVATE LIMITED Foreign shareholder 2.8% 19,220,973 0 － 0
BBH BOS S/A FIDELITY FD - CHINA
Foreign shareholder 2.35% 16,106,326 0 － 0
FOCUS FD
GSIC A/C MONETARY AUTHORITY OF
Foreign shareholder 0.89% 6,101,940 0 － 0
SINGAPORE
VALUE PARTNERS HIGH-DIVIDEND
Foreign shareholder 0.87% 5,966,881 0 － 0
STOCKS FUNDS
HTHK-MANULIFE CHINA VALUE
Foreign shareholder 0.77% 5,272,277 0 － 0
FUND
BBH A/C VANGUARD EMERGING
Foreign shareholder 0.69% 4,707,066 0 － 0
MARKETS STOCK INDEX FUND
BBH S/A FIDELITY FUNDS SICAV-
Foreign shareholder 0.67% 4,591,482 0 － 0
HEALTH CARE
UBS CUSTODY SERVICES SINGAPORE
Foreign shareholder 0.64% 4,401,632 0 － 0
PTE. LTD.
UBS (LUXEMBOURG) S.A. Foreign shareholder 0.57% 3,908,889 0 － 0
Among the top 10 shareholders,Yantai Changyu Group Company Limited has no associated relationship
The explanation for the associated
or accordant action relationship with the other 9 listed shareholders, and the relationship among the other
relationship and accordant action
shareholders is unknown.
Explanation for the top 10 shareholders who
involved in financing activities and stock The top 10 shareholders do not involve in financing activities and stock trade business.
trading business (if any)
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2013 Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
(3) Disclosure for property right and control relations between the Company and its actual
controllers via the flow chart
Changyu Group and 27 persons for medium-level of the Company
100%
Yantai Yusheng Investment & Development Co., Ltd. Changyu Group and 46 common staff of the Company
O
T
U J F G U H
S A R E . E
37.78%
R 62.22%
A P A R K C
A N M . O
REINA REINA REINA REINA
U
N C A N
AUGUSTO RICCARDO MARINA LODOVICO
E N T
R
24% 6% 5% Y5% 5% I
E 25% 25% 25% 25%
S
A
IFC 55% N
Yantai Yuhua Investment & Development Illva Saronno Investment SASAC Yantai
D
Co., Ltd
10% 45% 33% 12%
current shareholders for A share Changyu Group current shareholders for B
share
15.75% 50.40% 33.85%
the Company
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2013 Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
3. Management's Discussion & Analysis
(1) Summarization of operation
In 2013，under the influence of the slowdown of domestic economic growth, overwhelming flow
of foreign wine into Chinese market and the relative national policies, the competition in the
domestic wine industry was intensified, especially there was a great decline on the effective
demands for the premium wines, which brought a strong pressure to the Company’s production and
operation. Facing quite a lot of external disadvantages, the Company insisted to focus on the market,
adjust the marketing tactics and product structure, perfect the marketing channels and promote
product sales, but still failed to turn the situation of decline in operating results compared to the last
year. In the year, the Company realized business income of CNY 4320.95 million, 23.44% down
over the previous year, and realized net profit of CNY 1048.19 million, 38.38% down over the
previous year.
Description Increase or decrease Cause of major changes
of the end of the
period over the end
of last year
Operating revenue -23.44% Mainly because of decline of sales volume
Operating cost -3.08% Mainly because of decline of sales volume
Sales expense -25.71% Mainly because of reduction of advertising expense
in 2013
Management expense -3.49% Mainly because of decrease of landscaping expense
in 2013 over the year before
R&D investment 11.60% Mainly because of increase of expenses for the
development of technology research in2013
Financial expense 6.11% Mainly because of reduction of interest income due
to decrease of time deposit balance
Net amount of cash flow -43.54% Mainly because of year-on-year decline of operating
generated in operating revenue that makes inflow of cash in operating
activities activities decrease
Net amount of cash flow -166.38% Mainly because of increase of cash expenditure for
generated in investment the investment projects
activities
Net amount of cash flow 0.65% Almost the same with last year, no major changes
generated in capital-
raising activities
Review and summary for the disclosed development strategy and the progress of the Company’s
business plan during the report period.
During the report period, influenced by the abrupt change of market situation and the great
recession on the demand for the premium wines, the business income of the Company was in a
great decline, which is CNY 4.3 billion in 2013 and far from the target fixed in the beginning of the
year of realizing business income no less than CNY 6 billion. In order to deal with the unfavorable
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2013 Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
business environment, during the report period, the Company carried out the operation strategy of
steady development in the middle and high-end wines, and vigorous expansion for the low-level
wines, brandy and imported wines with own brands. While making efforts to promote the
development of middle and high-end wines, the Company made an appropriate tilt on marketing
resources to the low-level wines, brandy and imported wines with own brands for meeting the
market demand, which played a certain part in early reversing the decline on the business income.
The main work in the report period is as following:
Firstly, to perfect sales system and products structure, strengthen the marketing process
management and expense control. The Company further defined the division of responsibility and
business function for wine sales companies and channel market departments. In order to satisfy the
demand of consumers at multi-levels, in view of the different consumer groups and the terminal
classes, the Company established in succession middle-high channel, medium-small channel,
county-level channel, class A supermarket direct-supplying company, class B supermarket semi-
supplying company, pioneer franchised stores, tourism products sales company, E-commerce and
VIP clients service company with providing salesmen, dealer teams and marketing expenses on
basis of channel types and designing the marketing strategy in more specific, which achieved a
better result. The Company insisted the urban general distribution system for the century cellar wine,
delimited main areas to greatly promote chateau products, sorted out the products and unified the
image of Jiebaina, compressed the number of products as well as set up the new brand for medium-
low level wines, which changed the situation of the low level wines in a great number but without
brand in the past, developed high value-added brandy gift box and brought out Koyac XO brandy in
porcelain barrel, increased greatly the brands quantity for the imported wines and built the exclusive
products system suitable with the sales channels. Meanwhile, the Company improved the
formulation, application and the process control in the implementation procedures of marketing
programs, strengthened the terminal building and assessment as well as the management and control
for the focus expenses such as advertisement cost, staff wages, warehouse fee and freight etc.,
which effectively increased the efficiency in the use of funds.
Secondly, to accelerate the informatization construction and management innovation. The Company
accelerated the progress in the implementation of the first phase of SAP system project, which has
been completely used in the process of finance, purchase, storage, production plan, cost, quality
traceability management as well as order sales, which were involved in 13 branch companies.
Focusing on the future development goals and the urgent problems to solve on management,
production, technology and marketing, the Company proposed and completed over 500 items of
innovation and reasonable projects, which brought the related works and management level to a
new step.
Thirdly, to reinforce the construction of the vineyard bases, perfect the management work on grape
purchase, improve the research and development ability on new product and new technology. While
consolidating the current vineyard bases, in order to increase the large-scale cultivation and
decrease the labor cost, the Company purchased 7 sets of machinery equipments for vine field
management, such as grape prepruner, trimmer and grape harvester, took construction and
management for Yantai vineyard bases in accordance with the criterion of scalization,
standardization and mechanization, which opened the first complete mechanization planting in
Chinese wine vineyard base. In addition, the Company put through the purchase work on raw
material of grape in 2013, improved the pricing model for raw material of grape, initially formed
the linkage mechanism for grape price to integrate with the world market and realized the market-
set price, better quality better price and price on quality, which brought better quality and more
reasonable price for the Company’s purchased grapes as well as a stable and harmonious
relationship of supply and demand, and also was helpful to improve the Company’s products cost
performance and competitiveness. In 2013 the Company finished 3 provincial technology research
projects, passed the examination and acceptance of the experts from provincial science and
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2013 Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
technology department, in which, the overall technical level of ice wine project was in the
international leading level, 2 projects on the flavor of vine and wine reached the international
advanced level and got 2 national invention patent license. Koyac Brandy won two silver awards at
International Assessment Conference and Ice Wine won a gold medal at “World Leadership region”
wine competition.
Fourthly, to steadily carry out the capital investment projects. It was in a smooth progress for the
Company’s major investment projects, in which, Changyu Reina Chateau Sha’anxi, Changyu
Moser XV Chateau Ningxia and Changyu Baron Balboa Chateau Xinjiang was opened successively
and officially put into operation, the construction for the main building of Tinlot Chateau and
Koyac Brandy Chateau in the project of Changyu International Wine City was completed and
Etablissements Roullet-Fransac located at Cognac France was purchased by the Company to add
the production and business for Cognac.
(2) 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 120-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.
(3) 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.
①The sector competition setup and development trend
Due to the continuous limitation for the domestic consumption of premium wine in the future long
time, the continuing entrance of imported wines to Chinese market, and the great impact for the
traditional sales channels caused by the new channels such as E-commerce, the competition in the
domestic wine industry will still be awfully fierce in the current and future long time. But in the
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2013 Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
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 ability, catch the
opportunities, actively take adjustments and make full use of oncoming and traditional sales
channels, can timely get the run of the consumers’ demands and provide products of high
performance-to-price ratio will have an opportunity to be the final winners of competition and form
a new structure of the future Chinese wine market.
②The 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-level wines and brandy, make efforts to
provide consumers with a rich variety of products in a competitive price.
③Management plan in a new year
In 2013, the Company will try its best to realize business income of not less than CNY4.6 billion
and control the main operating costs and three period charges below CNY3.2 billion.
④The measures the Company will take
The Company will emphasize the following aspects, so as to better catch the opportunities and face
with the challenges:
Firstly, to focus on the market and further perfect marketing system, strengthen marketing
management and ability. The Company will further perfect the layout and assessment system for the
sales team, enhance the development and construction for the sales terminals, assure to put in place
for every regulation and measure made by the Company, further perfect marketing implementation
suggestions for each variety and channel, promote the sales of the Company’s products at the
terminals, accelerate the construction of SAP system and logistics distribution & management
system, advance the Company’s market reaction speed and marketing ability.
Secondly, to further strengthen the control for production cost and major operation expenses,
constantly increase fund efficiency. The Company will continue to adhere the centralized purchase
for the main raw materials, strictly control purchase price, perfect wage system for every ton of
wine, improve the control for quota fund and credit management, try the best to reduce capital
charges and increase fund usage efficiency.
Thirdly, to strengthen the construction and management for vineyards, continually increase the
research and development ability and products quality. The Company will carry out the
normalization construction and management for the vineyards in accordance with the criterion of
scalization, standardization and mechanization, continue to practice the tracking and management
of winemakers for the vineyards, build the vineyards at Xinjiang and Yantai for promotion and
demonstration on mechanization management, greatly promote the machinery works and planting
technology in light of technical specification on grape planting management, try to reduce the cost
on planting grapes and improve the grape quality. The Company will perfect the classification
standards for bulk wine, set up archives for Jiebaina and above vintage wines, neaten and sort out
the current products, dig products characteristics, enrich product varieties, develop new wine
products according to the market demands including fruit style, origin style and single variety style,
make craftwork improvement and increase the products’ competition on price.
Fourthly, to continuously promote the projects of Yantai Changyu Industrial Park and the
construction for pioneer franchised stores, strictly control the investment amount on projects, make
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2013 Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
sure to finish the construction for all projects and put them into operation on the basis of scheduled
progress and quality.
4. Issues related to financial report
(1) Compared with the previous year’s financial report, explanation on the changes of
accounting policies, accounting estimates,accounting method.
During the report period, there were no changes of accounting policies, accounting estimates,
accounting method compared with the previous year’s financial report.
(2) During the report period, a description of the situation on the Company makes retroactive
adjustments or restates because of changes of accounting errors.
There were no big accounting errors which need to make retroactive adjustments or restate situation.
(3) Compared with the previous year’s financial report, explanation for the changes of the
consolidated statements scope.
During the report period, the Company took over 100% property right of France Etablissements
Roullet-Fransac, set up Laizhou Changyu Wine Sales Company with holding 100% property right.
The Company has already included both of them in the consolidated statements scope. Besides, the
consolidated statements scope is in consistency with the previous year.
(4) During the report period, be explained on the public accountants issued “non-standard
audit reports” by Board of directors andsupervisoryboard.
Deloitte Hua Yong certified public accountants Co., LTD has audited the 2013 annual financial
statements of Yantai Changyu Pioneer Wine Company Limited (the “Company”) and issued the
standard device and clean opinion for the audit report.
Yantai Changyu Pioneer Wine Co. Ltd.
Board of Directors
25th April 2014
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