YANTAI CHANGYU PIONEER WINE
COMPANY LIMITED
Financial Statements and Auditor's Report
For the year ended 31 December 2014
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
FINANCIAL STATEMENTS AND AUDITOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2014
CONTENTS PAGE
AUDITOR'S REPORT 1-2
THE CONSOLIDATED BALANCE SHEET 3-4
THE COMPANY'S BALANCE SHEET 5-6
THE CONSOLIDATED INCOME STATEMENT 7
THE COMPANY'S INCOME STATEMENT 8
THE CONSOLIDATED CASH FLOW STATEMENT 9
THE COMPANY'S CASH FLOW STATEMENT 10
THE CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY 11
THE COMPANY'S STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY 12
NOTES TO THE FINANCIAL STATEMENTS 13 - 95
De Shi Bao (Shen) Zi (15) No. P1560
AUDITOR'S REPORT
TO THE SHAREHOLDERS OF
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
We have audited the accompanying financial statements of Yantai Changyu Pioneer Wine
Company Limited and its subsidiaries which comprise the consolidated and company's balance
sheets as at 31 December 2014, and the consolidated and company's income statements, the
consolidated and company's cash flow statements and the consolidated and company's statements
of changes in shareholders' equity 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. Auditor's 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 auditor's 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.
-1-
AUDITOR'S REPORT
TO THE SHAREHOLDERS OF
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED - continued
3. Opinion
In our opinion, the financial statements of Yantai Changyu Pioneer Wine Company Limited
present fairly, in all material respects, the consolidated and company's financial position as of 31
December 2014, and the consolidated and company's 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 (Signature and seal)
Shanghai, China Li Xu (Signature and seal)
25 April 2015
-2-
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED BALANCE SHEETS
YEAR ENDED 31 DECEMBER 2014
ASSETS Notes 2014 2013
RMB RMB
CURRENT ASSETS
Cash and bank balances VI-1 1,145,365,071 1,367,818,182
Notes receivable VI-2 138,315,319 79,702,753
Accounts receivable VI-3 145,672,411 177,109,516
Prepayments VI-4 8,073,786 45,997,863
Interest receivable VI-5 3,619,429 8,417,995
Other receivables VI-6 31,362,302 99,331,794
Inventories VI-7 2,087,376,398 2,121,117,437
Other current assets 29,662,076
____________ ____________-
Total current assets 3,589,446,792
____________ 3,899,495,540
____________
NON-CURRENT ASSETS
Available-for-sale financial assets VI-8 - -
Fixed assets VI-9 2,532,682,355 1,917,641,344
Construction in progress VI-10 1,700,466,500 1,423,654,530
Materials for construction of fixed assets - 676,539
Bearer biological assets VI-11 151,723,241 101,794,515
Intangible assets VI-12 452,951,194 296,129,754
Goodwill VI-13 13,112,525 13,112,525
Long-term prepaid expenses VI-14 201,911,605 165,521,803
Deferred tax assets VI-15 254,186,823 158,533,090
Other non-current assets VI-16 15,751,605
____________ 21,370,902
____________
Total non-current assets 5,322,785,848
____________ 4,098,435,002
____________
Total assets 8,912,232,640
____________ 7,997,930,542
____________
-3-
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED BALANCE SHEETS
YEAR ENDED 31 DECEMBER 2014 - continued
LIABILITIES AND EQUITY Notes 2014 2013
RMB RMB
CURRENT LIABILITIES
Short-term borrowings VI-17 300,000,000 243,170,674
Notes payable VI-18 10,000,000 5,765,694
Accounts payable VI-19 357,811,822 258,116,331
Receipts in advance VI-20 215,127,598 188,651,254
Employee benefits payable VI-21 158,948,592 130,720,235
Taxes payable VI-22 87,504,048 194,413,430
Interest payable 3,475,641 2,152,059
Deferred income VI-23 12,398,718 12,915,801
Other payables VI-24 469,804,317
____________ 497,301,630
____________
Total current liabilities 1,615,070,736
____________ 1,533,207,108
____________
NON-CURRENT LIABILITIES
Long-term borrowings VI-25 209,380,000 -
Deferred income VI-23 76,024,992 83,611,041
Deferred tax liabilities VI-15 4,565,636 5,336,115
Other non-current liabilities VI-26 3,998,352
____________ 4,755,794
____________
Total non-current liabilities 293,968,980
____________ 93,702,950
____________
Total liabilities 1,909,039,716
____________ 1,626,910,058
____________
EQUITY
Share capital VI-27 685,464,000 685,464,000
Capital reserve VI-28 563,139,042 563,139,042
Other comprehensive income VI-29 (2,803,271) -
Surplus reserve VI-30 342,732,000 342,732,000
Retained earnings VI-31 5,251,920,374
____________ 4,616,944,663
____________
Equity attributable to shareholders
of the Company 6,840,452,145 6,208,279,705
Non-controlling interests 162,740,779
____________ 162,740,779
____________
Total equity 7,003,192,924
____________ 6,371,020,484
____________
Total liabilities and equity 8,912,232,640
____________ 7,997,930,542
____________
The accompanying notes form an integral part of these financial statements.
The financial statements on pages 3 to 95 were signed by the following:
Legal Representative: _________________________________
Person in Charge of the Accounting Body: _________________
Chief Accountant: ____________________________________
-4-
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
BALANCE SHEET OF THE COMPANY
YEAR ENDED 31 DECEMBER 2014
ASSETS Notes 2014 2013
RMB RMB
CURRENT ASSETS
Cash and bank XIV-1 496,138,263 602,444,243
Notes receivable XIV-2 98,158,251 32,594,381
Accounts receivable XIV-3 1,516,518 1,600,968
Prepayments XIV-4 1,710,787 24,824,672
Interest receivable XIV-5 3,580,811 8,417,995
Dividend receivable XIV-6 402,596,884 752,595,884
Other receivables XIV-7 4,708,836,276 3,709,583,949
Inventories XIV-8 681,696,774 781,284,189
Other current assets 14,996,807
____________ ____________-
Total current assets 6,409,231,371
____________ 5,913,346,281
____________
NON-CURRENT ASSETS
Available-for-sale financial assets VI-8 - -
Long-term equity investments XIV-9 1,093,437,027 1,048,208,923
Fixed assets XIV-10 403,210,655 425,294,116
Construction in progress XIV-11 182,765 269,802
Bearer biological assets XIV-12 83,631,722 60,851,409
Intangible assets XIV-13 76,760,678 79,139,831
Deferred tax assets XIV-14 27,053,571
____________ 22,956,747
____________
Total non-current assets 1,684,276,418
____________ 1,636,720,828
____________
Total assets 8,093,507,789
____________ 7,550,067,109
____________
-5-
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
BALANCE SHEET OF THE COMPANY
YEAR ENDED 31 DECEMBER 2014 - continued
LIABILITIES AND EQUITY Notes 2014 2013
RMB RMB
CURRENT LIABILITIES
Short-term borrowings VI-17 300,000,000 243,170,674
Accounts payable XIV-15 228,052,722 166,453,563
Employee benefits payable XIV-16 70,233,251 66,416,387
Taxes payable XIV-17 18,205,124 37,578,670
Interest payable 3,475,641 2,152,059
Deferred income 3,017,898 2,559,227
Other payables XIV-18 1,030,604,819
____________ 1,612,596,521
____________
Total current liabilities 1,653,589,455
____________ 2,130,927,101
____________
NON-CURRENT LIABILITIES
Long-term borrowings VI-25 209,380,000 -
Deferred income 22,747,915 20,095,300
Other non-current liabilities 1,895,828
____________ 2,180,162
____________
Total non-current liabilities 234,023,743
____________ 22,275,462
____________
Total liability 1,887,613,198
____________ 2,153,202,563
____________
EQUITY
Share capital VI-27 685,464,000 685,464,000
Capital reserve XIV -19 557,222,454 557,222,454
Surplus reserve VI-30 342,732,000 342,732,000
Retained earnings 4,620,476,137
____________ 3,811,446,092
____________
Total equity 6,205,894,591
____________ 5,396,864,546
____________
Total liabilities and equity 8,093,507,789
____________ 7,550,067,109
____________
-6-
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED INCOME STATEMENT
YEAR ENDED 31 DECEMBER 2014
Notes 2014 2013
RMB RMB
I. Revenue VI-32 4,156,727,525 4,320,948,572
Less: Cost of sales VI-32 1,372,444,612 1,357,897,999
Taxes and surcharges VI-33 269,446,774 236,394,164
Selling expenses VI-34 1,006,009,364 1,140,836,150
Administrative expenses VI-35 256,980,018 245,498,950
Impairment loss of assets VI-36 1,995,877 2,149,438
Financial expenses VI-37 (17,256,721)
____________ (18,700,357)
____________
II. Operating profit 1,267,107,601 1,356,872,228
Add: Non-operating income VI-38 43,996,405 42,108,726
Including: gains from disposal
of non-current assets 121,113 271,989
Less: Non-operating expenses VI-39 8,370,249 1,874,223
Including: losses from disposal
of non-current assets 5,207,658
____________ 678,016
____________
III. Profit before tax 1,302,733,757 1,397,106,731
Less: Income tax VI-40 325,026,046
____________ 348,920,804
____________
IV. Profit for the year and attributable
to shareholders of the Company 977,707,711
____________ 1,048,185,927
____________
V. Other comprehensive income (post-tax)
Other comprehensive income
to be reclassified to profit and loss
Foreign currency statement
translation difference (2,803,271)
____________ -
____________
Other comprehensive income (post-tax) (2,803,271)
____________ -
____________
VI. Total comprehensive income
attributable to owners of the Company 974,904,440
____________ 1,048,185,927
____________
VII. Earnings per share
(I) Basic earnings per share VI-41 1.43
____________ 1.53
____________
(II) Diluted earnings per share VI-41 N/A N/A
____________
____________
-7-
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
INCOME STATEMENT OF THE COMPANY
YEAR ENDED 31 DECEMBER 2014
Notes 2014 2013
RMB RMB
I. Revenue XIV -20 1,647,825,652 1,730,694,774
Less: Cost of sales XIV -20 1,406,987,744 1,473,772,762
Taxes and surcharges XIV -21 157,026,901 135,046,585
Administrative expenses XIV -22 112,051,545 109,664,952
Impairment loss/(reverse) of assets XIV -23 (192,908) 4,392,429
Financial expenses XIV -24 (11,053,553) (25,948,141)
Investment income XIV -25 1,164,089,666
____________ 1,126,019,415
____________
II. Operating Profit 1,147,095,589 1,159,785,602
Add: Non-operating income 6,371,028 4,266,595
Including: gains from disposal
of non-current assets 105,236 1,374
Less: Non-operating expenses 5,801,396 1,019,467
Including: losses from disposal
of non-current assets 5,181,727
____________ 663,565
____________
III. Profit before tax 1,147,665,221 1,163,032,730
Less: Income tax (4,096,824)
____________ 8,345,452
____________
IV. Profit for the year
and total comprehensive income 1,151,762,045
____________ 1,154,687,278
____________
-8-
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31 DECEMBER 2014
Notes 2014 2013
RMB RMB
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from the sale of goods
and the rendering of services 4,787,289,147 4,766,532,032
Receipts of tax refunds 18,259,690 22,163,624
Other cash receipts relating to operating activities VI-42(1) 24,543,547
__________ 47,960,711
__________
Sub-total of cash inflows from operating activities 4,830,092,384
__________ 4,836,656,367
__________
Cash payments for goods purchased and services received (1,255,567,298) (1,293,320,336)
Cash payments to and on behalf of employees (358,415,330) (379,880,613)
Payment of various types of taxes (1,301,077,872) (1,368,825,802)
Other cash payments relating to operating activities VI-42(2) (844,948,588)
__________ (1,059,555,309)
__________
Sub-total of cash outflows from operating activities (3,760,009,088)
__________ (4,101,582,060)
__________
Net cash flows from operating activities VI-43(1) 1,070,083,296
__________ 735,074,307
__________
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in term deposits over 3 months 307,694,951 1,292,524,719
Proceeds from return on investments 24,230,453 33,050,471
Proceeds from disposal of fixed assets 1,181,895
__________ 1,026,411
__________
Sub-total of cash inflows from investing activities 333,107,299
__________ 1,326,601,601
__________
Cash paid for acquisition of properties, plants and equipment,
intangible assets and other long-term assets (1,238,293,585) (962,180,456)
Cash paid for term deposits over 3 months (77,547,483) (907,392,728)
Other cash paid for the purchase of non-controlling interest __________- (16,883,864)
__________
Sub-total of cash outflows from investing activities (1,315,841,068)
__________ (1,886,457,048)
__________
Net cash flows from investing activities (982,733,769)
__________ (559,855,447)
__________
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received from Non-controlling interest - 16,359,770
Cash receipts from borrowings 515,368,080 243,170,674
Other cash received from financing activities 129,182,292
__________ __________ -
Sub-total of cash inflows from financing activities 644,550,372
__________ 259,530,444
__________
Cash paid for dividends, profits and interests (353,707,371) (764,539,398)
Cash paid for borrowings (242,219,439)
Cash paid from other financing activities VI-42(3) (125,000,000)
__________ (275,945,000)
__________
Sub-total of cash outflows from financing activities (720,926,810)
__________ (1,040,484,398)
__________
Net cash flows from financing activities (76,376,438)
__________ (780,953,954)
__________
Effect of foreign exchange rate changes
on cash and cash Equivalents (7,059,747) -
NET INCREASE OF CASH AND CASH EQUIVALENTS 3,913,342 (605,735,094)
ADD: CASH AND CASH EQUIVALENTS
AT BEGINNING OF THE YEAR VI-43(2) 956,558,932
__________ 1,562,294,026
__________
CASH AND CASH EQUIVALENTS AT END OF THE YEAR VI-43(2) 960,472,274
__________ 956,558,932
__________
-9-
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CASH FLOW STATEMENT OF THE COMPANY
YEAR ENDED 31 DECEMBER 2014
Notes 2014 2013
RMB RMB
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from the sale of goods
and the rendering of services 1,827,219,301 1,993,219,656
Other cash receipts relating to operating activities 12,168,205
__________ 9,194,891
__________
Sub-total of cash inflows from operating activities 1,839,387,506
__________ 2,002,414,547
__________
Cash payments for goods purchased and services received (1,302,377,275) (1,385,474,499)
Cash payments to and on behalf of employees (151,732,255) (162,425,829)
Cash payment of various types of taxes (257,237,660) (206,446,458)
Other cash payment relating to operating activities (1,594,026,341)
__________ (1,459,407,016)
__________
Sub-total of cash outflows from operating activities (3,305,373,531)
__________ (3,213,753,802)
__________
Net cash flows from operating activities XIV-26 (1,465,986,025)
__________ (1,211,339,255)
__________
CASH FLOWS FROM INVESTING ACTIVITIES
Cash receipts from deposits over 3 months 295,694,951 1,292,524,719
Cash receipts from return on investments 1,530,610,338 1,395,495,286
Cash receipts from disposals of fixed assets 550,824
__________ 4,000
__________
Sub-total of cash inflows from investing activities 1,826,856,113
__________ 2,688,024,005
__________
Cash payments for acquisition of fixed assets,
intangible assets and other long-term assets (52,003,088) (131,396,826)
Cash payments for term deposits over 3 months (53,547,483) (907,392,728)
Cash payments for subsidiary investment (37,980,500)
__________ (29,988,530)
__________
Sub-total of cash outflows from investing activities (143,531,071)
__________ (1,068,778,084)
__________
Net cash flows from investing activities 1,683,325,042
__________ 1,619,245,921
__________
CASH FLOWS FROM FINANCING ACTIVITIES
Cash receipts from borrowings 515,368,080 243,170,674
Other cash received from financing activities 129,182,292
__________ __________ -
Cash inflows from financing activities 644,550,372
__________ 243,170,674
__________
Cash paid for dividends, profits and interests (351,636,158) (754,010,400)
Cash paid for borrowings (242,219,439) -
Cash paid from other financing activities (125,000,000)
__________ (125,000,000)
__________
Cash outflows from financing activities (718,855,597)
__________ (879,010,400)
__________
Net cash flows from financing activities (74,305,225)
__________ (635,839,726)
__________
Effect of foreign exchange rate changes
on cash and cash Equivalents (6,939,315) (635,839,726)
INCREASE/(DECREASE) OF CASH
AND CASH EQUIVALENTS 136,094,477 (227,933,060)
ADD: CASH AND CASH EQUIVALENTS
AT BEGINNING OF THE YEAR XIV-27 197,150,989
__________ 425,084,049
__________
CASH AND CASH EQUIVALENTS AT END OF THE YEAR XIV-27 333,245,466
__________ 197,150,989
__________
- 10 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED SATATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2014
2014
Attributable to shareholders of the Company
Issued Capital Other comprehensive Surplus Retained Non-controlling
capital surplus income reserve earnings interests Total
RMB RMB RMB RMB RMB RMB RMB
I. Opening balance
of the current year _______
685,464,000 _______
563,139,042 _______- ________ ________
342,732,000 4,616,944,663 _______
162,740,779 ________
6,371,020,484
II. Changes for the year
(I) Total comprehensive income - - (2,803,271) - 977,707,711 - 974,904,440
(II) Profit distribution
Distributions to
shareholders (VI-31) _______- _______- _______- ________- ________
(342,732,000) _______- ________
(342,732,000)
III. Closing balance of
the current year 685,464,000 563,139,042 (2,803,271) 342,732,000 5,251,920,374 162,740,779 7,003,192,924
_______ _______ _______ ________ ________ _______ ________
2013
Attributable to shareholders of the Company
Issued Capital Other comprehensive Surplus Retained Non-controlling
capital surplus income reserve earnings interests Total
RMB RMB RMB RMB RMB RMB RMB
I. Opening balance
of the current year _______
685,464,000 _______
562,139,042 _____
- ________ ________
342,732,000 4,322,769,136 _______
146,381,009 ________
6,059,485,187
II. Changes for the year
(I) Total comprehensive income - - - - 1,048,185,927 - 1,048,185,927
(II)Shareholders' injection
Injection of non-controlling
interest - - - - - 16,359,770 16,359,770
(III) Profit distribution
Distributions to
shareholders (VI-31) - - - - (754,010,400) - (754,010,400)
(IV) Others (Notes VI-28) _______- _______
1,000,000 _____
- ________- ________- _______- ________
1,000,000
III. Closing balance
of the current year 685,464,000 563,139,042 - 342,732,000 4,616,944,663 162,740,779 6,371,020,484
_______ _______ _____ ________ ________ _______ ________
- 11 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
STATEMENT OF CHANGES IN EQUITY OF THE COMPANY
YEAR ENDED 31 DECEMBER 2014
2014
Issued capital Capital reserve Surplus reserve Retained earnings Total
RMB RMB RMB RMB RMB
I. Opening balance
of the current year 685,464,000
________ 557,222,454
________ 342,732,000
________ 3,811,446,092
_________ 5,396,864,546
_________
II. Changes for the year
(I) Total comprehensive income - - - 1,151,762,045 1,151,762,045
(II) Profit distribution
Distributions to shareholders (VI-31) ________- ________- ________- (342,732,000)
_________ (342,732,000)
_________
III. Closing balance
of the current year 685,464,000 557,222,454
________ 342,732,000
________ 4,620,476,137
_________ 6,205,894,591
_________
________
2013
Issued capital Capital reserve Surplus reserve Retained earnings Total
RMB RMB RMB RMB RMB
I. Opening balance
of the current year 685,464,000
________ 557,222,454
________ 342,732,000
________ 3,410,769,214
_________ 4,996,187,668
_________
II. Changes for the year
(I) Total comprehensive income - - - 1,154,687,278 1,154,687,278
(II) Profit distribution
Distributions to shareholders (VI-31) ________- ________- ________- (754,010,400)
_________ (754,010,400)
_________
III. Closing balance
of the current year 685,464,000
________ 557,222,454
________ 342,732,000
________ 3,811,446,092
_________ 5,396,864,546
_________
- 12 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
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. Registration place of the Company is Yantai, Shandong.
Headquarter of the Company is located at No. 56 Da Ma Lu, Zhifu District, Yantai, Shandong,
PRC.
As at 31 December 2014, the total shares issued by the Company amounts to 685,464,000 shares.
Please refer to Notes VI-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 25 April 2015.
According to the Company's articles of association, the financial statements will be reviewed by
shareholders on the shareholder's meeting.
For consolidation scope of the year, please refer to Notes VIII "Equity in other entities" in detail.
For detail of changes in consolidation scope of the year, please refer to Notes VII "Change in
consolidation scope".
II. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
1. Basis of preparation
The Group has adopted the Accounting Standards for Business Enterprises ("ASBE") issued by
the Ministry of Finance ("MoF") (also including the 2014 new issued and revised accounting
standards). 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 2014).
- 13 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
II. BASIS OF PREPARATION OF FINANCIAL STATEMENTS - continued
2. Basis of accounting and principle of measurement
The Group has adopted the accrual basis of accounting. 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.
Under the historical cost measurement, an asset is measured at the fair value of consideration paid
in cash and cash equivalents at the date of the purchase. Liability is measured at the value of asset
received through taking current obligation, the contract value for taking current obligation, or the
cash and cash equivalents value estimated for repaying debt in daily business activity.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date, regardless of whether
that price is directly observable or estimated using another valuation technique. Fair value for
measurement and/or disclosure purposes in these consolidated financial statements is determined
on such a basis.
Fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the
inputs to the fair value measurements are observable and the significance of the inputs to the fair
value measurement in its entirety, which are described as follows:
1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date;
2) Level 2 inputs are inputs, other than quoted prices included within Level 1, that are
observable for the asset or liability, either directly or indirectly; and
3) Level 3 inputs are unobservable inputs for the asset or liability.
3. Going concern
As at 31 December 2014, the Group evaluated the profitability ability in the foreseeable 12
months and did not notice any event or circumstance that would constitute significant doubt on
going concern ability of the Group. Therefore, the financial statements have been prepared on a
going concern basis.
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
1. 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 2014, financial performance and cash flow in 2014
of the Company and the Group.
2. Accounting year
The accounting year of the Group is from 1 January to 31 December of each calendar year.
3. Business cycle
Business cycle refers to the period from purchasing assets to be processed to receiving cash or
cash equivalents by the Company. The business cycle of the Company is 12 months.
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
Euro 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.
5. Business combination
5.1Business 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.
Qualified identifiable assets, liabilities and contingent liabilities obtained by acquirer in the
acquisition are measured using fair value at the acquisition date.
The cost of combination exceeds the acquirer's interest in the fair value of the acquiree's
identifiable net assets, the difference is treated as an asset and recognised as goodwill, which is
measured at cost on initial recognition.
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.
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
6. Preparation of consolidated financial statements
6.1 Preparation of consolidated financial statements
The scope of consolidation in the consolidated financial statements is determined on the basis of
control. Control is the power to govern the financial and operating policies of an enterprise so as
to obtain benefits from its operating activities. The Group will reevaluate if changes in relevant
facts and circumstances results in changes in relevant factors involved in the above definition of
control.
Consolidation of subsidiary starts from the control on the subsidiary by the Group and ends at the
loss of control on the subsidiary by the Group.
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.
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 non-
controlling interests and presented as "non-controlling interests" in the consolidated balance sheet
within shareholders' equity. The portion of net profits or losses of subsidiaries for the period
attributable to non-controlling interests is presented as "non-controlling interests" in the
consolidated income statement below the net profit line item.
When the amount of loss for the period attributable to the non-controlling shareholders of a
subsidiary exceeds the non-controlling shareholders' portion of the opening balance of owners'
equity of the subsidiary, the excess amount are still allocated against non-controlling interests.
7. Cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash
equivalents are the Group's short-term, highly liquid investments that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value.
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
8. Translation of transactions and financial statements denominated in foreign currencies
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 that (1) 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; (2) exchange differences related to hedging instruments for
the purpose of hedging against foreign currency risks are accounted for using hedge accounting;
(3) exchange differences arising from available-for-sale non-monetary items denominated in
foreign currencies and changes in the carrying amounts of available-for-sale monetary items are
recognised as other comprehensive income and included in capital reserve.
Foreign currency non-monetary items measured at historical cost are translated to the amounts in
functional currency at the spot exchange rates on the dates of the transactions and the amounts in
functional currency remain unchanged. Foreign currency non-monetary items measured at fair
value are re-translated at the spot exchange rate on the date the fair value is determined.
Difference between the re-translated functional currency amount and the original functional
currency amount is treated as changes in fair value (including changes of exchange rate) and is
recognised in profit and loss or as other comprehensive income included in capital reserve.
8.2 Translation of financial statements denominated in foreign currencies
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 of other comprehensive income 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".
The opening balances and the comparative figures of previous year are presented at the translated
amounts in the previous year's financial statements.
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- 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 other financial assets and financial liabilities, transaction costs are
included in their initial recognised amounts.
9.1 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.
9.2 Classification, recognition and measurement of financial assets
On initial recognition, the Group's 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. Financial assets of the
Group are loans and receivables and available-for-sale financial assets.
9.2.1 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 cash and bank, 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.
9.2.2 Available-for-sale financial assets
Available-for-sale financial assets include non-derivative financial assets that are designated on
initial recognition as available for sale, and financial assets that are not classified as financial
assets at fair value through profit or loss, loans and receivables or held-to-maturity investments.
For investments in equity instruments that do not have a quoted market price in an active market and
whose fair value cannot be reliably measured, they are measured at cost.
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
9. Financial instruments - continued
9.3 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 borrower's 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) A significant or prolonged decline in the fair value of an investment in an equity
instrument below its cost;
(9) Other objective evidence indicating there is an impairment of a financial asset.
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
9. Financial instruments - continued
9.3 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 available for sale 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 COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
9. Financial instruments - continued
9.4 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.
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.
9.5 Classification, recognition and measurement of financial liabilities
Debt and equity instruments issued by the Group are classified into financial liabilities or equity
on the basis of the substance of the contractual arrangements and definitions of financial liability
and equity instrument.
On initial recognition, financial liabilities are classified into financial liabilities at fair value
through profit or loss and other financial liabilities. The financial liabilities in group are other
financial liabilities, including short-term borrowings, notes payables, account payables, interest
payables, other payables and long-term borrowings etc.
9.5.1 Other financial liabilities
Other financial liabilities are subsequently measured at amortised cost using the effective interest
method, with gain or loss arising from derecognition or amortisation recognised in profit or loss.
9.6 Derecognition of financial liabilities
The Group derecognises a financial liability (or part of it) only when the underlying present
obligation (or part of it) is discharged. An agreement between the Group (an existing borrower)
and an existing lender to replace the original financial liability with a new financial liability with
substantially different terms is accounted for as an extinguishment of the original financial
liability and the recognition of a new financial liability.
When the Group derecognises a financial liability or a part of it, it recognises the difference
between the carrying amount of the financial liability (or part of the financial liability)
derecognised and the consideration paid (including any non-cash assets transferred or new
financial liabilities assumed) in profit or loss.
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
9. Financial instruments - continued
9.7 Offsetting financial assets and financial liabilities
Where the Group has a legal right that is currently enforceable to set off the recognised financial
assets and financial liabilities, and intends either to settle on a net basis, or to realise the financial
asset and settle the financial liability simultaneously, a financial asset and a financial liability shall
be offset and the net amount is presented in the balance sheet. Except for the above circumstances,
financial assets and financial liabilities shall be presented separately in the balance sheet and shall
not be offset.
9.8 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group
after deducting all of its liabilities. The Group does not recognise any changes in the fair value of
equity instruments. The equity instruments transaction expenses deducted from equity.
The Group treats distribution to equity instrument holders as profit distributions. Shareholder
equity is not affected by share dividend distributed.
10. Account Receivables
10.1 Receivables that are individually significant and for which bad debt provision is individually
assessed
A receivable that exceeds RMB 3,000,000 is deemed as an individually significant receivable by
the Group.
For receivables that are individually significant, the Group assesses the receivables individually
for impairment. For a financial asset that is not impaired individually, the Group includes the asset
in a group of financial assets with similar credit risk characteristics and collectively assesses them
for impairment. Receivables for which an impairment loss is individually recognised are not
included in a collective assessment of impairment.
10.2 Receivables that are not individually significant but for which bad debt provision is
individually assessed
For receivables that are not individually significant but for which bad debt provision is
individually assessed, when objective evidence suggests that the Group cannot collect receivables
in accordance with original clauses, the Group would recognize impairment loss and provide bad
debts according to the difference between carrying amount and present value of future cash flows.
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- 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 weighted average method.
Agricultural products harvested are reported in accordance with the CAS 1 Inventories.
11.3 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.
Provision for decline in value of other inventories is made based on the excess of cost of
inventory over its net realisable value on an item-by-item basis.
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.
11.4 Inventory count system
The perpetual inventory system is maintained for stock system.
11.5 Amortisation method for low cost and short-lived consumable items and packaging materials
Packaging materials and low cost and short-lived consumable items are amortised using the
immediate write-off method.
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
12. Long term equity investments
12.1 Basis for determining control, joint control and significant influence
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.
12.2 Determination of initial 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.
Audit fee, legal services, consulting fees and other related management costs in acquisition are
expensed in profits and losses when happened.
Other long-term equity investments acquired from other than acquisitions are recognised using
original cost.
12.3 Subsequent measurement and recognition of profit or loss
12.3.1 Long-term equity investment accounted for using the cost method
The Group accounts for long-term equity investment using the cost method. A subsidiary is an
investee that is controlled by the Group.
Under the cost method, a long-term equity investment is measured at initial investment cost.
Long-term equity investment is adjusted when capital is added or recollected. Investment income
is recognised in the period in accordance with the attributable share of cash dividends or profit
distributions declared by the investee.
12.4 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.
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
13. Fixed assets
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%
Estimated net residual value assumes the situation where a fixed asset expire for its estimated
useful life and is in its expected final status. Estimated net residual value is the amount that the
Group can obtain from the disposal less expected disposal fees.
13.3 Other explanations
If a fixed asset is upon disposal or no future economic benefits are expected to be generated from
its use or disposal, the fixed asset is derecognised. When a fixed asset is sold, transferred, retired
or damaged, the amount of any proceeds on disposal of the asset net of the carrying amount and
related taxes is recognised in profit or loss for the period.
The Group reviews the useful life and estimated net residual value of a fixed asset and the
depreciation method applied at least once at each financial year-end, and account for any change
as a change in an accounting estimate.
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.
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
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.
16. Biological assets
The biological assets of the Group are bearer biological assets.
16.1 Bearer biological assets
Bearer biological assets are biological assets, for example, held for the production of agricultural
produce, provision of services or rental, Bearer biological assets in the Group are vines. A bearer
biological asset is initially measured at cost. The cost of a bearer biological asset self-grown or
self-bred comprises those costs necessarily incurred and directly attributable to the asset before
the asset becomes available for its intended production and operating purposes, and any
borrowing cost meeting the capitalisation criteria.
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 and expected net salvage value by considering the normal
producing life of the bearer biologial assets.
The Group reviews the useful life and estimated net residual value of bearer biological assets and
the depreciation method applied at least once at each financial year-end, and account for any
change as a change in an accounting estimate.
On the sale, identification of any shortages during stocktaking, death or damage of biological
asset, the proceeds on disposal net of the carrying amount and relevant taxes is recognised in
profit or loss for the current period.
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
17. Intangible assets
17.1 Intangible assets
Intangible assets include land use rights, software, 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. The useful lives of the intangible assets are as
follows:
Annual
Item Useful life Net residual value amortization rate
Land use rights 40-50 years - 2-2.5%
Software 5-10 years - 10-20%
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.
18. Impairment of long-term assets
The Group and the Company review the impairment status of long-term equity investments, fixed
assets, construction in progress, bearer biological asset and intangible assets with finite useful life
at the end of each year. If the assets exist impairment, the Group estimates the recoverable amount
of the assets. An intangible asset with an 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.
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. 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.
If recoverable amount of assets is less than book value, the difference is recognised as impairment
provision and expensed in current period.
Goodwill 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 impairment is recognised in profit or loss for the period in which it is incurred and will not be
reversed in any subsequent period.
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
19. 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 of the Group are amortized over the following period:
Amortization period
Land requisition fee 50 years
Land lease prepayment 50 years
Greening fee 5 years
Leasehold improvement 3-5years
Others 3 years
20. Employee benefits
20.1 Short-term employee benefits
In an accounting period in which an employee has rendered service to the Group, the Group
recognises the actual employee benefits for that service as a liability. The employee benefits of
the Group are either included in cost of related assets or charged to profit or loss in the period
when they are incurred. Non-monetary employee benefits are measured at fair value.
Social insurances such as medical insurance, injury insurance and pregnancy insurance, housing
funds, labor union and employee education fees paid by the Group for employees, are recognised
as relevant liability in the period in which the employees provide service, in accordance with the
regulated recognition basis and percentage. The related expenditures are either included in cost of
related assets or charged to profit or loss in the period when they are incurred.
20.2 Accounting treatments of retired benefits
Retired benefits of the Group are all predetermined provision plan.
In the period in which the employees provide service, the Group recognise liability in accordance
with the amounts to be paid calculated according to the predetermined provision plan, and the
related expenditures are either included in cost of related assets or charged to profit or loss in the
period when they are incurred.
20.3 Accounting treatments of termination benefits
When providing termination benefits to employees, the Group recognise employee benefits
payroll resulting from termination benefits at the earlier of: the Group cannot unilaterally
withdraw from the termination plan or the redundancy offer; the Group recognise relevant costs
and expenses related to the payment of termination benefits in reconstructuring.
- 28 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
21. Revenue
21.1 Revenue from sale of goods
Revenue from sale of goods is recognised when the Group has transferred to the buyer the
significant risks and rewards of ownership of the goods. The Group retains neither continuing
managerial involvement to the degree usually associated with ownership nor effective control
over the goods sold. The amount of revenue can be measured reliably and it is probable that the
associated economic benefits will flow to the Group. The associated costs incurred or to be
incurred can be measured reliably.
21.2 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 the outcome of the transaction involving the rendering of services cannot be estimated
reliably, revenue is recognised only to the extent of the costs incurred that will be recoverable,
and the costs incurred are recognised as expenses for the period. When it is not probable that the
costs incurred will be recovered, revenue is not recognised.
22. Government grants
Government grants are transfer of monetary assets and non-monetary assets from the government
to the Group at no consideration. The income is accounted for as either a government grant related
to an asset or a government grant related to income based on its nature.
A government grant is recognised only when the Group can comply with the conditions attaching
to the grant and the Group will receive the grant. Monetary government grants are measured by
the amount received or receivable.
22.1 Government grant related to an asset
A government grant related to an asset is recognised as deferred income, and evenly amortised to
profit or loss over the useful life of the related asset.
22.2 Government grant related to income
For a government grant related to income, if the grant is a compensation for related expenses or
losses to be incurred in subsequent periods, the grant is recognised as deferred income, and
recognised in profit or loss over the periods in which the related costs are recognised. If the grant
is a compensation for related expenses or losses already incurred, the grant is recognised
immediately in profit or loss for the period.
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
23. Deferred tax assets/deferred tax liabilities
The income tax expenses include current income tax and deferred income tax.
23.1 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.
23.2 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 COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
23. Deferred tax assets/ deferred tax liabilities - continued
23.2 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.
23.3 Net off of income taxes
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.
24. 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.
24.1 Operating leases
24.1.1 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.
- 31 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
25. Other significant accounting policies, accounting estimates and preparation of financial statements
From 1 July 2014, the Group has adopted a series of new accounting standards issued by The
Ministry of Finance, including Accounting Standard for Business Enterprises No.39-Fair value
measurement, Accounting Standard for Business Enterprises No.40-Joint Arrangements,
Accounting Standard for Business Enterprises No.41-Disclosure of interests in other entities,
Accounting Standard for Business Enterprises No.2-Long-term equity investment, Accounting
Standard for Business Enterprises No.9-Employee benefit, Accounting Standard for Business
Enterprises No.30- Presentation of financial statement, Accounting Standard for Business
Enterprises No.33-Consolidated Financial Statements Accounting Standard for Business
Enterprises No.37-Financial instrument disclosures.These changes in accounting policies were
approved in the No.8meeting by the No.6 board of directors of the Company.
Long-term equity investment
Before adopting Accounting Standard for Business Enterprises No.2-Long-term equity investment
(Revised), the Group treated as long-term investment for investment with neither control nor
significant influence to investee, no quoted market price in an active market and whose fair value
cannot be reliably measured at cost.
After adopting Accounting Standard for Business Enterprises No.2-Long-term equity investment
(Revised), the Group treated as available-for-sale financial assets for the investment with neither
control nor significant influence to investee, no quoted market price in an active market and
whose fair value cannot be reliably. The Group undertakes retrospective adjustments for the
changes in accounting policy, resulting the change from long-term equity investment to as
available-for-sale financial assets for investment with neither control nor significant influence to
investee, no quoted market price in an active market and whose fair value cannot be reliably. As
full bad debts provision has been made for the asset on 31 December 2013, the amount in blance
sheet is not affected.
Employee benefit
Before adopting Accounting Standard for Business Enterprises No.9-Employee benefit (Revised),
for retired benefits, when the Group terminates 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.
After adopting Accounting Standard for Business Enterprises No.9-Employee benefit (Revised),
please see Notes III 20(3)-Accounting treatments for retired benefits for its accounting policies.
Management of the Group believes that adopting the accounting standard does not have a material
impact on the financial statements.
- 32 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
25. Other significant accounting policies, accounting estimates and preparation of financial statements
- continued
Joint Arrangements
Accounting Standard for Business Enterprises No.40-Joint Arrangement classifies joint
arrangements as joint operations and joint ventures. An entity determines the type of joint
arrangement in which it is involved by considering its rights and obligations. An entity assesses its
rights and obligations by considering the structure and legal form of the arrangement, the
contractual terms agreed to by the parties to the arrangement. A joint operation is a joint
arrangement whereby the parties that have joint control of the arrangement have rights to the assets,
and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement
whereby the parties that have joint control of the arrangement have rights to the net assets of the
arrangement. Management of the Group believes that adopting the accounting standard does not
have a material impact on the financial statements.
Consolidated Financial Statements
Accounting Standard for Business Enterprises No.33-Consolidated Financial Statements (Revised)
has revised the definition of control, the "control" is defined as "investor owns the power to
investee, earns changeable return through participating relevant activities of the investee, has the
power to affect the changeable return through utilizing the power to the investee and makes
explicit accounting rules about the special transaction. Management of the Group believes that
adopting the accounting standard does not have a material impact on the financial statements.
Financial instrument disclosures
Accounting Standard for Business Enterprises No.37-Financial instrument disclosures (Revised)
adds rules relating to offset and disclosure requirements, adds disclosure requirements about
financial asset transfer and modifies disclosure requirements about the maturity of financial assets
and liabilities. This financial statement has been prepared in accordance with the standard, and
with comparable annual financial statements disclosure adjusted accordingly.
Presentation of financial statement
Accounting Standard for Business Enterprises No.30- Presentation of financial statement (Revised)
separates other comprehensive income into following two categories: (1) Other comprehensive
income items which will not be reclassified subsequently to profit or loss; (2) Other
comprehensive income items which will be reclassified subsequently to profit or loss when
specific conditions are met. This financial statement has been prepared in accordance with the
standard, and with comparable annual financial statements disclosure adjusted accordingly.
- 33 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
25. Other significant accounting policies, accounting estimates and preparation of financial statements
- continued
Fair value measurement
Accounting Standard for Business Enterprises No.39-Fair value measurement regulates
measurement and disclosure of fair value. Adopting the standard does not have a significant impact
on measurement of financial statement items, but will lead to more extensive disclosures on fair
value by the Group. This financial statement has been prepared in accordance with the standard.
Disclosure of interests in other entities
Accounting Standard for Business Enterprises No.41-Disclosure of interests in other entities
applies to the disclosure of an enterprise's interest in subsidiaries, joint arrangements, associates
and unconsolidated structured entities. Adopting the standard will lead to more extensive
disclosures on financial statements by the Group. This financial statement has been prepared in
accordance with the standard, and with comparable annual financial statements disclosure adjusted
accordingly.
IV. 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 III, the Group is required to make
judgments, 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.
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.
- 34 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
IV. CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES AND KEY
ASSUMPTIONS AND UNCERTAINTIES IN ACCOUNTING ESTIMATES - continued
Significant accounting judgments and accounting estimates - continued
Depreciation
As set out in Note III-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 fixed assets. This estimate is based on
the historical experience of the actual useful lives of fixed assets 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.
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 accounts receivable
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.
- 35 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
IV. CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES AND KEY
ASSUMPTIONS AND UNCERTAINTIES IN ACCOUNTING ESTIMATES - continued
Significant accounting judgments and accounting estimates - continued
Inventory provision based on net realizable value
The inventory are measured on the lower of carrying value and net realizable value, and provision
should be made for impairment on obsolete and slow moving inventories. The group will reassess
whether the net realizable value is lower than the carrying cost at the end of each year.
V. 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% or 33%
on its taxable income.
Other than tax incentives stated in Notes-V (2), applicable tax rates of the Group in 2014 and
2013 are all stated as above.
2. Tax incentives and relative permit
Ningxia Changyu Grape Growing Co., Ltd.("Ningxia Growing"), 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.
A subsidiary of the Company, Xinjiang Tianzhu Co., Ltd ("Xinjiang Tianzhu") which is a wine
production enterprise incorporated in Xinjiang Weizu Autonomous. In accordance with (Caishui
[2011] No.60) and (Xinzhengfa [2010] No.105), which is from 2012 to 2016, 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 current year is 9%.
A subsidiary of the Company, Xinjiang Babao Baron Chateau Co., Ltd. ("Shihezi Chateau")
which is a wine production enterprise incorporated in Xinjiang Weizu Autonomous. In
accordance with (Caishui [2011] No.60) and (Xinzhengfa [2010] No.105), 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 current year is 9%.
- 36 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Cash and bank
Closing balance Opening balance
RMB RMB
Cash 101,660 772,817
Bank balance 1,010,259,393 1,235,788,080
Other currency fund 135,004,018
____________ 131,257,285
____________
Total 1,145,365,071
____________ 1,367,818,182
____________
As at 31 December 2014, the balance of restricted cash of the Group is RMB 2,643,519 (31
December 2013: RMB 2,609,237), which is the Group's housing fund.
As at 31 December 2014, the Group's other monetary assets include security of RMB125,000,000
018 (31 December 2013: RMB125,000,000)s pledged for a short-term borrowing from HSBC of
HKD152,000,000 (translated as RMB119,912,800), refundable deposit for notes payable of Shi
He Zi Chateau of RMB10,000,000 (31 December 2013: RMB 5,965,996)and company cards
deposit guarantee of RMB4,018 (31 December 2013: RMB 291,289).
As at 31 December 2014, the Group's overseas cash and bank deposit is RMB 43,746,008 (31
December 2013: RMB 13,104,666).
As at 31 December 2014, The Group's term deposits with original maturity of more than three
months when acquired is RMB 47,245,260 (31 December 2013: RMB 277,392,728) with interest
rates ranging from 3.25%-4.13%, which will mature from 3 months to 1 year.
2. Notes receivable
(1) Categories of notes receivable
Closing balance Opening balance
RMB RMB
Bank acceptances 138,315,319
__________ 79,702,753
_________
(2) Notes receivable which have been pledged as security at the end of the period:
As of 31 December 2014, there was no pledged notes receivable (31 December 2013: Nil).
- 37 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
2. Notes receivable - continued
(3) Notes endorsed by the Group to other parties which are not yet due at the end of the period
Closing balance Opening balance
RMB RMB
Bank acceptances 47,805,224
__________ 19,167,830
_________
As at 31 December 2014, notes endorsed by the Group to other parties which are not yet due at
the end of the period is RMB47,805,224 (31 December 2013: RMB19,167,830). The notes are
used for payment to suppliers. The Group believes that due to good reputation of bank, the risk of
notes not accepting by bank on maturity is very low, and almost all the risks and rewards on
ownership of the notes receivable have been transferred to the supplier, therefore derecognise the
note receivables endorsed. If the bank is unable to pay the notes on maturity, according to the
relevant laws and regulations of China, the Group would undertake limited liability for the notes.
(4) Notes receivable reclassified to accounts receivable due to the drawers' inability to settle the note
on maturity
No notes receivable were reclassified as accounts receivable due to the default of drawer (31
December 2013: Nil).
3. Accounts receivable
(1) Disclosure of accounts receivable by categories:
Closing balance Opening balance
Bad debts Carrying Bad debts Carrying
Amount provision amount Amount provision amount
Amount Proportion Amount Ratio Amount Amount Proportion Amount Ratio Amount
RMB % RMB % RMB RMB % RMB % RMB
Accounts receivable that are
individually significant and
for which bad debt provision
has been assessed individually 67,557,319 46.4 - - 67,557,319 72,118,959 40.7 - - 72,118,959
Accounts receivable that are
not individually significant but
for which bad debt provision
has been assessed individually ______ ___
78,115,092 53.6 ____ ____ ______ ______ ___
- - 78,115,092 104,990,557 59.3 ____
- ____ ______
- 104,990,557
Total 145,672,411 100.0 - - 145,672,411 177,109,516 100.0 - - 177,109,516
______ ___ ____ ____ ______ ______ ___ ____ ____ ______
- 38 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
3. Accounts receivable - continued
(1) Disclosure of accounts receivable by categories: - continued
The Group determines that accounts receivable of more than RMB3,000,000 is considered as
individually significant trade receivable.
The normal credit term is one month, which can be extended to one year for certain major
customers. The accounts receivable are interest-free.
The aging analysis is as follows:
Closing balance Opening balance
RMB RMB
Within 1 year 145,672,411 174,141,205
1 to 2 years -
__________ 2,968,311
__________
145,672,411
__________ 177,109,516
__________
(2) Recognitions, collections and reversals during the current period:
As at 31 December 2014, there was no bad debt provision for accounts receivable (31 December
2013: Nil). There was no bad debt provision made, reversed or written-off by management in
2014 (2013: Nil).
(3) Top five entities with the largest balances of accounts receivable:
Relationship Percentage of
with the Group Amount Aging total receivables
RMB %
Nonggongshang Supermarket
(Group) Co., Ltd Third party 13,983,913 Within 1 year 9.6
Wal-Mart (China) Investment Co., Ltd. Third party 9,764,215 Within 1 year 6.7
Suguo Supermarket Co., Ltd Third party 8,979,267 Within 1 year 6.2
Kunshan Runhua Business Co. Ltd
Huangpu branch Third party 8,363,514 Within 1 year 5.7
Wumart Stores, Inc. Third party 7,864,077
________ Within 1 year 5.4
___
48,954,986
________ 33.6
___
- 39 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
4. Prepayments
(1) The aging analysis is as follows:
Closing balance Opening balance
Amount Ratio Amount Ratio
RMB % RMB %
Within 1 year 8,073,786
_________ 100.0
_____ 45,997,863
_________ 100.0
_____
(2) As at 31 December 2014, the top 5 of prepayments are as follows:
Reason Percentage of
Relationship for being total advances
with the Group Amount Aging outstanding to suppliers
RMB %
Austria Lawrence
Fine Wines V Co. Ltd Third party 2,828,300 Within 1 year goods not received 35.0
Shandong Electricity Company
Yantai branch Third party 677,389 Within 1 year electricity purchase 8.4
Beijing Diaoyutai Wine Co. Third party 400,800 Within 1 year prepaid deposits 5.0
Liu, Yuling Third party 348,124 Within 1 year goods not received 4.3
Yu, Zhihai Third party 328,194
________ Within 1 year goods not received 4.1
___
4,582,807
________ 56.8
___
5. Interest receivable
(1) Categories of interest receivable
Closing balance Opening balance
RMB RMB
Interests of term deposits 3,619,429
________ 8,417,995
________
(2) Overdue interest
As at 31 December 2014, there was no overdue interest receivable (31 December 2013: Nil).
- 40 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Other receivables
(1) Disclosure of other receivables by categories
Closing balance Opening balance
Bad debts Carrying Bad debts Carrying
Amount provision amount Amount provision amount
Amount Proportion Amount Ratio Amount Amount Proportion Amount Ratio Amount
RMB % RMB % RMB RMB % RMB % RMB
Other receivables that are
individually significant and
for which bad debt provision
has been assessed individually 16,540,213 42.9 (7,199,521) 43.5 9,340,692 65,272,429 61.2 (7,392,429) 11.3 57,880,000
Other receivables that are
not individually significant but
for which bad debt provision
has been assessed individually ______ ___ _____-
22,021,610 57.1 ___- ______ ______ ___ _____-
22,021,610 41,451,794 38.8 ___- ______
41,451,794
合计 38,561,823 100.0
______ ___ (7,199,521) ___ ______ ______ ___ (7,392,429) ___6.9 ______
_____ 18.7 31,362,302 106,724,223 100.0
_____ 99,331,794
The Group determines that other receivables of more than RMB 3,000,000 are considered as
individually significant other receivables.
Other receivables that are individually significant and for which bad debt provision has been
assessed individually:
As at 31 December 2014, 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
process of liquidation
Tiantong Security Co., Ltd. 7,199,521
_______ 7,199,521
_______ 100 Unable to repay
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
process of liquidation
Tiantong Security Co., Ltd. 7,392,429
_______ 7,392,429
_______ 100 Unable to repay
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 22,513,054 58.4 - 22,513,054 96,808,614 90.7 - 96,808,614
1 to 2 years 7,422,977 19.3 - 7,422,977 1,936,191 1.8 - 1,936,191
2 to 3 years 976,083 2.5 - 976,083 221,072 0.2 - 221,072
Over 3 years 7,649,709
_______ 19.8
____ (7,199,521)
_______ 450,188
_______ 7,758,346
_______ ____7.3 (7,392,429)
_______ 365,917
_______
38,561,823 100.0 (7,199,521) 31,362,302 106,724,223 100.0 (7,392,429) 99,331,794
_______ ____ _______ _______ _______ ____ _______ _______
- 41 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Other receivables - continued
(2) Accrual, reversal and written-off during the current period
Opeing balance Accrual Reversal Written-off Closing balance
RMB RMB RMB RMB RMB
2014 7,392,429 _______ (192,908)
_______ ________ 7,199,521
________
_______
No bad debt accrued in 2014, and bad debt reversed in 2014 is RMB 192,908.
Reasons for Basis of determining Accumulated bad debt Amount of
reversal or the original provision prior to reversals or
Content of other receivables collections bad debt provision reversals or collections collections
RMB RMB
Tiantong Security Co., Ltd. Collected Exceed credit period (7,392,429)
________ 192,908
______
(3) Other receivables written off in the reporting period
No other receivable written off in 2014.
(4) Disclosure of other receivables by categories
Closing balance Opening balance
RMB RMB
Deposit 8,651,139 8,794,120
Petty cash receivable 3,138,780 3,657,944
Refund of consumption tax, real estate tax 8,772,123 6,927,183
Land purchase deposit - 52,880,000
Others 10,800,260
__________ 27,072,547
_________
31,362,302
__________ 99,331,794
_________
(5) Top five entities with the largest balances of other receivables
As at 31 December 2014, the top 5 of other receivables are as follows:
Percentage of total Bad debt
Nature Amount Aging other receivable Amount
RMB % RMB
Tiantong Security Co., Ltd. Investment fund 7,199,521 Over 3 years 18.7 7,199,521
Yantai Economic and Technological
Development Zone Construction
Industry Association Deposit 5,000,000 1-2 years 13.0 -
Shihezi National Tax Bureau Refund tax 4,340,692 Within 1 year 11.2 -
Yantai National Tax Bureau Refund tax 2,407,934 Within 1 year 6.2 -
Liaoning Administration of
Foreign Experts Affairs Reimbursed expenses 1,894,055
________ 1-2 years ___4.9 _______-
20,842,202 54.0 7,199,521
________ ___ _______
- 42 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
7. Inventories
(1) Disclosure of inventories by categories
Closing balance Opening balance
Net carrying Net carrying
Balance Provision amount Balance Provision amount
RMB RMB RMB RMB RMB RMB
Raw material 74,820,215 - 74,820,215 85,025,169 - 85,025,169
Work in progress 919,070,983 - 919,070,983 930,137,624 - 930,137,624
Finished goods 1,108,809,575
_________ _______ 1,093,485,200
(15,324,375) _________ 1,119,090,234
_________ (13,135,590)
_______ 1,105,954,644
_________
2,102,700,773 (15,324,375) _________
_______ 2,087,376,398
_______ _________ _________ (13,135,590) _________
_________ 2,134,253,027 _______ 2,121,117,437
(2) Inventory provision
2014 Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Finished goods 13,135,590
________ 2,188,785
_______ -
________ 15,324,375
________
8. Available-for-sale financial assets
(1) Available-for-sale financial assets
Closing balance Opening balance
Amount Impairment Carrying amount Amount Impairment Carrying amount
RMB RMB RMB RMB RMB RMB
Available-for-sale
equity instruments
measured at cost 10,000,000 (10,000,000)
_______ -
______ 10,000,000
_________ (10,000,000)
_______ -
______
_________ _______ _______
(2) Available-for-sale financial assets measured at cost
Carrying amount Provision for impairment losses Proportion of
voting power in Cash dividend
Investee Opening Increase Decrease Closing Opening Increase Decrease Closing the investee (%) for the period
RMB RMB RMB RMB RMB RMB RMB RMB RMB
Yantai Dingtao
Construction and
Development Co., Ltd. 10,000,000 - - 10,000,000 10,000,000 - - 10,000,000 18 -
- 43 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
9. Fixed assets
(1) Details of fixed assets
Buildings Machinery Motor Vehicles Total
RMB RMB RMB RMB
I. Total original carrying amount
1. Opening balance 1,464,646,808 1,236,192,126 24,325,489 2,725,164,423
2. Increase
Purchase 4,823,315 47,752,763 2,129,517 54,705,595
Transfer from CIP 590,228,245 98,432,128 - 688,660,373
3. Decrease
Disposal __________- (8,402,917)
__________ (680,303)
________ (9,083,220)
__________
4. Closing balance 2,059,698,368
__________ 1,373,974,100
__________ 25,774,703
________ 3,459,447,171
__________
II. Total accumulated depreciation
1. Opening balance 222,433,019 565,658,995 19,431,065 807,523,079
2. Increase
Additions 47,202,827 78,071,524 1,875,434 127,149,785
3. Decrease
Disposal __________- (7,560,146)
__________ (347,902)
________ (7,908,048)
__________
4. Closing balance 269,635,846
__________ 636,170,373
__________ 20,958,597
________ 926,764,816
__________
III. Total carrying amount of
fixed assets
1. Closing carrying amount 1,790,062,522
__________ 737,803,727
__________ 4,816,106
________ 2,532,682,355
__________
2. Opening carrying amount 1,242,213,789
__________ 670,533,131
__________ 4,894,424
________ 1,917,641,344
__________
As at 31 December 2014, there was no fixed assets with ownership restricted (31 December 2013:
Nil).
As at 31 December 2014, there was no temporary idle fixed assets, no fixed assets leased under
finance leases , no leased out under operating leases and no held for sale at the end of the period.
(2) Fixed assets of which certificates of title have not been obtained
As at 31 December 2014, buildings without property certificate are as follows:
Reasons why certificates
Items Amount of title have not been obtained
RMB
Xinjiang Shihezi Chateau factory building 256,981,006 Processing
Beijing Chateau European town, main, service building 233,407,559 Processing
Ningxia Wine production factory and office building 77,789,345 Processing
Sales Company office buildings 44,351,379 Processing
Xinjiang Tianzhu fermentations and storage warehouse 28,325,121 Processing
Ice Wine Chateau office building and packing workshop 10,429,634 Processing
Fermentation center office, experiment building and workshop 6,556,657 Processing
Jingyang factory fermentation building 4,969,078 Processing
Kylin Packaging finished goods warehouse and workshop 2,759,562
__________ Processing
__________
- 44 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
10. Construction in progress
(1) Construction in progress
Closing balance Opening balance
RMB RMB
The Company's reconstruction project 182,767 269,802
Xinjiang Tianzhu workshop reconstruction project 317,758 1,018,309
Kylin Packing production line project - 19,800
Yantai Chateau vineyard project - 10,619,000
AFIP plaza reconstruction project 28,000 -
Ningxia Chateau road project 4,083,378 600,000
Ice Wine Chateau project 69,840 -
Sales Company construction project 39,316,089 66,682,027
Langfang Castel reconstruction project 271,057 -
Jingyang Wine fermentation workshop
reconstruction project 794,385 158,569
Ningxia united workshop - 1,464,202
Shi He Zi Chateau construction project 69,298,865 152,871,244
Xinjiang Sales Co. construction project 6,513,350 -
Ningxia Chateau construction project 127,432,353 92,062,210
Xianyang Chateau construction project 222,927,964 403,657,745
Research, development and manufacturing center
Construction Project 1,127,641,913 558,716,989
Ding Luo Te Chateau Project 73,517,357 119,074,949
Huanren factory construction project 26,261,424 16,439,684
Chang'an Chateau tourism project 1,810,000
____________ -
____________
1,700,466,500
____________ 1,423,654,530
____________
(2) Changes in significant construction in progress
Accumulated
Opening Transfer to Opening expenditure/b
Budget balance Addition PPE balance udget Status Financed by
RMB RMB RMB RMB RMB %
Xinjiang Tianzhu technology
innovation and reconstruction project 3,500,000 1,018,309 2,018,462 (2,719,013) 317,758 92.7 92.7 Self-raised
Yantai Chateau vineyard project 30,000,000 10,619,000 9,916,359 (20,535,359) - 68.5 68.5 Self-raised
Sales Company construction project 161,350,000 66,682,027 18,011,481 (45,377,419) 39,316,089 88.2 88.2 Self-raised
Shihezi Chateau Construction Project
(include Xinjiang Sales) 780,000,000 152,871,244 80,212,788 (157,271,817) 75,812,215 82.4 82.4 Self-raised
Ningxia Chateau Construction Project
(include Ningxia Growing) 414,150,000 92,662,210 79,015,348 (40,161,827) 131,515,731 90.7 90.7 Self-raised
XianyangChateauConstructionProject
(include Shanxi Tourism) 620,740,000 403,657,745 150,024,525 (328,944,306) 224,737,964 89.2 89.2 Self-raised
Research, development and
manufacturing center 1,693,970,000 558,716,989 568,924,924 - 1,127,641,913 66.6 66.6 Self-raised
Ding Luo Te Chateau project 192,400,000 119,074,949 47,238,806 (92,796,398) 73,517,357 86.4 86.4 Self-raised
Huanren factory construction project 31,000,000 16,439,684 9,821,740 - 26,261,424 84.7 84.7 Self-raised
1,421,742,157 965,184,433 (687,806,139) 1,699,120,451
There was no interest capitalized in construction in progress in 2014.
As at 31 December 2014, there was no indication of impairment, therefore no provision was made.
- 45 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Bearer biological assets
Measured at cost
Planting RMB
I. Total original carrying amount
1. Opening balance 110,589,680
2. Increase
Self cultivated 55,887,849
3. Decrease
Disposal (5,093,268)
__________
4. Closing balance 161,384,261
__________
II. Total accumulated depreciation
1. Opening balance 8,795,165
2. Increase
Accrual 865,855
__________
3. Closing balance 9,661,020
__________
III. Total net carrying amount
1. Closing net carrying amount 151,723,241
__________
2. Opening net carrying amount 101,794,515
__________
As at 31 December 2014, there is no biological asset with ownership restricted.
As at 31 December 2014, biological assets of the Group include mature bearer biological assets of
RMB 23,758,058 (2013: RMB 13,994,402) and immature bearer biological assets of RMB
127,965,183. (2013: RMB 87,800,113)
As at 31 December 2014, there is no indication that biological assets may be impaired, and no
provision was made.
- 46 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
12. Intangible assets
(1) Intangible asset
Land use rights Microsoft use rights Total
RMB RMB RMB
I. Total original carrying amount
1. Opening balance 301,043,015 27,123,447 328,166,462
2. Increase
Purchase 158,324,359
__________ 9,893,577
_________ 168,217,936
__________
3. Closing balance 459,367,374
__________ 37,017,024
_________ 496,384,398
__________
II. Total accumulated depreciation
1. Opening balance 27,687,916 4,348,792 32,036,708
2. Increase
Accrual 8,595,240
__________ 2,801,256
_________ 11,396,496
__________
3. Closing balance 36,283,156
__________ 7,150,048
_________ 43,433,204
__________
III. Total net carrying amount
1. Closing net carrying amount 423,084,218
__________ 29,866,976
_________ 452,951,194
__________
2. Opening net carrying amount 273,355,099
__________ 22,774,655
_________ 296,129,754
__________
As at 31 December 2014, there was no intangible asset with restricted ownership.
(2) Intangible asset with restricted ownership
Amount Reasons
RMB
Yantai Development District A
- 48、49、51、52 151,895,607 Processing
__________
- 47 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. Goodwill
Investee Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Etablissements Roullet
Fransac (Fransac Sales) 13,112,525 -
________ -
______ 13,112,525
________
________
The Group recognised a goodwill of RMB13,112,525 in regard to the acquisition of Fransac Sales,
and the Goodwill has been allocated to relevant asset groups to undertake impairment test.
The recoverable amount of an asset group is determined based on the present value of expected
future cash flows. Future cash flow projections are made based on financial budgets approved by
management covering a 5-year period (projecting period) and presume that cash flows after the
projecting period (subsequent period) remain unchanged. Discount rate used in calculating
recoverable amount is 9.9%. One key assumption in projecting future cash flows is the growth
rate in projecting period, which is computed based on the expected growth rate of the industry.
Growth rate of sales in subsequent period is 2%. Management of the Group believes that any
reasonable changes in the above assumptions will not cause book value of the subsidiary exceeds
its recoverable amount.
According to the assessment, the Group confirms that no impairment provision need to be made
for goodwill in the reporting period.
14. Long-term prepaid expenses
2014 Opening balance Increase Amortization Closing balance
RMB RMB RMB RMB
Land lease prepayments 62,501,074 - (1,690,886) 60,810,188
Land requisition fee 48,391,000 - (884,630) 47,506,370
Greening fee 43,693,264 8,133,342 (11,230,548) 40,596,058
Leasehold improvement - 38,022,896 (1,289,211) 36,733,685
Others 10,936,465
_________ 6,033,442
________ (704,603)
________ 16,265,304
_________
165,521,803
_________ 52,189,680
________ (15,799,878)
________ 201,911,605
_________
________
- 48 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
15. Deferred tax assets/liabilities
Deferred tax assets and deferred tax liabilities are not related to income tax of the same tax
authorities of the same tax subjects, thus not presented with the net amount after netting.
(1) Recognised deferred tax assets not presented at the net amount after offset：
Closing balance Opening balance
Temporary Temporary
Items differences Deferred tax assets differences Deferred tax assets
RMB RMB RMB RMB
Unrealized profit from intra
- company transactions 632,127,732 158,031,933 337,972,433 84,493,108
Unpaid bonus 95,326,160 23,831,540 78,542,951 19,635,738
Retirement benefit 15,936,065 3,984,016 19,509,959 4,877,490
Asset impairment provision 32,523,896 8,130,974 30,528,019 7,632,005
Deductable losses 160,950,941 44,093,889 97,387,257 24,346,814
Deferred income 88,423,710 16,114,471 96,526,843 17,547,935
1,025,288,504 254,186,823 660,467,462 158,533,090
(2) Recognised deferred tax liabilities not presented at the net amount after offset：
Closing balance Opening balance
Taxable temporary Deferred Taxable temporary Deferred
Item difference tax liability difference tax liability
RMB RMB RMB RMB
Revaluation surplus in
business combination
Not under common control 18,262,543 4,565,636 21,344,460 5,336,115
(3) Deferred tax assets and liabilities not recognized:
Closing balance Opening balance
RMB RMB
Deductable losses 1,363,422
_________ 20,440,916
_________
(4) Deductable losses not recognized as deferred tax assets will expire in:
Closing balance Opening balance
RMB RMB
2014 - 19,077,494
2015 1,363,422
_________ 1,363,422
_________
1,363,422
_________ 20,440,916
_________
- 49 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
16. Other non-current assets
Closing balance Opening balance
RMB RMB
Receivable from transfer of
Ningxia Growing's biological assets 15,751,605
__________ 21,370,902
_________
17. Short-term borrowings
Categories of short-term borrowings
Closing balance Opening balance
RMB RMB
Secured loans with securities under the custody of lenders - 243,170,674
Unsecured and non-guaranteed loans 300,000,000
__________ -
__________
300,000,000
__________ 243,170,674
__________
As at 31 December 2014, unsecured loans detail is as follows:
Bank Amount Repayment date Interest rate
RMB %
HSBC China Qingdao branch 100,000,000 18 July 2014 - 19 January 2015 5.4
HSBC China Qingdao branch 100,000,000 27 November 2014 - 26 November 2015 5.0
ICBC Yantai branch 100,000,000
_________ 10 July 2014 - 9 July 2015 5.4
____
_________ ____
As at 31 December 2014, short-term borrowing of the Group are all fixed interest rate borrowings.
18. Notes payables
Closing balance Opening balance
RMB RMB
Bank acceptances 10,000,000
_________ 5,765,694
_________
As at 31 December 2014, there was no due notes payable unpaid (31 December 2013: Nil).
- 50 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
19. Accounts payable
The aging analysis of accounts payable are as follows
Closing balance Opening balance
RMB RMB
Within 1 year 357,811,822
__________ 258,116,331
__________
20. Advances from customers
The aging analysis of advances from customers are as follows
Closing balance Opening balance
RMB RMB
Within 1 year 208,769,108 182,757,182
1 to 2 years 1,898,868 5,894,072
2 to 3 years 4,459,622
__________ -
__________
215,127,598
__________ 188,651,254
__________
21. Employee benefit payable
(1) Employee benefit payable
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Short-term payroll 111,190,545 353,791,940 (322,027,521) 142,954,964
Post-demission benefits
- predetermined provision plan 23,672 30,609,765 (30,575,874) 57,563
Termination benefits 19,506,018
_________ 2,241,982
_________ (5,811,935)
_________ 15,936,065
_________
130,720,235
_________ 386,643,687
_________ (358,415,330)
_________ 158,948,592
_________
(2) Short-term payroll
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Salaries and bonus 108,645,022 320,261,874 (288,988,942) 139,917,954
Staff benefit - 10,809,302 (10,803,334) 5,968
Staff welfare 153,590 10,665,428 (10,657,529) 161,489
Includes:
Medical insurance 153,590 9,123,499 (9,118,602) 158,487
Injury insurance - 816,511 (814,939) 1,572
Maternity insurance - 725,418 (723,988) 1,430
Housing fund 9,932 8,150,367 (8,090,063) 70,236
Union fee and education fee 2,382,001
_________ 3,904,969
_________ (3,487,653)
_________ 2,799,317
_________
111,190,545
_________ 353,791,940
_________ (322,027,521)
_________ 142,954,964
_________
- 51 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
21. Employee benefit payable - continued
(3) Predetermined provision plan
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Pension 23,449 29,060,721 (29,028,207) 55,963
Unemployment insurance 223
_____ 1,549,044
________ (1,547,667)
________ 1,600
_____
23,672
_____ 30,609,765
________ (30,575,874)
________ 57,563
_____
________
The Group participates in pension insurance and unemployment insurance plans established by
government institution. According to those plans, the Group pays pension and unemployment
insurance each month on the basis of 18% and 1% last period salary respectively. Apart from
these monthly expenses, the Group does not bear any further payment obligation. This year the
Group should pay RMB 29,060,721 and RMB 1,549,044 (In 2013: RMB 30,598,636 and RMB
1,637,364) respectively into pension insurance and unemployment insurance. At 31 December
2014, the Group has unpaid pension and unemployment insurance of RMB 55,963 and RMB
1,600 respectively (At 31 December 2013: RMB 23,499 and RMB 223), which is due to the
pension insurance and unemployment insurance plan at the end of the reporting period. These
payments have been paid after the end of the reporting period.
22. Taxes payable
Closing balance Opening balance
RMB RMB
Value added tax (62,755,555) 862,414
Consumption tax 18,849,955 26,658,283
Business tax 1,005,135 4,348,055
Corporation income tax 109,836,980 142,079,369
Urban land use tax 1,519,318 878,982
Individual income tax 6,644,281 6,824,553
City construction tax 4,831,936 6,016,703
Property tax 898,914 655,545
Others 6,673,084
__________ 6,089,526
__________
87,504,048
__________ 194,413,430
__________
- 52 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
23. Deferred income
Closing balance Opening balance
RMB RMB
Government grants
Current liabilities 12,398,718 12,915,801
Non-current liabilities 76,024,992
_________ 83,611,041
_________
88,423,710
_________ 96,526,842
_________
Government grants
Recognized in Related to
Opening Addition non-operating income Closing Assets/Income
RMB RMB RMB RMB
Luxury wine culture industry
construction specific funds 2,520,000 - (2,520,000) - Income
Miyun Propaganda Department transfer 4,444,725 - (888,945) 3,555,780 Assets
Grape base project specific funds 740,000 - (740,000) - Assets
Ningxia industry revitalization and
technology reconstruction funds 14,360,000 - (3,295,000) 11,065,000 Assets
Industry revitalization and technology
reconstruction specific funds 21,330,000 - - 21,330,000 Assets
Wine base liquor brewage project 10,478,990 - (1,434,874) 9,044,116 Assets
WuYouYiXin industrial cluster specific funds 180,000 - (60,000) 120,000 Assets
Changyu chateau project funds 19,818,600 - (3,702,000) 16,116,600 Assets
Wine electronic tracking system
specific funds 5,860,527 - (667,053) 5,193,474 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 - (1,100) 62,900 Assets
Information system construction
project technology funds 5,800,000 - (580,000) 5,220,000 Assets
Integration projects subsidies - 100,000 - 100,000 Income
Cross-border e-Business projects subsidies - 2,200,000 (20,560) 2,179,440 Income
Wine grape subsidies - 470,000 - 470,000 Income
Modern agriculture grape production
development subsidies - 324,000 - 324,000 Income
Agricultural technology subsidies - 750,000 (117,600) 632,400 Income
Grape base construction project _______ - ______
2,600,000 _______
(520,000) _______
2,080,000 Assets
Total 96,526,842 6,444,000 (14,547,132) 88,423,710
_______ ______ _______ _______
Less: Non-current liabilities due within one year _______
12,915,801 _______
12,398,718
Other non-current liabilities 83,611,041 76,024,992
_______ _______
As at 31 December 2014, the Group recognise current liability for deferred income to be
accounted in profit or loss within one year, and recognise non-current liability for deferred income
to be accounted in profit or loss over one year.
- 53 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
24. Other payables
(1) Natures of other payables are as follows
Closing balance Opening balance
RMB RMB
Deposit from distributors 134,470,408 215,888,735
Payables for equipment and construction 90,857,839 49,195,300
Payables for transportation 24,388,114 13,937,729
Royalty fee 77,809,993 78,986,198
Advertising costs 43,488,770 51,854,647
Other loans 22,522,636 22,522,636
Employee deposit 10,005,000 2,012,959
Deposits from suppliers 2,263,984 2,565,206
Payables for contracting fee 27,132,371 22,159,875
Others 36,865,202
__________ 38,178,345
__________
469,804,317
__________ 497,301,630
__________
(2) Description of significant other payables aged more than one year
Company Amount Reasons
RMB
Beijing Qinglang agriculture science and technology
development limited company 18,630,431 Other loans
Beijing Qinglang agriculture science and technology 9,516,214 Payables for contracting fee
development limited company
Yantai De'an Investment Company Limited 3,892,205 Other loans
Yantai De'an Investment Company Limited 3,245,832
_________ Payables for contracting fee
35,284,682
_________
- 54 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
25. Long-term borrowings
Categories of long-term borrowings
Closing balance Opening balance
RMB RMB
Secured loans with securities under the custody of lenders 119,912,800 -
Unsecured and non-guaranteed loans 89,467,200
__________ -
______
209,380,000 -
______
__________
As at 31 December 2014, secured loan 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 HKD 152,000,000(equivalent to RMB
119,912,800) with quarterly paid interest rate of the 3 months Hong Kong interbank offered rates
plus 195 basis points and borrowing period from 4 July 2014 to 3 July 2016. As at 31 December
2014, the interest rate of secured loan is 2.4%.
As at 31 December 2014, credit loan of EUR 12,000,000 (equivalent to RMB 89,467,200) is
borrowed by the Company from Yantai Branch of ICBC. Monthly paid interest rate is 6 months
benchmark London interbank offered rate plus 355 basis points and borrowing period is from 1
October 2014 to 29 September 2017. As at 31 December 2014, the interest rate of credit loan is 3.7%.
As at 31 December 2014, the group's long-term borrowings are all floating rate loans.
26. Other non-current liabilities
Closing balance Opening balance
RMB RMB
Employee benefit 3,998,352
_________ 4,755,794
_________
As at 31 December 2014, employee benefit represents deposit from bonus accrued for managers
and above. According to the bonus payment schedule of 2014, the bonus is expected to be paid
during 2016 to 2017.
- 55 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
27. Share capital
2014
Opening balance Increase Decrease Closing balance
RMB 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
and total shares 685,464,000
_________ -
______ -
______ 685,464,000
_________
2013
Opening balance Increase Decrease Closing balance
RMB 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
and total shares 685,464,000
_________ -
______ -
______ 685,464,000
_________
28. Capital reserve
2014
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Share premium 557,222,454 - - 557,222,454
Other 5,916,588
_________ -
______ -
______ 5,916,588
_________
Total 563,139,042
_________ -
______ -
______ 563,139,042
_________
2013
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Share premium 557,222,454 - - 557,222,454
Other 4,916,588
_________ 1,000,000
_______ -
______ 5,916,588
_________
Total 562,139,042
_________ 1,000,000
_______ -
______ 563,139,042
_________
According to Xing Cai (Qi) Fa [2009]1160, Ningxia Wine Co.Ltd. ("Ningxia Wine") recognised
government grant of RMB1,000,000 into capital reserve. The government grant is obtained for 3
years in 2013 and was previously recognised in deferred income.
- 56 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
29. Other comprehensive income
2014
2014
Less: last year other Post-tax Post-tax
Before-tax comprehensive income Less: attributable attributable
Items Opening balance amount in P/L current year tax expense to parent to NCI Closing balance
Other comprehensive
income to be reclassified
to profit and loss (2,803,271) - - (2,803,271) - (2,803,271)
Foreign currency statement
translation difference - (2,803,271) - - (2,803,271) - (2,803,271)
____ _____ ____ ____ _____ ____ _____
30. 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 2014.
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.
31. Retained earnings
Closing balance Opening balance
RMB RMB
Retained earnings brought forward 4,616,944,663 4,322,769,136
Add: profit attributable to shareholders of the Company 977,707,711 1,048,185,927
Less: Dividends paid in respect prior year's profit -
Withdrawal of legal surplus (342,732,000) (754,010,400)
Conversion of ordinary share dividends ____________ ____________-
Retained earnings carried forward 5,251,920,374
____________ 4,616,944,663
____________
- 57 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
31. Retained earnings - continued
(1) Appropriation to statutory surplus reserve
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.
(2) Appropriation to surplus reserve by subsidiaries
As at 31 December 2014, the balance of the Group's unappropriated profits include appropriation
to surplus reserve by subsidiaries amounting to RMB 49,484,644 (31 December 2013: RMB
37,554,671).
(3) Profit distribution decided after the balance sheet date
According to a proposal of the board of directors approved on 25 April 2015, on the basis of
685,464,000 issued shares in 2014, cash dividends of RMB 4.4 for every 10 share will be
distributed to all the shareholders. The aggregate amount of cash dividend is RMB301,604,160. The
above proposal regarding dividends distribution is yet to be approved in a shareholders' meeting.
32. Operating income and costs
Operating income is analyzed as follows:
2014 2013
RMB RMB
Principal operating income 4,113,169,270 4,273,801,693
Other operating income 43,558,255
____________ 47,146,879
____________
4,156,727,525
____________ 4,320,948,572
____________
Operating cost is analyzed as follows:
2014 2013
RMB RMB
Principal operating cost 1,354,777,577 1,336,631,197
Other operating cost 17,667,035
____________ 21,266,802
____________
1,372,444,612
____________ 1,357,897,999
____________
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.
- 58 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
33. Taxes and surcharges
2014 2013
RMB RMB
Consumption tax 171,424,114 150,438,896
Business Tax 2,853,114 2,595,076
City construction tax 51,051,930 44,937,923
Education fee and surcharges 36,830,754 31,426,897
Others 7,286,862
__________ 6,995,372
__________
269,446,774
__________ 236,394,164
__________
For detail standards of tax rate please refer to Notes V Tax.
34. Selling expenses
2014 2013
RMB RMB
Advertising costs 466,868,778 592,734,876
Freight 120,998,488 126,085,723
Salary and employee benefit 183,841,797 181,783,664
Trademark fee 77,809,993 78,986,198
Warehouse leasing expenses 50,816,255 37,714,861
Travelling expenses 20,986,441 20,927,235
Commission 2,926,165 13,828,552
Others 81,761,447
____________ 88,775,041
____________
1,006,009,364
____________ 1,140,836,150
____________
- 59 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
35. General and administrative expense
2014 2013
RMB RMB
Salary and employee benefit 42,752,029 39,539,807
Insurance fee 28,953,319 29,625,036
Leasing expenses 11,063,572 7,337,569
Depreciation 33,086,559 24,694,962
Amortization 10,961,304 8,396,636
Administrative expenses 14,472,830 13,706,767
Travelling expenses 5,290,745 6,604,787
Entertainment fee 3,786,968 3,964,265
Property tax, stamp duty and other taxes 13,585,138 11,118,372
Maintenance fee 16,559,436 15,723,166
Green fee 16,207,197 21,275,912
Contracting fee 16,539,989 18,415,497
Technology development fee 3,057,225 4,149,451
Service fee 4,158,814 5,890,437
Cleaning fee 6,860,665 4,875,096
Others 29,644,228
__________ 30,181,190
__________
256,980,018
__________ 245,498,950
__________
36. Loss on impairment of assets
2014 2013
RMB RMB
Reversal of impairment loss (192,908) (607,571)
Inventory impairment (reversal) 2,188,785 (2,242,991)
Impairment of available for sale assets -
_________ 5,000,000
_________
1,995,877
_________ 2,149,438
_________
37. Financial income
2014 2013
RMB RMB
Interest income (23,614,179) (27,620,072)
Exchange difference (7,031,076) (6,632,540)
Less: Interest expenses 12,298,953 12,681,058
Bank charges 1,089,581
__________ 2,871,197
__________
(17,256,721)
__________ (18,700,357)
__________
- 60 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
38. Non-operation income
Recognized in
extraordinary
2014 2013 profit and loss
RMB RMB RMB
Gains on disposal of non-current assets 121,113 271,989 121,113
Including: gain on disposal of plant
property and equipment 121,113 271,989 121,113
Government grants 40,545,714 36,659,754 40,545,714
Penalty income 637,531 210,757 637,531
Others 2,692,047
_________ 4,966,226
_________ 2,692,047
_________
43,996,405
_________ 42,108,726
_________ 43,996,405
_________
Government grants recognized in the income statement is as follows:
Assets/income
2014 2013 related
RMB RMB
Major projects support fund 6,878,819 1,680,000 Assets related
Small and medium enterprises
support fund 5,010,153 3,902,827 Assets related
Tax refund 18,259,690 22,163,624 Income related
Others 10,397,052
_________ 8,913,303
_________ Income related
40,545,714
_________ 36,659,754
_________
39. Non-operation expenses
Recognized in
extraordinary
2014 2013 profit and loss
RMB RMB RMB
Loss on disposal of non-current assets 5,207,658 678,016 5,207,658
Including: losses from disposal
of fixed assets 114,390 678,016 114,390
losses from disposal
of biological assets 5,093,268 - 5,093,268
Donation 434,352 291,729 434,352
Others 2,728,239
_________ 904,478
_________ 2,728,239
_________
8,370,249
_________ 1,874,223
_________ 8,370,249
_________
- 61 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
40. Income tax
2014 2013
RMB RMB
Current income tax 421,450,258 357,077,756
Deferred income tax (96,424,212)
__________ (8,156,952)
__________
325,026,046
__________ 348,920,804
__________
Reconciliation between income tax expenses and profits is as follows:
2014 2013
RMB RMB
Profit before tax 1,302,733,757 1,397,106,731
Income tax expense at statutory tax rate 25% 325,683,439 349,276,683
Effect of different tax rates applied by certain subsidiaries (1,356,542) (2,677,153)
Non-taxable income - (131,500)
Non-deductible expenses 699,149
____________ 2,452,774
____________
Income tax expenses at the Group's effective tax rate 325,026,046
____________ 348,920,804
____________
41. Basic and dilutive 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.
2014 2013
RMB RMB
Earnings
Consolidated profit attributable to ordinary
shareholders of the Company 977,707,711
____________ 1,048,185,927
____________
Shares
Weighted average number of outstanding
ordinary shares 685,464,000
____________ 685,464,000
____________
Basic earnings per share 1.43
____________ 1.53
____________
The Company does not have potential dilutive ordinary shares.
From the balance sheet date to the date of approval of this report, there are no subsequent events
which would affect the numbers of the weighted average number of outstanding of ordinary
shares.
- 62 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
42. Notes to consolidated cash flow statement
(1) Cash received relating to other operating activities:
2014 2013
RMB RMB
Government grants 22,286,024 42,783,729
Others 2,257,523
_________ 5,176,982
_________
24,543,547
_________ 47,960,711
_________
(2) Cash paid relating to other operating activities:
2014 2013
RMB RMB
Selling expenses 726,232,000 944,945,796
General and administrative expenses 107,585,895 102,626,714
Others 11,130,693
____________ 11,982,799
____________
844,948,588
____________ 1,059,555,309
____________
(3) Cash paid relating to other financing activities:
2014 2013
RMB RMB
Cash liquidation of trust scheme - 150,945,000
Pledged security of short-term borrowing 125,000,000
__________ 125,000,000
__________
125,000,000
__________ 275,945,000
__________
- 63 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
43. Supplementary information to consolidated cash flow statement
(i) Supplementary information to consolidated cash flow statement
2014 2013
RMB RMB
Cash flows from operating activities
calculated by adjusting the net profit:
Net profit 977,707,711 1,048,185,927
Add: Loss for impairment of assets 1,995,877 2,149,438
Depreciation of fixed assets 127,149,785 125,540,127
Amortization of intangible assets 11,396,496 6,839,668
Amortization of Biological assets 865,855 846,620
Amortization of long-term prepaid expenses 15,799,878 17,780,973
Loss/(gain) on disposal of property
plant and equipment 5,086,545 406,027
Finance income (7,012,502) (21,571,554)
Increase/(decrease) in deferred tax assets (95,653,733) (8,156,952)
Decrease/(increase) in deferred tax liabilities (770,479) -
Decrease/(increase) in inventories 31,552,254 149,746,995
Decrease/(increase) in operating receivables 48,497,684 (49,235,221)
Increase/(decrease) in operating payables (46,532,075)
____________ (537,457,741)
____________
Net cash flows from operating activities 1,070,083,296
____________ 735,074,307
____________
(ii) Cash and cash equivalent
Closing balance Opening balance
RMB RMB
Closing balance of cash and bank 1,145,365,071 1,367,818,182
Less:
restricted bank deposits 2,643,519 2,609,237
restricted other monetary funds 135,004,018 131,257,285
deposit with a period of over three months 47,245,260
____________ 277,392,728
____________
Closing balance of cash and cash equivalents 960,472,274
____________ 956,558,932
____________
- 64 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
43. Supplementary information to consolidated cash flow statement - continued
(ii) Cash and cash equivalent - continued
Closing balance Opening balance
RMB RMB
Cash 960,472,274 956,558,932
Including:
Cash on hand 101,660 772,817
Bank deposits on demand 960,370,614
__________ 955,786,115
__________
Closing balance of cash and cash equivalents 960,472,274
__________ 956,558,932
__________
44. Assets with restriction of ownership
Closing balance Opening balance
RMB RMB
Cash and bank 137,647,537
__________ 133,866,522
__________
As at 31 December 2014, cash and bank balances with restriction of ownership include: the
Group's housing fund of RMB2,643,519, security of RMB125,000,000 pledged for a short-term
borrowing from HSBC of HKD 152,000,000 (translated as RMB 119,912,800), refundable
deposit for notes payable of Shi He Zi Chateau of RMB 10,000,000, and company cards deposit
guarantee of RMB4,018.
45. Foreign monetary items
Closing foreign Exchange Closing translated
Items currency balance rate RMB balance
Cash and bank
EUR 46,148
__________ 7.4556
______ 344,061
__________
Long-term borrowing
EUR 12,000,000 7.4556 89,467,200
HKD 152,000,000 0.7889 119,912,800
__________ ______ __________
- 65 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VII. CHANGE IN CONSOLIDATION SCOPE
Change in consolidation scope due to other reasons (new established subsidiaries)
Name Place and date of registration Legal representative Business nature Registered capital Principal activities Incorporate code
Subsidiaries acquired by establishment：
Francs Champs 17 December 2014 Zhou, Hongjiang Investment EUR 8,575,000 Investment、production N/A
Participations SAS("Francs Champs") Cognac, France Sales sales and export
Lanzhou Changyu Wine Sales 10 October 2014 Yang, Ming Sales RMB100,000 Sales of wine 31607272-1
Co. Ltd ("Lanzhou Sales") Lanzhou Gansu, China
Beijing Retailing Co. Ltd 28 April 2014 Pan, Jianfu Sales RMB500,000 Wholesale of pre-packed foods 09890880-9
("Beijing Retailing") Beijing, China
Tianjin Changyu Pioneer 8 November 2013
Sales Co. Ltd ("Tianjin Pioneer")* Tianjin, China Li, Haiping Sales RMB500,000 Wholesale of pre-packed foods 08301099-1
Fuzhou Changyu Pioneer 27 May 2014
Sales Co. Ltd ("Fuzhou Pioneer") Fuzhou Fujian, China Sun, Guiyang Sales RMB500,000 Wholesale of pre-packed foods 07976834-5
Nanjing Changyu Pioneer 12 November 2013
Sales Co. Ltd ("Nanjing Pioneer")* Nanjing Jiangsu, China Zhang, Fuqian Sales RMB500,000 Wholesale of pre-packed foods 08416861-9
Xianyang Changyu Pioneer 6 March 2014
Sales Co. Ltd ("Xianyang Pioneer") Xianyang Shanxi, China Wei, Binsheng Sales RMB500,000 Wholesale of pre-packed foods 08818837-7
Shenyang Changyu Pioneer 16 April 2014
Sales Co. Ltd ("Shenyang Pioneer") Shenyang Liaoning, China Xiao, Yongjie Sales RMB500,000 Wholesale of pre-packed foods 09789141-9
Jinan Changyu Pioneer 16 October 2013
Sales Co. Ltd ("Jinan Pioneer")* Jinan Shandong, China Li, Yingjun Sales RMB500,000 Wholesale of pre-packed foods 07617957-x
Shanghai Changyu Pioneer 15 November 2013
Sales Co. Ltd ("Shanghai Pioneer")* Shanghai, China Zhai, Deqiang Sales RMB500,000 Wholesale of pre-packed foods 08209497-8
Fuzhou Changyu Pioneer 16 October 2013
Sales Co. Ltd ("Fuzhou Pioneer")* Fushun Jiangxi, China Li, Shoukun Sales RMB500,000 Wholesale of pre-packed foods 07903537-9
Shijiazhuang Changyu Pioneer Sales 16 October 2013
Co. Ltd ("Shijiazhuang Pioneer")* Shijiazhuang Hebei, China Yi, Longhai Sales RMB500,000 Wholesale of pre-packed foods 08131179-0
Hangzhou Yuzefeng Sales 11 April 2014
Co. Ltd ("Hangzhou Yuzefeng") Hangzhou Zhejiang, China Xiao, Zhenbo Sales RMB500,000 Wholesale of pre-packed foods 09760041-5
Jilin Changyu Pioneer Sales 21 October 2013
Co. Ltd ("Jilin Pioneer")* Changchun Jilin, China Wang, Bo Sales RMB500,000 Wholesale of pre-packed foods 07364313-8
Beijing Changyu Pioneer Sales 12 March 2014
Co. Ltd ("Beijing Pioneer") Beijing, China Pan, Jianfu Sales RMB500,000 Wholesale of pre-packed foods 06125269-0
Haerbin Changyu Pioneer Sales 17 June 2014
Co. Ltd ("Haerbin Pioneer") Haerbin Heilongjiang, China Tan, Jun Sales RMB500,000 Wholesale of pre-packed foods 30082468-5
Hunan Changyu Pioneer Sales 10 March 2014
Co. Ltd ("Hunan Pioneer") Changsha Hunan, China Sun, Junming Sales RMB2,000,000 Wholesale of pre-packed foods 09446465-7
Yinchuan Changyu Pioneer Sales 21 November 2013
Co. Ltd ("Yinchuan Pioneer")* Yinchuan Ningxia, China Ruan, Shili Sales RMB500,000 Wholesale of pre-packed foods 07384874-X
Kunming Changyu Pioneer Sales 31 October 2013
Co. Ltd ("Kunming Pioneer")* Kunming Yunnan, China Ma, Long Sales RMB500,000 Wholesale of pre-packed foods 08042997-3
Chongqing Changyu Pioneer Sales 20 August 2014
Co. Ltd ("Chongqing Pioneer") Chongqing, China Wang, Wenkai Sales RMB500,000 Wholesale of pre-packed foods 30506782-0
Zhengzhou Changyu Pioneer Sales 14 October 2014
Co. Ltd ("Zhengzhou Pioneer") Zhengzhou Henan, China Bi, Jianhui Sales RMB500,000 Wholesale of pre-packed foods 31730946-0
Wuhan Changyu Pioneer Sales 12 September 2014
Co. Ltd ("Wuhan Pioneer") Wuhan Hubei, China Yu, Jun Sales RMB500,000 Wholesale of pre-packed foods 09200921-2
Taiyuan Changyu Pioneer Sales 3 September 2014
Co. Ltd ("Taiyuan Pioneer") Taiyuan Shanxi, China Zhang, Shuzheng Sales RMB500,000 Wholesale of pre-packed foods 39792586-0
Huhehaote Changyu Pioneer Sales 18 July 2014
Co. Ltd ("Huhehaote Pioneer") Huhehaote Inner Mongolia, China Han, Yong Sales RMB500,000 Wholesale of pre-packed foods 39776001-5
Chengdu Changyu Pioneer Sales 10 September 2014
Co. Ltd ("Chengdu Pioneer") Chengdu Sichuan, China Sun, Xiaopu Sales RMB500,000 Wholesale of pre-packed foods 39562291-1
Nanning Changyu Pioneer Sales 10 December 2014
Co. Ltd ("Nanning Pioneer") Nanning Guangxi, China Dong, Houxin Sales RMB500,000 Wholesale of pre-packed foods 32266009-5
* At 31 December 2013, these subsidiaries had completed registration but paid share capital
in 2014, therefore they are included in the consolidation scope of the Group in 2014.
- 66 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VIII. INTERESTS IN OTHER ENTITIES
1. Structure of the Group
Equity interest owned
by the company
Name Address Place of registration Nature Direct Indirect Acquisition method
Xinjiang Tianzhu (a) Shihezi, Xinjiang, China Shihezi, Xinjiang, China Manufacturing 60% - Subsidiary acquired in business combination
under non-common control
Fransac Sales Cognac, France Cognac, France Trading 100% - Subsidiary acquired in business combination
under non-common control
Beijing Changyu Sales and distribution Co., Ltd Beijing, China Beijing, China Sales 100% - Subsidiaries acquired by establishment
("Beijing Sales")
Yantai Kylin Packaging Co., Ltd. Yantai, Shandong, China Yantai, Shandong, China Manufacturing 100% - Subsidiaries acquired by establishment
("Kylin Packaging")
Yantai Changyu-Castel Wine Chateau Co., Ltd Yantai, Shandong, China Yantai, Shandong, China Manufacturing 70% - Subsidiaries acquired by establishment
("Changyu Chateau") (b)
Changyu (Jingyang) Wine Co., Ltd. Xianyang, Shanxi, China Xianyang, Shanxi, China Manufacturing 90% 10% Subsidiaries acquired by establishment
("Jingyang Wine")
Yantai Changyu Pioneer Wine Sales Co., Ltd. Yantai, Shandong, China Yantai, Shandong, China Sales 100% - Subsidiaries acquired by establishment
("Sales Company")
Langfang Development Zone Castel-Changyu Wine Lanfang, Hebei, China Lanfang, Hebei, China Manufacturing 39% 10% Subsidiaries acquired by establishment
Co., Ltd ("Langfang Castel") (c)
Changyu (Jingyang) Wine Sales Co., Ltd. Xianyang, Shanxi, China Xianyang, Shanxi, China Sales 10% 90% Subsidiaries acquired by establishment
("Jingyang Sales")
Langfang Changyu Pioneer Wine Sales Co., Ltd Lanfang, Hebei, China Lanfang, Hebei, China Sales 10% 90% Subsidiaries acquired by establishment
("Langfang Sales")
Shanghai Changyu Sales and distribution Co., Shanghai, China Shanghai, China Sales 30% 70% Subsidiaries acquired by establishment
Ltd. ("Shanghai Sales")
Beijing Changyu AFIP Agriculture development Miyun, Beijing, China Miyun, Beijing, China Sales - 100% Subsidiaries acquired by establishment
Co., Ltd ("Agriculture Development")
Beijing Changyu AFIP Wine Chateau Co., Ltd. (d) Beijing, China Beijing, China Manufacturing 70% - Subsidiaries acquired by establishment
Yantai ("Beijing Chateau") Changyu Wine Sales Yantai, Shandong, China Yantai, Shandong, China Sales 90% 10% Subsidiaries acquired by establishment
Co., Ltd. ("Wines Sales")
Yantai Changyu Pioneer International Co., Ltd. Yantai, Shandong, China Yantai, Shandong, China Sales 70% 30% Subsidiaries acquired by establishment
("Pioneer International")
Hangzhou Changyu Wine Sales Co., Ltd. Hangzhou, Zhejiang, China Hangzhou, Zhejiang, China Sales - 100% Subsidiaries acquired by establishment
("Hangzhou Changyu")
Ningxia Growing Yinchuang, Ningxia, China Yinchuang, Ningxia, China Planting 100% - Subsidiaries acquired by establishment
Huanren Changyu National Wines Sales Co., Ltd. Benxi, Liaoning, China Benxi, Liaoning, China Sales 100% - Subsidiaries acquired by establishment
("National Wines")
Liaoning Changyu Ice Wine Chateau Co., Ltd. Benxi, Liaoning, China Benxi, Liaoning, China Manufacturing 51% - Subsidiaries acquired by establishment
("Ice Chateau") (e)
Yantai Development Zone Changyu Trading Co., Yantai, Shandong, China Yantai, Shandong, China Sales - 100% Subsidiaries acquired by establishment
Ltd ("Development Zone Trading")
Shenzhen Changyu Wine Marketing Ltd. Shenzhen, Guangdong, China Shenzhen, Guangdong, China Sales - 100% Subsidiaries acquired by establishment
("Shenzhen Marketing")
Yantai Changyu Fushan Trading Yantai, Shandong, China Yantai, Shandong, China Sales - 100% Subsidiaries acquired by establishment
Company("Fushan Trading")
Beijing AFIP Meeting Center ("Meeting Center") Miyun, Beijing, China Miyun, Beijing, China Service - 100% Subsidiaries acquired by establishment
Beijing AFIP Tourism and Culture Miyun, Beijing, China Miyun, Beijing, China Tourism 70% - Subsidiaries acquired by establishment
Company("AFIP Tourism") (f)
Ningxia Wine Yinchuan, Ningxia, China Yinchuan, Ningxia, China Manufacturing 100% - Subsidiaries acquired by establishment
Yantai Changyu DingLuoTe Chateau. Yantai, Shandong China Yantai, Shandong China Retail and 100% - Subsidiaries acquired by establishment
("Ding Luo Te Chateau") Sales
Qing Tong Xia Changyu Wine Marketing Qing Tong Xia, Ningxia, China Qing Tong Xia, Ningxia, China Sales - 100% Subsidiaries acquired by establishment
Ltd("Qing Tong Xia Sales")
Shi He Zi Chateau Shihezi, Xinjiang, China Shihezi, Xinjiang, China Manufacturing 100% - Subsidiaries acquired by establishment
Ningxia Moser 15th Changyu Wine Chateau Co., Yinchuan, Ningxia, China Yinchuan, Ningxia, China Manufacturing 100% - Subsidiaries acquired by establishment
Ltd. (" Ningxia Chateau")
Shanxi Changyu Rina Castle Chateau Co., Ltd. Xianyang, Shanxi, China Xianyang, Shanxi, China Manufacturing 100% - Subsidiaries acquired by establishment
(" Chang'an Chateau")
Yantai Changyu Wine Research and Development Yantai, Shandong China Yantai, Shandong China Manufacturing 100% - Subsidiaries acquired by establishment
Co., Ltd. ("R&D Centre")
Changyu (HuanRen) Wine Co., Ltd Benxi LiaoNing China Benxi LiaoNing China Wine production 100% - Subsidiaries acquired by establishment
("Huan Ren Wine") Projecting
Xinjiang Changyu Sales Co., Ltd Shihezi Xinjiang China Shihezi Xinjiang China Sales - 100% Subsidiaries acquired by establishment
("Xinjiang Sales")
Xinjiang Changyu Winery Co., Ltd Shihezi Xinjiang China Shihezi Xinjiang China Manufacturing - 100% Subsidiaries acquired by establishment
("Xinjiang Winery")
Ningxia Changyu Trading Co., Ltd Yinchuan Ningxia China Yinchuan Ningxia China Sales - 100% Subsidiaries acquired by establishment
("Ningxia Trading")
Shanxi Changyu Rina Wine Sales Co., Ltd Xianyang Shanxi China Xianyang Shanxi China Sales - 100% Subsidiaries acquired by establishment
("Shanxi Sales")
Penglai Changyu Wine Sales Co., Ltd Penglai Shandong China Penglai Shandong China Sales - 100% Subsidiaries acquired by establishment
("Penglai Sales")
Laizhou Changyu Wine Sales Co., Ltd Laizhou Shandong China Laizhou Shandong China Sales - 100% Subsidiaries acquired by establishment
("Laizhou Sales")
Francs Champs Cognac, France Cognac, France Investment and 100% - Subsidiaries acquired by establishment
trading
Lanzhou Sales Lanzhou Gansu, China Lanzhou Gansu, China Sales 100% - Subsidiaries acquired by establishment
Beijing Retailing Beijing, China Beijing, China Sales - 100% Subsidiaries acquired by establishment
Tianjin Pioneer Tianjin, China Tianjin, China Sales - 100% Subsidiaries acquired by establishment
Fuzhou Pioneer Fuzhou Fujian, China Fuzhou Fujian, China Sales - 100% Subsidiaries acquired by establishment
Nanjing Pioneer Nanjing, Jiangsu, China Nanjing, Jiangsu, China Sales - 100% Subsidiaries acquired by establishment
Xianyang Pioneer Xianyang, Shanxi, China Xianyang, Shanxi, China Sales - 100% Subsidiaries acquired by establishment
Shenyang Pioneer Shenyang, Liaoning, China Shenyang, Liaoning, China Sales - 100% Subsidiaries acquired by establishment
Jinan Pioneer Jinan, Shandong, China Jinan, Shandong, China Sales - 100% Subsidiaries acquired by establishment
Shanghai Pioneer Shanghai, China Shanghai, China Sales - 100% Subsidiaries acquired by establishment
Fuzhou Pioneer Fuzhou, Jiangxi, China Fuzhou, Jiangxi, China Sales - 100% Subsidiaries acquired by establishment
Shijiazhuang Pioneer Shijiazhuang, Hebei, China Shijiazhuang, Hebei, China Sales - 100% Subsidiaries acquired by establishment
Hangzhou Yuzefeng Hangzhou, Zhejiang, China Hangzhou, Zhejiang, China Sales - 100% Subsidiaries acquired by establishment
Jilin Pioneer Changchun, Jilin, China Changchun, Jilin, China Sales - 100% Subsidiaries acquired by establishment
Beijing Pioneer Beijing, China Beijing, China Sales - 100% Subsidiaries acquired by establishment
Haerbin Pioneer Haerbin, Heilongjiang, China Haerbin, Heilongjiang, China Sales - 100% Subsidiaries acquired by establishment
Hunan Pioneer Changsha, Hunan, China Changsha, Hunan, China Sales - 100% Subsidiaries acquired by establishment
Yinchuan Pioneer Yinchuan, Ningxia, China Yinchuan, Ningxia, China Sales - 100% Subsidiaries acquired by establishment
Kunming Pioneer Kunming, Yunnan, China Kunming, Yunnan, China Sales - 100% Subsidiaries acquired by establishment
Chongqing Pioneer Chongqing, China Chongqing, China Sales - 100% Subsidiaries acquired by establishment
Zhengzhou Pioneer Zhengzhou, Henan, China Zhengzhou, Henan, China Sales - 100% Subsidiaries acquired by establishment
Wuhan Pioneer Wuhan, Hubei, China Wuhan, Hubei, China Sales - 100% Subsidiaries acquired by establishment
Taiyuan Pioneer Taiyuan, Shanxi, China Taiyuan, Shanxi, China Sales - 100% Subsidiaries acquired by establishment
Huhehaote Pioneer Huhehaote Inner Mongolia, China Huhehaote Inner Mongolia, Sales - 100% Subsidiaries acquired by establishment
China
Chengdu Pioneer Chengdu, Sichuan, China Chengdu, Sichuan, China Sales - 100% Subsidiaries acquired by establishment
Nanning Pioneer Nanning, Guangxi, China Nanning, Guangxi, China Sales - 100% Subsidiaries acquired by establishment
- 67 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VIII. INTERESTS IN OTHER ENTITIES - continued
1. Structure of the Group - continued
Explanation in difference between holding interests and voting rights in subsidiaries:
(a) Xinjiang Tianzhu was acquired by the Company, accounting for 60% of Xinjiang
Tianzhu's equity interest. Through agreement arrangement, the Company has the full
power to control Xinjiang Tianzhu's strategic operating, investing and financing policies.
The agreement arrangement will be terminated on 31 December 2018.
(b) Changyu Chateau is a Sino-foreign joint venture established by the Company and a
foreign investor, accounting for 70% of Changyu Chateau's equity interest. Through
agreement arrangement, the Company has the full power to control Changyu Chateau's
strategic operating, investing and financing policies. The agreement arrangement will be
terminated on 31 December 2022.
(c) Langfang Chateau is a Sino-foreign joint venture established by the Company and a
foreign investor, accounting for 49% of Langfang Chateau's equity interest by the
Company and subsidiaries. Through agreement arrangement, the Company has the full
power to control Langfang Chateau's strategic operating, investing and financing policies.
The agreement arrangement will be terminated on 31 December 2022.
(d) Beijing Chateau is a limited liability company established by the Company and domestic
investors, accounting for 70% of Beijing Chateau's equity interest. Through agreement
arrangement, the Company has the full power to control Beijing Chateau's strategic
operating, investing and financing policies. The agreement arrangement will be
terminated on 2 September 2019.
(e) Ice Chateau is a Sino-foreign joint venture established by the Company and a foreign
investor, accounting for 51% of Ice Chateau's equity interest. Through agreement
arrangement, the Company has the full power to control Ice Chateau's strategic operating,
investing and financing policies. The agreement arrangement will be terminated on 31
December 2016.
(f) AFIP Tourism is a limited liability company established by the Company and domestic
investors, accounting for 70% of AFIP Tourism's equity interest. Through agreement
arrangement, the Company has the full power to control AFIP Tourism's strategic
operating, investing and financing policies. The agreement arrangement will be
terminated on 2 September 2019.
- 68 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VIII. INTERESTS IN OTHER ENTITIES - continued
2. Non-wholly owned subsidiaries
Balance of the interests
The non-controlling of minority
Name shareholder ratio shareholders
Xinjiang Tianzhu 40% 56,093,912
Changyu Chateau 30% 12,365,016
Langfang Castel 51% 22,702,522
Beijing Chateau 30% 35,293,868
Ice Chateau 49% 33,319,062
AFIP Tourism 30% 2,966,399
Explanation in difference between share percentage and voting power of non-controlling interests:
Please see Note VIII -1.
3. Key financial information of important non-wholly owned subsidiaries
Closing balance Opening balance
Current Non-current Current Non-current Total Current Non-current Current Non-current Total
Name assets assets Total assets liabilities liabilities liabilities assets assets Total assets liabilities liabilities liabilities
Xinjiang Tianzhu 86,541,666 89,469,815 176,011,481 7,165,015 5,336,114 12,501,129 81,239,590 92,905,274 174,144,864 6,768,637 5,336,114 12,104,751
Changyu Chateau 56,430,830 113,883,719 170,314,549 88,220,921 - 88,220,921 96,487,353 103,678,442 200,165,795 119,959,582 - 119,959,582
Langfang Castel 29,986,460 24,229,921 54,216,381 7,753,321 - 7,753,321 33,029,246 25,777,415 58,806,661 11,835,706 - 11,835,706
Beijing Chateau 113,589,773 544,577,614 658,167,387 549,595,386 2,666,835 552,262,221 117,277,848 571,558,225 688,836,073 603,812,439 - 603,812,439
Ice Chateau 43,424,068 30,796,802 74,220,870 10,073,994 100,000 10,173,994 42,713,007 29,436,139 72,149,146 9,601,850 100,000 9,701,850
AFIP Tourism 22,013,654 1,138,756 23,152,410 4,847,671 - 4,847,671 25,794,776 690,766 26,485,542 9,644,326 - 9,644,326
2014 2013
Total Operating Total Operating
Operating comprehensive activities cash comprehensive activities cash
Name income Net profit (loss) income flows Operating income Net profit(loss) income flows
Xinjiang Tianzhu 86,483,652 1,470,239 1,470,239 (5,590,904) 65,260,973 778,119 778,119 (10,112,402)
Changyu Chateau 110,684,738 1,887,415 1,887,415 30,351,075 84,862,080 1,262,260 1,262,260 (9,076,400)
Langfang Castel 50,335,802 (507,895) (507,895) (2,788,417) 60,678,547 144,551 144,551 (6,676,277)
Beijing Chateau 160,547,230 20,881,532 20,881,532 29,246,144 80,532,065 (33,684,992) (33,684,992) (41,475,520)
Ice Chateau 51,973,176 1,599,580 1,599,580 (9,712,584) 24,802,111 (3,592,759) (3,592,759) 3,251,612
AFIP Tourism 55,171,595 1,463,523 1,463,523 16,993,824 97,928,987 12,535,965 12,535,965 (30,901,914)
IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT
The Group's major financial instruments include cash and bank, notes receivable, accounts
receivable, interest receivables, other receivables, other non-current assets, short-term borrowings,
notes payables, accounts payable, other payables, interest payables, and long-term borrowings.
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.
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.
- 69 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT - continued
1. Risk management objectives and policies
The Group's risk management objectives are to achieve a proper balance between risks and yield,
minimise the adverse impacts of risks on the Group's operation performance, and maximise the
benefits of the shareholders and other stakeholders. Based on these risk management objectives,
the Group's basic risk management strategy is to identify and analyse the Group's exposure to
various risks, establish an appropriate maximum tolerance to risk, implement risk management,
and monitors regularly and effectively these exposures to ensure the risks are monitored at a
certain level.
1.1 Market risk
1.1.1 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 EUR and HKD. Several of the
Group's subsidiaries have purchases and sales denominated in EUR and HKD while the Group's
other principal activities are denominated and settled in RMB. As at 31 December 2014, the
balance of the Group's assets and liabilities are both denominated in RMB except that the assets
and liabilities set out below are denominated in EUR and HKD. Currency risk arising from the
assets and liabilities denominated in foreign currencies may have impact on the Group's
performance.
Closing balance Opening balance
RMB RMB
Bank and cash 344,061 -
Long-term borrowings 209,380,000 -
Short-term borrowings -
___________ 243,170,674
___________
The Group closely monitors the effects of changes in the foreign exchange rates on the Group's
currency risk exposures. The Group currently does not take any measures to hedge currency risk
exposures.
- 70 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT - continued
1. Risk management objectives and policies - continued
1.1 Market risk - continued
1.1.1 Currency risk - continued
Sensitivity analysis on 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'
Change in exchange rate Effect on profit equity Effect on profit equity
RMB RMB RMB RMB RMB
HKD 5% increase against RMB (5,995,640) (5,995,640) (12,158,534) (12,158,534)
HKD 5% decrease against RMB 5,995,640 5,995,640 12,158,534 12,158,534
EUR 5% increase against RMB (4,456,157) (4,456,157) - -
EUR 5% decrease against RMB 4,456,157
________ 4,456,157
________ ________- ________-
________ ________ ________ ________
1.1.2 Interest rate risk - risk of changes in cash flows
The Group's cash flow interest rate risk of financial instruments relates primarily to variable-rate
bank borrowings (see NoteVI (1) and NoteVI (25) for details). It is the Group's policy to keep its
borrowings at floating rate of interests so as to eliminate the fair value interest rate risk.
The sensitivity analysis on interest rate risk
The sensitivity analysis on interest rate risk is based on the changes in the market interest rate may
influence the interest income or expense of the variable rate financial instruments.
Management of the Group believes interest rate risk on bank deposit is not significant, therefore
does not disclose sensitivity analysis for interest rate risk.
Where all other variables are held constant, the reasonably possible changes in the interest 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
Items Change in interest rate Effect on profit owners' equity Effect on profit owners' equity
Bank borrowings 50% increase (1,044,435) (1,044,435) N/A N/A
Bank borrowings 50% decrease 1,044,435 1,044,435 N/A N/A
The Group has no floating-rate borrowings in 2013, 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.
- 71 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT - continued
1. Risk management objectives and policies - continued
1.2 Credit risk
As at 31 December 2014, the Group's maximum exposure to credit risk which will cause a
financial loss to the Group due to failure to discharge an obligation by the counterparties
In order to minimise the credit risk, the Group has adopted a policy to ensure that all sales
customers have good credit records. the Group has delegated a team responsible for determination
of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action
is taken to recover overdue debts. 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. In addition, the Group reviews the
recoverable amount of each individual trade debt at each balance sheet date to ensure that
adequate impairment losses are made for irrecoverable amounts. In this regard, the management
of the Group considers that the Group's credit risk is significantly reduced.
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 2014, 33.6% of the Group
trade receivables are due from top 5 customers (31 December 2013: 30.0%). There is no collateral
or other credit enhancement on the balance of the trade receivables of the Group.
Analysis of individually impaired financial assets
As at 31 December 2014, the Group has provided full bad debts provision for the individually
impaired account receivable due from Tiantong Security Co., Ltd., which has been in insolvency.
1.3 Liquidity risk
In the management of the liquidity risk, the Group monitors and maintains a level of cash and
cash equivalents deemed adequate by the management to finance the Group's operations and
mitigate the effects of fluctuations in cash flows. The management monitors the utilisation of
bank borrowings and ensures compliance with loan covenants.
The following is the maturity analysis for financial assets and financial liabilities held by the
Group which is based on undiscounted remaining contractual obligations:
Non-derivative financial liabilities
Less than one month 1-3 months 3-12 months 1-5 years
RMB RMB RMB RMB
Short-term borrowings 101,046,667 1,704,444 204,802,222 -
Notes payables - - 10,000,000 -
Account payables 357,811,822 - - -
Other payables 323,064,925 - 146,739,392 -
Interest payables 3,026,660 - 448,981 -
Long-term borrowings 509,814
__________ 1,002,634
_________ 4,673,295
_________ 216,691,479
__________
785,459,888
__________ 2,707,078
_________ 366,663,890
_________ 216,691,479
__________
- 72 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT - continued
1. Risk management objectives and policies - continued
1.4 Fair value disclosure - Financial assets and liabilities not measured using fair value
As at 31 December 2014, management of the Group believes that book value of financial assets
measured under amortised cost method is approximately equal to their fair value.
X. RELATED PARTY AND RELATED PARTY TRANSACTIONS
1. Parent company
Name of Type of Place of Legal Scope Registered Percentage Percentage Incorporate
parent company Relation enterprise registration representative of business capital of shares of voting rights Code
RMB % %
Cotrolling Limited
Company Company Yantai SunLiqiang Manufacturing 50,000,000 50.4 50.4 265645824
During the year ended 31 December 2014, there is no change in parent company's registered
capital, shares holding or voting power.
2. Subsidiaries: Please refer to Note V III.
3. Other related parties
Name of related parities Nature of related parties Incorporate code
Yantai Changyu Wine Culture Museum Company controlled 258258654
Co., Ltd.("Wine Culture Museum") by the same parent
Yantai Changyu International Window of the Company controlled 672208146
Wine City Co., Ltd.("Window of the Wine City) by the same parent
Yantai ShenMa Packing Co., Ltd. Company controlled 553393350
("ShenMa Packing") by the same parent
Yantai Zhongya Pharmaceutical Tonic Company controlled 726203923
Wine Co., Ltd.("Zhongya Pharmaceutical") by the same parent
- 73 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
X. RELATED PARTY AND RELATED PARTY TRANSACTIONS - continued
4. Significant related party transactions
(1) Purchases from and sales to related parties
Purchase from related parties
The content of related 2014 2013
party transactions RMB RMB
ShenMa Packing product purchase 149,536,913 194,648,978
Zhongya Pharmaceutical product purchase 5,205,207 7,960,294
Wine Culture Museum product purchase 934,085 2,618,189
Window of the Wine City product purchase 4,161,708
__________ 100,246
__________
159,837,913
__________ 205,327,707
__________
All related party transactions are based on the negotiated price.
In 2014, purchases from related parties accounted for less than 11.8% of the Group's total
purchase (2013: 11.9%)
Sales to related parties
The content of related 2014 2013
party transactions RMB RMB
Wine Culture Museum goods sales 10,111,288 5,495,959
Window of the Wine City goods sales 7,083,716 2,524,559
Zhongya Pharmaceutical goods sales 2,596,070 1,890,313
ShenMa Packing goods sales 1,684,486
__________ 1,492,538
__________
21,475,560
__________ 11,403,369
__________
All related party transactions are based on the negotiated price.
In 2014, sales to related parties accounted for less than 1% of the Group's total sales (2013: less
than 1%).
(2) Property leased from a related party
The Group as Lessee
2014 Assets leased Beginning date Ending date Rental expense
Changyu Group Company Warehouse and office building 2012/1/1 2016/12/31 5,858,000
______
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 2014, the rental payable to Changyu Group
Company amounted to RMB5,858,000 (2013: RMB5,858,000).
- 74 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
X. RELATED PARTY AND RELATED PARTY TRANSACTIONS - continued
4. Significant related party transactions - continued
(3) Other significant related party transactions
Note 2014 2013
RMB RMB
Royalty fee (a) 77,809,993 78,986,198
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 2014, royalty fee paid to related company accounted for 100% of the Group (2013:
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 2014, the patents usage fee payable to Changyu Group Company amounted to
RMB50,000 (2013: RMB50,000).
During 2014, patent fee paid to related company accounted for 100% of the Group (2013:
100%).
(4) Remuneration of the management
2014 2013
RMB RMB
Remuneration of the management 8,884,459
_________ 8,292,000
________
- 75 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
X. RELATED PARTY AND RELATED PARTY TRANSACTIONS - continued
5. Balance due from/ to related parties
(1) Balance due from related parties
Closing balance Opening balance
Accounts receivable Balance Provision Balance Provision
RMB RMB RMB RMB
Zhongya Pharmaceutical 1,378,843 2,567,129 -
Shen Ma Packing. 15,820 911,197 -
Window of the Wine City _______- _____ 42,478
_______ -
_____
1,394,663
_______ _____ 3,520,804
_______ -
_____
The above amounts due from related parties are unsecured, interest-free and have no fixed terms
of repayment.
(2) Balance due to related parties
Closing balance Opening balance
RMB RMB
Accounts payable
Shen Ma Packing 53,027,076 46,370,178
Zhongya Pharmaceutical 6,550,051 4,520,101
Wine Culture Museum 1,043,208 177,526
Window of the Wine City 59,668
_________ -
_________
Total 60,680,003
_________ 51,067,805
_________
Other payable
Royalty fee payable to parent company 77,809,993 78,986,198
Shen Ma Packing 200,000 165,230
Zhongya Pharmaceutical -
_________ 52,760
_________
Total 78,009,993
_________ 79,204,188
_________
The above amounts due to related parties are unsecured, interest-free and have no fixed terms of
repayment.
- 76 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XI. COMMITMENT
1. Important commitments
(1) Capital commitments
Closing balance Opening balance
RMB'000 RMB'000
Capital commitments 687,460
________ 1,253,880
________
(2) Operating lease commitment
As lessee
Significant operating lease: Total future minimal lease payments under non-cancelable contract
with lessor are as follow:
Closing balance Opening balance
RMB'000 RMB'000
Within 1 year 25,505 23,612
1 to 2 years 10,271 11,208
2 to 3 years 7,252 9,726
3 years and above 21,262
_________ 28,390
______
64,290
_________ 72,936
______
2. Contingent liability
The Group and the Company do not have any significant contingent liabilities as at balance sheet
date.
XII. POST BALANCE SHEET DATE EVENT
According to the board of the directors resolution raised on 25 April 2015, the Company proposed
a cash dividend of RMB 4.4 (tax inclusive) for every 10 shares in respect of 2014 based on the
issued shares of 685,464,000. The aggregate amount of cash dividend is RMB 301,604,160. The
resolution is to be approved by the annual general meeting.
XIII. OTHER SIGNIFICANT EVENTS
Segment report
The Group is principally engaged in the production and sales of wine, brandy, and champagne. In
accordance with the Group's internal organization 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.
- 77 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS
1. Cash and bank
Closing balance Opening balance
RMB RMB
Cash 5,847 12,479
Bank Blance 371,128,398 477,140,475
Other currency fund 125,004,018
____________ 125,291,289
__________
Total 496,138,263
____________ 602,444,243
__________
As at 31 December 2014, the balance of restricted cash of the Group is RMB2,643,519 (31
December 2013: RMB2,609,237), which is composed of the Group's housing fund.
As at 31 December 2014, other currency fund of the Company include: security of RMB
125,000,000 (at 31 December 2013: RMB 125,000,000) pledged for a long-term borrowing from
HSBC of HKD 152,000,000(equivalent to RMB 119,912,800), and company cards deposit
guarantee of RMB 4,018(at 31 December 2013: RMB 291,289).
As at 31 December 2014, The Group's term deposits with original maturity from three months to
one year when acquired is RMB35,245,260 (31 December 2013: RMB277,392,728 ) with interest
rates ranging from 3.25%-4.13% .
2. Notes receivable
(1) Categories of notes receivable
Closing balance Opening balance
RMB RMB
Bank acceptances 98,158,251
_________ 32,594,381
_________
(2) Pledged notes receivable
As of 31 December 2014, there was no pledged notes receivable (31 December 2013: Nil).
- 78 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
2. Note receivable - continued
(3) Notes endorsed by the Group to other parties which are not yet due at the end of the period
Closing balance Opening balance
RMB RMB
Bank acceptances 52,895,804
__________ 16,727,830
_________
As at 31 December 2014，notes endorsed by the Group to other parties which are not yet due at
the end of the period is RMB 52,895,804 (31 December 2013: RMB 16,727,830). It is for the
payment to suppliers. The Group believes that due to bank good reputation, the risk of maturity
can not be cashed is very low, these notes receivable ownership of the risks and rewards have
been transferred to the supplier, therefore confirm the termination of the endorsement note
receivables. If bank is unable to settle the notes on maturity, according to the relevant laws and
regulations of China, the Group would undertake limited liability for the notes.
(4) Notes receivable were reclassified as accounts receivable due to the default of drawer
As of 31 December 2014, there was no notes receivable were reclassified as accounts receivable
due to the default of drawer (31 December 2013: Nil).
3. Accounts receivable
(1) The aging analysis is as follows:
Closing balance Opening balance
Balance Bad debts provisions Carrying Amount Balance Bad debts provisions Carrying Amount
Amount Proportion Amount Proportion Amount Amount Proportion Amount Proportion Amount
RMB (%) RMB (%) RMB RMB (%) RMB (%) RMB
Accounts receivable
that are individually
not significant and
for which bad debt
provision has been
assessed individually
______ ___
1,516,518 100.0
____
-
____ ______
- 1,516,518
______
1,600,968
___
100.0
____
-
____ ______
- 1,600,968
The Company determines that trade receivable of more than RMB3,000,000 is considered as
individually significant trade receivable.
The normal credit term of trade receivables is one month, which can be extended to one year for
certain major customers. The trade receivables are interest free.
There was no individually significant and for which bad debt provision has been assessed
individually account receivable.
The aging analysis is as follows:
Closing balance Opening balance
RMB RMB
Within 1 year 1,516,518
_________ 1,600,968
________
- 79 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
3. Accounts receivable - continued
(2) Provision, reversals and collections during the current period:
As at 31 December 2014, there was no provision provided for trade receivables (31 December
2013: Nil). The Company did not provide, reverse or write off any provision during 2014 (31
December 2013: Nil)
(3) Top three entities with the largest balances of accounts receivable
Relationship Proportion of
with the Group Amount Aging total receivables
RMB %
Yantai Huibao arts and
crafts Manufacturing Co., Ltd. Third party 1,052,828 Within 1 year 69.5
Zhongya Pharmaceutical Other related parties 447,870 Within 1 year 29.5
ShenMa Packing Other related parties 15,820
________ Within 1 year 1.0
____
1,516,518
________ 100.0
____
4. Prepayments
(1) The aging analysis is as follows:
Closing balance Opening balance
Amount Proportion Amount Proportion
RMB % RMB %
Within 1 year 1,710,787
_______ 100.0
____ 24,824,672
________ 100.0
____
(2) Top five entities with the largest balances of prepayments
Reason for Percentage of
Relationship being total advances
with the Group Amount Aging outstanding to suppliers
RMB %
Shandong Electric Power Group Third party 677,389 Within 1 year electric fee 39.6
Liu, Yuling Third party 348,124 Within 1 year goods not received 20.4
Yu, Zhihai Third party 328,194 Within 1 year goods not received 19.2
Rizhao Lingfei Packaging Co. Ltd. Third party 94,484 Within 1 year goods not received 5.5
Lin, Changxue Third party 80,428
_______ Within 1 year goods not received 4.7
___
1,528,619 89.4
___
_______
- 80 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
5. Interest receivable
(1) Categories of interest receivable
Closing balance Opening balance
RMB RMB
Interests of term deposits 3,580,811
________ 8,417,995
________
(2) Overdue interest
As at 31 December 2014, there was no overdue interest receivable (31 December 2013: Nil).
6. Dividend receivables
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Within 1 year
Including: Sales Company 738,981,500 1,013,615,384 (1,350,000,000) 402,596,884
Wines Sales - 90,000,000 (90,000,000) -
Huanren Wine - 25,000,000 (25,000,000) -
Langfang Sales - 474,282 (474,282) -
Jingyang Sales - 35,000,000 (35,000,000) -
Over 1 year
Including: Pioneer International 13,614,384
_________ __________- (13,614,384)
__________ -
_________
Total 752,595,884
_________ 1,164,089,666
__________ (1,514,088,666)
__________ 402,596,884
_________
__________
7. Other receivables
(1) Disclosure of other receivables by categories:
Closing balance Opening balance
Balance Bad debts provisions Carrying Amount Balance Bad debts provisions Carrying Amount
Amount Proportion Amount Proportion Amount Amount Proportion Amount Proportion Amount
RMB (%) RMB (%) RMB RMB (%) RMB (%) RMB
Other receivables that are
individually significant
and for which bad debt
provision has been
assessed individually 4,701,016,368 99.7 (7,199,521) 0.2 4,693,816,847 3,683,374,031 99.1 (7,392,429) 0.2 3,675,981,602
Other receivables that are
not individually significant
and for which bad debt
provision has been
assessed individually ______ ___0.3
15,019,429 _____- ___- ______
15,019,429 ______
33,602,347 ___0.9 _____- ___- ______
33,602,347
Total
______ ___
4,716,035,797 100.0
_____ ___0.2 ______
(7,199,521) 4,708,836,276 3,716,976,378
______ 100.0
___ (7,392,429)
_____ ___0.2 ______
3,709,583,949
The Company determines that other receivable of more than RMB3,000,000 is considered as
individually significant other receivable.
- 81 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
7. Other receivables - continued
(1) Disclosure of other receivables by categories: - continued
Other receivables that are individually significant and for which bad debt provision has been
assessed individually:
As at 31 December 2014, 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 process of liquidation
Tiantong Security Co., Ltd. 7,199,521
_______ 7,199,521
_______ 100 Unable to repay
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
the process of liquidation
Tiantong Security Co., Ltd 7,392,429
_______ 7,392,429
_______ 100 Unable to repay
The aging analysis is as follows:
Closing balance Opening balance
Bad debts Carrying Bad debts Carrying
Balance provision amount Balance provision amount
Amount Proportion Amount Amount Amount Proportion Amount Amount
RMB % RMB RMB RMB % RMB RMB
Within 1 year 4,708,620,670 99.8 - 4,708,620,670 3,709,472,668 99.8 - 3,709,472,668
1 to 2 years 215,606 0.0 - 215,606 111,281 - - 111,281
2 to 3 years - - - - -
Over 3 years 7,199,521
________ ____0.2 (7,199,521)
_______ ________- 7,392,429 7,392,429
________ ____0.2 ______ ________-
4,716,035,797 100.0 (7,199,521) 4,708,836,276 3,716,976,378 100.0 7,392,429 3,709,583,949
________ ____ _______ ________ ________ ____ ______ ________
- 82 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
7. Other receivables - continued
(2) Accrual, reversal and written-off during the current period:
Opening balance Accrued Reversed Writen-off Closing balance
RMB RMB RMB RMB RMB
2014 7,392,429 -
_____ (192,908)
______ -
_____ 7,199,521
_______
_______
No bad debt accrued in 2014, and bad debt reversed in 2014 is RMB 192,908.
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 (7,392,429)
_______ 192,908
_______
(3) Other receivable written off current year
No other receivable written off in 2014.
(4) Disclosure of other receivables by nature
Closing balance Opening balance
RMB RMB
Receivable from subsidiary 4,699,819,825 3,691,961,808
Consumption tax refund 1,924,913 1,880,028
Receivable deposit - 1,661,969
Others 7,091,538
____________ 14,080,144
____________
4,708,836,276
____________ 3,709,583,949
____________
(5) Top five entities with the largest balances of other receivables
As at 31 December 2014, the particulars of top 5 other receivables are as follows:
Proportion of total
Nature Amount Aging prepayments
RMB %
Development Centre Internal balance 884,290,206 Within 1 year 18.7
Changan Chateau Internal balance 712,804,638 Within 1 year 15.1
Shihezi Chateau Internal balance 611,720,867 Within 1 year 13.0
Beijing Chateau Internal balance 533,229,933 Within 1 year 11.3
Ningxia Wine Internal balance 418,128,500
__________ Within 1 year 8.9
___
3,160,174,144 67.0
___
__________
- 83 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
8. Inventories
Closing balance Opening balance
Net carrying Net carrying
Balance Provision amount Balance Provision amount
RMB RMB RMB RMB RMB RMB
Raw material 8,061,194 - 8,061,194 5,328,866 - 5,328,866
Work in progress 605,911,810 - 605,911,810 685,390,264 - 685,390,264
Finished goods 67,723,770
_________ -
_____ 67,723,770
_________ 90,565,059
_________ -
_____ 90,565,059
_________
681,696,774
_________ -
_____ 681,696,774
_________ 781,284,189
_________ -
_____ 781,284,189
_________
9. Long-term equity investments
Movement Cash Dividends
2014 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 -
Kylin Packaging 23,176,063 23,176,063 - 23,176,063 100 100 -
Changyu Chateau (a) 28,968,100 28,968,100 - 28,968,100 70 100 -
AFIP Tourism (a) 350,000 350,000 - 350,000 70 100 -
Pioneer International (b) 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 30,440,500 - 30,440,500 51 100 -
Beijing Chateau (a) 77,000,000 77,000,000 - 77,000,000 70 100 -
Sales Company 7,200,000 7,200,000 - 7,200,000 100 100 1,013,615,384
Langfang Sales (b) 100,000 100,000 - 100,000 10 100 474,282
Langfang Castel (a) 19,835,730 19,835,730 - 19,835,730 39 100 -
Wine Sales 4,500,000 4,500,000 - 4,500,000 90 100 90,000,000
Shanghai Sales(b) 300,000 300,000 - 300,000 30 100 -
Beijing Sales 850,000 850,000 - 850,000 100 100 -
Jingyang Sales (b) 100,000 100,000 - 100,000 10 100 35,000,000
Jingyang Wine (b) 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 -
Changan 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 6,000,000 11,000,000 100 100 25,000,000
French Sales 29,988,530 29,988,530 (29,988,530) - - - -
Francs Champs
Participations SAS _______
69,216,634 _______- ______
69,216,634 _______
69,216,634 100 100 _______-
1,117,425,557 1,048,208,923 45,228,104 1,093,437,027 1,164,089,666
_______ _______ ______ _______ _______
(a) The Company 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 VIII (1) for details.
(b) The Company has 100% voting power of those subsidiaries by the way of indirect
controlling.
During 2014, there was no significant restriction on the remittance of fund from the
investees to the Company.
- 84 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
10. Fixed assets
(1) Fixed assets
Buildings Machinery Motor vehicles Total
RMB RMB RMB RMB
I. Total original carrying amount
1. Opening balance 300,301,763 582,833,349 12,601,336 895,736,448
2. Increase
Purchase 3,313,956 11,917,141 781,111 16,012,208
CIP transfer 275,102 56,214 - 331,316
3. Decrease
Disposal -
_________ (2,332,423)
_________ (279,850)
_________ (2,612,273)
_________
4. Closing balance 303,890,821
_________ 592,474,281
_________ 13,102,597
_________ 909,467,699
_________
II. Total accumulated depreciation
1. Opening balance 93,360,535 367,510,418 9,571,379 470,442,332
2. Increase
Accrual 9,662,598 27,611,496 618,844 37,892,938
3. Decrease
Disposal _________- (1,815,138)
_________ (263,088)
_________ (2,078,226)
_________
4. Closing balance 103,023,133
_________ 393,306,776
_________ 9,927,135
_________ 506,257,044
_________
III. Total net carrying amount
1. Closing net carrying amount 200,867,688
_________ 199,167,505
_________ 3,175,462
_________ 403,210,655
_________
2. Opening net carrying amount 206,941,228
_________ 215,322,931
_________ 3,029,957
_________ 425,294,116
_________
As at 31 December 2014, there was no fixed assets with ownership restricted (31 December 2013:
Nil).
As at 31 December 2014, 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 (2013:
RMB: Nil).
(2) Fixed assets of which certificates of title have not been obtained:
As at 31 December 2014, buildings without property certificate are as follows：
Reasons why
certificates of title have
Items Amount not been obtained
RMB
Fermentation center office,
experiment building and workshop 6,556,657
__________ Processing
- 85 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
11. Construction in progress
(1) Construction in progress
Closing balance Opening balance
RMB RMB
The Company's reconstruction project 182,765
__________ 269,802
_______
(2) Current year movement on important construction
Accumulated
Opening Transfer to Closing expenditure/b The progress of
Budget balance Addition PPE balance udget construction Financed by
RMB RMB RMB RMB RMB %
The Company's
reconstruction project 201,440,000 269,802 244,279 (331,316) 182,765 91.0 91.0 Self-raised
There was no interest capitalized in construction in progress in 2014.
(3) As at 31 December 2014, there was no provision was made for the construction in process.
12. Bearer biological asset
Biological asset measured at cost
Planting
RMB
I. Total original carrying amount
1. Opening balance 67,302,314
2. Increase
Self cultivated 28,460,486
3. Decrease
Disposal (5,093,268)
__________
4. Closing balance 90,669,532
__________
II. Total accumulated depreciation
1. Opening balance 6,450,905
2. Increase
Accrual 586,905
__________
3. Closing balance 7,037,810
__________
III. Total net carrying amount
1. Closing net carrying amount 83,631,722
__________
2. Opening net carrying amount 60,851,409
__________
As at 31 December 2014, there is no biological asset with ownership restricted.
- 86 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
12. Bearer biological asset - continued
As at 31 December 2014, the Company's accumulated depreciation of biological assets is RMB
7,037,810 (2013: RMB 6,450,905).
As at 31 December 2014, biological assets of the Company include mature bearer biological
assets of RMB 7,923,216 (2013: RMB 8,510,121) and immature bearer biological assets of RMB
75,708,506. (2013: RMB 52,341,288)
As at 31 December 2014, there is no indication that biological assets may be impaired, and no
provision was made.
13. Intangible assets
Intangible assets
Land use right Software use right Total
RMB RMB RMB
I. Total original carrying amount
1. Opening and closing balance 96,594,766
_________ 3,480,000
_________ 100,074,766
__________
II. Total accumulated depreciation
1. Opening balance 17,454,935 3,480,000 20,934,935
2. Increase
Accrual 2,379,153
_________ -
_________ 2,379,153
__________
3. Closing balance 19,834,088
_________ 3,480,000
_________ 23,314,088
__________
III. Total net carrying amount
1. Closing net carrying amount 76,760,678
_________ -
_________ 76,760,678
__________
2. Opening net carrying amount 79,139,831
_________ -
_________ 79,139,831
__________
As at 31 December 2014, there was no intangible asset with restricted ownership.
- 87 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
14. Deferred tax assets and liabilities
Deferred tax assets and deferred tax liabilities that are not presented at the net amount after offset
Recognised deferred tax assets not presented at the net amount after offset
Closing balance Opening balance
Item Deductible Deferred Deductible Deferred
temporary difference tax assets temporary difference tax assets
RMB RMB RMB RMB
Unrealized profit from intra
company transactions 9,000,404 2,250,101 7,795,104 1,948,776
Unpaid bonus 28,548,564 7,137,141 29,568,378 7,392,095
Retirement benefit 11,514,647 2,878,662 14,416,547 3,604,137
Asset impairment provision 17,199,521 4,299,880 17,392,429 4,348,107
Deductable losses 16,185,336 4,046,334 - -
Deferred income 25,765,813 6,441,453 22,654,527 5,663,632
108,214,285 27,053,571 91,826,985 22,956,747
15. Trade payables
The aging analysis is as follows:
Closing balance Opening balance
RMB RMB
Within 1 year 228,052,722
__________ 166,453,563
__________
16. Employee benefit
(1) Employee benefit
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Short-term salaries and welfare 51,864,092 143,836,063 (136,981,551) 58,718,604
Post-demission benefits
- predetermined provision plan - 10,060,441 (10,060,441) -
Termination benefit 14,552,295
_________ 1,652,615
_________ (4,690,263)
_________ 11,514,647
_________
66,416,387
_________ 155,549,119
_________ (151,732,255)
_________ 70,233,251
_________
- 88 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
16. Employee benefit - continued
(2) Short-term salaries and welfare
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Salaries and bonus 49,583,695 127,184,205 (120,593,968) 56,173,932
Staff benefit - 7,430,814 (7,427,314) 3,500
Staff welfare - 4,318,828 (4,318,828) -
Includes:
Medical insurance - 3,382,675 (3,382,675) -
Injury insurance - 490,366 (490,366) -
Maternity insurance - 445,787 (445,787) -
Housing fund - 3,584,493 (3,584,493) -
Union fee and education fee 2,280,397
_________ 1,317,723
_________ (1,056,948)
_________ 2,541,172
_________
51,864,092
_________ 143,836,063
_________ (136,981,551)
_________ 58,718,604
_________
(3) Predetermined provision plan
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Pension - 9,325,372 (9,325,372) -
Unemployment insurance -
_____ 735,069
_________ (735,069)
_________ -
_____
-
_____ 10,060,441
_________ (10,060,441)
_________ -
_____
The Company participates in pension insurance and unemployment insurance plans established by
government institution. According to those plans, the Company pays pension and unemployment
insurance each month on the basis of 18% and 1% last period salary respectively. Apart from
these monthly expenses, the Company does not bear any further payment obligation. This year the
Company should pay RMB 9,325,372 and RMB 735,069 (In 2013: RMB 9,217,726 and RMB
682,538) respectively into pension insurance and unemployment insurance. At 31 December 2014,
the Company does not have unpaid pension and unemployment insurance (At 31 December 2013:
Nil) which is due to the pension insurance and unemployment insurance plan and not paid at the
end of the reporting period.
- 89 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
17. Taxes payable
Closing balance Opening balance
RMB RMB
Value added tax (7,183,464) 3,289,792
Consumption tax 12,157,986 19,900,332
Corporation income tax 3,034,692 3,348,032
Urban land use tax 837,367 421,924
Individual income tax 6,213,385 6,275,760
City construction tax 1,510,366 2,319,867
Property tax 355,417 127,674
Others 1,279,375
__________ 1,895,289
_________
18,205,124
__________ 37,578,670
_________
18. Other payables
(1) Natures of other payables are as follows
Closing balance Opening balance
RMB RMB
Payable to subsidiaries 1,013,237,829 1,585,656,605
Payables for equipment and construction 7,437,012 14,058,146
Payables for transportation 306,238 971,220
Deposits from suppliers 436,271 277,430
Others 9,187,469
____________ 11,633,120
____________
1,030,604,819
____________ 1,612,596,521
____________
(2) As at 31 December 2014, there were no significant outstanding balance aged over than one year.
19. Capital reserve
2014 Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Share premium 557,222,454
_________ -
______ -
______ 557,222,454
_________
- 90 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
20. Revenue and cost of sales
Revenue is as follows:
2014 2013
RMB RMB
Principal operating income 1,647,825,652
____________ 1,730,694,774
____________
Cost of sales is as follows:
2014 2013
RMB RMB
Principal operating cost 1,406,987,744
____________ 1,473,772,762
____________
21. Tax and surcharges
2014 2013
RMB RMB
Consumption tax 129,159,521 112,191,992
City construction tax 14,952,818 12,054,335
Education fee and surcharges 10,672,202 8,897,690
Others 2,242,360
__________ 1,902,568
__________
157,026,901
__________ 135,046,585
__________
22. General and administrative expense
2014 2013
RMB RMB
Salary and employee benefit 31,119,420 26,777,563
Insurance fee 21,720,066 21,246,591
Leasing expenses 7,569,488 6,048,896
Depreciation 3,860,257 3,718,349
Amortization 2,917,149 2,373,076
Administrative expenses 8,748,731 8,489,998
Travelling expenses 2,704,509 4,127,300
Entertainment fee 278,344 288,524
Property tax, stamp duty and other taxes 5,331,881 3,942,998
Maintenance fee 9,685,094 10,416,751
Others 18,116,606
__________ 22,234,906
__________
112,051,545
__________ 109,664,952
__________
- 91 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
23. Loss on impairment of assets
2014 2013
RMB RMB
Impairment loss of available for sale assets - 5,000,000
Reversal of impairment loss (192,908)
________ (607,571)
________
(192,908)
________ 4,392,429
________
24. Financial Expense
2014 2013
RMB RMB
Interest income (15,866,780) (25,717,422)
Exchange earning (6,093,361) (4,055,987)
Less: Interest expenses 10,227,740 2,174,286
Bank charges 678,848
_________ 1,650,982
_________
(11,053,553)
_________ (25,948,141)
_________
25. Investment income
2014 2013
RMB RMB
Long-term equity investment income accounted
for by using the cost method 1,164,089,666
____________ 1,126,019,415
____________
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 2014 2013
RMB RMB
Sales Company 1,013,615,384 970,000,000
Wine Sales 90,000,000 11,140,442
AFIP Tourism - 68,000,000
____________ ____________
As at 31 December 2014 and at 31 December 2013, there was no significant restriction on the
remittance of investment income to the Company.
- 92 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
26. Supplement to cash flow statement
2014 2013
RMB RMB
Cash flows from operating activities
calculated by adjusting the net profit:
Net profit 1,151,762,045 1,154,687,278
Add: Impairment/(reverse) provision (192,908) 4,392,429
Depreciation of fixed assets 37,892,938 34,615,038
Amortization of intangible assets 2,379,153 2,373,077
Amortization of biological assets 586,905 586,905
Losses/(gains) on disposal of property,
plant and equipment 5,076,491 662,192
Finance expenses (11,684,489) (29,773,409)
Investment income (1,164,089,666) (1,126,019,415)
Increase in deferred tax assets (4,096,824) (3,439,545)
Decrease/(increase) in inventories 99,587,415 112,158,569
Increase in trade receivables (1,057,576,001) (1,562,373,091)
Increase/(decrease) in trade payables (525,631,084)
____________ 200,790,717
____________
Net cash flows from operating activities (1,465,986,025) (1,211,339,255)
____________
____________
27. Cash and cash equivalents
2014 2013
RMB RMB
Closing balance of cash and bank 496,138,263 602,444,243
Less:
Restricted bank deposits 2,643,519 2,609,237
Restricted other monetary assets 125,004,018 125,291,289
Deposit with a period of over three months 35,245,260
__________ 277,392,728
__________
Closing balance of cash and cash equivalents 333,245,466
__________ 197,150,989
__________
2014 2013
RMB RMB
Cash and bank 333,245,466 197,150,989
Including: Cash on hand 5,847 12,479
Bank deposits on demand 333,239,619
__________ 197,138,510
__________
Closing balance of cash and cash equivalents 333,245,466
__________ 197,150,989
__________
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
28. Related party transactions
(1) Purchase of materials
2014 2013
RMB RMB
Subsidiaries 275,537,285 230,279,590
Other related parties 105,807,546
__________ 135,903,876
__________
381,344,831
__________ 366,183,466
__________
(2) Sales of goods
2014 2013
RMB RMB
Subsidiaries 1,640,615,167 1,723,774,566
Other related parties 7,210,485
____________ 6,920,208
____________
1,647,825,652
____________ 1,730,694,774
____________
29. Receivables and payables to related parties
(1) Trade receivables
Trade receivables Closing balance Opening balance
Balance Bad debts provision Balance Bad debts provision
RMB RMB RMB RMB
Other related parties 463,690
_______ -
_______ 1,600,968
_______ -
_______
Other receivables Closing balance Opening balance
Balance Bad debts provision Balance Bad debts provision
RMB RMB RMB RMB
Subsidiaries 4,699,819,825
__________ -
_______ 3,691,961,808
__________ -
_______
The above receivables due from related parties are unsecured, have no interest or fixed date of
repayment.
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
29. Receivables and payables to related parties - continued
(2) Trade payables
Trade Payables Closing balance Opening balance
RMB RMB
Subsidiaries - 9,497,134
Other related parties 29,592,060
_________ 33,518,567
_________
29,592,060
_________ 43,015,701
_________
Other payables Closing balance Opening balance
RMB RMB
Subsidiaries 1,013,237,829 1,585,656,605
Other related parties 200,000
____________ 3,906
____________
1,013,437,829
____________ 1,585,660,511
____________
The above payables due to related parties are unsecured, have no interest or fixed date of
repayment.
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
APPENDIX I SUPPLEMENTARY INFORMATION TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2014
I. DETAILS OF EXTRAORDINARY PROFIT AND LOSS
2014
RMB
Loss on disposal of non-current assets, including
reversal of accrued impairment provision (5,086,545)
Tax rebate and reduction without formal approval documents 13,405,520
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) 27,140,194
Other non-operating income and expense 166,987
Reversal of bad debt provision of receivables tested individually 192,908
Corporate income tax effect (8,302,732)
__________
27,516,332
__________
The Company'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 2014. Please
refer to Note VI-38 and VI-39.
II. RETRUN ON EQUITY ("ROE") AND EARNINGS PRE SHARE ("EPS")
The Company's ROE and EPS are calculated in accordance with the CSRC regulations of the
"Information Preparing and Disclosure Rules of Public Company No. 9 - calculation and
disclosure of ROE and EPS" (Revised 2010).
Weighted average
2014 ROE Basic EPS
% RMB
Net profit attributable to shareholders of the Company 15.11 1.43
Net profit attributable to shareholders
of the Company deducting extraordinary profit and loss 14.69
_____ 1.39
____
The Company did not have any potential dilutive shares.
Weighted average
2013 ROE Basic EPS
% RMB
Net profit attributable to shareholders of the Company 16.45 1.53
Net profit attributable to shareholders
of the Company deducting extraordinary profit and loss 16.78
_____ 1.48
____
The Company did not have any potential dilutive shares.
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