Yantai Changyu Pioneer Wine Co. Ltd.
2013 Annual Report
2014 Final 01
April, 2014
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report
Contents
I、Important Notice and Definition ................................................................................................. 3
II、Brief Introduction for the Company ....................................................................................... 5
III、Summary of Accounting Datas and Financial Indicators ................................................... 8
IV、Board of Directors’ Report ................................................................................................... 11
V、Major Issues ............................................................................................................................. 32
VI、Changes in Shares and the Shareholders’ Situation .......................................................... 38
VII、Situation for Directors, Supervisors, Senior Managers and staffs .................................... 46
VIII、Corporate Governance ....................................................................................................... 57
IX、Internal Control ..................................................................................................................... 64
X、Financial Report ...................................................................................................................... 66
XI、Reference Documents .......................................................................................................... 164
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report
I. Important Notice and Definition
The board of directors，the board of supervisors，directors, supervisors & senior managers of
the Company collectively and individually accept full responsibility for the truthfulness，
accuracy and completeness of the information contained in this report and confirm that to the
best of their knowledge and belief there are no unfaithful facts, significant omissions or
misleading statements.
Except the following directors, other directors all personally attended the meeting for
deliberating the annual report.
Absent directors Directors’ post Absent reason Authorized person
Mr. Augusto Reina Director Due to working Mr. Aldino Marzorati
Mr. Jean Paul Pinard Director Due to working Mr. Sun Liqiang
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, 2013，
we plan to pay CNY 5.00 in cash as dividends for every 10 shares (including tax) to the
Company’s all shareholders, send 0 bonus(including tax) and capital reserve will not be
transferred to equity. ”
Mr. Sun Liqiang (Chairman of the Company), Mr. Leng Bin (Chief Financial Officer) and Mr.
Jiang Jianxun (Financial Director) assure the truthfulness, accuracy and completeness of the
financial report in the annual report.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 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
Refers to Deloitte Hua Yong certified public accountants co.,
Deloitte Hua Yong
LTD (special general partnership)
CNY Refers to Chinese Yuan
Significant Risk Warning
1. The Company may face significant risks in production and operation, please refer to
“expectation for the Companys future development” sector of “5. Risks likely to occur”
part in the chapter four named “Board of Directors Report”. We advise investors to read
carefully and pay attention to the investment risks.
2. The business plan and target in the report do not represent the earnings forecast of the
listed company in 2014, which depends on several factors including the changes of market
conditions and the effort extent of managing team etc. with a great uncertainty, so the
investors should be in a special attention.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 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 0086-535-6633656 0086-535-6633656
Fax 0086-535-6633639 0086-535-6633639
E-mail quwm@changyu.com.cn stock@changyu.com.cn
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report
3、Information disclosure and filing location
The newspapers in which the “China Securities Newspaper” , “Securities Times” and
Companys information is disclosed “Hong Kong Commercial Daily”
Web Site assigned by CSRC to carry
http://www.cninfo.com.cn
the annual report
Board of Directors Office of the Company,
Filing location
56 Dama Road, Yantai, Shandong
4、Registration changes
Registration Registration Business License Organization
Tax No.
Date Place No. Code
State Taxation
the Business
Bureau
Administration
First September 37060216500338-1
th Bureau of 3700001806012 26710003－5
registration 18 , 1997 Local Taxation
Shandong
Bureau
Province
370601267100035
State Taxation
the Business
Registration Bureau
st Administration
at the end of 1 August, 37060216500338-1
Bureau of 370000018060122 26710003－5
the report 2012 Local Taxation
Shandong
period Bureau
Province
370601267100035
On 18th September 1997 the Companys operating scope was the
production, processing and sales of wine, distilled liquor, healthy liquor,
fruit liquor, non-alcohol beverages, fruit jam, packing materials and
winemaking machines.
On 17th April 2008, after the deliberation of 2007 shareholders meeting,
the Companys operating scope is amended to “the Company, legally
Changes for the main registered, is in business of production, processing and sales of wine,
distilled liquor, medicated liquor, fruit liquor, non-alcohol beverages,
business of the Company fruit jam, packing materials and winemaking machines; licensed import
since it was listed 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 sales of wine,
distilled liquor, medicated liquor, fruit liquor, non-alcohol beverages,
fruit jam, packing materials and its products, winemaking machines;
licensed import and export; external investments according to
governmental policies.
Changes for all previous
controlling shareholders No.
(if have)
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report
5、Other documents
The accountant appointed by the Company
Deloitte Hua Yong certified public accountants co., LTD (special
Name
general partnership)
Address No. 1 East Chang'an Avenue, Dongcheng District, Beijing
Name of signatory
Xu Zhaohui, Li Xu
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
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
III、Summary of Accounting Datas and Financial 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 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 -39.3% 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. 31st 2013 Dec. 31st 2012 Dec. 31st 2011
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
2. Differences in accounting datas under PRC accounting standards and international
accounting standards
(1) Differences of net profit and net asset in the financial report disclosed according to both
international accounting standards and PRC accounting standards
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
Unit: CNY
Net profit attributed to the shareholders of Net asset attributed to the shareholders of the
the listed company listed company
This period Last period End of the period Beginning of the
period
According to
PRC accounting 1,048,185,927 1,700,928,117 6,208,279,705 5,913,104,178
standards
Item and amount adjusted in accordance with international accounting standards
According to
international
accounting 1,048,185,927 1,700,928,117 6,208,279,705 5,913,104,178
standards
(2) Differences of net profit and net asset in the financial report disclosed according to both foreign
accounting standards and PRC accounting standards
Unit: CNY
Net profit attributed to the Net asset attributed to the shareholders of the
shareholders of the listed company listed company
This period Last period End of the period Beginning of the period
According to PRC
accounting 1,048,185,927.00 1,700,928,117.00 6,208,279,705.00 5,913,104,178.00
standards
Item and amount adjusted in accordance with foreign accounting standards
According to
foreign accounting 1,048,185,927.00 1,700,928,117.00 6,208,279,705.00 5,913,104,178.00
standards
3. Item and amount of irregular profit and loss
Unit：CNY
Item 2013 2012 2011 Explanation
Gain on disposal of non-current
assets, including the reversal of 271,989.00 -1,940,260.00 2,735,871.00
accrued impairment provision
Tax refund or exemption that is either
non-recurring or without proper 10,038,943.00
approval
Government grants credited in profit 36,659,754.00 23,393,756.00 4,701,553.00
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
and loss (except for those recurring
government grants that are closely
related to the entity's operation, in line
with related regulations and have
proper basis of calculation)
Gains on fair value change and
disposal of trading financial assets
and financial liabilities, except for
52,122.00
those from hedgings that are closely
related to the entity's principal
operations
Other non-operating income and
3,302,760.00
expense
Other items on gains and losses
10,953,355.00 4,282,169.00
defined in irregular gains and loss
Reversal of unpaid advertising fee 74,072,580.00
Less. Income tax effect 9,396,861.00 7,435,162.00 23,729,380.00
Total 30,837,642.00 24,971,689.00 72,153,858.00 --
The reasons shall be made clear and definitely as to the irregular profit and loss that the Company
has defined by virtue of the Explanatory Announcement on Public Companys Information
Disclosure No.1 - Irregular Profit and Loss and as to regarding the irregular profit and loss as
recurrent profit and loss as specified in the Explanatory Announcement on Public Companys
Information Disclosure No.1 - Irregular Profit and Loss.
□Available V Not available
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
IV、Board of Directors’ Report
1、 Summarization
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 Companys 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.
2、Analysis to main business
(1)、Summarization
Description Increase or decrease of Cause of major changes
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 activities revenue that makes inflow of cash in operating
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
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
Review and summary for the disclosed development strategy and the progress of the Companys
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
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.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
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 Companys purchased grapes as well as a stable and harmonious
relationship of supply and demand, and also was helpful to improve the Companys 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
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
Companys major investment projects, in which, Changyu Reina Chateau Shaanxi, 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.
The cause of difference that the Companys 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 income from the Companys self-produced wine is
CNY3331.52million, which is reduced 26.8% comparing with last year, and that from brandy is
CNY 818.69 million, which is reduced 4.7% comparing with the same period of last year.
Whether the Companys sales revenue for material object is more than labor income
√Yes □ No
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
Year-on-year increase
Sector Description 2013 2012
or decrease (%)
Wine Sales volume 67,978 81,677 -16.77%
Brandy Sales volume 37,713 40,659 -7.25%
Explanation on the causes of over 30% changes of the related comparison data.
□available √ Not available
The Companys big orders in hand
□ available √ Not available
Major changes or adjustments of the Companys products or services during the report period.
□ available √ Not available
The Companys important customers
The total sales amount of the top five customers（CNY） 150,291,353.00
Total sales of the top five customers accounting for the
3.5%
proportion in total sales for the year（%）
Information on the Companys 5 biggest customers
√available □Not available
Sales Amount Proportion in Total Sales for
No. Customer Name
（CNY） the year（%）
Dali Qianxingrong wine shop at Nanhai
1 38,543,431.00 0.9%
district of Foshan city
Songzhou Huimingxin wine shop at Baiyun
2 35,388,051.00 0.8%
district of Guangzhou city
Fuzhou Shengshi voyage and port trade
3 26,095,961.00 0.6%
company
Liangji shop in Shijiao town of Fogang
4 25,359,599.00 0.6%
county
Quanxingming wine shop in Luocheng of
5 Huian county (its former: 24,904,311.00 0.6%
ChongwuLongxing shop of Huian county)
Total — 150,291,353.00 3.5%
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(3)、 Costs
Sector category
Unit: CNY
2013 2012
Proportion in Proportion in Year-on-year
Sector Description increase or
Amount the operating Amount the operating
decrease(%)
cost (%) cost (%)
Finished
681,263,276 51.27% 690,952,316 51.02% 0.25%
liquor
Wine and
Packing
alcoholic 500,978,025 37.7% 504,132,271 37.22% 0.48%
material
beverages
Wages 50,892,703 3.83% 58,407,065 4.31% -0.48%
Production 95,663,454 7.2% 100,877,948 7.45% -0.25%
Product category
Unit: CNY
2013 2012
Proportion
Proportion in Year-on-year
Product Description in the increase or
Amount Amount the operating
operating decrease(%)
cost (%)
cost (%)
Finished
475,798,429 49.57% 478,009,218 50.37% -0.8%
wine
Packing
365,596,609 38.09% 347,191,316 36.58% 1.51%
Wine material
Wages 37,909,423 3.95% 42,493,417 4.48% -0.53%
Production
80,584,406 8.4% 81,393,397 8.58% -0.18%
cost
Finished
Brandy 168,174,140 56.48% 175,239,406 54.23% 2.25%
wine
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
Packing
103,136,386 34.64% 119,144,258 36.87% -2.23%
material
Wages 12,262,608 4.12% 12,990,167 4.02% 0.1%
Production
14,181,985 4.76% 15,768,958 4.88% -0.12%
cost
Note:
Comparing with the same period of last year, there is no great changes for the products cost
structure.
The Companys important suppliers
The total purchase amount of the top 5 suppliers 568,040,163.14
The proportion of the total purchase amount of the top 5 suppliers in the annual 32.87%
purchase amount
Information on the Companys top 5 biggest suppliers
√available □Not available
Proportion in Total Purchase
Purchase Amount
No. Supplier Name for the year
(CNY) （%）
1 Yantai Shenma Packaging Co., Ltd. 194,648,978.00 11.3%
2 Yantai Changyu Glass Co.,Ltd. 184,151,819.44 10.7%
Liquan subsidiary of Shandong 99,632,871.40 5.8%
3
Yantai Winery Co.,Ltd.
4 Xinjiang Yuyuan Wine Co.,Ltd. 45,242,667.80 2.6%
Xinjiang Tianyu Pioneer Wine 44,363,826.50 2.6%
5
Co.,Ltd.
Total 568,040,163.14 32.87%
(4)、Expenses
During the report period, the Companys sales expense reduced 25.71%, mainly due to the active
compression on advertising campaign in accordance with the changed market condition.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(5)、R&D expenditure
In 2013 the Companys R&D expenditure was totally CNY 12.31 million, counting 0.3% of the
business income with a year-on-year growth of 11.60%, mainly due to the increase on technology
research and development in 2013.
(6)、 Cash flow
Unit: CNY
Year-on-year
Item 2013 2012 increase or
decrease (%)
Subtotal of cash inflow in
4,836,656,366 6,830,238,129 -29.19%
operating activities
Subtotal of cash outflow in
4,101,581,759 5,528,196,807 -25.81%
operating activities
Net amount of cash flow
735,074,607 1,302,041,322 -43.54%
generated in operating activities
Subtotal of cash inflow in
1,326,601,601 1,322,520,366 0.31%
investment activities
Subtotal of cash outflow in
1,886,457,048 1,532,689,645 23.08%
investment activities
Net amount of cash flow
-559,855,447 -210,169,279 -166.38%
generated in investment activities
Subtotal of cash inflow in
259,530,444 100,062,522 159.37%
capital-raising activities
Subtotal of cash outflow in
1,040,484,398 886,158,412 17.42%
capital-raising activities
Net amount of cash flow
generated in capital-raising -780,953,954 -786,095,890 0.65%
activities
Net increase of cash and cash
-605,734,794 305,776,153 -298.1%
equivalents
Explanation on the causes of over 30% year-on-year changes of the related data.
√Available □Not available
17
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
Comparing with the same period of last year, during the report period, subtotal of cash inflow in
operating activities was reduced 29.19%, mainly due to the decrease of cash receivable for the
products sold out; subtotal of cash outflow in operating activities was reduced 25.81%, mainly due
to the decrease of cash payable for purchasing commodities; net amount of cash flow generated in
operating activities was reduced 43.54%, mainly due to the decrease of cash receivable for the
products sold out; subtotal of cash outflow in investment activities was increased 23.08%, mainly to
the growth of the cash expenditure for each investment project; net amount of cash flow generated
in investment activities was reduced 166.38%, mainly due to the big growth of cash outflow in
investment activities; subtotal of cash inflow in capital-raising activities was increased 159.37%,
mainly due to the growth of the short term borrowing; subtotal of cash outflow in capital-raising
activities was increased 17.42%, mainly due to the cash expenditure on the liquidation for credit
plan and cash deposit for borrowing Hongkong dollar, net increase of cash and cash equivalents was
reduced 298.1%, mainly due to the decrease of cash inflow in operating activities and the growth of
cash outflow in investment activities.
Explanation on the causes of the major differences between the cash inflow in the Companys
operating activities and the years net profit during the report period.
√Available □Not available
During the report period, the net amount of cash flow in the operating activities was CNY 735.07
million, which was less CNY 313.12 million than the net profit of the same period CNY1048.19
million, mainly due to the growth on the cash expenditure for each kind of payable.
18
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
3、Structure of main businesses
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 4,150,214,615 1,257,643,985 69.7% -23.29% -1.15% -6.79%
beverages
Product
Wine 3,331,522,647 959,888,527 71.19% -26.8% 1.14% -7.96%
Brandy 818,691,968 297,755,458 63.63% -4.69% -7.86% 1.25%
Region
Domestic 4,256,342,361 1,327,428,084 68.81% -23.16% -1.69% -6.9%
In case the Companys 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.
□ Available √Not available
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
4、Analysis to assets and liabilities
(1)、Major changes of assets
Unit: CNY
At the end of 2013 At the end of 2012 Proportion
increase
Proportion Proportion Explanation on major
or
Amount in the total Amount in the total changes
decrease
assets (%) assets (%)
(%)
The decrease of sales
receivables and the
distribution for the 2012
Monetary
1,367,818,182 17.09% 2,227,470,828 27.42% -10.33% cash bonus, which
funds
brought the great
decline of monetary
funds.
Receivables 177,109,516 2.21% 135,217,384 1.66% 0.55% --
Inventory 2,121,117,437 26.51% 2,268,621,441 27.93% -1.42% --
Investment
0
real estate
Long-term
equity 0% 5,000,000 0.06% -0.06% --
investments
Fixed assets 1,917,641,344 23.97% 1,823,983,721 22.45% 1.52% --
Mainly because of the
Construction increase of investments
1,423,654,530 17.79% 832,828,689 10.25% 7.54%
in progress for the construction
projects.
(2)、Major changes of liabilities
Unit: CNY
2013 2012 Proportion
Proportion Proportion increase or Explanation on major
Amount in the total Amount in the total decrease changes
assets (%) assets (%) (%)
Short-term
243,170,674 3.04% 0% 3.04% —
borrowings
20
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
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 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 companys 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 Shaanxi, whose scales and
structures have generally met the Companys 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.
21
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
6、Analysis to investments
(1)、Analysis to the major subsidiaries and joint stock companies
Information about the major subsidiaries and joint stock companies
Total Operating Operating
Company Main products or Registered Net asset Net profit
Company name Industry assets revenue profit
type services capital (CNY) (CNY)
(CNY) (CNY) (CNY)
Yantai Changyu-Castle To research, produce 98,613,174.46 80,206,213.88 84,862,080.00 1,564,927.11 1,262,260.08
Wine and
Wine Chateau Co. LTD. and sell wine and
alcoholic USD 5
Subsidiary sparkling wine as
beverages million
well as the tourism
industry
service
Langfang Castel- Wine and 58,806,661.19 46,970,955.00 60,678,546.99 517,563.22 144,550.65
Changyu Wine Co. LTD. Joint stock alcoholic To produce and sell USD
company beverages wine 6,108,818
industry
Yantai Kylin Packaging Subsidiary Packaging To produce and sell CNY 15.41 39,388,513.15 24,489,537.10 75,348,886.47 4,087,445.83 2,856,738.39
Co. LTD. industry packaging material million
Chateau Changyu AFIP Subsidiary Wine and 161,199,876.55 85,023,634.16 80,532,064.51 -36,833,642.94 -33,684,991.54
To research, produce
Global alcoholic CNY 110
and sell brandy and
beverages million
wine
industry
Chateau Liaoning Subsidiary Wine and 72,149,145.86 62,447,295.62 24,802,110.65 -6,840,184.26 -3,592,758.95
CNY 26.30
Changyu Ice Wine Co., alcoholic To produce ice wine
million
Ltd. beverages
22
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
industry
Xinjiang Tianzhu Subsidiary Wine and To plant grape, 174,144,864.01 162,040,112.69 65,260,972.92 1,077,785.41 778,118.90
Winery Co., Ltd. alcoholic produce and sell CNY 75
beverages grape juice, bulk million
industry wine and fruit wine
Explanation on the major subsidiaries and joint stock companies
The total asset of Yantai Changyu Castel Chateau Co. Ltd. drops significantly over the same period last year , mainly due to sharply dropping of
accounts receivable of Internal contacts, net asset is decreased, mainly because of the profit distribution. The net asset of Langfang Castel-Changyu
Wine Co. is decreased, mainly because of the profit distribution; operating income, operating profit and net profit are increased, mainly because sales
are up. The total profit of Yantai Kylin Packaging Co. Ltd. is decreased, mainly because of the reduction of Internal contacts accounts receivable and
profit distribution. The total asset and net asset of Chateau Beijing Changyu AFIP Global and Chateau Liaoning Changyu Ice Wine Co., Ltd are
decreased sharply, mainly because of the profit distribution and operating loss. The operating income, operating profit and net profit of other
companies except Langfang Castel-Changyu Wine Co. are going down, mainly because of the reduction of sales.
Acquisition and disposal of subsidiaries during the report period
√ Available □Not available
Company name Purpose for acquisition and Way of acquisition and disposal Influence for the whole
disposal of subsidiaries during the of subsidiaries during the report production and achievement
report period period
Etablissements Roullet-Fransac To gain cognac production Whole acquisition Due to its small scale on
sources, enrich the Companys production and operation,
brandy products system and currently it is in a limited
accelerate the steps on the influence for the Companys
Companys internationalization. whole production and
achievement.
23
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(2)、Important projects financed with non-raised capital
Unit: CNY0000
Actual
investment
Investment
Total until the Project Project
Project Name in the report
Investment end of the progress benefits
period
report
period
Construction of Tinlot Chateau 15,240 2,490 10,290 68% 0
Construction of Changyu Reina
Being
Chateau 31,074 3,500 29,000 96%
completed and
Sha'anxi put into
Construction of Chateau Moser XV production for
24,415 1,000 24,000 95% the main
Ningxia
Construction of Changyu Baron Balboa building
23,343 3,010 27,000 96%
Chateau XinJiang
Construction of Changyu International
65,331 23,400 27,000 40% 0
Wine City blending and cooling Center
Construction of Changyu International
46,736 23,900 25,500 50% 0
Wine City Bottling Center
Construction of Changyu International
12,095 4,700 5,800 45% 0
Wine City Logistics Center
Construction of Changyu Vine and
20,000 3,200 3,200 10% 0
Wine Research Institute
Construction of Treasure Wine Chateau 14,545 2,260 2,605 15% 0
Construction of Vineyards 9,140 4,544 5,452 60% 0
Investment in landscaping 5,000 1,093 1,093 20% 0
Construction of Koyac Brandy Chateau 16,530 2,500 2,500 15% 0
Procurement of Oak Barrels 5,000 2,556 2,556 50% 0
Construction of Changyu Vineyards at
6,550 3,280 3,280 50% 0
Zhuqiao town of Laizhou city
Total 294,999 81,433 169,276 -- --
Inquiry index for the disclosed
temporary announcement at the NO.
assigned website ( if any)
24
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
7、Forecast on the business achievement from January to March of 2014
Caution and explanation for the forecast on the accumulated net profit from the beginning of
the year to the end of the next report period, which could probably be in a loss or in a great
change comparing with the same period of last year.
8、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 Companys future development.
(1)The 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 long run, peoples pursuits to health and fashion life thanks to increase
of their incomes will ceaselessly stimulate their demand for quality wine, thats 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.
(2)The Companys 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.
(3) Management 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.
(4) The 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
Companys products at the terminals, accelerate the construction of SAP system and logistics
distribution & management system, advance the Companys 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
25
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
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 sure to finish the construction for all projects and put them into operation on the basis
of scheduled progress and quality.
(5) Risks likely to occur
A) Risks in price fluctuation of raw materials
Grapes are the Companys main raw materials. The grapes 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 ordersand
add the uncertainty to the Companys 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
Companys 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 Companys 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.
D) Risks in investment faults
26
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
According to the Companys plan, currently the Company has finished the production layout at
home, and will pay more attention to the overseas merge and acquisition in the same industry.
Currently, considering the big investment amount and long term construction period for Yantai
Changyu Industrial Park and more unforeseeable factors for the overseas merge and acquisition
projects, though the decision team of the Company took an adequate argument and scientific
decision-making, under the influence of uncertain factors for individual projects, there are still to
have the risks of facing with the investment amount out of budget or hardly taking back the
expected investment earnings.
9、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.
10、The Company’s profit and dividend distribution
Promulgation, implementation or adjustment of profit distribution policies, especially the
cash dividend policy during the report period.
Available V not available
According to the auditing result made by Ernst & Young Hua Ming Certified Public
Accounts Co. Ltd., the net profit that the Company made in 2012 was CNY 1,700.928117
million. After deducting the minority shareholders profit and loss, the net profit belong to the
Companys shareholders is CNY 1,700.928117 million. After the deliberation of the
Companys Board of Directors and the Shareholders Meeting, the profit plan of 2012 is as
following: Because the left amount of legal earned surplus reserve is less than 50% of the
registered capital, while making profit distribution, the legal earned surplus reserve of CNY
46.789370 million will be drawn firstly. Then based on the Companys 685,464,000 shares at
total up to December 31, 2012, we plan to pay CNY 11 in cash as dividends for every ten
shares (including tax) to the Companys all shareholders, totaling up to CNY 754.0104
million, accounting for 44.33% of the net profit CNY 1700.928117 million attributable to the
shareholders of the parent company in the consolidated statement, the retained and
undistributed profit of CNY 900.128347 million will be reserved for the distribution of next
year. This plan is in line with the provisions of the Companys Articles of Association. On
July 3, 2013, the Company released the Implementation Announcement of 2012 Annual
Equity Distribution, determining that the share registration day of A Stock was on July 10,
2013 and the ex-dividend day was on July 11, 2013, the last trading day of B Stock was on
July 10, 2013, the share registration day was on July 15, 2013 and the ex-dividend day was
on July 11, 2013. The Company also distributed equity before July 30, 2013 to the
Companys all A Stock holders registered after closing of Shenzhen Stock Exchange on the
afternoon of July 10, 2013 at China Securities Depository and Clearing Corporation Limited
Shenzhen Company and the Companys all B Stock holders registered after closing of
Shenzhen Stock Exchange on the afternoon of July 15, 2013 at China Securities Depository
and Clearing Corporation Limited Shenzhen Company.
27
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
Special explanation
Whether it is in accordance with the requirements of the regulation in the Articles Yes
of Association and the resolution of shareholders
Whether the distribution standard and proportion is clear and definite Yes
Whether the relative decision process and mechanism is complete Yes
Whether the independent directors perform their responsibilities and play the roles. Yes
Whether the small and middle shareholders have the chance to express their Yes
advices and appeals, as well as their lawful right and interest is in an enough
protection.
Whether it is legal and transparent for the condition and process while adjusting Yes
and amending the cash dividends distribution policy.
The Companys 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 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 Companys 527.28 million shares at
total up to December 31, 2011, we plan to pay CNY 15.2 in cash as dividends for every ten
shares (including tax) to the Companys all shareholders, 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 Companys all shareholders. According to this plan, in the year of
2011 totally CNY959.65 million of profit was distributed, accounting for 50.32% of net
profits CNY1907.21 million 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 Companys profit distribution plan and 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 the registered capital, while making profit distribution, the legal earned surplus
reserve of CNY 46.789370 million will be drawn firstly. Then based on the Companys
685,464,000 shares at total up to December 31, 2012, we plan to pay CNY 11 in cash as
dividends for every ten shares (including tax) to the Companys all stockholders, totaling up
to CNY 754.0104 million, accounting for 44.33% of the net profit CNY 1700.928117 million
attributable to the shareholders of the parent company in the consolidated statement, the
retained and undistributed profit of CNY 900.128347 million will be reserved for the
distribution of next year.
The Companys preliminary scheme of profit distribution in 2013 is as following: Because
the left amount of legal earned surplus reserve reaches 50% of registered capital, while
making profit distribution, the legal earned surplus reserve will be not drawn. Based on the
Companys 685.464 million shares at total up to December 31, 2013, we plan to pay CNY 5
in cash as dividends for every ten share (including tax) to the Companys all shareholders,
totaling up to CNY 342.732 million accounted for 32.70% of net profits CNY1048.185927
million attributable to shareholders of parent company in the consolidated statements. The
retained and undistributed profit of CNY 705.453927 million will be reserved for distribution
in the next year.
The Companys cash dividend record in recent three years
28
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
Unit: CNY
Proportion in the net
Net profit belonging to
profit belonging to the
Amount of cash the listed companys
listed companys
Year of distribution dividend (including stockholders in the
stockholders in the
tax) consolidated statement
consolidated statement
of the distribution year
(%)
2013 342,732,000 1,048,185,927 32.70%
2012 754,010,400 1,700,928,117 44.33%
2011 801,465,600 1,907,208,732 42.02%
During the report period the Company earned profit, the undistributed profit of the parent
company was positive but without proposing cash dividend distribution.
Available V not available
11. The Company’s preliminary scheme of profit distribution and preliminary scheme of
increasing equity with capital reserve
Number of sending bonus shares per ten shares (share) 0
Number of dividend payout per ten shares (CNY) (including tax) 5
The cardinal number of the capital stocks for the preliminary distribution
685,464,000
scheme (shares)
Total cash dividend distribution （CNY）(including tax) 342,732,000.00
Distributable profit (CNY) 1,048,185,927.00
The proportion of cash dividend distribution in the total profit distribution 100%
Cash dividend distribution policy
Others
Policy of cash dividend
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.
Detailed explanation for the Companys preliminary scheme of profit distribution and
preliminary scheme of increasing equity with capital reserve
According to the audit result from Deloitte Hua Yong, the realized net profit of the Company
is CNY 1048.185927 million, after deducting the minority shareholders profit and loss, the
net profit attributed to the shareholders of the Company is CNY 1048.185927 million.
According to PRC accounting standard, the situation for the attributable profit of
consolidation and parent company in 2013 is as following:
29
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
Unit: CNY
Consolidation Parent company
Undistributable profit at the end the year 4,616,944,663 3,811,446,092
Including: net profit in 2013 1,048,185,927 1,154,687,278
Distributable profit carried over to the 4,322,769,136 3,410,769,214
beginning of the year
Distribution for 2012 dividend 754,010,400 754,010,400
Withdrawing for the legal earned surplus 0 0
reserve
According to regulation of 157th item in the Articles of Association, which is that 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, meanwhile,
considering the large amount on the capital expenditure in 2014, under the condition of not
influencing the normal production and operation, the Company put forward preliminary
scheme on profit distribution in 2013 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 Companys 685.464 million shares at total up to December 31, 2013, we plan to pay CNY
5 in cash as dividends for every ten share (including tax) to the Companys all shareholders,
totaling up to CNY 342.732 million accounted for 32.70% of net profits CNY1048.185927
million attributable to shareholders of parent company in the consolidated statements. The
retained and undistributed profit of CNY 705.453927 million will be reserved for distribution
in the next year. The cash dividend for the shareholders of B share listed overseas was paid in
Hongkong dollar according to the middle rate between CNY and Hongkong dollar issued by
the Peoples Bank of China on the first working day after the resolution date of 2013
shareholders meeting.
12、Social Responsibility
During the report period, considering the fulfillment of the Companys social responsibility,
please see 2013 social responsibility report disclosed on www.cninfo.com.cn on 26th April
2014.
The listed company and its subsidiaries are whether or not to belong to the heavy pollution
industry stipulated by the state environmental protection department.
Yes V No Not available
The listed company and its subsidiaries are whether or not to exist major social security
problems.
Yes V No Not available
The Company is whether or not to be in an administrative penalty.
Yes V No Not available
30
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
13、The Company’s Receptions, Studies and Visits
Meeting Field
Luo Pengai from Yinhua fund
room of survey
2013.01.16 management Co., Ltd, Tang Zhi from
the
Huatai securities Co., Ltd
Company
Meeting Field
Lin Shanshan from CICC( Hongkong
room of survey
2013.01.17 Securities), Chen Xihua from First state
the
investment (Hong Kong) Co., LTD
Company
Meeting Field
room of survey
2013.01.18 Marshall Wace LLP Fehim Can Sever
the
Company
Meeting Field Zhang Yong from China Asset current
room of survey Management Co.,Ltd. Zhang Zhimin From business
2013.03.06 the Pingan assets management Co., Ltd. Sui operation
Company Wei from Haitong Securities Company situation
Limited and
Meeting Field GuQuan and Sun Xiaoning from Singapore other
room of survey government investment consulting (Beijing) issues
2013.03.14
the Co., Ltd. Wu Xiaolin from Swiss Bank
Company Corporation.
Meeting Field Li Xuan from CLSA Asia-Pacific Markets,
room of survey Yu Chunsheng，Morgan Stanley, Ding Jing
the from Choi tong securities Co., Ltd. Zhang
Company Yanzhen,Wen Hongwei from
2013.05.15
CITICSecuritiesCo., Ltd, Zhu Quan from
Mingji international investment company,
Tang Jianhua from Shenzhen Yihengsheng
property management Co., Ltd.
Meeting Field Zheng Youfeng from Guangzhou Changjin
room of survey Investment Management Co., LTD.Gao
the Xiang from JingLin Asset Management
2013.09.17 Company Co., LTD.Shi Xingtao from Everbright
Pramerica Fund Management Co., Ltd. Li
Linwei from Anbang Asset Management
Co., LTD.
31
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
V、Major Issues
1、Material litigation and arbitration
□ available √not available
There are no material litigation and arbitration during the report period.
2、Media’s doubts
□ available √not available
There are no common doubts issued by Media during the report period.
3、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)
Related Procurement (http://www.cni
Yantai Shenma Under the
partys of Agreement nfo.com.cn)
Packing Co., same parent － 19,464.9 14.22% Check －
commodity commodity price Announcement
Ltd. company
and labor and No.2013-L005,
32
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
transaction acceptance title of
of labor announcement:
from related Announcement
party on 2013
Routine Related
Deals
Total -- -- 19,464.9 -- -- -- -- --
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 Companys procurement and transport costs of packing materials so as to strengthen its
product competitiveness.
The Companys independency will not be affected by related transactions because the Company has
Influence of related transaction on listed companys
lower requirements for production technology of packing materials and there are too many qualified
independency
producers ready for selection.
The level of Companys 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 CNY194.649 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.
33
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(2)、Other important related transactions
Detailed information of other routine related transactions among Company, Companys controlling shareholder Yantai Changyu Group Co. and its
subsidiaries , please see Annex 7 “Relations among the Related Parties and Their Transactions” in the Financial Statement of the report.
Interim reports disclosure websites related queries about the significant related party transactions
Disclosure date of interim
Name of Interim announcement Website of disclosure of interim announcement
announcement
Announcement on 2013 Routine Related
April 19, 2013 http://www.cninfo.com.cn
Transactions
34
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
4、Major and important contracts and execution results
(1)、 Trusteeship, contract and leasehold issues
A) Contract situation
Contract situation description
During the report period, the contract for the operation of the Company, please see Annex 5 “the
part of “1. Subsidiary” in the consolidation scope of consolidated financial statements which is in
the reports 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
B) Leasehold situation
Leasehold situation description
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 1 st 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 important contracts
Other important contracts please see 26 part of “Other non-current liabilities” and 24 part of
“Non-current liabilities due within one year” in the notes 6 to the consolidated financial statements
of the reports financial report.
5、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
Commitments at share reform － － － － －
Commitments made in － － － － －
acquisition report or equity
changes report
Commitments at asset － － － － －
restructuring
In-process
Commitments at the initial Yantai According to 18th May
Forever performed
public offering or refinancing Changyu "Trademark 1997
35
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
Group Co. License
Ltd. Contract", the
Company will
pay trademark
royalty for the
"Changyu"prod
ucts of Yantai
Changyu Group
Co., Ltd every
year, Yantai
Changyu Group
Co., Ltd will use
trademark to
advertise
Changyu
trademarks and
the Contract
products.
Yantai
Changyu Intra-industry 18th May Has been
Forever
Group Co. competition 1997 performing
Ltd.
Commitments at middle and
small shareholders of the － － － －
Company
Commitment under timely
Yes
implementation or not
Whether or not to have specific
reasons of the unimplemented
NO
commitment and next steps(if
any)
36
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
6、The appointment and dismissal of certified public accountants
Currently appointed accounting firm
Deloitte Hua Yong certified public accountants co., Ltd.
Domestic accounting firm name
(special general partnership)
Reward for domestic accounting firm
190
(CNY0000)
Consecutive period for the audit
1
services of domestic accounting Firm
Name of Certified public accountant
for the audit services of domestic Xu Zhaohui, Li Xu
accounting Firm
Whether or not to dismiss the accounting firm during the report period
√Yes □NO
Whether or not to dismiss the accounting firm during the audit period
□Yes √ NO
Whether or not implement approval process when replacing the accounting firm
√Yes □NO
The explanation of dismissing and changing the accounting firm.
The Company will not appoint Ernst & Young Hua Ming certified public Accounts Co., Ltd. to be
the auditor, and will change to Deloitte Hua Yong to be the Companys auditor who will audit the
Companys 2013 financial report and 2013 internal control report through the approval of 5th
session of Board of Directors 14th meeting and 2012 shareholders meeting.
To employ internal control audit accounting firms, financial adviser or sponsor.
√ available □not available
The Company will appoint Deloitte Hua Yong as certified public accountants of the Companys
2013 internal control, and continue appointing this company as certified public accountants of the
Companys 2014 internal control.
37
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
VI、Changes in Shares and the Shareholders’ Situation
1、Changes in shares
Unit: share
Amount before this change Change (+, -) Amount after this change
Transfer
Percentage Allot Distribute bonus other to others Sub total Percentage
Amount new capital Amount
% share %
share share
capital
1、Unrestricted shares 685,464,000 100% 685,464,000 100%
(1)、A shares 453,460,800 66.15% 453,460,800 66.15%
(2)、B shares 232,003,200 33.85% 232,003,200 33.85%
2、Total shares 685,464,000 100% 685,464,000 100%
Cause of share change
□ available √ not available
Approval of stock change
□ available √ not available
Transfer of changed shares
□ available √ not available
38
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
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 Companys common shareholders, etc..
□ available √ not available
Other contents the Company thinks necessary or securities regulatory departments ask to make public.
□ available √ not available
2、Situation for shareholders and the actual controllers
(1)、The number of shareholders of the Company and the shareholdings
Unit：share
Total 50,322 Total number of shareholders until the end of Total 51,106
Total shareholders in the report
the 5th trading days before the disclosure day 36006 Shareholders of A share
37511 Shareholders of A share
period
12811 Shareholders of B share of the annual report 15100 Shareholders of B share
Shareholders holding more than 5% or the top 10 shareholders holding situation
Shares held Changes Number Pledged or frozen
Number of
Character of Percentage until the end of
Name of Shareholders shareholders (%) of the report during the unrestricted Share
restricted Amount
period report period shares status
shares
Domestic
YANTAI CHANGYU GROUP CO.
non-state-owned legal 50.4% 345,473,856 0 0 345,473,856 0
LTD.
person
GAOLING FUND,L.P. Foreign shareholder 3.53% 24,176,997 -102,734 0 24,176,997 0
GIC PRIVATE LIMITED Foreign shareholder 2.8% 19,220,973 19,220,973 0 19,220,973 0
BBH BOS S/A FIDELITY FD -
Foreign shareholder 2.35% 16,106,326 982,850 0 16,106,326 0
CHINA FOCUS FD
39
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
GSIC A/C MONETARY
Foreign shareholder 0.89% 6,101,940 540,493 0 6,101,940 0
AUTHORITY OF SINGAPORE
VALUE PARTNERS
HIGH-DIVIDEND STOCKS Foreign shareholder 0.87% 5,966,881 0 0 5,966,881 0
FUNDS
HTHK-MANULIFE CHINA
Foreign shareholder 0.77% 5,272,277 5,272,277 0 5,272,277 0
VALUE FUND
BBH A/C VANGUARD
EMERGING MARKETS STOCK Foreign shareholder 0.69% 4,707,066 4,707,066 0 4,707,066
INDEX FUND
BBH S/A FIDELITY FUNDS
Foreign shareholder 0.67% 4,591,482 4,591,482 0 4,591,482
SICAV-HEALTH CARE
UBS CUSTODY SERVICES
Foreign shareholder 0.64% 4,401,632 4,401,632 0 4,401,632 0
SINGAPORE PTE. LTD.
UBS (LUXEMBOURG) S.A. Foreign shareholder 0.57% 3,908,889 -1,094,110 0 3,908,889 0
Strategic investors or legal result of the placement of new
No.
shares to become a top 10 shareholders(if have)(see note3)
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
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. 24,176,997 B share 24,176,997
40
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
GIC PRIVATE LIMITED 19,220,973 B share 19,220,973
BBH BOS S/A FIDELITY FD - CHINA FOCUS FD 16,106,326 B share 16,106,326
GSIC A/C MONETARY AUTHORITY OF SINGAPORE 6,101,940 B share 6,101,940
VALUE PARTNERS HIGH-DIVIDEND STOCKS FUNDS 5,966,881 Bshare 5,966,881
HTHK-MANULIFE CHINA VALUE FUND 5,272,277 B share 5,272,277
BBH A/C VANGUARD EMERGING MARKETS STOCK INDEX FUND 4,707,066 B share 4,707,066
BBH S/A FIDELITY FUNDS SICAV-HEALTH CARE 4,591,482 B share 4,591,482
UBS CUSTODY SERVICES SINGAPORE PTE. LTD. 4,401,632 B share 4,401,632
UBS (LUXEMBOURG) S.A. 3,908,889 B share 3,908,889
The explanation for the associated relationship and accordant action of the top 10 Among the top 10 shareholders, Yantai Changyu Group
shareholders with unrestricted shares, the the associated relationship and accordant Company Limited has no associated relationship or accordant
action between the top 10 shareholders with unrestricted shares and the top 10 action relationship with the other 9 listed shareholders, and the
shareholders relationship among the other shareholders is unknown.
Explanation for the top 10 shareholders who involved in financing activities and The top 10 shareholders do not involve in financing activities
stock trading business (if have)(see notes 4) and stock trade business.
Whether or not the Companys shareholders promise to buy back trading during the report period
□ Yes √ No
41
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(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, distilled liquor and
non-alcohol beverages, planting of
Yantai Changyu Group Co. Ltd. Sun Liqiang 1997.04.27 26564582－4 CNY 50 million
agricultural products and export
business under the scope of
permission.
Finance data: at the end of 2013, total asset of controlling shareholder Yantai Changyu Group Co. Ltd.
amount to CNY 8.6 billion, net liability amounts to CNY 1.9 billion, net asset amounts to CNY 6.7
Operating results, financial condition, cash billion, 2013 operating income amounts to CNY 4.4 billion, net profit amounts to CNY 1.1 billion, net
cash flows generated from operating activities amount to CNY 0.8 billion.
flow and future development strategy etc. Development strategy: continuing to concentrate advantage of resource, focus on wine
business, develop properly related industries, try the best to promote the coordination of different
industrial development.
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
42
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(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.
Receiving the investments and dividends that Italian or overseas businesses
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
companys joint ventures and performing the duties of a controlling party;
engaging in the activities in terms of providing financial assistance, technical
ILLVA Saronno Augusto EUR and R&D and occupational training, shareholding affairs, organizing the
2005.01.24 －
Investment Italy Reina 5,160,000 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,
International Finance mainly dedicated to investment in private sectors of developing countries
USD 2.36
Corporation Cai Jinyong 1956.07.25 － while providing technical support and consultation service. The corporation
billion
is a multilateral financial institution that ranks first in the world in terms of
providing capital stock and loans to developing countries. Its purpose is to
43
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
promote sustainable investments of private sectors of developing countries in
order to alleviate poverty and improve peoples life.
State-owned Assets
Supervision and
According to the municipal government authorization, to perform the
Administration Wei Jing 2005.02.01 004260686 －
investors responsibility on behalf of state asset.
Commission of Yantai
Municipal Government
Operating results,
financial condition, cash
No.
flow and future
development strategy etc.
Equity situation for the
other domestic listed
companies controlled by No.
the actual controller
during the report period
Changes of the actual controllers during the report period
□ available √ not available
44
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
Introduction for property right and control relations between the Company and its actual controllers
Actual controller controls the Company through a trust or other asset management
□ available √ not available
45
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
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
Beginning date Ending date of the shares shares the
Name Post Status Gender Age
of the post the post beginning during the during the ending
of the period period of the
period period
Sun Liqiang Chairman to the Board of present M
Directors 66 2013.05.14. 2016.05.13 0 0 0 0
incumbent
Zhou Hongjiang Vice-chairman to the present M
Board of Directors and 49 2013.05.14. 2016.05.13 0 0 0 0
general manager incumbent
Leng Bin Director and vice-general present M
manager 51 2013.05.14. 2016.05.13 0 0 0 0
incumbent
Qu Weimin Director, Vice-general present M
manager and Secretary to 56 2013.05.14. 2016.05.13 0 0 0 0
the Board of Directors incumbent
Chen Jizong Director present M
38 2013.05.14. 2016.05.13 0 0 0 0
incumbent
Augusto Reina Director present M
73 2013.05.14. 2016.05.13 0 0 0 0
incumbent
Aldino Marzorati Director present M
61 2013.05.14. 2016.05.13 0 0 0 0
incumbent
46
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
Antonio Director present M
Appignani 75 2013.05.14. 2016.05.13 0 0 0 0
incumbent
Jean Paul Pinard Director present M
64 2013.05.14. 2016.05.13 0 0 0 0
incumbent
Xiao Wei Independent director present M
53 2013.05.14. 2016.05.13 0 0 0 0
incumbent
Wang Zhuquan Independent director leave post M 49 2010.05.13. 2013.05.12 0 0 0 0
Wang Shigang Independent director Present M
48 2013.05.14. 2016.05.13 0 0 0 0
incumbent
Fu Mingzhi Chairman for the Board of M
Supervisors leave post 60 2010.05.13 2013.05.12 0 0 0 0
Zhang Hongxia Supervisor leave post F 57 2010.05.13 2013.05.12 0 0 0 0
Jiang Jinqiang Supervisor leave post M 41 2010.05.13 2013.05.12 0 0 0 0
Kong Qingkun Chairman for the Board of present M
Supervisors 41 2013.05.14. 2016.05.13
incumbent
Zhang Lanlan Supervisor present F
44 2013.05.14. 2016.05.13
incumbent
Guo Ying Supervisor present F
39 2013.05.14. 2016.05.13
incumbent
Yang Ming Vice-general manager present M
55 － － 0 0 0 0
incumbent
Li Jiming Chief engineer present M
47 － － 0 0 0 0
incumbent
Jiang Hua Vice-general manager present M
50 － － 0 0 0 0
incumbent
Sun Jian Vice-general manager present M
47 － － 0 0 0 0
incumbent
47
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
Jiang Jianxun Finance manager present M
47 － － 0 0 0 0
incumbent
Total － － － － － － 0 0 0 0
48
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
2、Situation for the work experience
The main work experiences of the Companys directors, supervisors and senior management in the
recent 5 years.
(1)、Members of board of directors
Mr. Sun Liqiang, a college graduate and senior economist. He was the representative of 10th and
11th National Peoples Congress, Now he is the 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, a doctoral graduate and senior engineer,. Now he is the vice chairman of
Changyu Group ,and the representative of 12th National Peoples Congress. He began serving as
general manager of the Company on December 28th , 2001, Director, Vice Chairman and
concurrently as General Manager of the Company on May 20th , 2002, he has held the position ever
since.
Mr. Leng Bin, 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 and held the position ever since.
Mr. Qu Weimin, is a bachelor of engineering and senior economist. He has been serving as director,
vice General Manager and concurrently as Secretary to the board of directors of the Company since
September 18th , 1997.
Mr. Chen Jizong, a university graduate, the qualifications of statistician and accountant, now is the
union director of property management department of SASAC Yantai and Director of Changyu
Group. He has been director of the Company since 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. Xiao Wei, a postgraduate and lawyer, and now is the partner of Jun He Law Office. He began
serving as independent director of the Company on September 1st, 2010. he has held the position
ever since.
49
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
Mr. Wang Shigang, MBA and qualification of China Certified Public Accountant, now is the board
chairman of Shandong Tianhengxin Construction Cost Consultion 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. Kong Qingkun, 41-year-old, a university graduate and economist, used to be the section
member of production department in the healthy liquor branch; the clerk and vice manager of
general manager office, now he is the manager of general manager office.
Ms. Zhang Lanlan, 44-year-old, a university graduate and economist, used to be vice-manager of
import/export company, manager of import department; she is manager of board of directors office
now.
Ms. Guo Ying, 39-year-old, a university graduate and senior accountant, used to be the member of
financial audit department of Yantai Yiqing Industry Company; senior staff of operating
supervision department of SASAC Yantai, senior staff and deputy director of directors & supervisor
office; now she is deputy director of directors & supervisor office of SASAC Yantai.
(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 and has held the position ever since.
Mr. Li Jiming, is a doctoral graduate and applied researcher. He began serving as Chief Engineer of
the Company on September 14th, 2001 and has held the position ever since.
Mr. Jiang Hua, is a postgraduate and senior engineer. He began serving as Deputy General Manager
of the Company on September 14th, 2001 and has held the position ever since.
Mr. Sun Jian, holds an MBA and economist. He began serving as Deputy General Manager of the
Company on March 22nd, 2006 and has held the position ever since.
Mr. Jiang Jianxun, holds an MBA and is an accredited accountant. He began serving as Financial
Manager of the Company on May 20th, 2002. he has held the position ever since.
50
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
Post in the shareholders company
√ available □ not available
Paid by
Beginning date Ending date of
Name Shareholders Company Post shareholders
of the post the post
company or not
Sun Liqiang Chairman and
Yantai Changyu Group Co. Ltd. general manager 2013.10.08 2017.10.07 No
Zhou Hongjiang Vice chairman
Yantai Changyu Group Co. Ltd. 2013.10.08 2017.10.07 No
Leng Bin Director
Yantai Changyu Group Co. Ltd. 2009.10.28 2013.10.08 No
Li Jiming Director
Yantai Changyu Group Co. Ltd. 2013.10.08 2017.10.07 No
Sun Jian Director
Yantai Changyu Group Co. Ltd. 2013.10.08 2017.10.07 No
Chen Jizong Director
Yantai Changyu Group Co. Ltd. 2013.10.08 2017.10.07 No
Augusto Reina Director
Yantai Changyu Group Co. Ltd. 2013.10.08 2017.10.07 No
Aldino Marzorati Director
Yantai Changyu Group Co. Ltd. 2013.10.08 2017.10.07 No
Antonio Appignani Director
Yantai Changyu Group Co. Ltd. 2013.10.08 2017.10.07 No
Jean Paul Pinard Director
Yantai Changyu Group Co. Ltd. 2013.10.08 2017.10.07 No
Explanation for the post in the
No.
shareholders company
Post at other companies
√ available □ not available
51
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
Beginning
Post at other Ending date of Paid by other
Name Others Company date of the
company the post company or not
post
Yantai Changyu Zhongya
Director and legal
Leng Bin Medicine & Healthy Liquor Co., 2012.09.10 No
representative
Ltd
Explanation for the post in the
No.
shareholders company
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 was passed during the Board of Directors meeting.
Salary of directors, supervisors and senior management during the report period.
52
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
Unit: CNY0000
Total reward
Total reward Actual reward at
from the
Name Post Gender Age Status from the the end of the
shareholders
company report period
company
Sun Liqiang Chairman to the Board of M present
Directors 66 123.9 0 92.2
incumbent
Zhou Hongjiang Vice-chairman to the Board M present
of Directors and general 49 103.9 0 77.6
manager incumbent
Leng Bin Director and vice-general M present
manager 51 76.8 0 59.9
incumbent
Qu Weimin Director, Vice-general M present
manager and Secretary to the 56 75.5 0 58.9
Board of Directors incumbent
Chen Jizong Director M present
38 0 0 0
incumbent
Augusto Reina Director M present
73 0 0 0
incumbent
Aldino Marzorati Director M present
61 0 0 0
incumbent
Antonio Appignani Director M present
75 0 0 0
incumbent
Jean Paul Pinard Director M present
64 0 0 0
incumbent
Xiao Wei Independent Director M present
53 5 0 5
incumbent
Wang Zhuquan Independent Director M
49 leave post 0 0 0
53
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
Wang Shigang Independent Director M
48 leave post 5 0 5
Fu Mingzhi Chairman for the Board of M
supervisors 60 leave post 34.3 0 27.1
Zhang Hongxia supervisor
F 57 leave post 0 0 0
Jiang Jinqiang Supervisor M
41 leave post 0 0 0
Kong Qingkun Chairman for the Board of M present
supervisors 41 50.4 0 40.1
incumbent
Zhang Lanlan supervisor F present
44 18.4 0 16.7
incumbent
Guo Ying supervisor F present
39 0 0 0
incumbent
Yang Ming Vice-general manager M present
55 72 0 55.6
incumbent
Li Jiming Chief Engineer M present
47 72 0 55.6
incumbent
Jiang Hua Vice-general manager M present
50 72 0 55.6
incumbent
Sun Jian Vice-general manager M present
47 72 0 55.6
incumbent
Jiang Jianxun Finance manager M present
47 48 0 38.8
incumbent
Total -- -- -- -- 829.2 0 643.7
The awarded equity incentives for the directors, supervisors and senior management of the Company during the report period
□available √ not available
54
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
4、Changes for Company’s directors, supervisors, Senior Management
Name Post Type Date Reason
Appointed for 6
Wang Zhuquan Independent director leave post after full term 2013.05.12
years
Fu Mingzhi Chairman for the Board of supervisors leave post after full term 2013.05.12 Retired
Zhang Hongxia Supervisor leave post after full term 2013.05.12 Retired
Jiang Jinqiang Supervisor leave post after full term 2013.05.12 Change jobs
Kong Qingkun Chairman for the Board of supervisors Be elected 2013.05.13
Zhang Lanlan supervisor Be elected 2013.05.13
Guo Ying supervisor Be elected 2013.05.13
55
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
5、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.
6、Staff of the Company
As to December 31st 2013, the total registered staff number of the Company (including the Companys headquarter and main controlling subsidiary
companies) was 5,204, consisting of :
Classification Category Number Percentage of total staff
Specialty constitution Production and service staff 2,648 50.88%
Sales staff 2,129 40.91%
Technical staff 152 2.92%
Financial and administrative staff 275 5.29%
Education degree Bachelor or above 1,488 28.59%
College graduate 1,877 36.07%
Vocational school 725 13.93%
Senior high school diploma or below 1,114 21.41%
56
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
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 Companys governance structure is in accord with
requirements of relevant regulatory documents on listing companys 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
Companys 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.
(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.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(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.
Whether the Companys corporate governance is not in compliance with the Company Law and the
relevant provisions of China Securities Regulatory Commission
□ Yes √ No
The Companys corporate governance is in compliance with the Company Law and the relevant
provisions of China Securities Regulatory Commission.
Progress of the Companys 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 Companys 5th session of Board of Directors 10th meeting 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, the Company has strictly managed staffs who contact with inside information Source against
material inside information of the sensitive disclosure etc such as reporting information insiders’
registration, and informing timely to supervisory department. During the report period, there were no in
the Company the information insiders transactions of the Companys shares by taking advantage of the
sensitive inside information that affects the Companys share price before it was disclosed and no
supervisory departments punishment records, either.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
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
Working Report 2012,
The Board of Supervisors
Working Report 2012,
2012Annual Report, Announcement NO.:
2012 Profit Distribution
2013-Temporary 007,
Scheme,
Proposal on the Reelection Announcement Name:
of Board of Directors, Resolution for 2012
2012 th th
15 May Proposal on the All 16 May Shareholders meeting,
Shareholders Appointment of deliberated
2013 2013 Disclosure media:
Meeting independent directors, and passed
“China Securities
Proposal on the Reelection Newspaper” ,
of Board of Supervisors, “Securities Times” ,
Proposal on the “Hong Kong
Company's Authorization Commercial Daily” and
www.cninfo.com.cn
Management System
Proposal on Renewal of
Contract with the Present
Certified Public
Accountants Firm
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 attendance Absence
attendance attendance attendance personally for
time
successive twice
Geng Zhaolin 2 1 1 0 0 No.
Wang Zhuquan 2 1 1 0 0 No.
Xiao Wei 6 2 4 0 0 No.
Wang Shigang 6 2 4 0 0 No.
Attendance time of independent
directors for the shareholders 1
meeting
Explanation for not attending personally the board of directors meetings for successive twice. No.
- 59 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(2)、 Any objections for the Companys projects from the independent directors
Whether or not the independent directors raised any objections for the Companys projects.
□Yes √No.
During the report period, the independent directors did not raise any objections for the Companys
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
Because the Company changed the accounting firm and the first increasing contents of internal control
audit, independent directors proposed that the Company should reinforce communicating with the
accounting firm, and requested that the accountant should properly ensure main emphasis audited field
and the progress of auditing; inspected the Companys investment projects in person, proposed that the
Company should strictly control the budget of capital expenditure of project investment, properly
reinforce engineering preliminary budget audits and audit of return. The Company adopted the relevant
propositions, ensured 2013 fiscal and internal control audit going well; control effectively with the
investment scale of each 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 28, 2013, 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 Companys 2012 annual report who
expounded the main standards, main emphasis audited field, the problems and the matters necessary to
adjust that were found during the auditing. Weve 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 Companys management reported to us as well as the progress of important
events, we believe that we have no objection to the Companys 2012 financial statement preliminarily
examined by Ernst & Young Hua Ming Assurance & Advisory Business Services and the preliminary
audit opinions of that Services.”
(B) On 17th April 2013, the Board of Directors auditing committee deliberated and passed 2012
Auditing Report issued by Ernst &Young Hua Ming Certified Public Accounts Co., Ltd., Draft Proposal
on 2012 Profit Distribution, Proposal on Appointment for Certified Public Accountants Firm, 2012 Self
Assessment Report on the Company's Internal Control.
All of Committee members unanimously agree that the above proposals should be supplied for the 5th
Session Board of Directors 14th Meeting of the Company to make deliberation.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
The meeting reached the following consensus:
①Ernst & Young Hua Ming Certified Public Accounts Co., Ltd. issued a clean-opinion auditing report
on the Companys 2012 financial statements, which reflected the Companys financial condition,
operating results and cash flow truly, objectively and correctly.
② The profit distribution scheme the Company formulated is relatively acceptable, taking the
stockholders interest into account while paying attention to the Companys long-term development .
③The Companys “2012 Self Assessment Report on the Company's Internal Control” has truly and
objectively mirrored out the present standing of the Companys 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 Companys 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 Regions 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.
④In order to ensure auditors independency and prevent occurrence of fraudulent practices, the meeting
proposed that the Company will not appoint Ernst &Young Hua Ming Certified Public Accounts Co. Ltd
to be the Companys auditor in 2013, and will change to appoint Deloitte Hua Yong certified public
accounts co., Ltd. to be the Companys auditor in 2013 for a period of one year who will make audit in
the following two aspects:
Firstly, to audit the Companys 2013 financial report and release a financial auditing report.
Secondly, to audit the Companys 2013 internal control and release an internal control auditing report.
The annual auditing fee for the above parts are CNY 1.9million including travel expense and all service
charge.
Besides that the meeting has approved and deliberated “2013 internal auditing plan”.
(C) On 26th August 2013, the board of directors auditing committee deliberated and passed 2013
Semiannual Report and Semiannual Profit Distribution 2013. The meeting reached the following
consensus:
①The Companys 2013 semiannual financial statements reflected the Companys financial condition,
operating results and cash flow truly, objectively and correctly.
②As the Company just realized 2012 annual profit distribution scheme in middle July 2012, we propose
neither to distribute profits for the first half of 2013 nor to increase the Companys 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 6th
Session Board of Directors 2nd Meeting of the Company to make deliberation.
(2)、Summary report of the board of directors emolument committee
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
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 Companys directors and senior managers.
“2012 Assessment Results of the Companys Senior Officers Performance”was deliberated and passed
by the board of directors emolument committee on 17th April 2013, who thought that proposal was in
compliance with assessment methods stipulated in the“proposal on Incentive Scheme on the Companys
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 5th Session
Board of Directors 14th Meeting of the Company for making deliberation.
During the report period, the board of directors emolument committee also examined the 2012 payroll
records of the directors and the senior managers who receive salaries from the Company. The committee
believes that the Companys directors, supervisors and senior managers got paid completely in line with
the processes of the Companys 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.
□Yes √No
During the report period, the board of supervisors has no objection during their oversight activities.
6、Relative to the controlling shareholder, independence and completeness of the Company on
business, personnel, assets, organization and finance
(1)、Personnel arrangement: the Companys 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. The Company has
already transferred free the trademarks to the Company including 黄金冰谷，爱斐堡，爱菲堡，爱斐 and
AFIP etc trademarks. However, due to some issues from the past, the Company permitted to use
“Changyu” etc the intangible assets such as part of trademark ownership and patent still held by the
controlling shareholders.
(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
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
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.
(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 Companys 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 Companys
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 22 % than last year.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
IX、Internal Control
1、Internal control construction
According to the rules of General Criteria of Companys Internal Control jointly issued by the Ministry of
Finance, CSRC and other five ministries with its corresponding guidelines and Jinan securities regulatory
bureau related documents, combining with actually practicing the standardized construction of internal
control system of the Company. In order to vigorously advance for the standardized construction of
internal control system, the Company has established a leading group of internal control and self
assessment team responsible for internal control standard system, the headquarter of Company and other
subsidiaries set up control & reconciliation specialist who undertake the standardized construction of
internal control system and the specific implementation, until now the Company has established the
relatively standardized internal control standard system, and implemented effectively. Meanwhile in
accordance with the changes of internal and external environment, continuously push to the improvement
and renewal of the internal control system, in order to ensure the effectiveness of internal control.
2、The board of directors’ statement on the internal control responsibilities
It is the responsibility of the board of directors to establish, perfect and effectively execute the internal
control, evaluate its efficiency and disclose truthfully the assessment report on internal control as
requested by Companys internal control standard system. The board of supervisors should supervise the
establishment and implementation of board of directors on the internal control. Managers should take in
charge of organizing and leading the daily operation of Companys internal control. The board of
directors，the board of supervisors，directors, supervisors & senior management of the Company
collectively and individually accepted full responsibility for the truthfulness，accuracy and completeness
of the information contained in the report and confirm that to the best of their knowledge and belief there
are no unfaithful facts, significant omissions or misleading statements. The target of the Companys
internal control is to reasonably guarantee the lawfulness and compliance on operation management, the
safety of assets, the truthfulness and completeness of financial report and its related information, so as to
improve business efficiency and result and promote the realization of development strategy. Due to the
inherent limitations, internal control only can provide the reasonable guarantee for realizing the above
mentioned targets. Besides, owing to the changed situation which could probably cause the irrelevancy of
internal control or reduce the compliance for the control policy and formality, there is a certain risk to
calculate the efficiency of the future internal control according to the assessment result of internal
control.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
3、Basis of establishing internal control for financial report
Basis of establishing internal control for financial report is in accordance with the rules of General
Criteria of Companys Internal Control with its corresponding guidelines, the guidelines of listed
companys internal control issued by CSRC.
4、Self-assessment report on internal control
The specific circumstances for the significant defects of the internal control found during the report
period in the internal control self assessment report.
During the report period, the significant defects of internal control havent been found.
Disclosure date for the full text of the
26th April 2014
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
Audit opinions of the internal control audit report
We believe that Yantai Changyu Pioneer Wine Co., Ltd. is in accordance with the rules of General
Criteria of Companys Internal Control and other related rules, all significant aspects keep effective
internal control in the financial report
Disclosure date for the full text of the th
26 April 2014
internal control self assessment report
Disclosure index for the full text of the Document name: 2013 internal control report on self
internal control self assessment report assessment. Website address: www.cninfo.com.cn
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-assessment 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 Board of Directors and also been
in strict performance. During the report period, there are no big errors in 2012 annual report and 2013
semi-annual report issued and disclosed by the Company.
- 65 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
X、Financial Report
1、Audit Report
Type of audit opinion Standard unqualified audit opinion
Date signed on audit report 24th April, 2014
Deloitte Hua Yong certified public accountants co.,
Audit agency name
Ltd. (special general partnership)
Certified public accountant's name Xu Zhaohui Li Xu
De Shi Bao (Shen) Zi (14) No. P1493
AUDITOR'S REPORT
TO THE 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"), which comprise the
consolidated and company balance sheets as at 31 December 2013, 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.
1. Management' responsibility for the financial statements
Management of the Company is responsible for the preparation and fair presentation of these financial
statements. This responsibility includes: (1) preparing the financial statements in accordance with
Accounting Standards for Business Enterprises to achieve fair presentation of the financial statements; (2)
designing, implementing and maintaining internal control which is necessary to enable that the financial
statements are free from material misstatement, whether due to fraud or error.
2. Auditors' responsibility
Our responsibility is to express an audit opinion on these financial statements based on our audit. We
conducted our audit in accordance with China Standards on Auditing. China Standards on Auditing
require that we comply with the 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 audit 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, Certified Public Accountants consider the internal
control relevant to the preparation and fair 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 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.
- 66 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
AUDITOR'S REPORT
TO THE SHAREHOLDERS OF
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED - continued
(A joint stock limited company incorporated in the People's Republic of China)
Opinion
In our opinion, the financial statements of Yantai Changyu Pioneer Wine Company Limited present fairly,
in all material respects, the company's and consolidated financial position as of 31 December 2013, and
the company's and consolidated results of operations and cash flows for the year then ended in
accordance with Accounting Standards for Business Enterprises.
Deloitte Touche Tohmatsu Chinese Certified Public Accountant
Certified Public Accountants LLP Xu Zhao Hui
Shanghai, China Li Xu
24 April 2014
- 67 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
CONSOLIDATED BALANCE SHEET
YEAR ENDED 31 DECEMBER 2013
ASSETS Notes 2013 2012
RMB RMB
CURRENT ASSETS
Cash and bank VI-1 1,367,818,182 2,227,470,828
Notes receivables VI-2 79,702,753 92,635,701
Trade receivables VI-3 177,109,516 135,217,384
Advances to suppliers VI-4 45,997,863 44,294,482
Interest receivable VI-5 8,417,995 7,215,854
Other receivables VI-6 99,331,794 28,462,945
Inventories VI-7 2,121,117,437
____________ 2,268,621,441
____________
Total current assets 3,899,495,540
____________ 4,803,918,635
____________
NON-CURRENT ASSETS
Long-term equity investments VI-8 - 5,000,000
Property, plant and equipment VI-9 1,917,641,344 1,823,983,721
Construction in progress VI-10 1,423,654,530 832,828,689
Materials for construction of fixed assets 676,539 -
Intangible assets VI-11 296,129,754 278,293,922
Biological assets VI-12 101,794,515 39,681,580
Goodwill VI-13 13,112,525 -
Long-term prepaid expenses VI-14 165,521,803 160,871,860
Deferred tax assets VI-15 158,533,090 150,376,138
Other non-current assets VI-17 24,972,804
____________ 28,180,035
____________
Total non-current assets 4,102,036,904
____________ 3,319,215,945
____________
Total assets 8,001,532,444
____________ 8,123,134,580
____________
68
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
CONSOLIDATED BALANCE SHEET
YEAR ENDED 31 DECEMBER 2013 - continued
LIABILITIES AND EQUITY Notes 2013 2012
RMB RMB
CURRENT LIABILITIES
Short-term borrowings VI-18 243,170,674 -
Notes payable 5,765,694 -
Trade payables VI-19 258,116,331 324,881,168
Advances from customers VI-20 188,651,254 450,172,253
Employee benefits VI-21 134,322,137 140,484,927
Taxes payable VI-22 194,413,430 444,084,576
Other payables VI-23 497,301,630 470,650,111
Interest payable 2,152,059 -
Non-current liability due within 1 year VI-24 - 150,945,000
Other current liabilities VI-25 12,915,801
____________ 8,090,382
____________
Total current liabilities 1,536,809,010
____________ 1,989,308,417
____________
NON-CURRENT LIABILITIES
Deferred tax liability VI-15 5,336,115 5,336,115
Other non-current liabilities VI-26 88,366,835
____________ 69,004,861
____________
Total non-current liabilities 93,702,950
____________ 74,340,976
____________
Total liabilities 1,630,511,960
____________ 2,063,649,393
____________
EQUITY
Share capital VI-27 685,464,000 685,464,000
Capital surplus VI-28 563,139,042 562,139,042
Surplus reserve VI-29 342,732,000 342,732,000
Retained earnings VI-30 4,616,944,663 4,322,769,136
Equity attributable to shareholders
of the Company 6,208,279,705 5,913,104,178
Non-controlling interests 162,740,779
____________ 146,381,009
____________
Total equity 6,371,020,484
____________ 6,059,485,187
____________
Total liabilities and equity 8,001,532,444
____________ 8,123,134,580
____________
The accompanying notes form an integral part of these financial statements.
The financial statements on pages 3 to 93 were signed by the following:
Legal Representative: _________________________________
Person in Charge of the Accounting Body: _________________
Chief Accountant: ____________________________________
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
BALANCE SHEET OF THE COMPANY
YEAR ENDED 31 DECEMBER 2013
ASSETS Notes 2013 2012
RMB RMB
CURRENT ASSETS
Cash and bank XII-1 602,444,243 1,090,260,851
Notes receivabless XII-2 32,594,381 1,450,000
Trade receivables XII-3 1,600,968 710,080
Dividend receivable XII-4 752,595,884 993,614,383
Advances to suppliers XII-5 24,824,672 26,131,908
Interest receivable VI-5 8,417,995 7,215,854
Other receivables XII-6 3,709,583,949 2,194,219,753
Inventories XII-7 781,284,189
____________ 893,442,758
____________
Total current assets 5,913,346,281
____________ 5,207,045,587
____________
NON-CURRENT ASSETS
Long-term equity investments XII-8 1,048,208,923 1,006,492,893
Property, plant and equipment XII-9 425,294,116 354,789,743
Construction in progress XII-10 269,802 24,640,660
Intangible assets 79,139,831 81,512,908
Biological assets XII-11 60,851,409 16,866,437
Deferred tax assets XII-12 22,956,747 19,517,202
Other non-current assets XII-13 2,616,525
____________ 2,502,630
____________
Total non-current assets 1,639,337,353
____________ 1,506,322,473
____________
Total assets 7,552,683,634
____________ 6,713,368,060
____________
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
BALANCE SHEET OF THE COMPANY
YEAR ENDED 31 DECEMBER 2013 - continued
LIABILITIES AND EQUITY Notes 2013 2012
RMB RMB
CURRENT LIABILITIES
Short-term borrowings VI-18 243,170,674 -
Trade payables XII-14 166,453,563 164,815,117
Employee benefits XII-15 69,032,912 80,144,533
Taxes payable XII-16 37,578,670 17,995,089
Other payables XII-17 1,612,596,521 1,432,464,297
Interest payable 2,152,059 -
Other current liabilities 2,559,227
____________ 1,856,337
____________
Total current liabilities 2,133,543,626
____________ 1,697,275,373
____________
NON-CURRENT LIABILITIES
Other non-current liabilities 22,275,462
____________ 19,905,019
____________
Total non-current liabilities 22,275,462
____________ 19,905,019
____________
Total liability 2,155,819,088
____________ 1,717,180,392
____________
EQUITY
Share capital VI-27 685,464,000 685,464,000
Capital surplus XII-18 557,222,454 557,222,454
Surplus reserve VI-29 342,732,000 342,732,000
Retained earnings 3,811,446,092
____________ 3,410,769,214
____________
Total equity 5,396,864,546
____________ 4,996,187,668
____________
Total liabilities and equity 7,552,683,634 6,713,368,060
____________ ____________
The accompanying notes form an integral part of these financial statements.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
CONSOLIDATED INCOME STATEMENT
YEAR ENDED 31 DECEMBER 2013
Notes 2013 2012
RMB RMB
Revenue VI-32 4,320,948,572 5,643,530,553
Less: Cost of sales VI-32 1,357,897,999 1,401,088,983
Taxes and surcharges VI-33 236,394,164 318,214,304
Selling expenses VI-34 1,140,836,150 1,449,224,163
Administrative expenses VI-35 245,498,950 254,374,809
Impairment loss of assets VI-36 2,149,438 2,777,648
Add: Financial income VI-37 18,700,357
____________ 19,918,261
____________
Operating profit 1,356,872,228 2,237,768,907
Add: Non-operating income VI-38 42,108,726 35,378,260
Less: Non-operating expenses VI-39 1,874,223 2,971,409
Including: losses on disposal
of non-current assets 678,016
____________ 2,581,199
____________
Profit before tax 1,397,106,731 2,270,175,758
Less: Income tax VI-40 348,920,804
____________ 569,247,641
____________
Profit for the year 1,048,185,927
____________ 1,700,928,117
____________
Attributable to shareholders of the Company 1,048,185,927
____________ 1,700,928,117
____________
Earnings per share
Basic earnings per share VI-41 1.53
____________ 2.48
____________
Diluted earnings per share VI-41 N/A
____________ N/A
____________
Comprehensive income 1,048,185,927
____________ 1,700,928,117
____________
Attributable to shareholders of the Company 1,048,185,927
____________ 1,700,928,117
____________
The accompanying notes form an integral part of these financial statements.
- 72 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
INCOME STATEMENT OF THE COMPANY
YEAR ENDED 31 DECEMBER 2013
Notes 2013 2012
RMB RMB
Revenue XII-19 1,730,694,774 1,776,979,032
Less: Cost of sales XII-19 1,473,772,762 1,444,948,143
Taxes and surcharges XII-20 135,046,585 175,240,595
Administrative expenses XII-21 109,664,952 126,120,749
Impairment loss of assets XII-22 4,392,429 -
Add: Financial income XII-23 25,948,141 24,834,687
Investment income XII-24 1,126,019,415
____________ 1,091,018,499
____________
Operating Profit 1,159,785,602 1,146,522,731
Add: Non-operating income 4,266,595 2,141,698
Less: Non-operating expenses 1,019,467
____________ 2,434,516
____________
Profit before tax 1,163,032,730 1,146,229,913
Less: Income tax 8,345,452
____________ 15,334,107
____________
Profit for the year 1,154,687,278
____________ 1,130,895,806
____________
Total comprehensive income 1,154,687,278
____________ 1,130,895,806
____________
The accompanying notes form an integral part of these financial statements.
- 73 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
CONSOLIDATED SATATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2013
2013
Attributable to shareholders of the Company
Issue Capital Surplus Retained Non-controlling
capital surplus reserve earnings Subtotal interests Total
RMB RMB RMB RMB RMB RMB RMB
1January 2013 685,464,000
_______ 562,139,042
_______ 342,732,000 4,322,769,136 5,913,104,178
_______ ________ ________ 146,381,009
_______ 6,059,485,187
________
Profit for the year and
total comprehensive income - - - 1,048,185,927 1,048,185,927 - 1,048,185,927
Shareholders' injection
Injection of non-controlling
interest - - - - - 16,359,770 16,359,770
Proposed final dividend
(Notes VI-30)
Withdrawal of surplus reserve - - - (754,010,400) (754,010,400) - (754,010,400)
Others (Notes VI-28) -
_______ 1,000,000
_______ - - 1,000,000
_______ ________ ________ -
_______ 1,000,000
________
31 December 2013 685,464,000 563,139,042 342,732,000 4,616,944,663 6,208,279,705 162,740,779 6,371,020,484
_______ _______ _______ ________ ________ _______ ________
2012
Attributable to shareholders of the Company
Issue Capital Surplus Retained Non-controlling
capital surplus reserve earnings Subtotal interests Total
RMB RMB RMB RMB RMB RMB RMB
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 and
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
Withdrawal of surplus reserve - - 46,789,370 (46,789,370) - - -
Proposed final dividend
(Notes VI-30) - - - (801,465,600) (801,465,600) - (801,465,600)
Others (Notes VI-30) 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
________
The accompanying notes form an integral part of these financial statements.
- 74 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
STATEMENT OF CHANGES IN EQUITY OF THE COMPANY
YEAR ENDED 31 DECEMBER 2013
2013
Issued capital Capital surplus Surplus reserve Retained earnings Total
RMB RMB RMB RMB RMB
1 January 2013 685,464,000
________ 557,222,454
________ 342,732,000
________ 3,410,769,214
_________ 4,996,187,668
_________
Profit for the year and
total comprehensive income - - - 1,154,687,278 1,154,687,278
Withdrawal of surplus reserve
Proposed final dividend (Notes VI-30) -
________ -
________ -
________ (754,010,400)
_________ (754,010,400)
_________
31 December 2013 685,464,000
________ 557,222,454
________ 342,732,000
________ 3,811,446,092
_________ 5,396,864,546
_________
2012
Issued capital Capital surplus Surplus reserve Retained earnings Total
RMB RMB RMB RMB RMB
1 January 2012 527,280,000
________ 557,222,454
________ 295,942,630
________ 3,286,312,378
_________ 4,666,757,462
_________
Profit for the year and
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 VI-30) -
________ -
________ -
________ (801,465,600)
_________ (801,465,600)
_________
Shareholder equity internal carry forward
Others (Notes VI-30) 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
_________
The accompanying notes form an integral part of these financial statements.
- 75 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31 DECEMBER 2013
Notes 2013 2012
RMB RMB
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from sales of goods or rendering of service 4,766,532,032 6,775,549,780
Cash received form tax refund 22,163,624 14,636,437
Cash received relating to other operating activities VI-42 47,960,711
__________ 40,051,912
__________
Cash inflows from operating activities 4,836,656,367
__________ 6,830,238,129
__________
Cash paid for goods and services (1,293,320,336) (1,997,334,346)
Cash paid to and on behalf of employees (379,880,613) (409,261,052)
Cash paid for all types of taxes (1,368,825,802) (1,768,277,184)
Cash paid relating to other operating activities VI-42 (1,059,555,309)
__________ (1,353,324,225)
__________
Cash outflows from operating activities (4,101,582,060)
__________ (5,528,196,807)
__________
Net cash flows from operating activities VI-43 735,074,307
__________ 1,302,041,322
__________
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in term deposits over 3 months 1,292,524,719 1,273,844,720
Proceeds from return on investments 33,050,471 46,581,313
Proceeds from disposal of property, plant and equipment 1,026,411
__________ 2,094,333
__________
Cash inflows from investing activities 1,326,601,601
__________ 1,322,520,366
__________
Cash paid for acquisition of properties, plants and equipments,
intangible assets and other long-term assets (962,180,456) (870,164,926)
Cash paid for term deposits over 3 months (907,392,728) (662,524,719)
Other cash paid for the purchase of non-controlling interest (16,883,864)
__________ -
__________
Cash outflows from investing activities (1,886,457,048)
__________ (1,532,689,645)
__________
Net cash flows from investing activities (559,855,447)
__________ (210,169,279)
__________
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received from Non-controlling interest 16,359,770 10,062,522
Cash receipts from borrowings 243,170,674 -
Cash received from other financing activities -
__________ 90,000,000
__________
Cash inflows from financing activities 259,530,444
__________ 100,062,522
__________
Dividends paid and interest paid (764,539,398) (805,660,589)
Cash paid from other financing activities VI-42 (275,945,000)
__________ (80,497,823)
__________
Cash outflows from financing activities (1,040,484,398)
__________ (886,158,412)
__________
Net cash flows from financing activities (780,953,954)
__________ (786,095,890)
__________
NET INCREASE OF CASH AND CASH EQUIVALENTS (605,735,094) 305,776,153
ADD: CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR VI-43 1,562,294,026
__________ 1,256,517,873
__________
CASH AND CASH EQUIVALENTS AT END OF YEAR VI-43 956,558,932
__________ 1,562,294,026
__________
The accompanying notes form an integral part of these financial statements.
- 76 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
CASH FLOW STATEMENT OF THE COMPANY
YEAR ENDED 31 DECEMBER 2013
Notes 2013 2012
RMB RMB
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from sales of goods or rendering of service 1,993,219,656 2,190,406,491
Cash received relating to other operating activities 9,194,891
__________ 8,085,071
__________
Cash inflows from operating activities 2,002,414,547
__________ 2,198,491,562
__________
Cash paid for goods and services (1,385,474,499) (1,930,252,146)
Cash paid to and on behalf of employees (162,425,829) (147,607,346)
Cash paid for all types of taxes (206,446,458) (335,467,847)
Cash paid relating to other operating activities (1,459,407,016)
__________ (1,026,816,523)
__________
Cash outflows from operating activities (3,213,753,802)
__________ (3,440,143,862)
__________
Net cash flows from operating activities XII-25 (1,211,339,255)
__________ (1,241,652,300)
__________
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in term deposits over 3 months 1,292,524,719 1,268,844,720
Proceeds from return on investments 1,395,495,286 2,003,196,895
Proceeds from disposals of property, plant and equipment 4,000
__________ 6,647,026
__________
Cash inflows from investing activities 2,688,024,005
__________ 3,278,688,641
__________
Cash paid for acquisition of property, plant and equipment,
intangible assets and other long-term assets (131,396,826) (36,503,683)
Cash paid for term deposits over 3 months (907,392,728) (662,524,719)
Cash paid for subsidiary investment (29,988,530)
__________ (408,193,530)
__________
Cash outflows from investing activities (1,068,778,084)
__________ (1,107,221,932)
__________
Net cash flows from investing activities 1,619,245,921
__________ 2,171,466,709
__________
CASH FLOWS FROM FINANCING ACTIVITIES
Cash receipts from borrowings 243,170,674
__________ -
__________
Cash inflows from financing activities 243,170,674
__________ -
__________
Cash paid for distribution of dividends or profits
and for interest expenses (754,010,400) (801,465,600)
Cash paid from other financing activities (125,000,000)
__________ -
__________
Cash outflows from financing activities (879,010,400)
__________ (801,465,600)
__________
Net cash flows from financing activities (635,839,726)
__________ (801,465,600)
__________
INCREASE/(DECREASE) OF CASH
AND CASH EQUIVALENTS (227,933,060)
__________ 128,348,809
__________
ADD: CASH AND CASH EQUIVALENTS
AT BEGINNING OF THE YEAR XII-26 425,084,049
__________ 296,735,240
__________
CASH AND CASH EQUIVALENTS AT END OF THE YEAR XII-26 197,150,989
__________ 425,084,049
__________
The accompanying notes form an integral part of these financial statements.
- 77 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2013
(I) 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.
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 V-27 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 [23 April] 2014.
According to the Company's articles of association, the financial statements will be reviewed by
shareholders on the shareholder's meeting.
- 78 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(II) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES
1. Preparation of financial statements
The Group has adopted the Accounting Standards for Business Enterprises ("ASBE") issued by
the Ministry of Finance ("MoF") on 15 February 2006. In addition, the Group has disclosed
relevant financial information in accordance with Information Disclosure and Presentation Rules
for Companies Offering Securities to the Public No. 15－ General Provisions on Financial
Reporting (Revised in 2010).
The financial statements are prepared on a going concern basis.
The Group adopts the historical cost as the principle of measurement in the financial statements.
Where assets are impaired, provisions for asset impairment are made in accordance with relevant
requirements.
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 2013, financial performance and cash flow in 2013
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
Renminbi (“RMB”) is the currency of the primary economic environment in which the Company
and its domestic subsidiaries operate. Therefore, the Company and its domestic subsidiaries
choose RMB as their functional currency. The Company's foreign subsidiary chooses Currency
RMB as its functional currency on the basis of the primary economic environment in which it
operates. The Group adopts RMB to prepare its financial statements.
- 79 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(II) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
5. Business combination
Business combinations not involving enterprises under common control and goodwill
A business combination not involving enterprises under common control is a business
combination in which all of the combining enterprises are not ultimately controlled by the same
party or parties before and after the combination.
The cost of combination is the aggregate of the fair values, at the acquisition date, of the assets
given, liabilities incurred or assumed, and equity securities issued by the acquirer in exchange for
control of the acquiree. The intermediary expenses incurred by the acquirer in respect of auditing,
legal services, valuation and consultancy services, etc. and other associated administrative
expenses attributable to the business combination are recognised in profit or loss when they are
incurred. Where a business combination not involving enterprises under common control is
achieved in stages that involve multiple transactions, the cost of combination is the sum of the
consideration paid at the acquisition date and the fair value at the acquisition date of the acquirer's
previously held interest in the acquiree. The equity interest in the acquiree held before the
acquisition date is remeasured at its fair value at the acquisition date, with any difference between
its fair value and its carrying amount being recognised as investment income. The other
comprehensive income of the acquiree before the acquisition date relating to the previously held
interest in the acquiree is transferred to investment income.
Goodwill arising on a business combination is measured at cost less accumulated impairment
losses, and is presented separately in the consolidated financial statements. It is tested for
impairment at least at the end of each year.
For the purpose of impairment testing, goodwill is considered together with the related assets
group(s), i.e., goodwill is reasonably allocated to the related assets group(s) or each of assets
group(s) expected to benefit from the synergies of the combination. An impairment loss is
recognised if the recoverable amount of the assets group or sets of assets groups (including
goodwill) is less than its carrying amount. The impairment loss is firstly allocated to reduce the
carrying amount of any goodwill allocated to such assets group or sets of assets groups, and then
to the other assets of the group pro-rata on the basis of the carrying amount of each asset (other
than goodwill) in the group.
The recoverable amount of an asset is the higher of its fair value less costs of disposal and the
present value of the future cash flows expected to be derived from the asset. An asset's fair value
is the price in a sale agreement in an arm's length transaction. If there is no sale agreement but an
asset is traded in an active market, fair value is the current bid price. If there is no sale agreement
or active market for an asset, fair value is assessed based on the best information available. Costs
of disposal include legal costs related to the disposal of the asset, related taxes, costs of removing
the asset and direct costs to bring the asset into condition for its sale. The present value of
expected future cash flows of an asset shall be determined by estimating the future cash flows to
be derived from continuing use of the asset and from its ultimate disposal and applying the
appropriate discount rate to those future cash flows.
The impairment of goodwill is recognised in profit or loss for the period in which it is incurred
and will not be reversed in any subsequent period.
- 80 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(II) 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 2013. The subsidiaries are entities that are
controlled by the Company.
For a subsidiary disposed of by the Group, the operating results and cash flows before the date of
disposal (the date when control is lost) are included in the consolidated income statement and
consolidated statement of cash flows, as appropriate.
For a subsidiary acquired through a business combination not involving enterprises under
common control, the operating results and cash flows from the acquisition date (the date when
control is obtained) are included in the consolidated income statement and consolidated statement
of cash flows, as appropriate, and no adjustment is made to the opening balances and comparative
figures in the consolidated financial statements.
For a subsidiary acquired through a business combination not involving enterprises under
common control, the operating results and cash flows from the acquisition date (the date when
control is obtained) are included in the consolidated income statement and consolidated statement
of cash flows, as appropriate, and no adjustment is made to the opening balances and comparative
figures in the consolidated financial statements.
The significant accounting policies and accounting periods adopted by the subsidiaries are
determined based on the uniform accounting policies and accounting periods set out by the
Company.
All significant intra-group balances and transactions are eliminated on consolidation.
The portion of subsidiaries' equity that is not attributable to the Company is treated as minority
interests and presented as "minority interests" in the consolidated balance sheet within
shareholders' equity. The portion of net profits or losses of subsidiaries for the period attributable
to minority interests is presented as "minority interests" in the consolidated income statement
below the "net profit" line item.
When the amount of loss for the period attributable to the minority shareholders of a subsidiary
exceeds the minority shareholders' portion of the opening balance of owners' equity of the
subsidiary, the excess amount are still allocated against minority interests.
- 81 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(II) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
7. Cash and cash equivalents
Cash comprises cash on hand and demand deposit. Cash equivalents refers to short-term, highly
liquid investments that are readily convertible into known amounts of cash and which are subject
to an insignificant risk of changes in value.
8. Foreign currency transactions and foreign currencies reporting
8.1 Transactions denominated in foreign currencies
A foreign currency transaction is recorded, on initial recognition, by applying the spot exchange
rate on the date of the transaction.
At the balance sheet date, foreign currency monetary items are translated into RMB using the spot
exchange rates at the balance sheet date. Exchange differences arising from the differences
between the spot exchange rates prevailing at the balance sheet date and those on initial
recognition or at the previous balance sheet date are recognised in profit or loss for the period,
except the exchange differences related to a specific-purpose borrowing denominated in foreign
currency that qualify for capitalisation are capitalised as part of the cost of the qualifying asset
during the capitalisation period.
8.2 Translation of financial statements denominated in foreign currencies
Cash flows arising from a transaction in foreign currency are translated at the spot exchange rate
on the date of the cash flows. The effect of exchange rate changes on cash and cash equivalents
is regarded as a reconciling item and presented separately in the cash flow statement.
For the purpose of preparing the consolidated financial statements, financial statements of a
foreign operation are translated from the foreign currency into RMB using the following method:
assets and liabilities on the balance sheet are translated at the spot exchange rate prevailing at the
balance sheet date; shareholders' equity items except for retained earnings are translated at the
spot exchange rates at the dates on which such items arose; all items in the income statement as
well as items reflecting the distribution of profits are translated at the spot exchange rates on the
dates of the transactions; the opening balance of retained earnings is the translated closing balance
of the previous year's retained earnings; the closing balance of retained earnings is calculated and
presented on the basis of each translated income statement and profit distribution item. The
difference between the translated assets and the aggregate of liabilities and shareholders' equity
items is separately presented as the exchange differences arising on translation of financial
statements denominated in foreign currencies under the shareholders' equity in the balance sheet.
Cash flows arising from a transaction in foreign currency and the cash flows of a foreign
subsidiary are translated at the spot exchange rate on the date of the cash flows. The effect of
exchange rate changes on cash and cash equivalents is regarded as a reconciling item and
presented separately in the cash flow statement as "effect of exchange rate changes on cash and
cash equivalents".
- 82 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(II) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
9. Financial instruments
Financial assets and financial liabilities are recognised when the Group becomes a party to the
contractual provisions of the instrument. Financial assets and financial liabilities are initially
measured at fair value. For financial assets and financial liabilities at fair value through profit or
loss, transaction costs are immediately recognised in profit or loss. For other financial assets and
financial liabilities, transaction costs are included in their initial recognised amounts.
9.1 Determination of fair value
Fair value is the amount for which an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arms length transaction. For a financial instrument which
has an active market, the Group uses the quoted price in the active market to establish its fair
value. For a financial instrument which has no active market, the Group establishes fair value by
using a valuation technique. Valuation techniques include using recent arms length market
transactions between knowledgeable, willing parties, reference to the current fair value of another
instrument that is substantially the same, discounted cash flow analysis and option pricing models.
9.2 Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset or a
financial liability (or a group of financial assets or financial liabilities) and of allocating the
interest income or interest expense over the relevant period, using the effective interest rate. The
effective interest rate is the rate that exactly discounts estimated future cash flows through the
expected life of the financial asset or financial liability or, where appropriate, a shorter period to
the net carrying amount of the financial asset or financial liability.
When calculating the effective interest rate, the Group estimates future cash flows considering all
contractual terms of the financial asset or financial liability (without considering future credit
losses), and also considers all fees paid or received between the parties to the contract giving rise
to the financial asset and financial liability that are an integral part of the effective interest rate,
transaction costs, and premiums or discounts, etc.
9.3 Classification, recognition and measurement of financial assets
On initial recognition, the Groups financial assets are classified into one of the four categories,
including financial assets at fair value through profit or loss, held-to-maturity investments, loans
and receivables, and available-for-sale financial assets. All regular way purchases or sales of
financial assets are recognised and derecognised on a trade date basis.
9.3.1 Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable
payments and fixed maturity dates that the Group's management has the positive intention and
ability to hold to maturity.
Held-to-maturity investments are subsequently measured at amortised cost using the effective
interest method. Gain or loss arising from derecognition, impairment or amortisation is recognised
in profit or loss.
- 83 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(II) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
9. Financial instruments - continued
9.3 Classification, recognition and measurement of financial assets - continued
9.3.2. Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. Financial assets classified as loans and receivables by the
Group include notes receivable, accounts receivable, interest receivable, dividends receivable, and
other receivables.
Loans and receivables are subsequently measured at amortised cost using the effective interest
method. Gain or loss arising from derecognition, impairment or amortisation is recognised in
profit or loss.
9.4 Impairment of financial assets
The Group assesses at each balance sheet date the carrying amounts of financial assets other than
those at fair value through profit or loss. If there is objective evidence that a financial asset is
impaired, the Group determines the amount of any impairment loss. Objective evidence that a
financial asset is impaired is evidence that, arising from one or more events that occurred after the
initial recognition of the asset, the estimated future cash flows of the financial asset, which can be
reliably measured, have been affected.
Objective evidence that a financial asset is impaired includes the following observable events:
(1) Significant financial difficulty of the issuer or obligor;
(2) A breach of contract by the borrower, such as a default or delinquency in interest or
principal payments;
(3) The Group, for economic or legal reasons relating to the borrowers financial difficulty,
granting a concession to the borrower;
(4) It becoming probable that the borrower will enter bankruptcy or other financial
reorganisations;
(5) The disappearance of an active market for that financial asset because of financial
difficulties of the issuer;
(6) Upon an overall assessment of a group of financial assets, observable data indicates that
there is a measurable decrease in the estimated future cash flows from the group of
financial assets since the initial recognition of those assets, although the decrease cannot
yet be identified with the individual financial assets in the group. Such observable data
includes:
- Adverse changes in the payment status of borrower in the group of assets;
- Economic conditions in the country or region of the borrower which may lead to a
failure to pay the group of assets;
(7) Significant adverse changes in the technological, market, economic or legal environment
in which the issuer operates, indicating that the cost of the investment in the equity
instrument may not be recovered by the investor;
(8) Other objective evidence indicating there is an impairment of a financial asset.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(II) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
9. Financial instruments - continued
9.4 Impairment of financial assets - continued
- Impairment of financial assets measured at amortised cost
If financial assets carried at amortised cost are impaired, the carrying amounts of the financial
assets are reduced to 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. The amount of reduction is recognised as an impairment loss in profit or loss. If, subsequent
to the recognition of an impairment loss on financial assets carried at amortised cost, there is
objective evidence of a recovery in value of the financial assets which can be related objectively
to an event occurring after the impairment is recognised, the previously recognised impairment
loss is reversed. However, the reversal is made to the extent that the carrying amount of the
financial asset at the date the impairment is reversed does not exceed what the amortised cost
would have been had the impairment not been recognised.
For a financial asset that is individually significant, the Group assesses the asset individually for
impairment. For a financial asset that is not individually significant, the Group assesses the asset
individually for impairment or includes the asset in a group of financial assets with similar credit
risk characteristics and collectively assesses them for impairment. If the Group determines that no
objective evidence of impairment exists for an individually assessed financial asset (whether
significant or not), it includes the asset in a group of financial assets with similar credit risk
characteristics and collectively reassesses them for impairment. Assets for which an impairment
loss is individually recognised are not included in a collective assessment of impairment.
- Impairment of financial assets measured at cost
If an impairment loss has been incurred on an investment in unquoted equity instrument (without
a quoted price in an active market) whose fair value cannot be reliably measured, or on a
derivative financial asset that is linked to and must be settled by delivery of such an unquoted
equity instrument, the carrying amount of the financial asset is reduced to the present value of
estimated future cash flows discounted at the current market rate of return for a similar financial
asset. The amount of reduction is recognised as an impairment loss in profit or loss. The
impairment loss on such financial asset is not reversed once it is recognised.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(II) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
9. Financial instruments - continued
9.5 Transfer of financial assets
The Group derecognises a financial asset if one of the following conditions is satisfied: (1) the
contractual rights to the cash flows from the financial asset expire; or (2) the financial asset has
been transferred and substantially all the risks and rewards of ownership of the financial asset is
transferred to the transferee; or (3) although the financial asset has been transferred, the Group
neither transfers nor retains substantially all the risks and rewards of ownership of the financial
asset but has not retained control of the financial asset.
If the Group neither transfers nor retains substantially all the risks and rewards of ownership of a
financial asset, and it retains control of the financial asset, it recognises the financial asset to the
extent of its continuing involvement in the transferred financial asset and recognises an associated
liability. The extent of the Groups continuing involvement in the transferred asset is the extent to
which it is exposed to changes in the value of the transferred asset.
For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, the
difference between (1) the carrying amount of the financial asset transferred; and (2) the sum of
the consideration received from the transfer and any cumulative gain or loss that has been
recognised in other comprehensive income, is recognised in profit or loss.
If a part of the transferred financial asset qualifies for derecognition, the carrying amount of the
transferred financial asset is allocated between the part that continues to be recognised and the
part that is derecognised, based on the respective fair values of those parts. The difference
between (1) the carrying amount allocated to the part derecognised; and (2) the sum of the
consideration received for the part derecognised and any cumulative gain or loss allocated to the
part derecognised which has been previously recognised in other comprehensive income, is
recognised in profit or loss.
10. Receivables
10.1 Receivables that are individually significant and for which bad debt provision is individually
assessed
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
RMB3,000,000 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.
10.2 Receivables for which bad debt provision is collectively assessed on a portfolio basis
The Group classifies the receivables that are not individually significant and those that are
individually significant but are not impaired individually into groups of financial assets according
to the similarity and relevance of credit risk characteristics. These credit risks usually reflect the
debtors' ability to pay the amounts due at maturity under contractual terms of related assets and
are related to the estimation of future cash flows of the assets subject to assessment.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(II) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
11. Inventories
11.1 Categories of inventories
The Group's inventories mainly include raw materials, work in progress and finished goods.
Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase,
costs of conversion and other expenditures incurred in bringing the inventories to their present
location and condition.
11.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the first-in-first-out method.
Agricultural products harvested are reported in accordance with the CAS 1 Inventories.
11.3 Inventory count system
The perpetual inventory system is maintained for stock system.
11.4 Basis for determining net realisable value of inventories and provision methods for decline in
value of inventories
At the balance sheet date, inventories are measured at the lower of cost and net realisable value. If
the net realisable value is below the cost of inventories, a provision for decline in value of
inventories is made. Net realisable value is the estimated selling price in the ordinary course of
business less the estimated costs of completion, the estimated costs necessary to make the sale and
relevant taxes. Net realisable value is determined on the basis of clear evidence obtained, and
takes into consideration the purposes of holding inventories and effect of post balance sheet
events.
After the provision for decline in value of inventories is made, if the circumstances that
previously caused inventories to be written down below cost no longer exist so that the net
realisable value of inventories is higher than their cost, the original provision for decline in value
is reversed and the reversal is included in profit or loss for the period.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(II) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
12. Long term equity investments
12.1 Determination of investment cost
For a long-term equity investment acquired not involving enterprises under common control, the
investment cost of the long-term equity investment is the cost of acquisition. For a long-term
equity investment acquired through business combination not involving enterprises under
common control and achieved in stages, the investment cost of the long-term equity investment is
the aggregate of the carrying amount of the equity interest held in the acquiree prior to the
acquisition date and the cost of the additional investment at the acquisition date. The long-term
equity investment acquired otherwise than through a business combination is initially measured at
its cost.
12.2 Subsequent measurement and recognition of profit or loss
12.2.1. Long-term equity investment accounted for using the equity method
The Group accounts for investment in associates and joint ventures using the equity method. An
associate is an entity over which the Group has significant influence and a joint venture is an
entity over which the Group exercises joint control along with other investors.
Under the equity method, where the initial investment cost of a long-term equity investment
exceeds the Groups share of the fair value of the investees identifiable net assets at the time of
acquisition, no adjustment is made to the initial investment cost. Where the initial investment
cost is less than the Groups share of the fair value of the investees identifiable net assets at the
time of acquisition, the difference is recognised in profit or loss for the period, and the cost of the
long-term equity investment is adjusted accordingly.
Under the equity method, the Group recognises its share of the net profit or loss of the investee for
the period as investment income or loss for the period. The Group recognises its share of the
investees net profit or loss based on the fair value of the investees individual separately
identifiable assets, etc at the acquisition date after making appropriate adjustments to conform
with the Group's accounting policies and accounting period. Unrealised profits or losses resulting
from the Group's transactions with its associates and joint ventures are recognised as investment
income or loss to the extent that those attributable to the Group's equity interest are eliminated.
However, unrealised losses resulting from the Group's transactions with its associates and joint
ventures which represent impairment losses on the transferred assets are not eliminated. Changes
in owners' equity of the investee other than net profit or loss are correspondingly adjusted to the
carrying amount of the long-term equity investment, and recognised as other comprehensive
income which is included in the capital reserve.
The Group discontinues recognising its share of net losses of the investee after the carrying
amount of the long-term equity investment together with any long-term interests that in substance
form part of its net investment in the investee is reduced to zero. If the Group has incurred
obligations to assume additional losses of the investee, a provision is recognized according to the
expected obligation, and recorded as investment loss for the period. Where net profits are
subsequently made by the investee, the Group resumes recognising its share of those profits only
after its share of the profits exceeds the share of losses previously not recognised.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(II) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
12. Long term equity investments - continued
12.2 Subsequent measurement and recognition of profit or loss - continued
12.2.2. Disposal of long-term equity investments
On disposal of a long term equity investment, the difference between the proceeds actually
received and receivable and the carrying amount is recognised in profit or loss for the period. For
a long-term equity investment accounted for using the equity method, the amount included in the
shareholders' equity attributable to the percentage interest disposed is transferred to profit or loss
for the period.
12.3 Basis for determining joint control and significant influence over investee
Control is the power to govern the financial and operating policies of an entity so as to obtain
benefits from its activities. Joint control is the contractually agreed sharing of control over an
economic activity, and exists only when the strategic financial and operating policy decisions
relating to the activity require the unanimous consent of the parties sharing control. Significant
influence is the power to participate in the financial and operating policy decisions of the investee
but is not control or joint control over those policies. When determining whether an investing
enterprise is able to exercise control or significant influence over an investee, the effect of
potential voting rights of the investee (for example, warrants and convertible debts) held by the
investing enterprises or other parties that are currently exercisable or convertible shall be
considered.
12.4 Methods of impairment assessment and determining the provision for impairment loss
The Group reviews the long-term equity investments at each balance sheet date to determine
whether there is any indication that they have suffered an impairment loss. If an impairment
indication exists, the recoverable amount is estimated. If such recoverable amount is less than its
carrying amount, a provision for impairment losses in respect of the deficit is recognised in profit
or loss for the period.
Once an impairment loss is recognised for a long-term equity investment, it will not be reversed in
any subsequent period.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(II) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
13. Property, plant and equipment
13.1 Recognition criteria for fixed assets
Fixed assets are tangible assets that are held for use in the production or supply of goods or
services, for rental to others, or for administrative purposes, and have useful lives of more than
one accounting year. A fixed asset is recognised only when it is probable that economic benefits
associated with the asset will flow to the Group and the cost of the asset can be measured reliably.
Fixed assets are initially measured at cost.
Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset and
if it is probable that economic benefits associated with the asset will flow to the Group and the
subsequent expenditures can be measured reliably. Meanwhile the carrying amount of the
replaced part is derecognised. Other subsequent expenditures are recognised in profit or loss in the
period in which they are incurred.
13.2 Depreciation of each category of fixed assets
A fixed asset is depreciated over its useful life using the straight-line method since the month
subsequent to the one in which it is ready for intended use. The useful life, estimated net residual
value rate and annual depreciation rate of each category of fixed assets are as follows:
Estimated Estimated Annual
useful life residual rate depreciation rate
Buildings 20-40years 0-5% 2.4%-5.0%
Machinery 10-20years 0-5% 4.8%-10.0%
Motor Vehicles 4-12years 0-5% 7.9%-25.0%
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.
13.3 Other explanations
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 II-19.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(II) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
14. Construction in progress
Construction in progress is measured at its actual costs. The actual costs include various
construction expenditures during the construction period, borrowing costs capitalised before it is
ready for intended use and other relevant costs. Construction in progress is not depreciated.
Construction in progress is transferred to a fixed asset when it is ready for intended use.
The Group assesses at each balance sheet date whether there is any indication that construction in
progress may be impaired. If there is any indication that such assets may be impaired, recoverable
amounts are estimated for such assets. Recoverable amount is estimated on individual basis. If it
is not practical to estimate the recoverable amount of an individual asset, the recoverable amount
of the asset group to which the asset belongs will be estimated. If the recoverable amount of an
asset or an asset group is less than its carrying amount, the deficit is accounted for as an
impairment loss and is recognised in profit or loss for the period.
For details of the impairment test and impairment loss recognition for construction in progress,
please refer to Note II-19.
15. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying
asset are capitalised when expenditures for such asset and borrowing costs are incurred and
activities relating to the acquisition, construction or production of the asset that are necessary to
prepare the asset for its intended use or sale have commenced. Capitalisation of borrowing costs
ceases when the qualifying asset being acquired, constructed or produced becomes ready for its
intended use or sale. Capitalisation of borrowing costs is suspended during periods in which the
acquisition, construction or production of a qualifying asset is suspended abnormally and when
the suspension is for a continuous period of more than 3 months. Capitalisation is suspended until
the acquisition, construction or production of the asset is resumed. Other borrowing costs are
recognised as an expense in the period in which they are incurred.
Where funds are borrowed under a specific-purpose borrowing, the amount of interest to be
capitalised is the actual interest expense incurred on that borrowing for the period less any bank
interest earned from depositing the borrowed funds before being used on the asset or any
investment income on the temporary investment of those funds. Where funds are borrowed under
general-purpose borrowings, the Group determines the amount of interest to be capitalised on
such borrowings by applying a capitalisation rate to the weighted average of the excess of
cumulative expenditures on the asset over the amounts of specific-purpose borrowings. The
capitalisation rate is the weighted average of the interest rates applicable to the general-purpose
borrowings.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(II) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
16. Biological assets
The biological assets of the Group are vines.
Biological assets should be recognized when and only when:
(i) The Group controls the asset as a result of past events;
(ii) It is probable that future economic benefits associate with the asset will flow to the entity;
and
(iii) The cost of the asset can be measured reliably.
Biological assets 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:
Estimated Estimated Annual
Category useful life residual rate depreciation rate
Vines 20 years - 5%
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.
17. Intangible assets
17.1 Intangible assets
Intangible assets include land use rights, patents, etc.
An intangible asset is measured initially at cost. When an intangible asset with a finite useful life
is available for use, its original cost less net residual value and any accumulated impairment
losses is amortised over its estimated useful life using the straight-line method. An intangible
asset with an indefinite useful life is not amortised.
For an intangible asset with a finite useful life, the Group reviews the useful life and amortisation
method at the end of the period, and makes adjustments when necessary.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(II) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
17. Intangible assets - continued
17.1 Intangible assets - continued
The useful lives of the intangible assets are as follows:
Useful life
Land use rights 40-50 years
Software use rights 5 years
17.2 Methods of impairment assessment and determining the provision for impairment losses of
intangible assets
The Group assesses at each balance sheet date whether there is any indication that the intangible
assets with a finite useful life may be impaired. If there is any indication that such assets may be
impaired, recoverable amounts are estimated for such assets. Recoverable amount is estimated on
individual basis. If it is not practical to estimate the recoverable amount of an individual asset, the
recoverable amount of the asset group to which the asset belongs will be estimated. If the
recoverable amount of an asset or an asset group is less than its carrying amount, the deficit is
accounted for as an impairment loss and is recognised in profit or loss for the period.
Intangible assets with indefinite useful life and intangible assets not yet available for use are
tested for impairment annually, irrespective of whether there is any indication that the assets may
be impaired.
Once the impairment loss of such assets is recognised, it is not be reversed in any subsequent
period.
18. Long term prepaid expenses
Long-term prepaid expenses represent expenses incurred that should be borne and amortised over
the current and subsequent periods (together of more than one year). Long-term prepaid expenses
are amortised using the straight-line method over the expected periods in which benefits are
derived.
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
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(II) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
19. Revenue
19.1 Revenue from sale of goods
Revenue from sale of goods is recognised when (1) the Group has transferred to the buyer the
significant risks and rewards of ownership of the goods; (2) the Group retains neither continuing
managerial involvement to the degree usually associated with ownership nor effective control
over the goods sold; (3) the amount of revenue can be measured reliably; (4) it is probable that the
associated economic benefits will flow to the Group; and (5) the associated costs incurred or to be
incurred can be measured reliably.
19.2 Revenue from rendering of services
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.
20. Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the
risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
The Group as lessee under operating leases
Operating lease payments are recognised on a straight-line basis over the term of the relevant
lease, and are either included in the cost of related asset or charged to profit or loss for the period.
Initial direct costs incurred are charged to profit or loss for the period. Contingent rents are
charged to profit or loss in the period in which they are actually incurred.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(II) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
21. Deferred tax assets/deferred tax liabilities
The income tax expenses include current income tax and deferred income tax.
21.1. Current income tax
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods
are measured at the amount expected to be paid (or recovered) according to the requirements of
tax laws.
21.2. Deferred tax assets and deferred tax liabilities
For temporary differences between the carrying amounts of certain assets or liabilities and their
tax base, or between the nil carrying amount of those items that are not recognised as assets or
liabilities and their tax base that can be determined according to tax laws, deferred tax assets and
liabilities are recognised using the balance sheet liability method.
Deferred tax is generally recognised for all temporary differences. Deferred tax assets for
deductible temporary differences are recognised to the extent that it is probable that taxable
profits will be available against which the deductible temporary differences can be utilised.
However, for temporary differences associated with the initial recognition of goodwill and the
initial recognition of an asset or liability arising from a transaction (not a business combination)
that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of
transaction, no deferred tax asset or liability is recognised.
For deductible losses and tax credits that can be carried forward, deferred tax assets are
recognised to the extent that it is probable that future taxable profits will be available against
which the deductible losses and tax credits can be utilised.
Deferred tax liabilities are recognised for taxable temporary differences associated with
investments in subsidiaries and associates, and interests in joint ventures, except where the Group
is able to control the timing of the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from
deductible temporary differences associated with such investments and interests are only
recognised to the extent that it is probable that there will be taxable profits against which to utilise
the benefits of the temporary differences and they are expected to reverse in the foreseeable
future.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates,
according to tax laws, that are expected to apply in the period in which the asset is realised or the
liability is settled.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(II) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
21. Deferred tax assets/ deferred tax liabilities - continued
21.2. Deferred tax assets and deferred tax liabilities - continued
Current and deferred tax expenses or income are recognised in profit or loss for the period, except
when they arise from transactions or events that are directly recognised in other comprehensive
income or in shareholders' equity, in which case they are recognised in other comprehensive
income or in shareholders' equity; and when they arise from business combinations, in which case
they adjust the carrying amount of goodwill.
At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if it
is no longer probable that sufficient taxable profits will be available in the future to allow the
benefit of deferred tax assets to be utilised. Such reduction in amount is reversed when it becomes
probable that sufficient taxable profits will be available.
When the Group has a legal right to settle on a net basis and intends either to settle on a net basis
or to realise the assets and settle the liabilities simultaneously, current tax assets and current tax
liabilities are offset and presented on a net basis.
When the Group has a legal right to settle current tax assets and liabilities on a net basis, and
deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable entities which intend either to settle
current tax assets and liabilities on a net basis or to realise the assets and liabilities simultaneously,
in each future period in which significant amounts of deferred tax assets or liabilities are expected to
be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a net basis.
22. Operating leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the
risks and rewards of ownership to the lessee. All other leases are classified as operating leases..
22.1 The Group as lessee under operating leases
Operating lease payments are recognised on a straight-line basis over the term of the relevant
lease, and are either included in the cost of related asset or charged to profit or loss for the period.
Initial direct costs incurred are charged to profit or loss for the period. Contingent rents are
charged to profit or loss in the period in which they are actually incurred.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(II) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES - continued
23. Other significant accounting policies, accounting estimates andpreparation of financial statements
23.1 Employee benefits
In an accounting period in which an employee has rendered service to the Group, the Group
recognises the employee benefits for that service as a liability, except for compensation for
termination of employment relationship with the employees.
The Group participates in the employee social security systems, such as basic pensions, medical
insurance, housing funds and other social securities established by the government in accordance
with relevant requirements. The related expenditures are either included in cost of related assets or
charged to profit or loss in the period when they are incurred.
When the Group terminates the employment relationship with employees before the expiry of the
employment contracts or provides compensation as an offer to encourage employees to accept
voluntary redundancy, if the Group has a formal plan for termination of employment relationship
or has made an offer for voluntary redundancy which will be implemented immediately, and the
Group cannot unilaterally withdraw from the termination plan or the redundancy offer, a
provision for the compensation payable arising from the termination of employment relationship
with employees is recognised with a corresponding charge to the profit or loss for the period.
23.2 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.
(III) CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES AND KEY
ASSUMPTIONS AND UNCERTAINTIES IN ACCOUNTING ESTIMATES
In the application of accounting policies as set out in Note II, the Group is required to make
judgment's, estimates and assumptions about the carrying amounts of items in the financial
statements that cannot be measured accurately, due to the internal uncertainties of the operating
activities. These judgments, estimates and assumptions are based on historical experience of the
Group's management as well as other factors that are considered to be relevant. Actual results may
differ from these estimates.
The Group periodically review the judgments, estimates and assumptions above on a going
concern basis. For those changes in accounting policies that only affect current financial
statements, the influences are recognized in current period. For those changes in accounting
policies that affect both current and future financial statements, the influences are recognized in
both current and prospective periods.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(III) CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES AND KEY
ASSUMPTIONS AND UNCERTAINTIES IN ACCOUNTING ESTIMATES - continued
Significant accounting judgments and accounting estimates
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.
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 II-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.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(III) CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES AND KEY
ASSUMPTIONS AND UNCERTAINTIES IN ACCOUNTING ESTIMATES - continued
Significant accounting judgments and accounting estimates - continued
Impairment of non-current assets
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.
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.
(IV) 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.
- 99 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(IV) 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.
(V) SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS
1. Particulars of the subsidiaries
Place and date Legal Business Registered Principle Incorporate
Name of registration representative nature capital activities code
Subsidiary acquired from a business combination: under non-common control
Xinjiang Tianzhu Wine Co., Ltd. 11 April 2006 ZhouHongjiang Manufacturing RMB75,000,000 Production 787 604 261
("Xinjiang Tianzhu") (a) Shihezi, Xinjiang, China and sales of wine
Etablissements Roullet 18 April 1983 ZhouHongjiang Sales EUR2,896,531 Trading, brokerage and N/A
Fransac) ("French Sales") (h) Cognac, France agent sales
Subsidiaries acquired by establishment
Beijing Changyu Sales and 14 July 1998 SunJian Sales RMB1,000,000 Sales of wine 634 377 029
Distribution Co., Ltd. Beijing, China
("Beijing Sales")
Yantai Kylin Packaging Co., 29 September 1999 YangMing Manufacturing RMB15,410,000 Production of 863 052 455
Ltd. ("Kylin Packaging") Yantai, Shandong, China packaging materials
Yantai Changyu-Castel 3 September 2001 SunLiqiang Manufacturing USD5,000,000 Production and 730 682 613
Wine Chateau Co., Ltd. Yantai, Shandong, China sales of wine
("Changyu Chateau") (b)
Changyu (Jingyang) 5 December 2001 WeiBingsheng Manufacturing RMB1,000,000 Production and 732 663 643
Wine Co., Ltd. ("Jingyang Wine") Jingyang, Shanxi, China sales of wine
Yantai Changyu Pioneer Wine 24 December 2001 JiangHua Sales RMB8,000,000 Sales of wine 746 576 380
Sales Co., Ltd. ("Sales Company") Yantai, Shandong, China
- 100 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(V) SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS - continued
1. Particulars of the subsidiaries - continued
Place and date Legal Business Registered Principle Incorporate
Name of registration representative nature capital activities code
Langfang Development (c) 1 March 2002 AlanCastel Manufacturing USD6,108,808 Production and 735 624 56X
Zone Castel-Changyu Wine Lanfang, Hebei, China sales of wine
Co., Ltd. ("Langfang Castel")
Changyu (Jingyang) Wine 8 April 2002 WeiBinsheng Sales RMB1,000,000 Sales of wine 735 379 154
Sales Co., Ltd. ("Jingyang Sales") Jingyang, Shanxi, China
Langfang Changyu Pioneer 19 April 2002 LiuWanqiang Sales RMB1,000,000 Sales of wine 737 388 150
Wine Sales Co., Ltd. Langfang, Hebei, China
("Langfang Sales").
Shanghai Changyu Sales and 28 April 2003 ZhouHongjiang Sales RMB1,000,000 Sales of wine 749 571 075
Distribution Co., Ltd. Shanghai, China
("Shanghai Sales")
Beijing Changyu AFIP Agriculture 8 November 2011 SunHongbo Sales RMB1,000,000 Planting 585 851 395
Development Co., Ltd. Beijing, China and tourism
("Agriculture Development")
Beijing Changyu AFIP 27 October 2005 SunLiqiang Manufacturing RMB110,000,000 Production and 780 953 469
Wine Chateau Co., Ltd.(d) Beijing, China sales of wine
Yantai("Beijing Chateau") 9 January 2006 JiangHua Sales RMB5,000,000 Sales of wine 783 487 627
Changyu Wine Sales Co., Ltd. Yantai, Shandong, China
("Wines Sales")
Yantai Changyu Pioneer 29 September 2005 ZhouHongjiang Sales RMB5,000,000 Import and technology 780 766 161
International Co., Ltd. Yantai, Shandong, China export of wine and
("Pioneer International")
Hangzhou Changyu 14 June 2006 JiangHua Sales RMB500,000 Whole-sale and retail 788 283 631
Wine Sales Co., Ltd. Hangzhou, Zhejiang, China of packaged food
("Hangzhou Changyu")
Ningxia Changyu 28 April 2006 ShaoChunsheng Planting RMB1,000,000 Plant andpurchase 788 200 410
Grape-Growing Co., Ltd. Yinchuang, Ningxia, China of grape
("Ningxia Growing")
Huanren Changyu National 16 November 2006 LengBin Sales RMB2,000,000 Whole-sale 794 822 179
Wines Sales Co., Ltd. Huanren, Liaoning, China and retail of wine
("National Wines")
Liaoning Changyu Ice 3 April 2003 ZhouHongjiang Manufacturing RMB26,300,000 Production and 747 128 301
Wine Chateau Co., Ltd. Benxi, Liaoning, China sales of ice wine
("Ice Chateau") (e)
Yantai Development Zone 4 December 2006 ZhouHongjiang Sales RMB5,000,000 Whole-sale 796 183 411
Changyu Trading Co., Ltd. Yantai, Shandong, China and retail of wine
("Development Zone Trading")
Shenzhen Changyu 17 July 2007 LinPu Sales RMB500,000 Whole-sale 664 195 20X
Wine Marketing Ltd. Futian, Shenzhen, China and retail of wine
("Shenzhen Marketing")
Yantai Changyu Fushan 27 March 2007 Zhou Hongjiang Sales RMB5,000,000 Whole-sale 660 176 044
Trading Company Yantai, Shandong, China and retail of wine
("Fushan Trading")
Beijing AFIP Meeting Center 4 December 2007 Sun Hongbo Services RMB500,000 Meeting service, 669 926 612
("Meeting Center") (f) Miyun, Beijing, China foods accommodation,
tourism and
sales ofsouvenir,
- 101 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(V) SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS - continued
1. Particulars of the subsidiaries - continued
Place and date Legal Business Registered Principle Incorporate
Name of registration representative nature capital activities code
Beijing AFIP Tourism 4 June 2008 Liu Shilu Tourism RMB500,000 Tourism and culture 676 627 372
and Culture Company Miyun, Beijing , China communication,
("AFIP Tourism") (g) development
of tourist resources,
meeting service
Ningxia Changyu 25 April 2008 Li Jiming Manufacturing RMB1,000,000 Manufacturing 670 408 275
Pioneer Wine Co., Ltd. Yinchuan, Ningxia, China and sales of wine,
("Ningxia Wine") packing material,
plant,process
and purchase of grapes
Yantai Changyu 26 November 2008 Liu Quan Sales RMB80,000,000 Packaging of foods 683 222 859
DingLuoTe Chateau. Yantai, Shandong China
("Ding Luo Te Chateau")
Qing Tong Xia Changyu 17 November 2009 Liu Yuquan Sales RMB500,000 Whole-sale 694 334 151
Wine Marketing Ltd. Qing Tong Xia, Ningxia, China and retail of wine
("Qing Tong Xia Sales")
XinJiang BaBao Baron Changyu 2 April 2010 Sun Liqiang Manufacturing RMB150,000,000 Manufacturing 552 414 949
Wine Chateau Co., Ltd. Shihezi, Xinjiang, China and sales of wine
("Shi He Zi Chateau")
Ningxia Moser 15th Changyu 26 April 2010 Zhou Hongjiang Manufacturing RMB2,000,000 Wine/packaging 694 349 740
Wine Chateau Co., Ltd. Yinchuan, Ningxia, China manufacturing,tourism
(" Ningxia Chateau")
Shanxi Changyu Rina 12 April 2010 Sun Liqiang Manufacturing RMB20,000,000 Tourism and 552 180 142
Castle Chateau Co., Ltd. Xianyang, Shanxi, China wine manufacturing
(" Chang'an Chateau")
Yantai Changyu Wine Research 29 March 2010 Sun Liqiang Manufacturing RMB500,000,000 Wine manufacturing 555 235 76X
and Development Co., Ltd. Yantai, Shandong China
("R&D Centre")
Changyu (HuanRen) 2 December 2011 Zhou Hong Jiang Manufacturing RMB5,000,000 Fermatition 587 310 365
Wine Co., Ltd Benxi LiaoNing China project preparation
("Huan Ren Wine")
Xinjiang Changyu Sales Co., Ltd 8 August 2011 Lin Pu Sales RMB10,000,000 Foods wholesales 580 208 296
("Xinjiang Sales") Shihezi Xinjiang China
Xinjiang Changyu Winery Co., Ltd 25 August 2011 Lin Pu Sales RMB10,000,000 Red wine 280 222 610
("Xinjiang Winery") Shihezi Xinjiang China and fruit wine
Ningxia Changyu Trading Co., Ltd 8 November 2012 ZhouHongjiang Sales RMB1,000,000 Whole sale of 054 609 428
("Ningxia Trading") (j) Yinchuan Ningxia China pre-packed foods
Shanxi Changyu Rina Wine 29 October 2012 SunLiqiang Sales RMB3,000,000 Tourism and 056 906 215
Sales Co., Ltd ("Shanxi Sales") (k) Xianyang Shanxi China wine manufacturing
Penglai Changyu Wine Sales 7 September 2012 Leng Bin Sales RMB5,000,000 Sales of red wine 053 429 070
Co., Ltd ("Penglai Sales") (l) Penglai Shandong China
Laizhou Changyu Wine Sales 19 July 2013 Leng Bin Sales RMB1,000,000 Sales of red wine 074 406 41-7
Co., Ltd ("Laizhou Sales") (l) Laizhou Shandong China
- 102 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(V) SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS - continued
1. Particulars of the subsidiaries - continued
Equity interest
owned by the company
Paid in capital Consolidate financial Non-controlling
Name at 31 December 2012 Direct Indirect Votingpower statements interes
Subsidiary acquired in business combination: under non-common control
Xinjiang Tianzhu (a) RMB60,000,000 60% - 100% Yes RMB56,093,912
French Sales (h) EUR2,896,531 100% - 100% Yes -
Subsidiaries acquired by establishment:
Beijing Sales RMB1,000,000 100% - 100% Yes -
Kylin Packaging RMB23,176,063 100% - 100% Yes -
Changyu Chateau (b) RMB28,968,100 70% - 100% Yes RMB12,365,016
Jingyang Wine RMB1,000,000 90% - 10% Yes -
Sales Company RMB8,000,000 90% 10% 100% Yes -
Langfang Castel (c) RMB12,142,200 39% 10% 100% Yes RMB22,702,522
Jingyang Sales RMB1,000,000 10% - 90% Yes -
Langfang Sales RMB1,000,000 10% - 90% Yes -
Shanghai Sales RMB1,000,000 30% 70% 100% Yes -
Agriculture Development RMB1,000,000 - 100% 100% Yes -
Beijing Chateau (d) RMB77,000,000 70% - 100% Yes RMB35,293,868
Wines Sales RMB5,000,000 90% 10% 100% Yes -
Pioneer International RMB5,000,000 70% 30% 100% Yes -
Hangzhou Changyu RMB500,000 - 100% 100% Yes -
Ningxia Growing RMB1,000,000 100% - 100% Yes -
National Wines RMB2,000,000 100% - 100% Yes -
Ice Chateau (e) RMB13,413,000 51% - 100% Yes RMB33,319,062
Development Zone Trade RMB5,000,000 - 100% 100% Yes -
Shenzhen Marketing RMB500,000 - 100% 100% Yes -
Fushan Trading RMB5,000,000 - 100% 100% Yes -
Meeting Center (f) RMB500,000 - 100% 100% Yes -
AFIP Tourism (g) RMB350,000 70% - 100% Yes RMB2,966,399
Ningxia Wine RMB1,000,000 100% - 100% Yes -
Ding Luo Te Chateau RMB80,000,000 100% - 100% Yes -
Qing Tong Xia Sales RMB500,000 100% 100% Yes -
Shi He Zi Chateau RMB150,000,000 100% - 100% Yes -
Ningxia Chateau RMB2,000,000 100% - 100% Yes -
Chang'an Chateau RMB20,000,000 100% - 100% Yes -
Research and
Development Centre RMB500,000,000 100% - 100% Yes -
Huan Ren Wine RMB5,000,000 100% - 100% Yes -
Xinjiang Sales RMB10,000,000 - 100% 100% Yes -
Xinjiang Winery RMB10,000,000 - 100% 100% Yes -
Ningxia Trading RMB1,000,000 - 100% 100% Yes -
Shanxi Sales RMB3,000,000 - 100% 100% Yes -
Penglai Wine Sales RMB5,000,000 - 100% 100% Yes -
Laizhou Wine Sales (i) RMB10,000,000 - 100% 100% Yes -
(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) 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 2022.
(c) Langfang Castel is a sino-foreign joint venture established by the Company and a foreign
investor. Pursuant to the agreement signed by the Company, Langfang Castel and the
foreign investor, the Company is entrusted to manage Langfang Castel and therefore has
the full power to control its strategic operating, investing and financing policies, therefore
the financial statements of Langfang Castel are consolidated in the Group's consolidated
financial statements. The operation agreement will be terminated on 31 December 2022.
- 103 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(V) SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS - continued
1. Particulars of the subsidiaries - continued
(d) 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.
(e) 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.
(f) Meeting Centre is a subsidiary of Beijing Chateau.
(g) 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.
(h) Laizhou sales is a limited liability company solely founded by the Company in 2013. Its
paid capital is RMB1, 000,000 which has been fully paid by the end of 2013.
(i) French sales is a limited liability company acquired by the Company in December 2013.
The Company holds its 100 percent shares.
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
The newly included subsidiary is as following:
Net Asset Net profit/(loss)
as at 2013.12.31 up to date
RMB RMB
Laizhou Trading 1,000,000 30,293,187
French Sales 16,876,005
_________ -
_________
- 104 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Cash and bank
2013 2012
RMB RMB
Cash on hand 772,817 48,894
Cash at bank 1,235,788,080 2,227,421,934
Other monetary assets 131,257,285
____________ -
____________
1,367,818,182
____________ 2,227,470,828
____________
As at 31 December 2013, the balance of restricted cash of the Group is RMB2,609,237(31
December 2012: RMB2,652,083), which is the Groups housing fund.
As at 31 December 2013, the Group's other monetary assets include security of RMB125,000,000
pledged for a short-term borrowing from HSBC of HKD303,963,343 (translated as
RMB243,170,674), refundable deposit for notes payable of Shi He Zi Chateau of RMB5,965,996,
and company cards deposit guarantee of RMB291,289.
As at 31 December 2013, the Group's overseas cash and bank deposit is RMB13,104,666 (31
December 2012: Nil).
As at 31 December 2013, The Group's term deposits with original maturity of more than three
months when acquired is RMB277,392,728 (31 December 2012: RMB662,524,719) with interest
rates ranging from 2.86%-3.58%, which will mature from 3 months to 1 year.
2. Notes receivable
2013 2012
RMB RMB
Bank acceptance bills 79,702,753
_________ 92,635,701
_________
As of 31 December 2013, there was no pledged notes receivables (31 December 2012: Nil), and
no notes receivables were reclassified as accounts receivable due to the default of drawer (31
December 2012: Nil).
As at 31 December 2013, the top four notes receivables endorsed to third parties but not yet
matured is as follows:
Drawer Issuing date Maturity date Amount
RMB
Better Life Commercial Chain Share Co.,Ltd 12/11/2013 3/11/2014 1,436,400
Jincheng Jinchengyuan Trading Ltd. 11/29/2013 5/29/2014 1,000,000
Jinan Luye Trading Ltd. 9/2/2013 3/2/2014 1,000,000
Wuxi Fanghe Sugar, Cigar and Wine Ltd 9/13/2013 3/13/2014 1,000,000
Fujian Nanan Ruigang Building Materials Ltd 9/26/2013 3/26/2014 1,000,000
________
5,436,400
________
As at 31 December 2013, there was no notes receivable discounted to obtain short-term loan .
- 105 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
3. Trade receivables
2013 2012
Balance Provision Balance Provision
Amoun Amoun Amoun Amoun
RMB % RMB % RMB % RMB %
Individually
significant 72,118,959 40.7 - - 73,711,433 54.5 - -
Individually
insignificant 104,990,557
_______ 59.3
___ ___- ___- 61,505,951
_______ 45.5
___ ___- ___-
177,109,516
_______ 100.0
___ ___- ___- 135,217,384
_______ 100.0
___ ___- ___-
___ ___
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 Group determines that trade receivable of more than RMB 3,000,000 is considered as
individually significant trade receivable.
The aging analysis is as follows:
2013 2012
RMB RMB
Within 1 year 174,141,205 135,217,384
1 to 2 years 2,968,311
__________ -
__________
177,109,516
__________ 135,217,384
__________
As at 31 December 2013, there was no bad debt provision for trade receivables (31 December
2012: Nil). There was no bad debt provision made, reversed or written-off by management in
2013 (2012: Nil).
As at 31 December 2013, there was no trade receivable due from shareholders with voting rights
of 5% or above (31 December 2012: Nil).
- 106 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
3. Trade receivables - continued
As at 31 December 2013, the top 5 of trade receivables are as follows:
Relationship Percentage of
with the Group Amount Aging total receivables
RMB %
Nonggongshang Supermarket (Group) Co., Ltd Third party 17,306,266 Within 1 year 9.8
Lianhua Supermarket Holdings Co. Ltd. Third party 10,584,587 Within 1 year 6.0
Kangcheng Investment (China) Co., Ltd. Third party 9,911,907 Within 1 year 5.6
Jiangsu Hengxing Wine Co., Ltd Third party 8,118,529 Within 1 year 4.6
Suguo Supermarket Co., Ltd Third party 7,076,116
________ Within 1 year 4.0
___
52,997,405
________ 30.0
___
As at 31 December 2013, trade receivables due from related parties are as following:
Percentage of
Relationship with the Group Amount total receivables
%
Yantai Zhongya
Phamaceutical
tonic wine Co., Ltd Under the control of the same parent company 2,567,129 1.5
Yantai ShenMa
Packing Co., Ltd. Under the control of the same parent company 911,197 0.5
Yantai Changyu
International Window of
the Wine City Co., Ltd. Under the control of the same parent company 42,478
_______ 0.0
___
3,520,804
_______ 2.0
___
As at 31 December 2012, trade receivables due from related parties are as following:
Percentage of
Relationship with the Group Amount total receivables
%
Yantai Zhongya
Phamaceutical
tonic wine Co., Ltd Under the control of the same parent company 1,820,376 1.3
Yantai Changyu
Tourism Co., Ltd Under the control of the same parent company 311,220
_______ 0.3
___
2,131,596
_______ 1.6
___
- 107 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
4. Advances to suppliers
The aging analysis is as follows:
2013 2012
RMB RMB
Within 1 year 45,997,863
__________ 44,294,482
__________
As at 31 December 2013, the top 5 of advances to suppliers are as follows:
Reason Percentage of
Relationship for being total advances
with the Group Amount Aging outstanding to suppliers
RMB %
Xinjiang Yuyuan Wine
Co., Ltd. Third party 20,069,242 Within 1 year goods not received 43.6
Sun Xiaofang Third party 5,350,000 Within 1 year goods not received 11.6
Austria Lawrence
Fine Wines V Co. Ltd Third party 3,364,403 Within 1 year goods not received 7.7
Xinjiang Tianyu Wine
Co., Ltd. Third party 3,200,053 Within 1 year goods not received 7.3
Weifang Qingxin Landscape
Engineering Ltd Third party 1,600,000
________ Within 1 year project not finished 3.5
___
33,583,698
________ 73.0
___
As at 31 December 2013, there was no advance paid to shareholders with voting rights of 5% or
above (31 December 2012: Nil).
5. Interest receivable
2013
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Interests of term deposits 7,215,854
_______ 20,838,161
________ (19,636,020)
________ 8,417,995
_______
________
As at 31 December 2013, there was no overdue interest receivable (31 December 2012: Nil).
- 108 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Other receivables
(1) Disclosure of other receivables by categories
2013 2012
Balance Bad debts provision Balance Bad debts provision
Amoun Amoun Amoun Amoun
RMB % RMB % RMB % RMB %
Individually
significant
and provision 65,272,429 61.2 (7,392,429) 100.0 11,120,600 28.1 (11,120,600) 100.0
Individually
insignificant
and provision 41,451,794
_______ 38.8
____ -
______ ____- 28,462,945
_______ 71.9
____ -
_______ ____-
106,724,223 100.0 (7,392,429) 100.0 39,583,545 100.0 (11,120,600) 100.0
_______ ____ ______ ____ _______ ____ _______ ____
The aging analysis is as follows:
Closing balance Opening balance
Bad debts Carrying Bad debts Carrying
Amount provision amount Amount provision amount
Amount Proportion Amount Amount Proportion Amount Amount Amount
RMB % RMB RMB % RMB RMB RMB
Within 1 year 96,808,614 90.7 - 96,808,614 26,741,541 67.6 26,741,541
1 to 2 years 1,936,191 1.8 - 1,936,191 943,410 2.4 943,410
2 to 3 years 221,072 0.2 - 221,072 376,038 0.9 376,038
Over 3 years 7,758,346
_______ ____7.3 (7,392,429)
_______ 365,917
_______ 11,522,556
_______ 29.1
____ (11,120,600)
_______ _______ 401,956
106,724,223 100.0 (7,392,429) 99,331,794 39,583,545 100.0 (11,120,600) 28,462,945
_______ ____ _______ _______ _______ ____ _______ _______
The movement of provision for other receivables is as follows:
Opeing balance Accrual Reversal Written-off Closing balance
RMB RMB RMB RMB RMB
2013 11,120,600
________ -
_______ (607,571)
_______ (3,120,600)
________ 7,392,429
________
As at 31 December 2013, the bad debt provision for individually significant balance is as follows:
Balance Bad debts provision Percentage Reason for provision
RMB RMB %
The debtor is in the
Tiantong Security Co., Ltd. 7,392,429
________ 7,392,429
________ 100 process of liquidation
________ ________
As at 31 December 2012, the bad debt provision for individually significant balance is as follows:
Balance Bad debts provision Percentage Reason for provision
RMB RMB %
Tiantong Security Co., Ltd. 8,000,000 8,000,000 100 The debtor is in the
process of liquidation
100 The aging is more than
three years and not
Finance Bureau of Jingyang County 3,120,600
________ 3,120,600
________ likely to be recovered
11,120,600
________ 11,120,600
________
- 109 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Other receivables - continued
(2) Reversals and collections during the current period
Reasons for Basis of determining Accumulated bad debt Amount of
reversal or the original bad debt provision prior to reversals or
Content of other receivables collections provision reversals or collections collections
RMB RMB
Tiantong Security Co., Ltd. Collected Exceed credit period (8,000,000) 607,571
(3) Other receivables written off in the reporting period
Write off of other receivables in 2013
Reason of Whether are related
Nature Write-off amount write-off party transaction
RMB
Custom of Yantai Government borrowings 3,120,600
_______ Unable to recover No
(4) As at 31 December 2013, there was no other receivable due from shareholders with voting rights
of 5% or above (31 December 2012: Nil).
(5) Top five entities with the largest balances of other receivables
As at 31 December 2013, the top 5 of other receivables are as follows:
Relationship Percentage of total
with the Group Amount Aging other receivable
RMB %
Non-taxing account of Bureau of
Finance of Yantai Economic
Development Zone Third party 52,880,000 Within 1 year 49.5
Tiantong Security Co., Ltd. Third party 7,392,429 Over 3 years 6.9
Construction Union of Yantai
Economic Development Zone Third party 5,000,000 Within 1 year 4.7
Liaoning Administration of
Foreign Experts Affairs Third party 1,894,055 Within 1 year 1.8
Yantai Electronic Company of
Shandong Electronic Power Group Third party 953,200
________ Within 1 year 0.9
___
68,119,684
________ 63.8
___
(6) As at 31 December 2013, there was no other receivable due from related parties (31 December
2012: Nil).
- 110 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
7. Inventories
2013 2012
Net carrying Net carrying
Balance Provision amount Balance Provision amount
RMB RMB RMB RMB RMB RMB
Raw material 85,025,169 - 85,025,169 61,041,026 - 61,041,026
Finished goods 1,119,090,234 (13,135,590) 1,105,954,644 1,051,981,303 (15,378,581) 1,036,602,722
Work in progress 930,137,624
_________ - 930,137,624
_______ _________ 1,170,977,693
_________ -
_______ 1,170,977,693
_________
2,134,253,027
_________ 13,135,590 2,142,226,138 2,284,000,022
_______ _________ _________ 15,378,581
_______ 2,268,621,441
_________
Movement of inventory provision is as follows:
2013 Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Finished goods 15,378,581
________ -
_______ (2,242,991)
________ 13,135,590
________
8. Long-term equity investment
2013
Opening
and closing Equity Voting Current year
Initial cost balance interest power Provision provision
RMB RMB % % RMB RMB
Cost method:
Yantai Dingtao
Construction and
Development Co., Ltd.
("Yantai Dingtao") 10,000,000
_______ 5,000,000
______ ___18 ___18 10,000,000
_______ 5,000,000
______
______ ______
- 111 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
9. Property, plant and equipment
2013 Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Cost
Buildings 1,376,818,737 97,296,111 (9,468,040) 1,464,646,808
Machineries and equipment 1,110,690,952 128,413,628 (2,912,455) 1,236,192,125
Motor vehicles 22,278,132
__________ 2,753,815
_________ (706,458)
________ 24,325,489
__________
2,509,787,821
__________ 228,463,554
_________ (13,086,953)
________ 2,725,164,422
__________
________
Accumulated depreciation
Buildings 184,409,573 39,161,069 (1,137,624) 222,433,018
Machineries and equipment 484,127,864 83,721,184 (2,190,053) 565,658,995
Motor vehicles 17,266,663
__________ 2,821,311
_________ (656,909)
________ 19,431,065
__________
685,804,100
__________ 125,703,564
_________ (3,984,586)
________ 807,523,078
__________
Net carrying amount
Buildings 1,192,409,164 1,242,213,790
Machineries and equipment 626,563,088 670,533,130
Motor vehicles 5,011,469
__________ 4,894,424
__________
1,823,983,721
__________ 1,917,641,344
__________
The increase of accumulated depreciation for 2013 is RMB125,703,564(2012: RMB125,261,510).
The amount of transfer from construction in progress to property, plant and equipment for 2013 is
RMB133,150,604 (2012: RMB208,080,554). The amount of property, plant and equipment
purchased is RMB 87,479,584 and the amount disposed of is RMB5,253,586.
As at 31 December 2013, there was no property, plant and equipment with ownership restricted
(31 December 2012: Nil).
As at 31 December 2013, buildings without property certificate are as follows:
Reason for not Expected
Amount receiving receiving date
RMB
Beijing Chateau European town, main, service building 215,934,181 Processing 2014
Ning Xia Wine production factory and office buildin 91,102,463 Processing 2014
Jingyang factory Fermentation building 66,476,601 Processing 2014
Xinjiang Tianzhu fermentations and storage warehouse 20,255,624 Processing 2014
Ice Wine Chateau office building and packing workshop 10,666,305 Processing 2014
Sales Company office buildings 5,259,058 Processing 2014
Kylin Packaging finished goods warehouse and workshop 2,843,788 Processing 2014
Fermentation/Experiment centre and workshop 2,061,465
_________ Processing 2014
_________
As at 31 December 2013, the Group has no temporary idle fixed assets, fixed assets held for sale,
fixed assets leased in under finance leases and fixed assets leased out under operating leases (2012:
RMB: Nil).
As at 31 December 2013, there was no property, plant and equipment
- 112 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
10. Construction in progress
2013 2012
RMB RMB
The Company's reconstruction project 269,802 24,640,660
Xinjiang Tianzhu workshop reconstruction project 1,018,309 4,479,084
Kylin Packing production line project 19,800 -
Yantai Chateau vineyard project 10,619,000 3,300,000
Ningxia Chateau road project 600,000 -
Beijing Chateau construction project - 11,731
Sales Company construction project 66,682,027 62,842,601
Langfang Castor workshop project - 7,633,319
Jingyang Wine fermentation workshop
reconstruction project 158,569 -
Ningxia united workshop 1,464,202 1,556,490
Shi He Zi Chateau construction project 152,871,244 156,451,724
Ningxia Chateau construction project 92,062,210 41,367,789
Xianyang Chateau construction project 403,657,745 261,525,502
R&D Centre construction project 558,716,989 169,912,227
Ding Luo Te Chateau Project 119,074,949 91,790,388
Huanren factory construction project 16,439,684
____________ 7,317,174
__________
1,423,654,530
____________ 832,828,689
__________
Accumulated
expenditure
2013 Budget Opening balance Addition Transfer to PPE Closing balance Financed by /budget
RMB RMB RMB RMB RMB %
The Company's reonstruction project 201,440,000 24,640,660 32,254,029 (56,624,887) 269,802 Self-raised 90.2
Xinjiang Tianzhu Workshop
Reconstruction Project 37,570,000 4,479,084 - (4,479,084) - Self-raised 100.0
Xinjiang Tianzhu technology
innovation and reconstruction project 3,500,000 - 1,225,437 (207,128) 1,018,309 Self-raised 35.0
Kylin Packing production line project 6,200,000 - 99,250 (79,450) 19,800 Self-raised 86.9
Yantai Chateau vineyard project 30,000,000 3,300,000 7,319,000 - Self-raised 35.4
Ningxia Chateau road project 600,000 - 600,000 - 600,000 Self-raised 100.0
Beijing Chateau construction project 268,565 11,731 10,464,327 (10,476,058) - Self-raised 99.4
AFIP Wine grape trellis project 21,000,000 - 268,565 (268,565) - Self-raised 100.0
Sales Company construction project 106,350,000 62,842,601 4,309,633 (470,207) 66,682,027 Self-raised 116.9
Langfang Castor workshop project 19,727,000 7,633,319 5,809,469 (13,442,788) - Self-raised 69.0
Jingyang ferment project 26,000,000 - 158,569 - 158,569 Self-raised 72.8
Ningxia United Workshop 58,700,000 1,556,490 187,028 (279,316) 1,464,202 Self-raised 98.0
Shihezi Chateau
Construction Project 750,000,000 156,451,724 43,242,641 (46,823,121) 152,871,244 Self-raised 75.0
Ningxia Chateau
Construction Project 284,150,000 41,367,789 50,694,421 - 92,062,210 Self-raised 104.4
Xianyang Chateau
Construction Project 800,000,000 261,525,502 142,132,243 - 403,657,745 Self-raised 51.1
R&D Centre
Construction Project 1,693,970,000 169,912,227 384,413,763 - 554,325,990 Self-raised 37.4
Ding Luo Te Chateau project 152,400,000 91,790,388 27,284,561 - 119,074,948 Self-raised 78.1
Huanren factory construction project 15,000,000 ______
7,317,174 ______
9,122,510 _______ _______
- 16,439,684 Self-raised 109.6
832,828,689 723,976,445 (133,150,604) 1,419,263,530
______ ______ _______ _______
There was no interest capitalized in construction in progress in 2013.
As at 31 December 2013, there was no provision was made for the construction in process.
- 113 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Intangible assets
2013 Opening balance Increase Closing balance
RMB RMB RMB
Cost
Land use right 299,710,962 1,332,053 301,043,015
Software use right 3,780,000
__________ 23,343,447
_________ 27,123,447
__________
303,490,962
__________ 24,675,500
_________ 328,166,462
__________
Accumulated amortization
Land use right 21,717,040 5,970,876 27,687,916
Software use right 3,480,000
__________ 868,792
_________ 4,348,792
__________
25,197,040
__________ 6,839,668
_________ 32,036,708
__________
Net carrying amount
Land use right 277,993,922 273,355,099
Software use right 300,000
__________ 22,774,655
__________
278,293,922
__________ 296,129,754
__________
The amortisation of 2013 is RMB6,839,668.
As at 31 December 2013, there was no intangible asset with restricted ownership.
12. Biological assets
2013
RMB
Opening balance 39,681,580
Addition 62,959,555
Amortization (846,620)
__________
Closing balance 101,794,515
__________
As at 31 December 2013, there is no biological asset with ownership restricted. As at 31
December 2013, the Group's accumulated depreciation of biological assets is RMB8,795,165
(2012: RMB7,948,545).
As at 31 December 2013, there is no indication that biological assets may be impaired, and no
provision was made.
- 114 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. Goodwill
2013 Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
French sales -
______ 13,112,525
________ -
______ 13,112,525
________
As mentioned above in Note XI-1, in order to determine the fair value of assets and liabilities of
French Sales at the acquisition date, a valuation institution is to be hired to determine the fair
value of the assets and liabilities of the company. As the valuation has not been commenced till
the issue of financial statements of 2013, the Group temporarily recognised the book value of
assets and liabilities of French Sales as its fair value at the acquisition date. Therefore, the Group
recognised a goodwill of RMB13,112,525 in regard to the acquisition. The valuation is expected
to be finished in 2014 and the book value of assets, liabilities and goodwill above will also be
adjusted according to the valuation result.
14. Long-term prepaid expenses
2013 Opening balance Increase Amortization Closing balance
RMB RMB RMB RMB
Land lease prepayments 63,541,467 2,936,860 (3,977,253) 62,501,074
Land requisition fee 50,849,948 - (2,458,948) 48,391,000
Greening fee 44,747,706 10,218,601 (11,273,043) 43,693,264
Others 1,732,739
_________ 9,275,455
________ (71,729)
________ 10,936,465
_________
160,871,860
_________ 22,430,916
________ (17,780,973)
________ 165,521,803
_________
________
15. Deferred tax assets/liabilities
Deferred tax assets and liabilities are presented separately:
Deferred tax assets and liabilities recognized are as follows:
2013 2012
RMB RMB
Deferred tax assets
Unrealized profit from intra-company transactions 84,493,108 98,817,513
Unpaid bonus 19,635,738 20,873,113
Retirement benefit 4,877,490 6,178,176
Asset impairment provision 7,632,005 7,874,795
Deductable losses 24,346,814 10,064,437
Deferred income 17,547,935
__________ 6,568,104
__________
158,533,090
__________ 150,376,138
__________
Deferred tax liabilities
Fair value adjustment in business combination under
non-common control 5,336,115
__________ 5,336,115
__________
- 115 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
15. Deferred tax assets/liabilities - continued
Deferred tax assets and liabilities not recognized:
2013 2012
RMB RMB
Deductable losses 20,440,916
_________ 20,505,913
_________
Deductable losses not recognized as deferred tax assets will expire in:
2013 2012
RMB RMB
2013 - 64,997
2014 19,077,494 19,077,494
2015 1,363,422
_________ 1,363,422
_________
20,440,916
_________ 20,505,913
_________
Temporary differences from assets and liabilities that resulting in such differences are as follows:
2013 2012
RMB RMB
Deductible temporary difference
Unrealized profit from intra-company transactions 337,972,438 395,270,055
Unpaid bonus 78,542,951 83,492,454
Early retirement benefit 19,509,959 24,712,704
Provision for impairment 30,528,019 31,499,181
Deductible losses 97,387,257 40,257,750
Deferred income 96,526,843
__________ 40,465,889
__________
660,467,467
__________ 615,698,033
__________
2013 2012
RMB RMB
Taxable temporary difference
Fair value adjustment in business
combination under non-common control 21,344,460
_________ 21,344,460
_________
- 116 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
16. Provision for impairment of assets
2013
Opeing balance Accrual Reversal Written-off Closing balance
RMB RMB RMB RMB RMB
Bad debt provision 11,120,600 - (607,571) (3,120,600) 7,392,429
Inventory provision 15,378,581 - (2,242,991) - 13,135,590
5,000,000
Investment of long-term investment ________ 5,000,000
_______ -
_______ -
________ 10,000,000
________
31,499,181
________ 5,000,000
_______ (2,850,562)
_______ (3,120,600)
________ 30,528,019
________
_______
17. Other non-current assets
2013 2012
RMB RMB
Ningxia Growing's biological assets 21,370,902 24,898,903
Unrecognised finance charge 3,601,902
__________ 3,281,132
__________
24,972,804
__________ 28,180,035
__________
18. Short-term borrowings
2013 2012
RMB RMB
Secured loans with securities under the custody of lenders 243,170,674
__________ -
______
As at 31 December 2013, secured loans with securities under the custody of lenders is the amount
borrowed by the Company from Qingdao Branch of HSBC with the bank deposit of RMB
125,000,000 as custody. The borrowing amount is HKD303,963,343 with annual interest rate of
1.8% and borrowing period from 5 July 2013 to 4 July 2014.
- 117 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
19. Trade payables
The trade payables are interest free with a credit period no more than three months from its
suppliers normally.
2013 2012
RMB RMB
Within 1 year 258,116,331
__________ 324,881,168
__________
As at 31 December 2013, there are no payables to the shareholders with voting rights of 5%, the
Group's outstanding balance payable to related parties are as following:
2013 2012
RMB RMB
Accounts payables to related party
Yantai ShenMa Packing Co., Ltd. 46,370,178 43,366,087
Yantai Zhongya Pharmaceutical Tonic Wine Co., Ltd. 4,520,101 7,972,184
Yantai Changyu Wine Culture Museum Limited 177,526
_________ -
_________
51,067,805
_________ 51,338,271
_________
20. Advances from customers
2013 2012
RMB RMB
Within 1 year 182,757,182 450,172,253
1 to 2 years 5,894,072
__________ -
__________
188,651,254
__________ 450,172,253
__________
As at 31 December 2013, the Group had no outstanding balance payable to the related parties or
shareholders with voting rights of 5% or above (31 December 2012: Nil).
- 118 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
21. Employee benefit
31 December 2013
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Salaries and bonus 87,598,216 308,001,166 (309,061,233) 86,538,149
Staff benefit - 8,499,785 (8,499,785) -
Staff welfare 262,293 42,937,485 (43,022,516) 177,262
Includes:
Medical insurance 57,516 8,998,978 (8,902,904) 153,590
Pension 202,487 30,598,636 (30,777,674) 23,449
Unemployment insurance 2,148 1,637,364 (1,639,289) 223
Injury insurance 142 929,453 (929,595) -
Maternity insurance - 773,054 (773,054) -
Housing fund 294,914 7,795,836 (8,080,818) 9,932
Union fee and education fee 2,018,390 4,684,475 (4,320,864) 2,382,001
Termination benefits 27,993,831 1,799,076 (6,684,987) 23,107,920
Other allowances 22,317,283
_________ -
_________ (210,410)
_________ 22,106,873
_________
140,484,927
_________ 373,717,823
_________ (379,880,613)
_________ 134,322,137
_________
As at 31 December 2013, the Group had no overdue employee benefit payable (31 December
2012: Nil).
22. Taxes payable
2013 2012
RMB RMB
Value added tax 862,414 (21,005,478)
Consumption tax 26,658,283 33,478,543
Business tax 4,348,055 1,041,384
Corporation income tax 142,079,369 405,075,954
Urban land use tax 878,982 1,180,572
Individual income tax 6,824,553 6,091,205
City construction tax 6,016,703 8,872,888
Property tax 655,545 1,904,752
Others 6,016,703
__________ 7,444,756
__________
194,413,430
__________ 444,084,576
__________
- 119 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
23. Other payables
2013 2012
RMB RMB
Deposit from distributors 215,888,735 210,775,654
Royalty fee 78,986,198 99,943,588
Payables for equipment and construction 63,133,029 51,846,156
Advertising costs 51,854,647 20,434,958
Deposits from suppliers 2,565,206 2,370,702
Others 84,873,815
__________ 85,279,053
__________
497,301,630
__________ 470,650,111
__________
The balance due to the shareholders with voting right of 5% or above is as follows:
2013 2012
RMB RMB
Royalty fee 78,986,198 99,943,588
Yantai ShenMa Packing Co., Ltd. 165,230 -
Yantai Zhongya Pharmaceutical Tonic Wine Co., Ltd. 52,760
_________ -
_________
79,204,188
_________ 99,943,588
_________
As at 31 December 2013, significant outstanding balance aged over than one year is as follows:
Reasons for
Amount payable outstanding
RMB
Economical cooperative society East Baiyan Street Unpaid
Juge District Miyun County 5,390,354
________ Land Rental
There was no repayment of the above balances after the balance sheet date.
- 120 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
24. Non-current liabilities due within one year
2013 2012
RMB RMB
Trust scheme due within one year - 142,785,000
Interest payable -
______ 8,160,000
__________
-
______ 150,945,000
__________
In October 2012, the Company and Shangdong Province International Trust Co., Ltd.("Shandong
Trust") entered into a profit transfer agreement ("October 2012 trust scheme"), 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 Shandong Trust and received RMB90,000,000 with annual interest rate
of 8.5%. The specified profit right includes the following benefits: (1) The gains generated in
the delivery of packed wine according to the delivering instruction by Shandong Trust; (2) The
disposal gain of the target assets in any case; and (3) Any other gains generated by the target
assets. According to the contract, the Company paid interest to Shandong Trust at an interest rate
of 8.5% and returned the amount of the trust option not exercised of target assets when the
arrangement expires. The October 2012 trust scheme has expired on 5 November 2013. As no
option is exercised by Shandong Trust, the Company liquidated the trust scheme in cash on 15
November 2013 in accordance with the agreement.
In July 2011, the Company and Zhonghai Trust Co., Ltd.("Zhonghai Trust") entered into a profit
transfer agreement ("July 2011 trust scheme"), 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 Trust and received RMB52,785,000 with annual interest rate of 7%. The specified
profit right includes the following benefits: (1) The gains generated in the delivery of packed wine
according to the delivering instruction by Zhonghai Trust; (2) The disposal gain of the target
assets in any case; and (3) Any other gains generated by the target assets. The July 2011 trust
scheme has expired on 20 February 2013. As no option is exercised by Zhonghai Trust, the
Company liquidated the trust scheme in cash on 21 February 2013 in accordance with the
agreement.
25. Other current liabilities
2013 2012
RMB RMB
Deferred income 12,915,801
_________ 8,090,382
________
- 121 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
25. Other current liabilities - continued
Details of deferred income:
2013 2012
RMB RMB
Government grant related with assets
Fund to support major constructing projects 4,403,000 2,404,874
Fund to support emerging and key industries 3,159,227 2,300,808
Others 5,353,574
_________ 3,384,700
________
12,915,801
_________ 8,090,382
________
26. Other non-current liabilities
2013 2012
RMB RMB
Employee benefit (1) 4,755,794 7,856,000
Deferred income (2) 83,611,041
_________ 61,148,861
_________
88,366,835
_________ 69,004,861
_________
(1) Employee benefit represents bonus accrued for management. According to the bonus
payment schedule of 2013, the bonus is expected to be paid during 2015 to 2016.
(2) Government grants:
Recognized in
non-operating Other Related to
Liability Items Opening Addition income movements Closing Assets/Income
RMB RMB RMB RMB RMB
Luxury wine culture industry
construction specific funds - 3,000,000 (480,000) - 2,520,000 Income
Miyun Propaganda Department transfer 4,444,725 - - - 4,444,725 Assets
Grape base project specific funds - 1,480,000 (740,000) - 740,000 Assets
Ningxia industry revitalization and
technology reconstruction funds 9,400,000 5,900,000 (940,000) - 14,360,000 Assets
Industry revitalization and technology
reconstruction specific funds - 21,330,000 - - 21,330,000 Assets
Wine base liquor brewage project 11,913,864 - (1,434,874) - 10,478,990 Assets
Innovation supporting funds 1,000,000 - - (1,000,000) - Assets
WuYouYiXin industrial cluster
specific funds 240,000 - (60,000) - 180,000 Assets
Changyu chateau project funds 23,677,300 - (3,858,700) - 19,818,600 Assets
Wine electronic tracking system
specific funds 7,633,354 - (1,772,827) - 5,860,527 Assets
Wine industry specific funds 930,000 - - - 930,000 Assets
Shandong Peninsula Blue Economic
Area construction funds 10,000,000 - - - 10,000,000 Assets
863 Program subsidy funds
for scientific research - 64,000 - - 64,000 Assets
Information system construction
project technology funds ______ ______
- 5,800,000 ______ - ______ - _______
5,800,000 Assets
Total ______ ______
69,239,243 37,574,000 ______
(9,286,401) ______
(1,000,000) _______
96,526,842
Less: Non-current liabilities due
within one year ______
(8,090,382) _______
(12,915,801)
Other non-current liabilities 61,148,861 83,611,041
______ _______
- 122 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
27. Share capital
Unrestricted
2013 Opening balance in 2013 Closing balance
RMB RMB RMB
Unrestricted shares
A Shares 453,460,800 - 453,460,800
B Shares 232,003,200
__________ -
_______ 232,003,200
__________
Total of unrestricted shares 685,464,000
__________ -
_______ 685,464,000
__________
Total shares 685,464,000
__________ -
_______ 685,464,000
__________
Unrestricted
2012 Opening balance in 2012 Closing balance
RMB RMB RMB
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
__________
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. 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 amount of share dividend transferred to share capital is
RMB158,184,000.
28. Capital surplus
2013 Opening balance Addition Closing balance
RMB RMB RMB
Share premium 557,222,454 - 557,222,454
Other 4,916,588
__________ 1,000,000
________ 5,916,588
__________
562,139,042
__________ 1,000,000
________ 563,139,042
__________
According to Xing Cai (Qi) Fa [2009]1160, Ningxia Wine recognised government grant of
RMB1,000,000 into capital reserve. The grant was previously recognised in deferred income and
was due within 2013.
- 123 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
28. Capital surplus - continued
2012 Opening balance Addition Closing balance
RMB RMB RMB
Share premium 557,222,454 - 557,222,454
Other 4,916,588
__________ -
______ 4,916,588
__________
562,139,042
__________ -
______ 562,139,042
__________
29. 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. As the Company's surplus reserve has reached 50% of the share
capital, the Company does not appropriate net profit to the surplus reserve in 2013.
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.
30. Retained earnings
2013 2012
RMB RMB
Retained earnings brought forward 4,322,769,136 3,628,279,989
Add: profit attributable to shareholders of the Company 1,048,185,927 1,700,928,117
Less: Dividends paid in respect prior year's profit - (801,465,600)
Withdrawal of legal surplus (754,010,400) (46,789,370)
Conversion of ordinary share dividends -
____________ (158,184,000)
____________
Retained earnings carried forward 4,616,944,663
____________ 4,322,769,136
____________
In accordance with 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.
As at 31 December 2013, the balance of the Group's unappropriated profits include appropriation
to surplus reserve by subsidiaries amounting to RMB37,554,671 (31 December 2012:
RMB33,838,221).
According to the board of the directors resolution raised on 24 April 2014, the Company proposed
a cash dividend of RMB5 (tax inclusive) for every 10 shares in respect of 2013 based on the
issued shares of 685,464,000. The aggregate amount of cash dividend is RMB342,732,000. The
resolution is to be approved by the annual general meeting.
- 124 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
31. Assets with restriction of ownership
2013 Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Cash at bank 2,652,083 131,257,285 (42,846) 133,866,522
Inventory 25,726,686
________ -
_________ (25,726,686)
________ -
_________
28,378,769
________ 131,257,285
_________ (25,769,532)
________ 133,866,522
_________
________
As at 31 December 2013, cash and bank balances with restriction of ownership include: the
Group's housing fund of RMB2,609,237, security of RMB125,000,000 pledged for a short-term
borrowing from HSBC of HKD303,963,343 (translated as RMB243,170,674), refundable deposit
for notes payable of Shi He Zi Chateau of RMB5,965,996, and company cards deposit guarantee
of RMB291,289.
As at 31 December 2012, the profit transfer trust scheme set on 2012 expired and the restriction
on inventory removed, therefore there is no inventory with restriction of ownership.
32. Operating income and costs
Operating income is analyzed as follows:
2013 2012
RMB RMB
Principal operating income 4,273,801,693 5,556,442,502
Other operating income 47,146,879
____________ 87,088,051
____________
4,320,948,572
____________ 5,643,530,553
____________
Operating cost is analyzed as follows:
2013 2012
RMB RMB
Principal operating income 1,336,631,197 1,359,873,644
Other operating income 21,266,802
____________ 41,215,339
____________
1,357,897,999
____________ 1,401,088,983
____________
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.
- 125 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
32. Operating income and costs - continued
Operating income from top five customers in 2013 is as follows:
Percentage of total
Amount operating incomes
RMB %
Foshan Nanhai Dali Qianxingrong wine house 38,543,431 0.9
Guangzhou Baiyun Huimingxin liquor store 35,388,051 0.8
Fuzhou Shengshi Hanggang Trading Co. Ltd. 26,095,961 0.6
Fugang Shijiao Liang's store 25,359,599 0.6
Hui'an Luocheng Quanxing liquor store 24,904,311
__________ 0.6
___
150,291,353
__________ 3.5
___
Operating income is analyzed as follows:
2013 2012
RMB RMB
Sale of goods 4,273,801,693 5,556,442,502
Rendering of services 47,146,879
____________ 87,088,051
____________
4,320,948,572
____________ 5,643,530,553
____________
33. Taxes and surcharges
2013 2012
RMB RMB
Consumption tax 150,438,896 198,061,661
Business Tax 2,595,076 4,490,563
City construction tax 44,937,923 61,248,671
Education fee and surcharges 31,426,897 45,595,614
Others 6,995,372
__________ 8,817,794
__________
236,394,164
__________ 318,214,304
__________
For detail standards of tax rate please refer to Notes IV Tax.
- 126 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
34. Selling expenses
2013 2012
RMB RMB
Advertising costs 577,727,845 832,290,075
Freight 126,085,723 136,710,184
Salary and employee benefit 196,790,695 191,099,359
Trademark fee 78,986,198 99,943,588
Warehouse leasing expenses 37,714,861 36,959,537
Travelling expenses 20,927,235 23,177,961
Commission 13,828,552 12,314,338
Expenses incurred for Wine festival 1,211,634 29,711,497
Others 87,563,407
____________ 87,017,624
____________
1,140,836,150
____________ 1,449,224,163
____________
35. General and administrative expense
2013 2012
RMB RMB
Salary and employee benefit 39,539,807 55,908,211
Insurance fee 29,625,036 30,024,891
Leasing expenses 7,337,569 8,943,367
Depreciation 24,694,962 23,715,321
Amortization 8,396,636 5,793,090
Administrative expenses 13,706,767 14,546,769
Travelling expenses 6,604,787 6,379,358
Entertainment fee 3,964,265 5,296,737
Property tax, stamp duty and other taxes 11,118,372 13,619,934
Maintenance fee 15,723,166 14,716,086
Management fee 23,545,171 11,745,536
Others 61,242,412
__________ 63,685,509
__________
245,498,950
__________ 254,374,809
__________
36. Loss on impairment of assets
2013 2012
RMB RMB
Impairment loss (607,571) -
Inventory provision (2,242,991) 2,777,648
Bad debts provision 5,000,000
_________ -
________
2,149,438
_________ 2,777,648
________
- 127 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
37. Financial income
2013 2012
RMB RMB
Interest income 34,252,612 38,033,736
Less: interest expenses (12,681,058) (8,493,989)
Bank charges (2,871,197)
__________ (9,621,486)
_________
18,700,357
__________ 19,918,261
_________
38. Non-operation income
2013 2012
RMB RMB
Gains on disposal of non-current assets 271,989 4,379,454
Including: gain on disposal of plant property
and equipments 271,989 640,939
Government grants 36,659,754 23,393,756
Penalty income 210,757 373,987
Others 4,966,226
_________ 7,231,063
_________
42,108,726
_________ 35,378,260
_________
Government grants recognized in the income statement is as follows:
2013 2012
RMB RMB
Major projects support fund 1,680,000 1,483,193
Small and medium enterprises support fund 3,902,827 646,646
Tax refund 22,163,624 14,636,437
Others 8,913,303
_________ 6,627,480
_________
36,659,754
_________ 23,393,756
_________
39. Non-operation expenses
2013 2012
RMB RMB
Loss on disposal of non-current assets 678,016 2,581,199
Including: loss on disposal of property,
plant and equipment 678,016 2,581,199
Donation 291,729 221,106
Others 904,478
________ 169,104
________
1,874,223
________ 2,971,409
________
- 128 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
40. Income tax
2013 2012
RMB RMB
Current income tax 357,077,756 554,519,329
Deferred income tax (8,156,952)
__________ 25,152,800
__________
348,920,804
__________ 569,247,641
__________
Reconciliation between income tax expenses and profits is as follows:
2013 2012
RMB RMB
Profit before tax 1,397,106,731 2,270,175,758
Income tax expense at statutory tax rate 25% 349,276,683 567,543,940
Effect of different tax rates applied by certain subsidiaries (2,677,153) (2,746,040)
Non-taxable income (131,500) (380,412)
Non-deductible expenses 2,452,774
____________ 4,830,153
____________
Income tax expenses at the Group's effective tax rate 348,920,804
____________ 569,247,641
____________
41. 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.
2013 2012
RMB RMB
Earnings
Consolidated profit attributable to
ordinary shareholders of the Company 1,048,185,927
____________ 1,700,928,117
____________
Shares
Weighted average number of outstanding
ordinary shares (i) 685,464,000
____________ 685,464,000
____________
Basic earnings per share 1.53
____________ 2.48
____________
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.
- 129 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
42. Notes to consolidated cash flow statement
Cash received relating to other operating activities:
2013 2012
RMB RMB
Government grants 42,783,729 30,555,824
Others 5,176,982
_________ 9,496,088
_________
47,960,711
_________ 40,051,912
_________
Cash paid relating to other operating activities:
2013 2012
RMB RMB
Selling expenses 944,945,796 1,233,262,732
General and administrative expenses 102,626,714 110,485,877
Others 11,982,799
____________ 9,575,616
____________
1,059,555,309
____________ 1,353,324,225
____________
Cash paid relating to other financing activities:
2013 2012
RMB RMB
Cash liquidation of trust scheme 150,945,000 80,497,823
Pledged security of short-term borrowing 125,000,000
__________ -
__________
275,945,000
__________ 80,497,823
__________
- 130 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
43. 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:
2013 2012
RMB RMB
Net profit 1,048,185,927
____________ 1,700,928,117
____________
Add: Loss for impairment of assets 2,149,438 2,777,648
Depreciation 125,540,127 125,261,510
Amortization of intangible assets 6,839,668 5,113,916
Amortization of Biological assets 846,620 795,539
Amortization of long-term prepaid expenses 17,780,973 14,130,153
Losses/(gain) on disposal of property,
plant and equipment 406,027 1,940,260
Finance income (21,571,554) (26,261,924)
Decrease/(increase) in deferred tax assets (8,156,952) 25,152,800
Decrease/(increase) in inventories 149,746,995 (515,434,507)
Decrease/(increase) in operating receivables (49,235,221) 32,246,207
Increase/(decrease) in operating payables (537,457,741)
____________ (64,608,397)
____________
Net cash flows from operating activities 735,074,307
____________ 1,302,041,322
____________
(ii) Cash and cash equivalent
2013 2012
RMB RMB
Closing balance 1,367,818,182 2,227,470,828
Including:
restricted bank deposits 2,609,237 2,652,083
restricted other monetary funds 131,257,285 -
deposit with a period of over three months 277,392,728
____________ 662,524,719
____________
Closing balance of cash and cash equivalents 956,558,932
____________ 1,562,294,026
____________
2013 2012
RMB RMB
Cash 956,558,932 1,562,294,026
Including:
Cash on hand 772,817 48,894
Bank deposits on demand 955,786,115
____________ 1,562,245,132
____________
Closing balance of cash and cash equivalents 956,558,932
____________ 1,562,294,026
____________
- 131 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VII) RELATED PARTY AND RELATED PARTY TRANSACTIONS
1. Parent company
Name of Type of Place of Legal Scope Registered Percentage Percentage Incorporate
parent company enterprise registration representative of business capital of shares of voting rights Code
RMB % %
Cotrolling Company Limited Company Yantai SunLiqiang Manufacturing 50,000,000 50.4 50.4 265645824
During the year ended 31 December 2013, there is no change in parent company's registered
capital, shares holding or voting power.
2. Subsidiaries: Please refer to Note V-1.
3. Other related parties
Nature of related parties Incorporate code
Yantai Changyu Travelling Co., Ltd. subs Controlled by the 258258654
same parent company
Yantai Changyu International Controlled by the 672208146
Window of the Wine City Co., Ltd. same parent company
Yantai ShenMa Packing Co., Ltd. e Co Controlled by the 553393350
same parent company
Yantai Zhongya Pharmaceutical Controlled by the 726203923
Tonic Wine Co., Ltd. same parent company
4. Significant related party transactions
(1) Purchases from and sales to related parties
Purchase from related parties
2013 2012
RMB RMB
Yantai ShenMa Packing Co., Ltd 194,648,978 206,438,932
Yantai Zhongya Pharmaceutical tonic Wine Co., Ltd. 7,960,294 7,821,383
Yantai Changyu Travelling Co. Ltd. 2,618,189 118,886
Yantai Changyu International Window
of the Wine City Co., Ltd 100,246
__________ 725,996
__________
205,327,707
__________ 215,105,197
__________
All related party transactions are based on the negotiated price.
In 2013, purchases from related parties accounted for less than 11.9% of the Group's total
purchase (2012: 12.0%)
- 132 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VII) RELATED PARTY AND RELATED PARTY TRANSACTIONS - continued
4. Significant related party transactions - continued
(1) Purchases from and sales to related parties - continued
Sales to related parties
2013 2012
RMB RMB
Yantai Changyu Wine Culture Museum Limited 5,495,959 4,382,547
Yantai Changyu International Window
of the Wine City Co., Ltd. 2,524,559 4,450,553
Yantai Zhongya Pharmaceutical tonic Wine Co., Ltd 1,890,313 512,551
Yantai ShenMa Packing Co., Ltd. 1,492,538
_________ -
________
11,403,369
_________ 9,345,651
________
All related party transactions are based on the negotiated price.
In 2013, sales to related parties accounted for less than 1% of the Group's total sales (2012: less
than 1%).
(2) Property leased from a related party
2013 Note Assets leased Beginning date Ending date Rental expense
Changyu Group Company (a) Warehouse and office building 2012/1/1 2016/12/31 5,858,000
______
______
(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 2013, the
rental payable to Changyu Group Company amounted to RMB5,858,000.
- 133 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VII) RELATED PARTY AND RELATED PARTY TRANSACTIONS - continued
4. Significant related party transactions - continued
(3) Other significant related party transactions
Note 2013 2012
RMB RMB
Royalty fee (a) 78,986,198 99,943,588
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 2013, royalty fee paid to related company accounted for 100% of the Group (2012:
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
RMB50,000. 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 2013, the patents usage fee payable to Changyu Group Company amounted to
RMB50,000 (2012: RMB50,000).
During 2013, patent fee paid to related company accounted for 100% of the Group (2012:
100%).
(4) Remuneration of the management
2013 2012
RMB RMB
Remuneration of the management 8,292,000
_________ 10,804,108
_________
- 134 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VII) RELATED PARTY AND RELATED PARTY TRANSACTIONS - continued
5. Balance due from/ to related parties
(1) Balance due from related parties
2013 2012
Trade receivables Balance Provision Balance Provision
RMB RMB RMB RMB
Yantai Zhongya Pharmaceutical
tonic Wine Co., Ltd. 2,567,129 - 1,820,376 -
Yantai Shen Ma Packing Co. Ltd. 911,197 - - -
Yantai Changyu International
Window of the Wine City Co., Ltd. 42,478 - - -
Yantai Changyu Travelling Co. Ltd. -
_______ -
_____ 311,220
_______ -
_____
3,520,804
_______ -
_____ 2,131,596
_______ -
_____
The above amounts due from related parties are unsecured, interest-free and have no fixed terms
of repayment.
(2) Balance due to related parties
2013 2012
RMB RMB
Trade payable
Yantai Shen Ma Packing Co, Ltd. 46,370,178 43,366,087
Yantai Zhongya Pharmaceutical tonic Wine Co., Ltd. 4,520,101 7,972,184
Yantai Changyu Wine Culture Museum Limited 177,526
_________ -
_________
Total 51,067,805
_________ 51,338,271
_________
Other payable
Royalty fee payable to parent company 78,986,198 99,943,588
Yantai Zhongya Co., 165,230 -
Yantai LtdShenMa Packing Co.,Ltd 52,760
_________ -
_________
Total 79,204,188
_________ 99,943,588
_________
The above amounts due to related parties are unsecured, interest-free and have no fixed terms of
repayment.
- 135 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(VIII) CONTINGENT LIABILITIES
The Group and the Company did not have any significant contingent liabilities as at balance sheet
date.
(IX) COMMITMENT
1. Capital commitments
2013 2012
RMB'000 RMB'000
Capital commitments
Authorized, but not contracted 1,123,880
____________ 1,605,664
____________
2. Operating lease commitment
As lessee
Significant operating lease: the Company has total future minimal lease payments under
non-cancelable contract with lessor are as follow:
2013 2012
RMB'000 RMB'000
Within one year 23,612 14,334
One year to two years 11,208 8,560
Two years to three years 9,726 6,512
Three years and above 28,390
_________ 20,279
_________
72,936
_________ 49,685
_________
(X) POST BALANCE SHEET DATE EVENT
According to the board of the directors resolution raised on 24 April 2014, the Company proposed
a cash dividend of RMB5 (tax inclusive) for every 10 shares in respect of 2013 based on the
issued shares of 685,464,000. The aggregate amount of cash dividend is RMB342,732,000. The
resolution is to be approved by the annual general meeting.
- 136 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(XI) OTHER SIGNIFICANT EVENTS
1. Business Consolidation
The group is the buyer in a business combination not under common control.
The basic information of the combination is as follows:
(1) Basic information of the acquiree:
French Sales is a limited company founded by Mr. Georges Roullet and Mr. Charles Tavernier in
Sant, French in 31 March 1983. The Company acquired 100% share of French Sales at the
consideration of EUR 3,575,000 (RMB29,988,530). After the acquisition, the Company holds 100%
share of French Sales.
(2) Primary financial information of the acquiree:
31 December 2013
Closing Balance
RMB
Primary financial information of the acquiree：
Identifiable assets
Cash and bank balances 13,104,666
Accounts receivable 1,502,386
Prepayments 15,844
Other receivables 297,601
Inventories 2,671,923
Fixed assets 1,550,012
Intangible assets 61,197
_________
Sub-total 19,203,629
_________
Identifiable liabilities
Accounts payable 1,928,669
Other payables 157,854
Employee benefits payable 215,238
Taxes payable 25,863
_________
Sub-total 2,327,624
_________
Total net assets 16,876,005
_________
Less: Minority interests -
Equity attributable to the Company's shareholders 16,876,005
Less: Acquisition consideration 29,988,530
_________
Goodwill 13,112,525
_________
- 137 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(XI) OTHER SIGNIFICANT EVENTS - continued
1. Business Consolidation - continued
(2) Primary financial information of the acquiree: - continued
According to the agreement of signed
on 16 October 2013, the Group acquired French Sales in 2013 December. In order to determine
the fair value of assets and liabilities of French Sales at the acquisition date, a valuation institution
is to be hired to determine the fair value of the assets and liabilities of the company. As the
valuation has not been commenced till the issue of financial statements of 2013, the Group
temporarily recognised the book value of assets and liabilities of French Sales as its fair value at
the acquisition date. Therefore, the Group recognised a goodwill of RMB13,112,525 in regard to
the acquisition. The valuation is expected to be finished in 2014 and the book value of assets,
liabilities and goodwill above will also be adjusted according to the valuation result.
The acquisition consideration is satisfied by cash. The cash and cash equivalent paid in the
acquisition of French Sales are:
Amount
RMB
Cash and cash equivalent as acquisition consideration 29,988,530
Less: cash and cash equivalents of the acquiree 13,104,666
_________
Net cash and cash equivalents paid in the acquisition of subsidiary 16,883,864
_________
2. Segment report
The Group is principally engaged in the production and sales of wine, brandy, sparkling wine. In
accordance with the Group's internal organisation structure, management requirements and
internal reporting system, the Group's operation determines only one operation segment and
reporting segment engaged in the production and sales within China. Therefore the Group does
not need to disclose additional segment report information.
- 138 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(XI) OTHER SIGNIFICANT EVENTS - continued
3. Financial instrument and risk management
The Group's major financial instruments include cash and bank, notes receivabless, accounts
receivables, interest receivables, other receivables, other non-current assets, short-term
borrowings, notes payables, trade payables, payroll payables, interest payables, other payables
and other non-current liabilities. Details of these financial instruments are disclosed in Note VI.
The risks associated with these financial instruments and the policies on how to mitigate these
risks are set out below. Management manages and monitors these exposures to ensure the risks
are monitored at a certain level.
(1) Risk management objectives and policies
Market risk
(a) Currency risk
Currency risk is the risk that losses will occur because of changes in foreign exchange rates. The
Group's exposure to the currency risk is primarily associated with HKD. The balance of the
Group's assets and liabilities are both denominated in RMB except the short term loan of HKD
303,963,343(RMB 243,170,674). Currency risk arising from the assets and liabilities denominated
in foreign currencies may have impact on the Group's performance.
(b) Interest rate risk - risk of changes in fair value
The Group's fair value interest rate risk of financial instruments relates primarily to fixed-rate
bank borrowings (see Note VI-18 for details). 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.
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, notes
receivables, 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 2013, 30.0% of trade
receivables of the Group are due from the top 5 customers (31 December 2012: 41.4%). There is
no collateral or other credit enhancement on the balance of the trade receivables of the Group.
- 139 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(XI) OTHER SIGNIFICANT EVENTS - continued
3. Financial instrument and risk management - continued
(1) Risk management objectives and policies - continued
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
Groups operations.
The Groups 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:
2013
Financial assets
1 to 3 months 3 to 12 months Over 1 year Total
RMB RMB RMB RMB
Cash and bank 956,559,232 424,501,488 - 1,381,060,720
Notes receivabless 53,438,752 26,264,001 - 79,702,753
Trade receivable 149,110,510 27,999,006 - 177,109,516
Interest receivables 8,417,995 - - 8,417,995
Other receivables 99,331,794 - - 99,331,794
Other non-current assets -
__________ -
_________ 21,370,902
________ 21,370,902
__________
1,266,857,983
__________ 478,764,495
_________ 21,370,902
________ 1,766,993,380
__________
Financial liabilities
1 to 3 months 3 to 12 months Over 1 year Total
RMB RMB RMB RMB
Short-term borrowings - 247,547,746 - 247,547,746
Notes payables - 5,765,694 - 5,765,694
Trade payables 225,248,499 32,867,832 - 258,116,331
Other payables 99,136,105 398,165,525 - 497,301,630
Interest payables 2,152,059 - - 2,152,059
Other non-current liabilities -
__________ -
_________ 4,755,794
________ 4,755,794
__________
326,536,663
__________ 684,346,797
_________ 4,755,794
________ 1,015,639,254
__________
- 140 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(XI) OTHER SIGNIFICANT EVENTS - continued
3. Financial instrument and risk management - continued
(2) Fair value
Fair values of the financial assets and financial liabilities are determined as follows:
The fair value of financial assets and financial liabilities with standard terms and
conditions and traded on active markets are determined with reference to quoted market
bid prices and ask prices respectively;
The fair value of other financial assets and financial liabilities (excluding derivative
instruments) are determined in accordance with generally accepted pricing models based
on discounted cash flow analysis or using prices from observable current market
transactions;
The management considers that the carrying amounts of financial assets and financial liabilities in
the financial statements approximate their fair values.
(3) Sensitivity analysis
The Group adopts sensitivity analysis technique to analyse how the profit and loss for the period
and shareholders' equity would have been affected by reasonably possible changes in the relevant
risk variables. As it is unlikely that risk variables will change in an isolated manner, and the
interdependence among risk variables will have significant effect on the amount ultimately
influenced by the changes in a single risk variable, the following are based on the assumption that
the change in each risk variable is on a stand-alone basis.
Currency risk
Where all other variables are held constant, the reasonably possible changes in the foreign
exchange rate may have the following pre-tax effect on the profit or loss for the period and
shareholders' equity:
Current year Prior year
Effect on Effect on
shareholders' shareholders'
Item Change in exchange rate Effect on profit equity Effect on profit equity
RMB RMB RMB RMB
Liability: HKD 5% increase (121,892) (121,892) - -
Liability: HKD 5% decrease 121,892 121,892 - -
- 141 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(XI) OTHER SIGNIFICANT EVENTS - continued
3. Financial instrument and risk management - continued
(3) Sensitivity analysis - continued
Interest rate risk
The Group has no floating-rate borrowings, and management of the Group considers the
fluctuation in interest rates of bank balances and pledged deposits is insignificant. Therefore, no
sensitivity analysis on interest rates for bank balances and pledged deposits is presented.
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS
1. Cash and bank
2013 2012
RMB RMB
Cash on hand 12,479 11,916
Cash at bank 477,140,475 1,090,248,935
Other monetary assets 125,291,289
____________ -
____________
602,444,243
____________ 1,090,260,851
____________
As at 31 December 2013, the balance of restricted cash of the Group is RMB 2,609,237 (31
December 2012: RMB2,652,083), which is composed of the Groups housing fund.
As at 31 December 2013, cash and bank balances with restriction of ownership include: security
of RMB125,000,000 pledged for a short-term borrowing from HSBC of HKD303,963,343
(translated as RMB243,170,674), and company cards deposit guarantee of RMB291,289.
As at 31 December 2013, The Group's term deposits with original maturity of more than three
months when acquired is RMB277,392,728 (31 December 2012: RMB662,524,719) with interest
rates ranging from 2.86%-3.58%, which will mature from 3 months to 1 year.
- 142 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
2. Note receivable
2013 2012
RMB RMB
Bank acceptances 32,594,381
_________ 1,450,000
_________
As of 31 December 2013, there was no pledged notes receivables (31 December 2012: Nil), and
no notes receivables were reclassified as accounts receivable due to the default of drawer (31
December 2012: Nil).
On 31 December 2013, the Company's pledged notes receivable is RMB16,727,830, the top five
largest amounts are:
Date of issue Date of issue Maturity date Amount
RMB
Suzhou Zhenwu Trading Co., Ltd. 22/9/2013 22/3/2014 1,000,000
Tai'an Mingyin Co., Ltd. 14/8/2013 13/2/2014 1,000,000
Jinan Luye Trading Co., Ltd. 2/9/2013 2/3/2014 1,000,000
Wuxi Fanghe Sugar alcohol Co., Ltd. 13/9/2013 13/3/2014 1,000,000
Fujian Nan'an Ruigang Co., Ltd. 26/9/2013 26/3/2014 1,000,000
_______
5,000,000
_______
As at 31 December 2013, there was no notes receivable discounted to obtain short-term loan.
3. Trade receivables
2013 2012
Carrying Amount Provision Carrying Amount Provision
Amount Amount Amount Amount
RMB % RMB % RMB % RMB %
Individually significant
and provision 1,600,968 100
______ ___ ___- ___- 710,080
_____ 100.0
___ ___- ___-
The normal credit term of trade receivables is one month, which can be extended to three months
for certain major customers. The trade receivables are interest free.
The Group determines that trade receivable of more than RMB 3,000,000 is considered as
individually significant trade receivable.
2013 2012
RMB RMB
Within 1 year 1,600,968
_________ 710,080
_________
- 143 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
3. Trade receivables - continued
As at 31 December 2013, there was no provision provided for trade receivables (31 December
2012: Nil). The Company did not provide, reverse or write off any provision during 2013 (31
December 2012: Nil)
As at 31 December 2013, there was no account receivable due from the Company's shareholders
with voting rights of 5% or above (31 December 2012: Nil).
As at 31 December 2013, the particulars of top 1 account receivables amount are as follows:
Ratio of total
Relationship with the Company Amount receivables
RMB %
Under common control 1,600,968
_______ 100.0
____
As at 31 December 2012, the particulars of top 1 account receivables amount are as follows:
Ratio of total
Relationship with the Company Amount receivables
RMB %
Under common control 710,080
______ 100.0
____
4. Dividend receivables
Aging Opening balance Increase Increase Closing balance
RMB RMB RMB RMB
Within 1 year
Including: Sales Company 980,000,000 970,000,000 (1,211,018,499) 738,981,501
AFIP Tourism - 68,000,000 (68,000,000) -
Kylin Packaging - 24,469,867 (24,469,867) -
AFIP Wine Chateau - 32,000,000 (32,000,000) -
Wines Sales - 11,140,442 (11,140,442) -
Ice Chateau - 5,458,011 (5,458,011) -
Shihezi Chateam - 5,265,269 (5,265,269) -
Langfang Castel - 5,162,898 (5,162,898) -
Jingyang Sales - 3,522,928 (3,522,928) -
Xinjiang Tianzhu - 1,000,000 (1,000,000) -
Over 1 year
Including: Pioneer International 13,614,383
__________ -
__________ -
__________ 13,614,383
_________
Total 993,614,383
__________ 1,126,019,415
__________ (1,367,037,914)
__________ 752,595,884
_________
__________
- 144 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
5. Advances from customers
The aging analysis is as follows:
2013 2012
RMB RMB
Within 1 year 24,824,672
_________ 26,131,908
_________
As at 31 December 2013, advances from customers are as follows:
Percentage of
Relationship Reason for being total advances
with the Group Amount Aging outstanding to suppliers
RMB %
Xinjiang Yuyuan Wine Co., Ltd. Third party 20,069,242 Within 1 year goods not received 80.8
Xinjiang Tianyu Wine Co., Ltd. Third party 3,200,053 Within 1 year goods not received 12.9
Shandong Electric Power Group Third party 863,325 Within 1 year electric fee 3.5
Shandong Taihe Construction
Management Co. Ltd. Third party 376,300 Within 1 year service not received 1.5
Shandong Yantai Brewery Co., Ltd.
Liquan wine branch Third party 137,229
_______ Within 1 year goods not received 0.6
___
24,646,149
_______ 99.3
___
As at 31 December 2013, there was no advance paid to shareholders with voting rights of 5% or
above (31 December 2012: Nil).
6. Other receivables
Closing balance Opening balance
Carrying amount Bad debts provision Carrying amount Bad debts provision
Amount Proportion Amount Proportion Amount Proportion Amount Proportion
RMB % RMB % RMB % RMB %
Individually significant
and provision 3,683,374,033 99.1 (7,392,429) 100.0 11,120,600 0.5 (11,120,600) 100.0
Individually insignificant
and provision 33,602,347
________ 99.8
___ -
______ ___- 2,194,219,753 99.5 -
________ ___ _______ ____-
3,716,976,380 100.0 (7,392,429) 100.0
________ ___ ______ ___ ________ 100.0 _______
2,205,340,353
___ (11,120,600) 100.0
____
The Group determines that other receivable of more than RMB 3,000,000 is considered as
individually significant other receivable.
- 145 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
6. Other receivables - continued
The aging analysis is as follows:
Closing balance Opening balance
Bad debts Carrying Bad debts Carrying
Amount provision amount Amount provision amount
Amount Proportion Amount Amount Amount Proportion Amount Amount
RMB % RMB RMB RMB % RMB RMB
Within 1 year 3,709,472,668 99.8 - 3,709,472,668 2,194,000,959 99.5 - 2,194,000,959
1 to 2 years 111,283 - - 111,283 191,603 - - 191,603
2 to 3 years - - - - 27,191 - - 27,191
Over 3 years 7,392,429
________ ____0.2 7,392,429
_______ ________ - 11,120,600
________ ____0.5 11,120,600
______ ________ -
3,716,976,380
________ 100.0 7,392,429 3,709,583,949 2,205,340,353 100.0
______ 2,194,219,753
____ _______ ________ ________ ____ 11,120,600 ________
The movement of provision for other receivables is as follows:
Opening Balance Accrued Reversed Write-off Closing Balance
RMB RMB RMB RMB RMB
2013 11,120,600
________ -
_____ (607,571)
______ (3,120,600)
________ 7,392,429
________
As at 31 December 2013, other receivable that are individually significant at the end of the period
but for which bad debt provision has been assessed individually:
Bad debt
Balance provision Percentage Reason for provision
RMB RMB %
The debtor is in
Tiantong Security Co.,Ltd. 7,392,429
_______ 7,392,429
_______ 100 the process of liquidation
_______ _______
As at 31 December 2012, other receivable that are individually significant at the end of the period
but for which bad debt provision has been assessed individually:
Bad debt
Balance provision Percentage Reason for provision
RMB RMB %
The debtor is in the
Tiantong Security Co.,Ltd. 8,000,000 8,000,000 100 process of liquidation
Aging over 3 years and
Finance Bureau of Jingyang 3,120,600
________ 3,120,600
________ 100 low recovering possibilities
11,120,600
________ 11,120,600
________
- 146 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
6. Other receivables - continued
Reversals and collections during the current period:
Basis of determining Accumulated bad debt
Reasons for the original bad debt provision prior to Amount of reversal
Cotent reversal or collections provison reversals or collections or collections
RMB RMB
Tiantong Security Co.,Ltd. Collected Exceed credit period (8,000,000)
_______ 607,571
______
_______
Accounts receivable written off in the reporting period
Whether arising from
related party
Nature Amount Reason for write off transactions
RMB
Finance Bureau of Jingyang Government borrowing 3,120,600
_______ Unable to collect No
As at 31 December 2013, there was no other receivable due from the shareholders with voting
rights of 5% or above. (31 December 2012: Nil)
As at 31 December 2013, the particulars of top 5 other receivables are as follows:
Relationship Percentage of total
with the Group Amount Aging advances to suppliers
RMB %
Sales Company Subsidiary 701,689,111 Within 1 year 18.9
Shihezi Chateau Subsidiary 574,116,402 Within 1 year 15.4
Changan Chateau Subsidiary 568,947,758 Within 1 year 15.3
Beijing Chateau Subsidiary 534,672,348 Within 1 year 14.4
Ningxia Wine Subsidiary 305,630,061
__________ Within 1 year 8.2
___
2,685,055,680
__________ 72.2
___
At 31 December 2013, the balance of other receivables from related parties is RMB3,691,961,808,
approximately 99.3% of total other receivables. These were all from subsidiaries of the
Company (2012: the balance of other receivable from related parties is RMB2,163,251,044,
approximately 98.1% of total other receivables).
- 147 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
7. Inventories
2013 2012
Net carrying Net carrying
Balance Provision amount Balance Provision amount
RMB RMB RMB RMB RMB RMB
Raw material 5,328,866 - 5,328,866 17,696,041 - 17,696,041
Finished goods 90,565,059 - 90,565,059 194,847,237 - 194,847,237
Work in progress 685,390,264
_________ -
_______ 685,390,264
_________ 680,899,480
_________ -
_______ 680,899,480
_________
781,284,189
_________ -
_______ 781,284,189
_________ 893,442,758
_________ -
_______ 893,442,758
_________
8. Long-term equity investments
Movement Cash Dividends
2013 Cost Opening balance for the year Closing balance Share holding Voting power for the year
RMB RMB RMB RMB % % RMB
Cost Method:
Xinjiang Tianzhu (a) 60,000,000 60,000,000 - 60,000,000 60 100 1,000,000
Vehicular Transportation 300,000 300,000 (300,000) - 100 100 -
Kylin Packaging 23,176,063 23,176,063 - 23,176,063 100 100 24,469,867
Changyu Chateau (a) 28,968,100 28,968,100 - 28,968,100 70 100 -
AFIP Tourism (a) 350,000 350,000 - 350,000 70 100 68,000,000
Pioneer International 3,500,000 3,500,000 - 3,500,000 70 100 -
Ningxia Growing 1,000,000 1,000,000 - 1,000,000 100 100 -
National Wines 2,000,000 2,000,000 - 2,000,000 100 100 -
Ice Chateau (a) 30,440,500 13,413,000 17,027,500 30,440,500 51 100 5,458,011
Beijing Chateau (a) 77,000,000 77,000,000 - 77,000,000 70 100 32,000,000
Sales Company 7,200,000 7,200,000 - 7,200,000 90 100 970,000,000
Langfang Sales (b) 100,000 100,000 - 100,000 10 100 -
Langfang Castel (a) 19,835,730 19,835,730 - 19,835,730 39 100 5,162,898
Wines Sales 4,500,000 4,500,000 - 4,500,000 90 100 11,140,442
Shanghai Sales (b) 300,000 300,000 - 300,000 30 100 -
Beijing Sales 850,000 8500,000 - 850,000 100 100 -
Jingyang Sales (b) 100,000 100,000 - 100,000 10 100 3,522,928
Jingyang Wine 900,000 900,000 - 900,000 90 100 -
Ningxia Wine 1,000,000 1,000,000 - 1,000,000 100 100 -
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 5,265,269
Xianyang Chateau 20,000,000 20,000,000 - 20,000,000 100 100 -
Development Centre 500,000,000 500,000,000 - 500,000,000 100 100 -
Huanren Wine 5,000,000 5,000,000 - 5,000,000 100 100 -
Yaitan Dingtao 10,000,000 5,000,000 (5,000,000) - 18 18 -
French Sales _______
29,988,530 _______ - ______
29,988,530 _______
29,988,530 100 100 _______ -
1,058,508,923 1,006,492,893 41,716,030 1,048,208,923 1,126,019,415
_______ _______ ______ _______ _______
(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 interests' holders. Please refer to Note V-1 for details.
(b) The Group has 100% voting power of those subsidiaries by the way of indirect controlling.
During 2013, there was no significant restriction on the remittance of fund from the investees to
the Company.
As at 31 December 2013, the impairment provision of RMB10, 000,000 was provided for Yantai
Dingtao (31 December 2012: RMB5,000,000).
- 148 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
9. Property, plant and equipment
2013 Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Cost
Buildings 234,177,475 67,758,962 (1,634,674) 300,301,763
Machineries and equipment 545,496,056 37,536,827 (199,534) 582,833,349
Motor vehicles 12,111,522
__________ 489,814
_________ -
________ 12,601,336
__________
791,785,053
__________ 105,785,603
_________ (1,834,208)
________ 895,736,448
__________
Accumulated depreciation
Buildings 91,881,381 2,453,339 (974,185) 93,360,535
Machineries and equipment 336,171,488 31,532,761 (193,831) 367,510,418
Motor vehicles 8,942,441
__________ 628,938
_________ -
________ 9,571,379
__________
436,995,310
__________ 34,615,038
_________ (1,168,016)
________ 470,442,332
__________
Net carrying amount
Buildings 142,296,094 206,941,228
Machineries and equipment 209,324,568 215,322,931
Motor vehicles 3,169,081
__________ 3,029,957
__________
354,789,743
__________ 425,294,116
__________
The increase of accumulated depreciation for 2013 is RMB34,615,038.
The amount of transfer from construction in progress to property, plant and equipment for 2013 is
RMB56,624,887. The amount of property, plant and equipment purchased is RMB49,160,716 and
the amount disposed of is RMB1,834,208.
As at 31 December 2013, the Group has no temporary idle fixed assets, fixed assets held for sale,
fixed assets leased in under finance leases and fixed assets leased out under operating leases (2012:
RMB: Nil).
10. Construction in progress
2013 2012
RMB RMB
The Company's reconstruction project 269,802
__________ 24,640,660
__________
Accumulated
expenditure
2013 Budget Opening balance Addition Transfer to PPE Closing balance Financed by /budget
RMB RMB RMB RMB RMB %
The Company's reconstruction project 201,440,000 24,640,660 32,254,029 (56,624,887) 269,802 Self-raised 90.2
There was no interest capitalized in construction in progress in 2013.
As at 31 December 2013, there was no provision was made for the construction in process.
- 149 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
11. Intangible assets
2013 Opening balance Increase Closing balance
RMB RMB RMB
Cost
Land use right 96,594,766 - 96,594,766
Software use right 3,480,000
__________ -
_________ 3,480,000
__________
100,074,766
__________ -
_________ 100,074,766
__________
Accumulated amortization
Land use right 15,081,858 2,373,077 17,454,935
Software use right 3,480,000
__________ -
_________ 3,480,000
__________
18,561,858
__________ 2,373,077
_________ 20,934,935
__________
Net carrying amount
Land use right 81,512,908 79,139,831
Software use right -
__________ -
__________
81,512,908
__________ 79,139,831
__________
The amortisation of 2013 is RMB2,373,077.
As at 31 December 2013, there was no intangible asset with restricted ownership.
12. Biological asset
2013
RMB
Opening balance 16,866,437
Addition 44,571,877
Amortization (586,905)
__________
Closing balance 60,851,409
__________
As at 31 December 2013, there is no biological asset with ownership restricted.
As at 31 December 2013, the Company's accumulated depreciation of biological assets is
RMB6,450,905 (2012: RMB5,864,000).
As at 31 December 2013, there is no indication that biological assets may be impaired, and no
provision was made.
- 150 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
13. Deferred tax assets and liabilities
Deferred tax assets and liabilities are presented separately:
(1) Deferred tax assets and liabilities recognized are as follows:
2013 2012
RMB RMB
Deferred tax assets
Unrealized profit from intra-company transactions 1,948,776 1,948,776
Unpaid bonus 7,392,095 8,629,470
Retirement benefit 3,604,137 4,676,306
Asset impairment provision 4,348,107 4,030,150
Deferred income 5,663,632
__________ 232,500
__________
22,956,747
__________ 19,517,202
__________
(2) Taxable and deductible temporary differences are as follows:
2013 2012
RMB RMB
Deductible temporary difference
Unrealized profit from intra-company transactions 7,795,104 7,795,104
Unpaid bonus 29,568,378 34,517,881
Early retirement benefit 14,416,547 18,705,224
Provision for impairment 17,392,429 16,120,600
Deferred income 22,654,527
__________ 930,000
__________
91,826,985
__________ 78,068,809
__________
14. Other non-current assets
2013 2012
RMB RMB
Unacknowledged financial changes 2,616,525
__________ 2,502,630
__________
- 151 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
15. Trade payables
The trade payables are interest free with a credit period no more than three months from its
suppliers normally.
2013 2012
RMB RMB
Within 1 year 166,453,563
__________ 164,815,117
__________
As at 31 December 2013, the Group had no significant outstanding balance aged more than one
year.
As at 31 December 2013, there was no trade payable due to the shareholders with voting rights of
5% or above.
The Company's outstanding balance payable to related parties are as following:
Proportion of
Relationship with the Company Amount account receivable
RMB %
Subsidiaries 9,497,134 6.0
Other related parties 33,518,567
_________ 20.0
____
Other related parties 43,015,701
_________ 26.0
____
16. Employee benefit
31 December 2013
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Salaries and bonus 34,558,166 125,619,021 (132,720,851) 27,456,336
Staff benefit - 5,915,306 (5,915,306) -
Staff welfare - 14,025,829 (14,025,829) -
Includes:
Medical insurance - 3,154,579 (3,154,579) -
Pension - 9,217,726 (9,217,726) -
Unemployment insurance - 682,538 (682,538) -
Injury insurance - 540,746 (540,746) -
Maternity insurance - 430,240 (430,240) -
Housing fund - 3,588,257 (3,588,257 ) -
Union fee and education fee 1,925,482 1,287,267 (932,352) 2,380,397
Termination benefits 21,343,603 878,528 (5,053,311) 17,168,820
Other allowances 22,317,282
_________ -
_________ (189,923)
_________ 22,127,359
_________
80,144,533
_________ 151,314,208
_________ (162,425,829)
_________ 69,032,912
_________
As at 31 December 2013, the Company had no overdue employee benefit payable.
- 152 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
17. Taxes payable
2013 2012
RMB RMB
Value added tax 3,289,792 (26,594,363)
Consumption tax 19,900,332 24,372,563
Corporation income tax 3,348,032 6,152,331
Urban land use tax 421,924 421,924
Individual income tax 6,275,760 6,267,584
City construction tax 2,319,867 3,383,809
Property tax 127,674 1,693,654
Others 1,895,289
__________ 2,297,587
__________
37,578,670
__________ 17,995,089
__________
18. Other payables
2013 2012
RMB RMB
Payable to subsidiaries 1,585,656,605 1,419,678,135
Payables for equipment, construction and transportation 15,029,366 6,267,120
Deposits from suppliers 277,430 75,193
Others 11,633,120
____________ 6,443,849
____________
1,612,596,521
____________ 1,432,464,297
____________
As at 31 December 2013, there were no significant outstanding balance aged over than one year.
The Company's outstanding balance payable to related parties are as following:
Proportion of
Relationship with the Company Amount account receivable
RMB %
Subsidiaries 1,558,942,200 97.0
Other related parties 3,906
____________ 0.0
____
Other related parties 1,558,946,106
____________ 97.0
____
19. Capital reserve
As at 31 December 2013 and 31 December 2012, the balance of capital reserve represented
capital premium.
- 153 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
20. Revenue and cost of sales
Revenue is as follows:
2013 2012
RMB RMB
Income from principal activities 1,730,694,774
____________ 1,776,979,032
____________
Cost of sales is as follows:
2013 2012
RMB RMB
Cost from principal activities 1,473,772,762
____________ 1,444,948,143
____________
In 2013, revenue derived from top 5 customers is as follows:
Percentage of
Amount total revenue
RMB %
Sales Company 1,257,744,394 72.7
Penglai Wine Sales 55,541,941 3.2
Changyu Chateau 33,074,752 1.9
Wines Sales 26,171,524 1.5
Pioneer International 15,834,736
____________ 0.9
____
1,388,367,347
____________ 80.2
____
In 2013, top 5 customers of the Company are all subsidiaries.
Revenue is as follows:
2013 2012
RMB RMB
Sales of good 1,730,694,774
____________ 1,776,979,032
____________
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
21. Tax and surcharges
2013 2012
RMB RMB
Consumption tax 112,191,992 149,442,375
City construction tax 12,054,335 13,521,752
Education fee and surcharges 8,897,690 10,001,707
Others 1,902,568
__________ 2,274,761
__________
135,046,585
__________ 175,240,595
__________
22. General and administrative expense
2013 2012
RMB RMB
Salary and employee benefit 26,777,563 43,527,397
Insurance fee 21,246,591 20,951,998
Leasing expenses 6,048,896 6,480,996
Depreciation 3,718,349 4,384,313
Amortization 2,373,076 2,939,080
Administrative expenses 8,489,998 9,644,535
Travelling expenses 4,127,300 3,867,717
Entertainment fee 288,524 329,739
Property tax, stamp duty and other taxes 3,942,998 4,166,506
Maintenance fee 10,416,751 7,130,541
Others 22,234,906
__________ 22,697,927
__________
109,664,952
__________ 126,120,749
__________
23. Loss on impairment of assets
2013 2012
RMB RMB
Long-term investment provision 5,000,000 -
Bad debts provision (607,571)
________ -
______
4,392,429
________ -
______
- 155 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
24. Financial income
2013 2012
RMB RMB
Interest income 29,773,409 30,599,023
Less: Interest expenses 2,174,286 3,953,834
Bank charges 1,650,982
_________ 1,810,502
_________
25,948,141
_________ 24,834,687
_________
25. Investment income
2013 2012
RMB RMB
Long-term equity investment income accounted
for by using the cost method 1,126,019,415
____________ 1,091,018,499
____________
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 2013 2012
RMB RMB
Sales Company 970,000,000 980,000,000
AFIP Tourism 68,000,000
__________ -
__________
As at 31 December 2013 and at 31 December 2012, there was no significant restriction on the
remittance of investment income to the Company.
- 156 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
26. Supplement to cash flow statement
Cash flows from operating activities calculated by adjusting the net profit:
2013 2012
RMB RMB
Net profit 1,154,687,278 1,130,895,806
Add: Impairment provision 4,392,429 -
Depreciation 34,615,038 47,318,392
Amortization of intangible assets 2,373,077 4,291,247
Amortization of Biological assets 586,905 586,905
Losses/(gains) on disposal of property,
plant and equipments 662,192 2,354,433
Finance costs (29,773,409) (30,599,023)
Investment income (1,126,019,415) (1,091,018,499)
Increase/(decrease) in deferred tax assets (3,439,545) 11,820,627
Increase in inventories 112,158,569 (313,990,373)
Increase in trade receivables (1,562,373,091) (475,386,959)
Increase/(decrease) in trade payables 200,790,717
____________ (527,924,856)
____________
Net cash flows from operating activities (1,211,339,255)
____________ (1,241,652,300)
____________
27. Cash and cash equivalents
2013 2012
RMB RMB
Closing balance 602,444,243 1,090,260,851
Including:
restricted bank deposits 2,609,237 2,652,083
restricted other monetary assets 125,291,289
deposit with a period of over three months 277,392,728
__________ 662,524,719
____________
Closing balance of cash and cash equivalents 197,150,989
__________ 425,084,049
____________
2013 2012
RMB RMB
Cash and bank 197,150,989 425,084,049
Including: Cash on hand 12,479 11,916
Bank deposits on demand 197,138,510
__________ 425,072,133
__________
197,150,989
__________ 425,084,049
__________
- 157 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
28. Related party transactions
(1) Purchase of materials
2013 2012
RMB RMB
Subsidiaries 230,279,590 362,864,737
Other related parties 135,903,876
__________ 110,901,395
__________
366,183,466
__________ 473,766,132
__________
(2) Sales of goods
2013 2012
RMB RMB
Subsidiaries 1,723,774,566 1,770,544,843
Other related parties 6,920,208
____________ 6,434,189
____________
1,730,694,774
____________ 1,776,979,032
____________
- 158 -
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
APPENDIX I SUPPLEMENTARY INFORMATION TO FINANCIAL
STATEMENTS
YEAR ENDED 31 DECEMBER 2013
I. DETAILS OF EXTRAORDINARY PROFIT AND LOSS
2013
RMB
Loss on disposal of non-current assets, including
reversal of accrued impairment provision (271,989)
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) (36,659,754)
Other non-operating income and expense (3,302,760)
Reversal of bad debt provision of receivables tested individually 607,571
Corporate income tax effect 9,396,861
__________
(30,837,642)
__________
__________
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 2013.Please refer to Note VI-38 and VI-39.
II. RETRUN ON EQUITY ("ROE") AND EARNINGS PRE SHARE
("EPS")
Weighted average
2013 ROE Basic EPS
% RMB
Net profit attributable to shareholders of the Company 17.30 1.53
Net profit attributable to shareholders
of the Company deducting extraordinary profit and loss 16.78 1.48
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
_____ ____
_____ ____
The Company did not have any potential dilutive shares.
Weighted average
2012 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.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
III. 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 2013 was
RMB1,367,818,182, decreasing by 39% compared with 2012. The decrease
is mainly due to the cash outflow of the financing and investing activities.
2. The balance of trade receivables at 31 December 2013 is RMB177,109,516,
increasing by 31% compared with 2012, which was mainly due to the increase
of direct supply of stores and supermarkets in 2013.
3. The balance of other receivables at 31 December 2013 is RMB99,331,794,
increasing by 249% compared with 2012, which was due to the significant
increase of deposits made for bid of land.
4. The balance of inventory as at 31 December 2013 was RMB2,121,117,437,
decreasing by 7% compared with 2012, which is mainly because the Company
bases its production on sales prospects. Since the sales revenue of 2013
decreased by 23% compared with 2012, the balance of inventory also
decreased.
5. The balance of long-term equity investments as at 31 December 2013 was zero,
decreasing by 100% compared with 2012, which was due to the provision of
RMB5,000,000 for the investments of Yantai Dingtao.
6. The balance of property, plant and equipment as at 31 December 2013 was
RMB1,917,641,344, increasing by 5% compared with 2012, which was
mainly due to the transfers from construction in process to property, plant and
equipment and the purchase of new equipment and company.
7. The balance of construction in progress as at 31 December 2013 was
RMB1,423,654,530, increasing by 71% compared with 2012, 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.
8. The balance of advance from customer was RMB188,651,254 as at 31
December 2013, decreasing by 58% compared with 2012. The decrease was
mainly due to the significant decrease of sales revenue under the poor market
condition.
161
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
9. The balance of other payables as at 31 December 2013 was RMB 497,301,630,
decreasing by 6% compared with 2012 which was mainly due to the increase
of unpaid advertisement expense.
10. The balance of tax payables as at 31 December 2013 was RMB194,413,430,
decreasing by 56% compared with 2012 due to the settlement of the unpayable
advertising fee and related income tax.
11. The balance of non-current liability due within 1 year as at 31 December 2013
was zero, decreasing by 100% compared with 2012, which is due to the
expiration and settlement of prior trust schemes.
12. The balance of capital surplus was RMB563,139,042 as at 31 December 2013,
increasing by RMB1,000,000 compared to 2012 mainly due to the recognize
of government grant of RMB 10,000,000, which was recorded in deferred
income in prior year, according to the local government article .
162
Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
III. VARIANCE ANALYSIS - continued
13. The balance of retained earnings was RMB4,616,944,663 as at 31 December
2013, increasing by 7% compared with 2012, which was due to the Group's
profit in 2013 and the distribution of profit for the year 2012.
14. The revenue of 2013 was RMB4,320,948,572, decreasing by 23% compared
with 2012. The cost of 2013 was RMB1,357,897,999, decreasing by 3%
compared with 2012. The decrease was mainly due to the decrease of sales
volume under current poor market condition.
15. The selling expense for 2013 was RMB1,140,836,150, decreasing by 21%
compared with 2012.The decrease was mainly due to the decrease of
promotion and advertisement expenses.
16. The other revenue was RMB42,108,726 in 2013, increasing by 19% compared
with 2012. The increase was mainly due to government grant received in
2013. The other expense was RMB1,874,223 in 2013, decreasing by 37%
compared with 2012 which was mainly due to the loss of disposal of
non-current asset.
17. The income tax expense for 2013 was RMB348,920,804, decreasing by 39%
compared with 2012. The decrease was in line with the decrease of taxable
income of the Group caused by the decrease of revenue.
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Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.
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 announements 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
25th April 2014
164
