YANTAI CHANGYU PIONEER WINE
COMPANY LIMITED
Financial Statements and Auditor's Report
For the year ended 31 December 2016
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
FINANCIAL STATEMENTS AND AUDITOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2016
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 – 100
De Shi Bao (Shen) Zi (17) No. P01956
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 2016, 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 2016, 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 Li Xu (Signature and seal)
Shanghai, China Li Yan Gang (Signature and seal)
20 April 2017
-2-
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED BALANCE SHEETS
YEAR ENDED 31 DECEMBER 2016
ASSETS Notes Closing balance Opening balance
RMB RMB
CURRENT ASSETS
Cash and bank VI-1 1,391,517,607 1,285,362,414
Notes receivable VI-2 210,470,027 113,988,122
Accounts receivable VI-3 173,062,628 197,795,091
Prepayments VI-4 2,175,606 3,591,098
Interest receivable VI-5 24,200 8,019,338
Other receivables VI-6 18,880,800 46,146,487
Inventories VI-7 2,248,609,740 2,260,852,964
Non-current assets held for sale VI-8 2,000,197 -
Other current assets VI-9 169,522,242
____________ 48,449,551
____________
Total current assets 4,216,263,047
____________ 3,964,205,065
____________
NON-CURRENT ASSETS
Available-for-sale financial assets VI-10 340,263 402,814
Fixed assets VI-11 4,683,187,493 3,089,245,185
Construction in progress VI-12 1,346,281,737 2,005,990,308
Bearer biological assets VI-13 201,428,980 192,198,283
Intangible assets VI-14 483,815,080 463,899,916
Goodwill VI-15 121,265,866 105,504,426
Long-term prepaid expenses VI-16 162,206,229 175,124,167
Deferred tax assets VI-17 295,937,037 302,406,656
Other non-current assets VI-18 17,352,239
____________ 45,234,641
____________
Total non-current assets 7,311,814,924
____________ 6,380,006,396
____________
Total assets 11,528,077,971
____________ 10,344,211,461
____________
-3-
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED BALANCE SHEETS
YEAR ENDED 31 DECEMBER 2016 - continued
LIABILITIES AND EQUITY Notes Closing balance Opening balance
RMB RMB
CURRENT LIABILITIES
Short-term borrowings VI-19 662,388,882 665,581,921
Notes payable VI-20 38,900,000 29,000,000
Accounts payable VI-21 545,231,319 569,278,368
Receipts in advance VI-22 425,246,421 234,566,504
Employee benefits payable VI-23 206,431,734 190,239,451
Taxes payable VI-24 144,042,600 41,285,107
Interest payable 563,613 977,304
Deferred income VI-25 11,163,883 11,241,873
Other payables VI-26 546,305,310 509,226,395
Non-current liabilities due within one year VI-27 71,799,093
____________ 156,335,647
____________
Total current liabilities 2,652,072,855
____________ 2,407,732,570
____________
NON-CURRENT LIABILITIES
Long-term borrowings VI-28 49,140,555 71,686,629
Long-term payables VI-29 293,000,000 -
Deferred income VI-25 101,775,243 69,836,411
Deferred tax liabilities VI-17 24,908,410 34,350,349
Other non-current liabilities VI-30 7,696,222
____________ 4,047,476
____________
Total non-current liabilities 476,520,430
____________ 179,920,865
____________
Total liabilities 3,128,593,285
____________ 2,587,653,435
____________
EQUITY
Share capital VI-31 685,464,000 685,464,000
Capital reserve VI-32 565,955,441 565,955,441
Other comprehensive income VI-33 (5,259,014) (10,442,512)
Surplus reserve VI-34 342,732,000 342,732,000
Retained earnings VI-35 6,620,118,562
____________ 5,980,390,074
____________
Equity attributable to shareholders
of the Company 8,209,010,989 7,564,099,003
Non-controlling interests 190,473,697
____________ 192,459,023
____________
Total equity 8,399,484,686
____________ 7,756,558,026
____________
Total liabilities and equity 11,528,077,971
____________ 10,344,211,461
____________
The accompanying notes form an integral part of these financial statements.
The financial statements on pages 3 to 100 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 2016
ASSETS Notes Closing balance Opening balance
RMB RMB
CURRENT ASSETS
Cash and bank XIV-1 269,460,060 280,818,833
Notes receivable XIV-2 1,114,200 38,429,319
Accounts receivable XIV-3 3,326,683 2,392,870
Prepayments XIV-4 702,647 445,619
Interest receivable VI-5 24,200 8,019,338
Dividend receivable XIV-5 531,819,113 788,092,349
Other receivables XIV-6 3,582,532,862 5,734,456,129
Inventories XIV-7 792,732,418 728,173,107
Non-current assets held for sale VI-8 2,000,197 -
Other current assets 20,085,058
____________ 22,700,317
____________
Total current assets 5,203,797,438
____________ 7,603,527,881
____________
NON-CURRENT ASSETS
Available-for-sale financial assets VI-10 - -
Long-term equity investments XIV-8 1,834,341,541 1,423,725,152
Fixed assets XIV-9 347,481,417 369,506,014
Construction in progress XIV-10 500,000 7,990,777
Bearer biological assets XIV-11 123,036,693 110,961,189
Intangible assets XIV-12 72,002,372 74,381,525
Deferred tax assets XIV-13 26,985,252 37,938,692
Other non-current assets XIV-14 2,617,457,460
____________ ____________-
Total non-current assets 5,021,804,735
____________ 2,024,503,349
____________
Total assets 10,225,602,173
____________ 9,628,031,230
____________
-5-
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
BALANCE SHEET OF THE COMPANY
YEAR ENDED 31 DECEMBER 2016 - continued
LIABILITIES AND EQUITY Notes Closing balance Opening balance
RMB RMB
CURRENT LIABILITIES
Short-term borrowings XIV-15 500,000,000 601,297,447
Accounts payable XIV-16 247,568,857 273,091,182
Receipts in advance XIV-17 6,000,000 -
Employee benefits payable XIV-18 70,812,761 71,058,615
Taxes payable XIV-19 33,266,225 19,331,311
Interest payable 563,613 977,304
Deferred income 1,767,054 1,767,054
Other payables XIV-20 368,310,362 994,821,281
Non-current liabilities due within one year XIV-21 29,227,200
____________ 127,345,600
____________
Total current liabilities 1,257,516,072
____________ 2,089,689,794
____________
NON-CURRENT LIABILITIES
Long-term borrowings VI-28 - 56,761,600
Deferred income 19,933,699 21,824,352
Other non-current liabilities 2,499,403
____________ 1,944,955
____________
Total non-current liabilities 22,433,102
____________ 80,530,907
____________
Total liability 1,279,949,174
____________ 2,170,220,701
____________
EQUITY
Share capital VI-31 685,464,000 685,464,000
Capital reserve XIV-22 557,222,454 557,222,454
Surplus reserve VI-34 342,732,000 342,732,000
Retained earnings 7,360,234,545
____________ 5,872,392,075
____________
Total equity 8,945,652,999
____________ 7,457,810,529
____________
Total liabilities and equity 10,225,602,173
____________ 9,628,031,230
____________
-6-
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED INCOME STATEMENT
YEAR ENDED 31 DECEMBER 2016
Notes 2016 2015
RMB RMB
I. Revenue VI-36 4,717,596,472 4,649,722,368
Less: Cost of sales VI-36 1,575,770,979 1,512,503,035
Taxes and surcharges VI-37 269,716,646 258,013,524
Selling expenses VI-38 1,253,260,668 1,211,127,163
Administrative expenses VI-39 309,783,548 313,968,409
Impairment loss of assets VI-40 3,279,266 2,823,115
Financial expenses VI-41 21,968,859
____________ 11,287,685
____________
II. Operating profit 1,283,816,506 1,339,999,437
Add: Non-operating income VI-42 55,172,160 50,065,317
Including: gains from disposal
of non-current assets 157,846 192,945
Less: Non-operating expenses VI-43 1,369,826 1,904,889
Including: losses from disposal
of non-current assets 143,127
____________ 56,884
____________
III. Profit before tax 1,337,618,840 1,388,159,865
Less: Income tax VI-44 357,029,446
____________ 357,884,235
____________
IV. Profit for the year 980,589,394
____________ 1,030,275,630
____________
Attribute to shareholders of the Company 982,460,488 1,030,073,860
Minority interest income (1,871,094) 201,770
____________ ____________
V. Other comprehensive income (post-tax)
Other comprehensive income attributable
to shareholders of the Company
Other comprehensive income
to be reclassified to profit and loss
Foreign currency statement translation difference 5,183,498 (7,639,241)
Other comprehensive income attributable
to minority interest 432,191
____________ (102,535)
____________
Other comprehensive income (post-tax) 5,615,689 (7,741,776)
____________
____________
VI. Total comprehensive income
Attribute to shareholders of the Company 987,643,986 1,022,434,619
Attribute to minority interest of the Company (1,438,903) 99,235
____________ ____________
Total comprehensive income 986,205,083
____________ 1,022,533,854
____________
VII. Earnings per share
(I) Basic earnings per share VI-45 1.43
____________ 1.50
____________
(II) Diluted earnings per share VI-45 N/A
____________ N/A
____________
-7-
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
INCOME STATEMENT OF THE COMPANY
YEAR ENDED 31 DECEMBER 2016
Notes 2016 2015
RMB RMB
I. Revenue XIV-23 1,415,104,946 1,383,184,483
Less: Cost of sales XIV-23 1,152,076,500 1,154,834,509
Taxes and surcharges XIV-24 106,469,217 128,127,130
Administrative expenses XIV-25 85,962,137 131,187,795
Financial expenses XIV-26 34,226,452 18,852,697
Investment income XIV-27 1,798,129,418
____________ 1,587,303,643
____________
II. Operating Profit 1,834,500,058 1,537,485,995
Add: Non-operating income 7,433,751 5,229,734
Including: gains from disposal
of non-current assets 157,846 160,609
Less: Non-operating expenses 405,899 921,076
Including: losses from disposal
of non-current assets 46,484
____________ 44,269
____________
III. Profit before tax 1,841,527,910 1,541,794,653
Less: Income tax 10,953,440
____________ (11,725,445)
____________
IV. Profit for the year
and total comprehensive income 1,830,574,470
____________ 1,553,520,098
____________
-8-
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31 DECEMBER 2016
Notes 2016 2015
RMB RMB
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from the sale of goods
and the rendering of services 4,441,041,101 5,005,115,064
Receipts of tax refunds 17,860,500 17,833,465
Other cash receipts relating to operating activities VI-46(1) 66,707,865
__________ 22,373,016
__________
Sub-total of cash inflows from operating activities 4,525,609,466
__________ 5,045,321,545
__________
Cash payments for goods purchased and services received 961,128,796 1,106,430,193
Cash payments to and on behalf of employees 435,621,220 400,245,285
Payment of various types of taxes 1,133,232,957 1,312,212,563
Other cash payments relating to operating activities VI-46(2) 1,105,714,523
__________ 1,083,387,137
__________
Sub-total of cash outflows from operating activities 3,635,697,496
__________ 3,902,275,178
__________
Net cash flows from operating activities VI-47(1) 889,911,970
__________ 1,143,046,367
__________
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in term deposits over 3 months 98,021,025 58,245,260
Proceeds from return on investments 7,723,126 9,337,943
Proceeds from disposal of fixed assets 7,208,774
__________ 3,373,254
__________
Sub-total of cash inflows from investing activities 112,952,925
__________ 70,956,457
__________
Cash paid for acquisition of properties, plants and equipment,
intangible assets and other long-term assets 704,834,302 775,468,190
Cash paid for term deposits over 3 months 92,021,025 20,000,000
Cash paid for the purchase subsidiaries and other equity VI-46(3) 3,539,144 207,868,406
Other cash payment relating to investing activities __________- 5,474,540
__________
Sub-total of cash outflows from investing activities 800,394,471
__________ 1,008,811,136
__________
Net cash flows from investing activities (687,441,546)
__________ (937,854,679)
__________
CASH FLOWS FROM FINANCING ACTIVITIES
Cash receipts from borrowings 1,011,089,858 598,060,185
Other cash received from financing activities VI-46(4) 180,477,587
__________ 4,000,000
__________
Sub-total of cash inflows from financing activities 1,191,567,445
__________ 602,060,185
__________
Cash paid for dividends, profits and interests 372,529,256 326,060,259
Cash paid for borrowings 839,962,581 325,272,800
Cash paid for acquisition minority interest - 150,000
Cash paid from other financing activities VI-46(5) 20,000,000
__________ 28,150,000
__________
Sub-total of cash outflows from financing activities 1,232,491,837
__________ 679,633,059
__________
Net cash flows from financing activities (40,924,392)
__________ (77,572,874)
__________
Effect of foreign exchange rate changes
on cash and cash equivalents 3,154,611 4,150,573
NET INCREASE OF CASH AND CASH EQUIVALENTS 164,700,643 131,769,387
Add: cash and cash equivalents at beginning of the year VI-47(3) 1,092,241,661
__________ 960,472,274
__________
CASH AND CASH EQUIVALENTS AT END OF THE YEAR VI-47(3) 1,256,942,304
__________ 1,092,241,661
__________
-9-
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CASH FLOW STATEMENT OF THE COMPANY
YEAR ENDED 31 DECEMBER 2016
Notes 2016 2015
RMB RMB
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from the sale of goods
and the rendering of services 1,260,184,309 1,407,696,475
Other cash receipts relating to operating activities 232,328,473
__________ 1,050,628
__________
Sub-total of cash inflows from operating activities 1,492,512,782
__________ 1,408,747,103
__________
Cash payments for goods purchased and services received 887,413,606 944,400,045
Cash payments to and on behalf of employees 121,662,409 149,896,172
Cash payment of various types of taxes 132,372,497 191,387,102
Other cash payment relating to operating activities 805,127,368
__________ 1,128,236,602
__________
Sub-total of cash outflows from operating activities 1,946,575,880
__________ 2,413,919,921
__________
Net cash flows from operating activities XIV-28 (454,063,098)
__________ (1,005,172,818)
__________
CASH FLOWS FROM INVESTING ACTIVITIES
Cash receipts from equity investment - 350,000
Cash receipts from deposits over 3 months 18,021,025 46,245,260
Cash receipts from return on investments 1,530,872,587 1,211,082,256
Cash receipts from disposals of fixed assets 9,705,026
__________ 190,205
__________
Sub-total of cash inflows from investing activities 1,558,598,638
__________ 1,257,867,721
__________
Cash payments for acquisition of fixed assets,
intangible assets and other long-term assets 28,351,843 42,104,159
Cash payments for term deposits over 3 months 12,021,025 20,000,000
Cash payments for subsidiary investment 468,882,418 325,163,585
Other cash payment relating to investing activities __________- 5,474,540
__________
Sub-total of cash outflows from investing activities 509,255,286
__________ 392,742,284
__________
Net cash flows from investing activities 1,049,343,352
__________ 865,125,437
__________
CASH FLOWS FROM FINANCING ACTIVITIES
Cash receipts from borrowings 500,000,000 595,268,270
Cash inflows from financing activities 135,584,347
__________ __________ -
Sub-total of cash outflows from investing activities 635,584,347
__________ 595,268,270
__________
Cash paid for dividends, profits and interests 372,039,591 325,424,652
Cash paid for borrowings 764,619,892
__________ 323,051,320
__________
Sub-total of Cash outflows from financing activities 1,136,659,483
__________ 648,475,972
__________
Net cash flows from financing activities (501,075,136)
__________ (53,207,702)
__________
Effect of foreign exchange rate changes
on cash and cash equivalents - 3,807,697
NET INCREASE/(DECREASE) OF CASH
AND CASH EQUIVALENTS 94,205,118 (189,447,386)
Add: cash and cash equivalents at beginning of the year XIV-29 143,798,080
__________ 333,245,466
__________
CASH AND CASH EQUIVALENTS AT END OF THE YEAR XIV-29 238,003,198
__________ 143,798,080
__________
- 10 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED SATATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2016
2016
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 _______
565,955,441 _____
(10,442,512) ________ ________
342,732,000 5,980,390,074 _______
192,459,023 ________
7,756,558,026
II. Changes for the year
(I) Total comprehensive income
1. Net Profit - - - - 982,460,488 (1,871,094) 980,589,394
2. Other comprehensive income (VI-33) - - 5,183,498 - - 432,191 5,615,689
(II) Profit distribution
Distributions to
shareholders (VI-35) _______- _______- _____
- ________- ________
(342,732,000) _______
(546,423) ________
(343,278,423)
III. Closing balance
of the current year 685,464,000 565,955,441 (5,259,014) 342,732,000 6,620,118,562 190,473,697 8,399,484,686
_______ _______ _____ ________ ________ _______ ________
2015
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 _______ ________ ________
(2,803,271) 342,732,000 5,251,920,374 _______
162,740,779 ________
7,003,192,924
II. Changes for the year
(I) Total comprehensive income
1. Net Profit - - - - 1,030,073,860 201,770 1,030,275,630
2. Other comprehensive income (VI-33) - - (7,639,241) - - (102,535) (7,741,776)
(II) Shareholders investment and
Divestment
1. Acquisition subsidiary (VII-1) - - - - - 32,585,408 32,585,408
2. Transaction with non-controlling
interests - 2,816,399 - - - (2,966,399) (150,000)
(III) Profit distribution
Distributions to
shareholders (VI-35) _______- _______- _______- ________- ________
(301,604,160) _______- ________
(301,604,160)
III. Closing balance of
the current year 685,464,000 565,955,441 (10,442,512) 342,732,000 5,980,390,074 192,459,023 7,756,558,026
_______ _______ _______ ________ ________ _______ ________
- 11 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
STATEMENT OF CHANGES IN EQUITY OF THE COMPANY
YEAR ENDED 31 DECEMBER 2016
2016
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
________ 5,872,392,075
_________ 7,457,810,529
_________
II. Changes for the year
(I) Total comprehensive income - - - 1,830,574,470 1,830,574,470
(II) Profit distribution
Distributions to shareholders (VI-35) ________- ________- ________- (342,732,000)
_________ (342,732,000)
_________
III. Closing balance
of the current year 685,464,000 557,222,454
________ 342,732,000
________ 7,360,234,545
_________ 8,945,652,999
_________
________
2015
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
________ 4,620,476,137
_________ 6,205,894,591
_________
II. Changes for the year
(I) Total comprehensive income - - - 1,553,520,098 1,553,520,098
(II) Profit distribution
Distributions to shareholders (VI-35) ________- ________- ________- (301,604,160)
_________ (301,604,160)
_________
III. Closing balance
of the current year 685,464,000
________ 557,222,454
________ 342,732,000
________ 5,872,392,075
_________ 7,457,810,529
_________
- 12 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2016
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, grape growing and acquisition, as well as travel resource
development, etc. . 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 2016 the total shares issued by the Company amounts to 685,464,000 shares.
Please refer to Note VI-31 in detail.
The holding company of the Group is Changyu Group Company, which is jointly controlled by
Yantai GuoFeng Investment Holding Ltd, ILLVA SARONNO HOLDING SPA, International
Finance Corporation and Yantai Yuhua Investment and Development Company Limited.
The financial statements have been authorized by the board of directors on 20 April 2017.
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"). 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).
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.
- 13 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
II. BASIS OF PREPARATION OF FINANCIAL STATEMENTS - continued
2. Basis of accounting and principle of measurement - continued
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 2016, 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.
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 2016, financial performance and cash flow in 2016
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.
- 14 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
continued
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 Company 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. Within the 12 month after acquisition, adjustment for the
provisional recognised value will be regarded as the recognition and measurement at acquisition
date.
At the end of the year for acquisition, if the fair value for qualified identifiable assets, liabilities
and contingent liabilities can be determined temporarily, temporally determined fair value will be
recognised as consideration for recognition and measurement of acquisition.
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.
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 re-evaluate if changes in relevant
facts and circumstances results in changes in relevant factors involved in the above definition of
control.
- 15 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
continued
6. Preparation of consolidated financial statements - continued
6.1 Preparation of consolidated financial statements - continued
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.
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.
For the transaction that Purchase minority interest or disposal part of the equity does not loss the
control of the subsidiaries, it should treated as equity transaction, and adjust the equity attributable
to shareholders and minority interest in order to reflex the changes of equity in subsidiaries. The
difference between minority interest adjustment and fair value of received/paid consideration will
adjust in capital reserve, and if capital reserve is not enough for offset, will adjust surplus reserve.
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.
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.
- 16 -
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 - continued
8.1 Transactions denominated in foreign currencies - continued
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.
- 17 -
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 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.
- 18 -
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.
- 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.
- 19 -
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 - continued
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.
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 payable, account payables, interest
payables, other payables, non-current liabilities due within one year and long-term payables etc.
- 20 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
continued
9. Financial instruments - continued
9.5 Classification, recognition and measurement of financial liabilities - continued
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.
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.
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. Accounts Receivable
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.
- 21 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
continued
10. Accounts Receivable - continued
10.1 Receivables that are individually significant and for which bad debt provision is individually
assessed - continued
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.
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.
- 22 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
continued
11. Inventories - continued
11.3 Basis for determining net realisable value of inventories and provision methods for decline in
value of inventories - continued
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.
12. Non-current assets held for sale
A certain non-current asset of the Group (excluding deferred tax asset) is accounted for as non-
current asset held for sale if all of the following conditions are satisfied at the same time: the non-
current asset can be disposed immediately at its current state solely based on the general terms for
disposal of similar non-current assets; a resolution has been made for the disposal of the non-
current asset; an irrevocable transfer agreement has been entered into with the transferee; and it is
highly probable that the transfer will be completed within one year. Non-current assets held for
sale are not depreciated or amortized, and are measured at the lower of the carrying amount and
the fair value less costs to sell.
13. Long term equity investments
13.1 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.
- 23 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
continued
13. Long term equity investments - continued
13.2 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. Where the acquiree's
equity is obtained at stages through multiple deals and finally a business combination not
involving enterprises under common control is achieved, the deals are accounted for considering
whether they are respectively attributable to "a package deal": where the deals are attributable to
"a package deal", the deals are treated as deals to obtain control.
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.
13.3 Subsequent measurement and recognition of profit or loss
13.3.1 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.
13.4 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.
14. Fixed assets
14.1 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.
- 24 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
continued
14. Fixed assets - continued
14.2 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 5-20years 0-5% 4.8%-20.0%
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.
14.3 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.
15. 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.
- 25 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
continued
16. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying
asset are capitalised when expenditures for such asset and borrowing costs are incurred and
activities relating to the acquisition, construction or production of the asset that are necessary to
prepare the asset for its intended use or sale have commenced. Capitalisation of borrowing costs
ceases when the qualifying asset being acquired, constructed or produced becomes ready for its
intended use or sale. Capitalisation of borrowing costs is suspended during periods in which the
acquisition, construction or production of a qualifying asset is suspended abnormally and when
the suspension is for a continuous period of more than 3 months. Capitalisation is suspended until
the acquisition, construction or production of the asset is resumed. Other borrowing costs are
recognised as an expense in the period in which they are incurred. Where funds are borrowed
under a specific-purpose borrowing, the amount of interest to be capitalized is the actual interest
expense incurred on that borrowing for the period less any bank interest earned from depositing
the borrowed funds before being used on the asset or any investment income on the temporary
investment of those funds.
17. Biological assets
17.1 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 - 5.0%
The Group evaluates the useful life and expected net salvage value by considering the normal
producing life of the bearer biological 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.
- 26 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
continued
18. Intangible assets
Intangible assets include land use rights, software, etc.
An intangible asset is measured initially at cost method. 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. 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 - 2.0%-2.5%
Software 5-10 years - 10.0%-20.0%
Trademark 10 years - 10.0%
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.
19. 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.
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.
- 27 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
continued
20. Long term prepaid expenses
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 5-20 years
Leasehold improvement 3-5years
Others 3 years
21. Employee benefits
21.1 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.
21.2 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.
21.3 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
22. Revenue
22.1 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.
22.2 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.
23. 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.
23.1 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.
23.2 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.
- 29 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
24. Deferred tax assets/deferred tax liabilities
The income tax expenses include current income tax and deferred income tax.
24.1 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.
24.2 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.
- 30 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
24. Deferred tax assets/deferred tax liabilities - continued
24.2 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.
24.3 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.
25. 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.
Operating lease accounting methods
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.
- 31 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
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.
Depreciation
As set out in Note III-14, 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.
- 32 -
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
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 assets 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.
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:
(1) China
Value added tax VAT is levied at 6% and 17% on the invoiced amount after
deduction of eligible input VAT.
Consumption tax The consumption tax of the group is levied on gross revenue
at rates ranging from 10% to 20%.
Business tax The Group is subject to a business tax of 5% on its taxable revenue.
City development tax Levied at 7% of total business tax payment.
Corporate income tax The Group is subject to a corporate income tax rate of 25%
on its taxable income.
- 33 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
V. TAXES - continued
(1) China - continued
As approved by the State Council, according to "Circular on Nationwide Implementation of Pilot
for Change from Business Tax to VAT" (Cai Shui [2016] No.36), since 1 May 2016, all the
business tax payers engaged in construction, real estate, finance and living services etc. are
included in the scope of pilot and pay VAT instead of business tax (the "change from business tax
to VAT"). Thereinto, the VAT rate for living services industry is 6%. The Group has been paying
VAT instead of business tax for its revenue from tour, accommodation, catering etc. since the
"change from business tax to VAT".
(2) France
Value added tax VAT is levied at 19.6% on the invoiced amount after deduction
of eligible input VAT.
Corporate income tax The Group is subject to a corporate income tax rate of 33%
on its taxable income.
(3) Spain
Value added tax VAT is levied at 21% on the invoiced amount after deduction
of eligible input VAT.
Corporate income tax The Group is subject to a corporate income tax rate of 28%
on its taxable income.(2015:30%)
Other than tax incentives stated in Note V-2, applicable tax rates of the Group in 2016 and 2015
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.
Xinjiang Tianzhu Co., Ltd ("Xinjiang Tianzhu"), a subsidiary of the Company, is an enterprise of
wine production and sales incorporated in Shihezi city, Xinjiang Weizu Autonomous. In
accordance with the Notice on Tax Policy Issues concerning Further Implementation of the
Western China Development Strategy (Cai Shui [2011] No.58), Xinjiang Tianzhu is qualified to
enjoy preferential taxation policies, which means it can pay corporate income tax at a preferential
rate of 15% for the period from 2015 to 2020.
Xinjiang Babao Baron Chateau Co., Ltd. ("Shihezi Chateau"), a subsidiary of the Company, is an
enterprise of wine production and sales incorporated in Shihezi city, Xinjiang Weizu Autonomous.
In accordance with the Notice on Tax Policy Issues concerning Further Implementation of the
Western China Development Strategy (Cai Shui [2011] No.58), Shihezi Chateau is qualified to
enjoy preferential taxation policies, which means it can pay corporate income tax at a preferential
rate of 15% for the period from 2015 to 2020.
- 34 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Cash and bank
Closing balance Opening balance
RMB RMB
Cash 117,507 179,488
Bank balance 1,240,607,797 1,103,705,354
Other currency fund 150,792,303
____________ 181,477,572
____________
Total 1,391,517,607
____________ 1,285,362,414
____________
At 31 December 2016, the balance of restricted cash of the Group is as follows:
Closing balance Opening balance
RMB RMB
The Company's housing fund 2,711,926
____________ 2,643,181
____________
2,711,926
____________ 2,643,181
____________
As at 31 December 2016, the Group's other monetary assets is as follows:
Closing balance Opening balance
RMB RMB
Research and Development Co., Ltd
("R&D Centre") pledged deposit 46,100,000 151,100,000
Refundable deposit for notes payable 38,900,000 30,000,000
Deposit for letter of credit 25,694,735 370,000
Alipay account balance 40,047,367 -
Company cards deposit guarantee 50,201
____________ 7,572
____________
150,792,303
____________ 181,477,572
____________
As at 31 December 2016, the balance of restricted of the alipay account is RMB 18,118,441 (31
December 2015: Nil).
As at 31 December 2016, the Group's overseas cash and bank deposit is RMB 16,080,618 (31
December 2015: RMB 6,019,640).
As at 31 December 2016, The Group's term deposits with original maturity of more than three
months when acquired is RMB 3,000,000 (31 December 2015: RMB 9,000,000) with interest rate
1.65%.
- 35 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Notes receivable
(1) Categories of notes receivable
Closing balance Opening balance
RMB RMB
Bank acceptances 210,470,027
__________ 113,988,122
_________
(2) Notes receivable which have been pledged as security at the end of the period
As at 31 December 2016, there was no pledged notes receivable (31 December 2015: Nil).
(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 198,302,531
__________ 84,677,596
_________
As at 31 December 2016, notes endorsed by the Group to other parties which are not yet due at
the end of the period is RMB 198,302,531 (31 December 2015: RMB 84,677,596). 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
As at 31 December 2016, no notes receivable were reclassified as accounts receivable due to the
default of drawer (31 December 2015: 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 75,230,493 43.5 - - 75,230,493 74,538,738 37.7 - - 74,538,738
Accounts receivable that are
not individually significant but
for which bad debt provision
has been assessed individually ______ ___
97,832,135 56.5 ____ ____ ______ ______ ___
- - 97,832,135 123,256,353 62.3 ____
- ____ ______
- 123,256,353
Total 173,062,628 100.0 - - 173,062,628 197,795,091 100.0 - - 197,795,091
______ ___ ____ ____ ______ ______ ___ ____ ____ ______
- 36 -
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 normal credit term is one month, which can be extended to one year for certain major
customers. The accounts receivable are interest-free.
As at 31 December 2016, ownership restricted accounts receivable is RMB 30,732,944 (31
December 2015: RMB 23,880,775), referring to Note VI-48.
The aging analysis is as follows:
Closing balance Opening balance
RMB RMB
Within 1 year 172,610,351 197,653,190
1 to 2 years 452,277
__________ 141,901
__________
173,062,628
__________ 197,795,091
__________
(2) Recognitions, collections and reversals during the current period:
As at 31 December 2016, there was no bad debt provision for accounts receivable (31 December
2015: Nil). There was no bad debt provision made, reversed or written-off by management in
2016 (2015: Nil).
(3) Top five entities with the largest balances of accounts receivable:
Relationship Percentage of
Name with the Group Amount Aging total receivables
RMB %
DIA Market Third party 13,687,807 Within 1 year 7.9
Nongongshang Supermarket
(Group) Co., Ltd Third party 13,625,761 Within 1 year 7.9
Wal-Mart (China) Investment Co., Ltd. Third party 6,416,066 Within 1 year 3.7
Fujian Minhou glorison Co., Ltd Third party 6,025,970 Within 1 year 3.5
Suguo Supermarket Co., Ltd Third party 5,731,598
________ Within 1 year 3.3
___
45,487,202
________ 26.3
___
- 37 -
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 2,175,606 100.0 3,096,223 86.2
1 to 2 years ________- _____- 494,875
________ 13.8
_____
2,175,606
________ 100.0
_____ 3,591,098
________ 100.0
_____
(2) As at 31 December 2016, the top 5 of prepayments were as follows:
Reason Percentage of
Relationship for being total advances
with the Group Amount Aging outstanding to suppliers
RMB %
Shandong Electricity Company
Yantai branch Third party 502,670 Within 1 year electricity purchase 23.1
DONELLIVINI S.P.A Third party 367,148 Within 1 year goods not received 16.9
Xinjiang Hua Xing Glass Co., Ltd Third party 116,267 Within 1 year goods not received 5.3
Shanghai Zi Ri Packing Co., Ltd Third party 104,832 Within 1 year goods not received 4.8
Chongqing Hao Sheng glass
incorporated company Third party 93,456
________ Within 1 year goods not received 4.3
___
1,184,373
________ 54.4
___
5. Interest receivable
(1) Categories of interest receivable
Closing balance Opening balance
RMB RMB
Interests of term deposits 24,200
________ 8,019,338
________
(2) Overdue interest
As at 31 December 2016, there was no overdue interest receivable (31 December 2015: Nil).
- 38 -
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 7,417,220 39.3 - - 7,417,220 32,390,931 60.7 (7,199,521) 22.2 25,191,410
Other receivables that are
not individually significant but
for which bad debt provision
has been assessed individually ______ ___ _____-
11,463,580 60.7 ___- ______ ______ ___ _____-
11,463,580 20,955,077 39.3 ___- ______
20,955,077
Total 18,880,800 100.0
______ ___ _____- 18,880,800
___- ______ ______ ___ (7,199,521) ___ ______
53,346,008 100.0
_____ 14.0 46,146,487
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 8,204,303 43.5 - 8,204,303 36,271,669 68.0 - 36,271,669
1 to 2 years 7,715,992 40.8 - 7,715,992 2,725,644 5.1 - 2,725,644
2 to 3 years 1,929,613 10.2 - 1,929,613 6,840,476 12.8 - 6,840,476
Over 3 years 1,030,892
_______ ____5.5 _______- 1,030,892
_______ 7,508,219
_______ 14.1
____ (7,199,521)
_______ 308,698
_______
Total 18,880,800
_______ ____ _______-
100.0 18,880,800
_______ 53,346,008 100.0 (7,199,521) 46,146,487
_______ ____ _______ _______
(2) Accrual, reversal and written-off during the current period
No bad debt accrued or reversed in 2016 (2015: bad debt was reversed RMB: Nil).
(3) Other receivables written off in the reporting period
Other receivables were written off RMB 7,199,521 in 2016. (2015: Nil).
(4) Disclosure of other receivables by categories
Closing balance Opening balance
RMB RMB
Deposit 13,191,851 27,424,926
Investment fund - 7,199,521
Petty cash receivable 2,934,424 6,679,122
Refund of consumption tax, real estate tax 573,586 635,482
Others 2,180,939
__________ 11,406,957
_________
18,880,800
__________ 53,346,008
_________
- 39 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Other receivables - continued
(5) Top five entities with the largest balances of other receivables
As at 31 December 2016, the top 5 of other receivables are as follows:
Percentage of total Bad debt
Nature Amount Aging other receivables Amount
RMB % RMB
Yantai Development Zone
Finance Bureau Construction deposit 7,417,220 Within 2 years 39.3 -
Yantai Development Zone Construction
Industry Association Construction deposit 2,151,300 Within 3 years 11.4 -
Canada Oros Ice-wine Co., Ltd Foreign investment fund 2,050,000 1-2 years 10.9 -
Shandong Electricity Company
Yantai branch Electricity deposit 1,385,200 2-3years 7.3 -
Yantai Economic and Technological
Development Zone Thermal Co., Ltd Deposit 500,000
________ Within 1 year ___2.6 _______-
13,503,720 71.5
________ ___ _______-
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 72,011,633 - 72,011,633 89,256,433 - 89,256,433
Work in progress 1,253,218,347 - 1,253,218,347 1,247,023,301 - 1,247,023,301
Finished goods 944,806,516
_________ _______ 923,379,760
(21,426,756) _________ 942,720,720
_________ (18,147,490)
_______ 924,573,230
_________
2,270,036,496 _______ 2,248,609,740
(21,426,756) _________
_________ 2,279,000,454 _______ 2,260,852,964
_______ _________ _________ (18,147,490) _________
(2) Inventory provision
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Finished goods 18,147,490 3,279,266
_______ -
________ 21,426,756
________
________
- 40 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
8. Non-current assets held for sale
Expected Expected
Closing balance Fair value disposal fees disposal time
RMB RMB RMB
Zhen Shan Tun Department 2,000,197 16,282,224
_______ 3,878,560
______ Within 1 year
________ _______ ______
Note: The Company has signed an irrevocable agreement for disposal of fixed assets, with the
amount of RMB 16,282,224, according to which the disposal is expected to be completed in 2017.
9. Other current assets
Closing balance Opening balance
RMB RMB
Prepaid taxes 26,238,092 28,201,991
Pending deduct VAT on purchase 135,316,274 3,580,354
Prepaid rent 7,967,876
__________ 16,667,206
__________
169,522,242
__________ 48,449,551
__________
10. 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 10,340,263
_________ (10,000,000)
_______ 340,263
______ 10,402,814
_________ (10,000,000)
_______ 402,814
______
_______ _______
(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 Ding Tao
Construction and
Development Co., Ltd
(Note 1). 10,000,000 - - 10,000,000 10,000,000 - - 10,000,000 18.0 -
Other(Note 2) 402,814 - (62,551) 340,263 - - - - Less than 1% -
10,402,814 - (62,551) 10,340,263 10,000,000 - - 10,000,000
Note 1: An impairment provision amounting to RMB 10,000,000 has been made by the Company
for the balance of the carrying amount of the equity investment in Yantai Dingtao Construction
and Development Co., Ltd. As the fair value of the investee which is an unlisted company cannot
be measured reliably, the Company measured such available-for-sale financial asset at cost.
Note 2: The Group holding equity ratios of investment companies are less than 1%. Investment
companies are all unlisted companies, and their fair value cannot be measured reliably, therefore,
the Group uses cost method to measure these available-for-sale financial assets.
- 41 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Fixed assets
(1) Details of fixed assets
Buildings Machinery Motor Vehicles Total
RMB RMB RMB RMB
I. Total original carrying amount
1. Opening balance 2,647,418,685 1,498,619,150 28,457,393 4,174,495,228
2. Increase
(1)Purchase 6,350,850 33,119,747 4,341,981 43,812,578
(2)Transfer from CIP 1,300,071,628 442,163,898 817,566 1,743,053,092
(3)Acquisition increase 5,935,266 2,114,634 - 8,049,900
3. Decrease
Disposal - (6,881,854) (4,287,799) (11,169,653)
Classified as Non-current
assets held for sale (VI-8) (3,599,221)
__________ __________- ________- (3,599,221)
__________
4. Closing balance 3,956,177,208
__________ 1,969,135,575
__________ 29,329,141
________ 5,954,641,924
__________
II. Total accumulated depreciation
1. Opening balance 336,439,433 725,768,456 23,042,154 1,085,250,043
2. Increase
Additions 75,321,191 120,291,861 2,165,958 197,779,010
3. Decrease
Disposal - (5,902,188) (4,073,410) (9,975,598)
Classified as Non-current
assets held for sale (VI-8) (1,599,024)
__________ __________- ________- (1,599,024)
__________
4. Closing balance 410,161,600
__________ 840,158,129
__________ 21,134,702
________ 1,271,454,431
__________
III. Total carrying amount
1. Closing carrying amount 3,546,015,608
__________ 1,128,977,446
__________ 8,194,439
________ 4,683,187,493
__________
2. Opening carrying amount 2,310,979,252
__________ 772,850,694
__________ 5,415,239
________ 3,089,245,185
__________
As at 31 December 2016, fixed assets with ownership restricted are RMB 68,658,094 (31
December 2015: RMB 18,405,000). Please refer to Notes VI-48 in detail.
As at 31 December 2016, Classified as available for sale assets are RMB 2,000,197 (31 December
2015:Nil), 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.
- 42 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Fixed assets - continued
(2) Fixed assets of which certificates of title have not been obtained
As at 31 December 2016, buildings without property certificate are as follows:
Reasons why certificates
Amount of title have not been obtained
RMB
Research and Development Co, Ltd Industry Production Centre 1,210,828,009 Processing
Changan Chateau Dormitory building, main building 265,374,545 Processing
Xinjiang Shihezi Chateau factory building 256,782,251 Processing
Beijing Chateau European town, main, service building 220,650,663 Processing
Ding Luo Te Chateau main building 90,847,654 Processing
Sales Company office buildings 21,896,020 Processing
Xinjiang Tianzhu fermentations and storage warehouse 19,057,557 Processing
Ice Wine Chateau office building and packing workshop 9,814,003 Processing
Jingyang factory fermentation building 4,389,119 Processing
Fermentation centre office, experiment building and workshop 3,994,837 Processing
Kylin Packaging finished goods warehouse and workshop 2,578,206 Processing
__________
2,106,212,864
__________
12. Construction in progress
(1) Construction in progress:
Closing balance Opening balance
RMB RMB
R&D Centre ("Changyu Wine integrational
Construction") Project 1,227,968,480 1,799,097,086
Ningxia Chateau Construction Project 36,717,169 13,709,767
Shihezi Chateau Construction Project 30,600,684 28,105,618
Sales Company construction project 26,011,600 55,645,386
Xianyang Chateau Construction Project 10,346,598 61,308,522
Ding Luo Te Chateau Project 4,871,422 5,000,221
AFIP plaza reconstruction project 3,713,945 3,659,245
Jingyang Wine fermentation workshop
reconstruction project 2,331,559 997,645
Other companies construction project 2,299,684 973,216
Huanren factory construction project 920,596 29,502,825
The Company's reconstruction project 500,000
____________ 7,990,777
____________
1,346,281,737
____________ 2,005,990,308
____________
- 43 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
12. Construction in progress - continued
(2) Changes in significant construction in progress：
Transfer to Total accumulated Capitalizing Interest
Opening Transfer to intangible Closing Capitalizing interest capitalization
Budget balance Addition PPE assets balance Status interest for this period rate Financed by
RMB RMB RMB RMB RMB RMB % RMB RMB %
Loans from
financial
R&D Centre ("Changyu Wine institutions
integrational Construction") Project 4,505,780,000 1,799,097,086 1,003,719,738 (1,574,848,344) - 1,227,968,480 62.2 2,289,723 2,289,723 1.2 and Self-raised
Changan Chateau Construction
Project 620,740,000 61,308,522 17,783,086 (68,745,010) - 10,346,598 95.0 - - - Self-raised
Sales Company construction project 161,350,000 55,645,386 11,407,602 (27,335,730) (13,705,658) 26,011,600 90.0 - - - Self-raised
Shihezi Chateau Construction
Project 780,000,000 28,105,618 14,565,801 (12,070,735) - 30,600,684 87.9 - - - Self-raised
Ningxia Chateau Construction
Project 414,150,000 13,709,767 31,819,787 (8,812,385) - 36,717,169 95.0 - - - Self-raised
Ding Luo Te Chateau project 192,400,000 5,000,221 4,468,303 (4,597,102) - 4,871,422 95.7 - - - Self-raised
Huanren factory construction project 31,000,000 29,502,825 4,319,991 (32,902,220) - 920,596 95.0 - - - Self-raised
1,992,369,425 1,088,084,308 (1,729,311,526) (13,705,658) 1,337,436,549 2,289,723 2,289,723
The interest capitalized in construction in progress is RMB 2,289,723 in 2016(2015: Nil).
(3) As at 31 December 2016, there was no indication of impairment, therefore no provision was made.
- 44 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. Bearer biological assets
Bearer biological assets are Vines, which measured in cost method
Immature Mature
biological assets biological assets Total
RMB RMB RMB
I. Total original carrying amount
1. Opening balance 132,806,510 70,761,347 203,567,857
2. Increase
(1) Purchase 751,300 - 751,300
(2) Cultivated increase 18,737,361 - 18,737,361
(3) Acquisition increase 1,519,808 250,080 1,769,888
(4) Transfer to mature assets
from immature assets (70,197,077)
__________ 70,197,077
_________ -
__________
3. Decrease
(1) Disposal (5,775,942)
__________ -
_________ (5,775,942)
__________
4. Closing balance 77,841,960
__________ 141,208,504
_________ 219,050,464
__________
II. Total accumulated depreciation
1. Opening balance - 11,369,574 11,369,574
2. Increase
Additions -
__________ 6,251,910
_________ 6,251,910
__________
3. Closing balance -
__________ 17,621,484
_________ 17,621,484
__________
III. Total net carrying amount
1. Closing net carrying amount 77,841,960
__________ 123,587,020
_________ 201,428,980
__________
2. Opening net carrying amount 132,806,510
__________ 59,391,773
_________ 192,198,283
__________
As at 31 December 2016, there was no biological asset with ownership restricted.
As at 31 December 2016, there was no indication that biological assets may be impaired, and no
provision was made.
- 45 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
14. Intangible assets
(1) Intangible asset
Land use rights Software use rights Trademark Total
RMB RMB RMB RMB
I. Total original carrying amount
1. Opening balance 467,605,436 37,653,788 15,237,653 520,496,877
2. Increase
(1)Purchase 23,884,633 1,076,223 201,924 25,162,780
(2)Transfer from CIP - 13,705,658 - 13,705,658
(3)Acquisition increase __________- __________- 2,488
________ 2,488
__________
3. Closing balance 491,490,069
__________ 52,435,669
__________ 15,442,065
________ 559,367,803
__________
II. Total accumulated depreciation
1. Opening balance 46,649,712 9,826,191 121,058 56,596,961
2. Increase
Additions 10,153,718
__________ 2,722,092
__________ 6,079,952
________ 18,955,762
__________
3. Closing balance 56,803,430
__________ 12,548,283
__________ 6,201,010
________ 75,552,723
__________
III. Total carrying amount
1. Closing carrying amount 434,686,639
__________ 39,887,386
__________ 9,241,055
________ 483,815,080
__________
2. Opening carrying amount 420,955,724
__________ 27,827,597
__________ 15,116,595
________ 463,899,916
__________
As at 31 December 2016, the intangible asset with restricted ownership was RMB 145,937,719,
Please refer to Note VI-48 in detail.
(2) Land use right without ownership certificate
As at 31 December 2016, details of land use right without ownership certificates are listed as
below:
Carrying amount Reasons
RMB
A-49 Residential Community of
Yantai Development Zone 23,690,000
__________ In progress
15. Goodwill
Investee Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Etablissements Roullet
Fransac ("Fransac Sales") 13,112,525 - - 13,112,525
Dicot Partners, S.L (" Dicot ") 92,391,901 - - 92,391,901
Societe Civile Argricole Du Chateau
De Mirefleurs ("Mirefleurs") _________- 15,761,440
________ -
______ 15,761,440
_________
Total 105,504,426
_________ 15,761,440
________ -
______ 121,265,866
_________
- 46 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
15. Goodwill - continued
The Group acquired Fransac Sales, Dicot and Mirefleurs in December 2013, September 2015 and
January 2016 respectively, resulting in respective goodwill amounting to RMB 13,112,525,RMB
92,391,901 and RMB 15,761,440, which have been allocated to corresponding asset groups for
impairment testing.
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. According to the corporate financial
structure and local corporate income tax rate, discount rate used in calculating the recoverable
amounts of Fransac Sales, Dicot and Mirefleurs are 10.3%, 8.5% and 10.3% (2015: 8.8%, 7.5%,
N/A) respectively. 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 values of these subsidiaries exceeds their
recoverable amounts.
According to the assessment, the Group confirms that no impairment provision need to be made
for goodwill in the reporting period.
16. Long-term prepaid expenses
Opening balance Increase Amortization Closing balance
RMB RMB RMB RMB
Land lease prepayments 59,328,587 - (1,481,601) 57,846,986
Land requisition fee 46,409,764 - (1,216,864) 45,192,900
Greening fee 34,229,777 25,363,472 (5,132,278) 54,460,971
Leasehold improvement 23,957,390 1,871,939 (24,737,750) 1,091,579
Others 11,198,649
_________ 1,532,588
________ (9,117,444)
________ 3,613,793
_________
175,124,167
_________ 28,767,999
________ (41,685,937)
________ 162,206,229
_________
________
- 47 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
17. 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 Deferred tax Temporary Deferred tax
differences assets differences assets
RMB RMB RMB RMB
Unrealized profit from intra
676,375,006 169,093,751 691,741,084 172,935,271
- company transactions
Unpaid bonus 154,895,784 38,723,946 133,017,447 33,254,362
Retirement benefit 13,115,948 3,278,987 16,147,369 4,036,842
Asset impairment provision 31,426,756 7,856,689 35,347,011 8,836,753
Deductable losses 176,273,380 44,068,345 265,793,269 66,448,318
Deferred income 112,939,126 25,230,521 81,078,284 16,895,110
Accrued Rebate 30,739,192 7,684,798 -- ---
1,195,765,192 295,937,037 1,223,124,464 302,406,656
(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 90,877,162 24,908,410 117,475,753 34,350,349
control
(3) Deferred tax assets and liabilities not recognized
Closing balance Opening balance
RMB RMB
Deductable losses 135,957,252
__________ 41,690,051
_________
(4) Deductable losses not recognized as deferred tax assets will expire in:
Closing balance Opening balance
RMB RMB
2019 7,311,273 -
2020 45,960,766 41,690,051
2021 82,685,213
__________ -
_________
135,957,252
_________ 41,690,051
_________
- 48 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
18. Other non-current assets
Closing balance Opening balance
RMB RMB
Receivable from transfer of biological assets 17,352,239 17,137,746
Prepaid investment fund for Mirefleurs - 22,622,355
Others -
__________ 5,474,540
_________
17,352,239
__________ 45,234,641
_________
19. Short-term borrowings
Closing balance Opening balance
RMB RMB
Credit loans 631,655,938 640,290,788
Mortgaged loans 30,732,944
__________ 25,291,133
__________
662,388,882
__________ 665,581,921
__________
As at 31 December 2016, short-term borrowings detail were as follows:
Loans amount Exchange rate RMB Nature of Interest rate
interest %
Credit loans (RMB) 600,000,000 1.0000 600,000,000 Floating 3.48%~3.92%
Credit loans (EUR) 4,332,394 7.3068 31,655,938 Fixed 0.89%~1.65%
Mortgaged loans (EUR) 4,206,074 7.3068 30,732,944
________ Fixed 0.90%~1.80%
662,388,882
________
________
As at 31 December 2016, mortgaged loans were Dicot Partners, S.L.U (" Dicot ") factoring of
accounts receivable from Banco de Sabadell, S.A. etc. EUR 4,206,074 (translated as RMB
30,732,944)(31 December 2015:RMB 23,880,775). There was no mortgage loans with fixed
assets in 31 December 2016 (31 December 2015:RMB 1,410,358).
20. Notes payable
Closing balance Opening balance
RMB RMB
Bank acceptances 38,900,000
_________ 29,000,000
_________
As at 31 December 2016, there was no due notes payable unpaid (31 December 2015: Nil). Notes
payable are all due within one year.
- 49 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
21. Accounts payable
The aging analysis of accounts payable are as follows
Closing balance Opening balance
RMB RMB
Within 1 year 544,128,280 567,791,049
1 to 2 years 1,103,039
__________ 1,487,319
__________
545,231,319
__________ 569,278,368
__________
22. Advances from customers
The aging analysis of advances from customers are as follows
Closing balance Opening balance
RMB RMB
Within 1 year 419,382,071 229,993,684
1 to 2 years 2,046,166 286,001
2 to 3 years 108,748 530,799
Over 3 years 3,709,436
__________ 3,756,020
__________
425,246,421
__________ 234,566,504
__________
23. Employee benefit payable
(1) Employee benefit payable as follows:
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Short-term payroll 174,061,906 410,151,564 (390,912,851) 193,300,619
Post-demission benefits
- predetermined provision plan 30,176 40,067,340 (40,082,349) 15,167
Termination benefits 16,147,369
_________ 1,594,599
_________ (4,626,020)
_________ 13,115,948
_________
190,239,451
_________ 451,813,503
_________ (435,621,220)
_________ 206,431,734
_________
- 50 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
23. Employee benefit payable - continued
(2) Employee benefit payable:
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Salaries and bonus 174,767,931 375,367,681 (352,486,022) 197,649,590
Staff benefit 179,078 11,865,885 (11,422,228) 622,735
Staff welfare 268,019 15,065,068 (15,075,838) 257,249
Includes:
Medical insurance 268,019 12,691,920 (12,702,690) 257,249
Injury insurance - 1,342,010 (1,342,010) -
Maternity insurance - 1,031,138 (1,031,138) -
Housing fund 47,318 10,313,104 (10,322,750) 37,672
Union fee and education fee 2,847,036
_________ 3,263,856
_________ (3,517,883)
_________ 2,593,009
_________
Total 178,109,382
_________ 415,875,594
_________ (392,824,721)
_________ 201,160,255
_________
Less: Non-current liabilities 4,047,476
_________ 7,696,222
_________
Short-term payroll 174,061,906
_________ 193,300,619
_________
(3) Predetermined provision plan
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Pension 29,995 38,404,278 (38,419,295) 14,978
Unemployment insurance 181
_____ 1,663,062
________ (1,663,054)
________ 189
_____
30,176 40,067,340
________ (40,082,349)
________ 15,167
_____
_____ ________
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 14%-21% and 1%-2% 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 38,404,278 and RMB 1,663,062 (2015: RMB 29,499,285 and RMB
1,648,525) respectively into pension insurance and unemployment insurance. As at 31 December
2016, the Group has unpaid pension and unemployment insurance of RMB 14,978 and RMB 189
respectively (31 December 2015: RMB 29,995 and RMB 181), 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.
- 51 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
24. Taxes payable
Closing balance Opening balance
RMB RMB
Value added tax 23,496,328 (45,821,559)
Consumption tax 30,361,471 18,638,837
Business tax - 509,491
Corporation income tax 69,388,730 49,020,665
Urban land use tax 2,651,262 2,812,536
Individual income tax 7,811,301 6,587,254
City construction tax 4,248,115 4,197,401
Property tax 1,071,223 855,668
Others 5,014,170
__________ 4,484,814
__________
144,042,600
__________ 41,285,107
__________
25. Deferred income
Closing balance Opening balance
RMB RMB
Government grants
Current liabilities 11,163,883 11,241,873
Non-current liabilities 101,775,243
__________ 69,836,411
_________
112,939,126
__________ 81,078,284
_________
- 52 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
25. Deferred income - continued
Government grants:
Recognized in Related to
Opening Addition non-operating income Closing Assets/Income
RMB RMB RMB RMB
Wine base liquor brewage project 7,609,243 - (1,434,943) 6,174,300 Assets
Shihezi chateau project funds 13,836,600 - (2,280,000) 11,556,600 Assets
reconstruction specific funds 19,908,000 - (1,422,000) 18,486,000 Assets
Ningxia industry revitalization and
technology reconstruction funds 7,676,000 - (3,295,000) 4,381,000 Assets
Wine grape subsidies 470,000 - (94,000) 376,000 Income
Modern agriculture grape production
development subsidies 324,000 - (64,800) 259,200 Income
WuYouYiXin industrial cluster specific funds 60,000 - (60,000) - 000 Assets
Agricultural technology subsidies 822,000 - (822,000) - Income
Industry revitalization and technology
(Huanren) wine production construction funds 4,000,000 - - 4,000,000 Assets
Wine electronic tracking system
specific funds 4,526,419 - (667,054) 3,859,365 Assets
Miyun Propaganda Department transfer 2,666,835 - (888,945) 1,777,890 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 59,890 283,200 - 343,090 Income
Information system construction
project technology funds 4,640,000 - (580,000) 4,060,000 Assets
Integration projects subsidies 28,800 - - 28,800 Income
Cross-border e-Business projects subsidies 1,660,497 125,100 (299,800) 1,485,797 Income
Red wine phenolics research projects funds 300,000 - (4,399) 295,601 Income
Grape base construction project 1,560,000 - (520,000) 1,040,000 Assets
Water pollution abatement project - 200,000 (66,267) 133,733 Income
Infrastructure construction project - 1,500,000 (31,250) 1,468,750 Assets
Industrial development support project - 41,000,000 - 41,000,000 Assets
Subsidy for updating of economic and energy-saving
technology _______- ______
1,283,000 _______- _______
1,283,000 Assets
Total 81,078,284 44,391,300 (12,530,458) 112,939,126
_______ ______ _______ _______
Less: Non-current liabilities due within one year _______
11,241,873 _______
11,163,883
Other non-current liabilities 69,836,411 101,775,243
_______ _______
As at 31 December 2016, 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
26. Other payables
(1) Natures of other payables are as follows
Closing balance Opening balance
RMB RMB
Deposit from distributors 128,539,352 114,475,163
Payables for equipment and construction 77,261,072 92,580,929
Payables for transportation 36,690,764 29,713,956
Royalty fee 78,572,540 86,001,287
Advertising costs 79,414,075 76,818,144
Accrued rebate 30,739,192 -
Capital increment from minority interest (Note) 29,847,320 22,522,636
Employee deposit 16,296,186 16,078,904
Deposits from suppliers 2,206,379 5,644,909
Payables for contracting fee 31,011,929 32,936,900
Others 35,726,501
__________ 32,453,567
__________
546,305,310
__________ 509,226,395
__________
(2) Description of significant other payables aged more than one year
Company Amount Reasons
RMB
Beijing Qinglang agriculture science and technology
development limited company 23,983,072 unfinished capital increment(Note)
Beijing Qinglang agriculture science and technology
development limited company 11,074,240 Payables for contracting fee
Yantai De'an Investment Company Limited 5,864,248 unfinished capital increment (Note)
Yantai De'an Investment Company Limited 4,729,122
_________ Payables for contracting fee
45,650,682
_________
Note: Unfinished capital increment is the investment fund from minority shareholders for the
subsidiary of the Company. As at 31 December 2016, capital increment procedures have not
finished.
27. Non-current liabilities due within one year
Closing balance Opening balance
RMB RMB
Long-term borrowings due within one year 59,799,093 156,335,647
Long-term payables due within one year 12,000,000
__________ -
_________
71,799,093 156,335,647
__________
__________
As at 31 December 2016, Long-term borrowings due within one year refers to Note VI-28, Long-
term payables due within one year refers to Note VI-29.
- 54 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
28. Long-term borrowings
Closing balance Opening balance
RMB RMB
Credit loan 40,304,811 66,868,836
Mortgaged loan 8,835,744
___________ 4,817,793
___________
49,140,555
___________ 71,686,629
___________
As at 31 December 2016, loans detail is as follows:
Loans amount Exchange rate RMB Nature Interest rate Due within Due over
of interest % one year one year
Credit loans (EUR) 4,000,000 7.3068 29,227,200 Floating 3.70% 29,227,200 -
Credit loans (EUR) 1,200,724 7.3068 8,773,451 Floating 1.75%-2.10% 7,261,465 1,511,987
Credit loans (EUR) 8,139,378 7.3068 59,472,805 Fixed 1.00%-4.42% 20,679,980 38,792,824
Mortgaged loans (EUR) (note)1,569,249 7.3068 ______
11,466,192 Fixed 2.10% _______2,630,448 _______
8,835,744
108,939,648 59,799,093 49,140,555
______ _______ _______
Note: As at 31 December 2016, mortgaged loans were Atrio using fixed assets EUR 3,765,967
(translated as RMB 27,517,168) as collateral for loans from Popular Espaol, EUR 1,569,249
(translated as RMB 11,466,192), (31 December 2015: RMB 6,068,519).
29. Long-term payables
Closing balance Opening balance
RMB RMB
Agricultural Development
Fund of China("CADF") 293,000,000
__________ -
_________
In 2016, RMB 305,000,000 from CADF was invested in R&D Centre, CADF accounted for
37.9% of the registered capital. According to the investment agreement, CADF will recovery
investment funds over 10 years, the investment income received equal to 1.2% of the remaining
unpaid principal per annum. In addition to the fixed income, CADF will no longer enjoy other
profits or bear the loss of R&D Centre .Therefore although the investment in R&D Centre,
nominally equity investment, is actually a debt investment. The group take this investment as
long-term payables, which measured in amortized cost. Refer to Note VI-48 for details of
mortgaged and pledged assets.
Long-term payables Termination date Due within 1 year Due after 1 year Mortgaged and pledged assets
RMB Yield rate Investment date of repayment RMB RMB
87,000,000 1.2% 12 January 2016 24 December 2025 10,000,000 77,000,000 Cash and bank and intangible assets
198,000,000 1.2% 29 February 2016 28 February 2026 - 198,000,000 Fixed assets and intangible assets
______
20,000,000 1.2% 16 June 2016 22 May 2026 _______
2,000,000 _______
18,000,000 Cash and bank
______
305,000,000 _______
12,000,000 _______
293,000,000
- 55 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
30. Other non-current liabilities
Closing balance Opening balance
RMB RMB
Employee benefit 7,696,222
_________ 4,047,476
_________
As at 31 December 2016, employee benefit represents deposit from bonus accrued for managers
and above. According to the bonus payment schedule of 2016, the bonus is expected to be paid
during 2018 to 2020.
31. Share capital
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
_________
_________
32. Capital reserve
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Share premium 560,038,853 - - 560,038,853
Other 5,916,588
_________ -
______ -
______ 5,916,588
_________
Total 565,955,441
_________ -
______ -
______ 565,955,441
_________
33. Other comprehensive income
2016
2016 Less: last year other Post-tax Post-tax
Before-tax comprehensive income Less: attributable attributable
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 (10,442,512) 5,615,689 - - 5,183,498 432,191 (5,259,014)
Foreign currency statement
translation difference (10,442,512) 5,615,689 - - 5,183,498 432,191 (5,259,014)
______ _____ ____ ____ _____ ____ _____
34. Surplus reserve
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Statutory surplus reserve 342,732,000
_________ -
______ -
______ 342,732,000
_________
- 56 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
34. Surplus reserve - continued
In accordance with the Company Law of the People's Republic of China and the Articles of
Association of the Company, the Company is required to appropriate 10% of the net profit to the
statutory surplus reserve until the accumulated balance of the statutory surplus reserve reaches 50%
of the registered share capital. The Company does not appropriate net profit to the surplus reserve
in 2016.
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.
35. Retained earnings
Closing balance Opening balance
RMB RMB
Retained earnings brought forward 5,980,390,074 5,251,920,374
Profit attributable to shareholders of the Company 982,460,488 1,030,073,860
Less: Dividends paid in respect prior year's profit (342,732,000)
____________ (301,604,160)
____________
Retained earnings carried forward 6,620,118,562
____________ 5,980,390,074
____________
(1) Appropriation to surplus reserve by subsidiaries
As at 31 December 2016, the balance of the Group's unappropriated profits include appropriation
to surplus reserve by subsidiaries amounting to RMB 71,360,640 (31 December 2015: RMB
54,946,701).
(2) Cash dividends approved by general meeting
According to the annual general meeting on 26 May 2016, dividends distribution plan has been
made. On the basis of 685,464,000 issued share capital, RMB 5.0 (including taxes) for every 10
shares was distributed to shareholders, in total RMB 342,732,000 cash dividends.
(3) Profit distribution decided after the balance sheet date
According to a proposal of the board of directors approved on 20 April 2017, on the basis of
685,464,000 issued shares in 2016, cash dividends of RMB 5.0 (including taxes) for every 10 share
will be distributed to all the shareholders. The aggregate amount of cash dividend is RMB
342,732,000. The above proposal regarding dividends distribution is yet to be approved in a
shareholders' meeting.
- 57 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
36. Operating income and costs
Operating income is analysed as follows:
2016 2015
RMB RMB
Principal operating income 4,646,909,704 4,589,025,348
Other operating income 70,686,768
____________ 60,697,020
____________
4,717,596,472
____________ 4,649,722,368
____________
Operating cost is analysed as follows:
2016 2015
RMB RMB
Principal operating cost 1,552,022,043 1,484,994,084
Other operating cost 23,748,936
____________ 27,508,951
____________
1,575,770,979
____________ 1,512,503,035
____________
The operating income for the Group is mainly from the sales of wine, brandy and sparkling wine.
In 2016, Over 94% (2015: over 98%) of the sales generated in PRC.
37. Taxes and surcharges
2016 2015
RMB RMB
Consumption tax 161,411,393 160,472,712
Business Tax 1,358,414 3,613,680
City construction tax 46,375,109 50,491,173
Education fee and surcharges 33,975,886 36,625,254
Property tax 8,221,152 -
Land use tax 9,146,595 -
stamp tax 2,659,421 -
Others 6,568,676
__________ 6,810,705
__________
269,716,646
__________ 258,013,524
__________
For detail standards of tax rate please refer to Notes V.
- 58 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
38. Selling expenses
2016 2015
RMB RMB
Advertising costs 536,552,061 547,276,390
Salary and employee benefit 258,845,366 237,132,890
Freight 135,375,515 124,662,391
Trademark fee 74,125,038 83,734,976
Warehouse leasing expenses 73,141,275 70,352,917
Depreciation cost 29,477,270 18,866,370
Labor fee 29,411,296 25,367,133
Travelling expenses 27,589,397 25,946,093
Renovation costs 25,292,999 19,140,522
Water and electricity fee 8,160,610 5,344,561
Office allowance 6,166,163 6,794,673
Packing cost 5,651,814 5,090,563
Security and sanitation fee 4,244,698 3,617,320
Business entertainment 3,871,778 2,227,544
Greening fee 3,651,567 2,993,204
Property management fee 3,320,577 4,487,152
Others 28,383,244
____________ 28,092,464
____________
1,253,260,668
____________ 1,211,127,163
____________
39. General and administrative expense
2016 2014
RMB RMB
Salary and employee benefit 98,464,931 90,478,250
Depreciation 45,605,723 38,123,017
Contracting fee 20,635,049 19,144,698
Maintenance fee 18,625,443 15,686,214
Administrative expenses 15,829,574 16,772,528
Amortization 14,795,181 12,129,490
Greening fee 11,509,618 15,154,393
Fire charge 10,923,600 -
Leasing expenses 10,702,734 9,190,948
Property tax, stamp duty and other taxes 10,169,607 28,441,366
Entertainment fee 7,253,858 5,660,174
Security and sanitation fee 5,889,095 6,573,075
Service fee 5,194,426 14,878,018
Travelling expenses 4,961,661 5,018,296
Others 29,223,048
__________ 36,717,942
__________
309,783,548
__________ 313,968,409
__________
- 59 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
40. Loss on impairment of assets
2016 2015
RMB RMB
Inventory impairment 3,279,266
________ 2,823,115
_________
41. Financial income
2016 2015
RMB RMB
Interest income (15,397,901) (16,778,280)
Exchange loss 7,632,532 4,349,534
Less: Interest expenses 27,831,179 21,957,762
Bank charges 1,903,049
__________ 1,758,669
__________
21,968,859
__________ 11,287,685
__________
42. Non-operation income
Recognized in
extraordinary
2016 2015 profit and loss
RMB RMB RMB
Gains on disposal of non-current assets 157,846 192,945 157,846
Including: gain on disposal of plant
property and equipment 157,846 192,945 157,846
Government grants 49,130,643 38,952,919 49,130,643
Penalty income 2,617,684 7,246,157 2,617,684
Others 3,265,987
_________ 3,673,296
_________ 3,265,987
_________
55,172,160
_________ 50,065,317
_________ 55,172,160
_________
- 60 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
42. Non-operation income - continued
Government grants recognized in the income statement is as follows:
Assets/income
2016 2015 related
RMB RMB
Major projects support fund 7,040,888 7,134,819 Assets related
Small and medium enterprises
support fund 4,138,304 4,107,054 Assets related
Tax refund 17,860,500 17,833,465 Income related
Others 20,090,951
_________ 9,877,581
_________ Income related
49,130,643
_________ 38,952,919
_________
43. Non-operation expenses
Recognized in
extraordinary
2016 2015 profit and loss
RMB RMB RMB
Loss on disposal of non-current assets 143,127 56,884 143,127
Including: losses from disposal
of fixed assets 143,127 56,884 143,127
Compensation and penalty loss 618,190 1,102,893 618,190
Donation 305,080 288,009 305,080
Others 303,429
_________ 457,103
_________ 303,429
_________
1,369,826
_________ 1,904,889
_________ 1,369,826
_________
44. Income tax
2016 2015
RMB RMB
Current income tax 360,001,766 407,380,757
Deferred income tax (2,972,320)
__________ (49,496,522)
__________
357,029,446
__________ 357,884,235
__________
- 61 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
44. Income tax - continued
Reconciliation between income tax expenses and profits is as follows:
2016 2015
RMB RMB
Profit before tax 1,337,618,840 1,388,159,865
Income tax expense at statutory tax rate 25% (2015:25%) 334,404,710 347,039,966
Effect of different tax rates applied by certain subsidiaries (4,829,468) (3,509,042)
Special tax incentives for oversea subsidiaries (2,520,771) -
Changes in opening balances of deferred tax
liabilities due to tax rate adjustment (1,992,564) -
Unrecognised deductable loss 20,671,303 10,422,513
Reversal of recognized deductible losses 2,895,497 -
Non-deductible expenses 6,892,488 3,930,798
Others 1,508,251
____________ -
____________
Income tax expenses at the Group's effective tax rate 357,029,446
____________ 357,884,235
____________
45. 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.
2016 2015
RMB RMB
Earnings
Consolidated profit attributable to ordinary
shareholders of the Company 982,460,488
____________ 1,030,073,860
____________
Shares
Weighted average number of outstanding
ordinary shares 685,464,000
____________ 685,464,000
____________
Basic earnings per share 1.43
____________ 1.50
____________
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
46. Notes to consolidated cash flow statement
(1) Cash received relating to other operating activities:
2016 2015
RMB RMB
Government grants 19,347,985 9,774,028
Interest income 2,808,735 1,679,535
Penalty income 2,617,684 7,246,157
Refundable deposits of notes payable 38,130,000 -
Others 3,803,461
_________ 3,673,296
_________
66,707,865
_________ 22,373,016
_________
(2) Cash paid relating to other operating activities:
2016 2015
RMB RMB
Selling expenses 942,936,949 949,202,920
General and administrative expenses 113,297,901 110,003,182
Refundable deposits of notes payable 47,030,000 20,000,000
Others 2,449,673
____________ 4,181,035
____________
1,105,714,523
____________ 1,083,387,137
____________
(3) Cash paid for the purchase subsidiaries and other equity:
2016 2015
RMB RMB
Cash paid for acquisition of Dicot - 190,148,125
Less: cash and cash equivalents for Dicot
at acquisition date - 4,902,074
Prepaid investment fund for Mirefleurs 3,540,923 22,622,355
Less: cash and cash equivalents for Mirefleurs
at acquisition date 1,779
__________ -
__________
3,539,144
__________ 207,868,406
__________
- 63 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
46. Notes to consolidated cash flow statement - continued
(4) Cash received relating to other financing activities:
2016 2015
RMB RMB
Pledged borrowing deposits and interest 135,584,347 -
Received government grants related to assets 43,783,000 4,000,000
Interest income from restricted deposits of
R&D Centre 1,110,240
__________ -
__________
180,477,587
__________ 4,000,000
__________
(5) Cash paid relating to other financing activities:
2016 2015
RMB RMB
Time deposits pledged of long-term borrowings of
R&D Centre 20,000,000 26,100,000
Canada Oros investment fund return -
__________ 2,050,000
__________
20,000,000
__________ 28,150,000
__________
- 64 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
47. Supplementary information to consolidated cash flow statement
(1) Supplementary information to consolidated cash flow statement
2016 2015
RMB RMB
Cash flows from operating activities
calculated by adjusting the net profit:
Net profit 980,589,394 1,030,275,630
Add: Loss for impairment of assets 3,279,266 2,823,115
Depreciation of fixed assets 197,779,010 163,322,504
Amortization of intangible assets 18,955,762 13,163,757
Amortization of Biological assets 6,251,910 1,708,554
Amortization of long-term prepaid expenses 41,685,937 32,050,283
Gains on disposal of property
plant and equipment (14,719) (136,061)
Finance expense 25,919,561 6,516,142
Decrease/ (increase) in deferred tax assets 6,469,619 (48,219,833)
Decrease in deferred tax liabilities (9,441,939) (1,276,689)
Decrease in inventories 18,897,985 3,921,192
Increase in operating receivables (737,321,198) (175,316,875)
Increase in operating payables 336,861,382
____________ 114,214,648
____________
Net cash flows from operating activities 889,911,970
____________ 1,143,046,367
____________
(2) Significant investing and financing activities not involving cash receipts and payments.
Closing balance Opening balance
RMB RMB
Payment of intangible assets and other
long-term assets by bank acceptances 503,817,808
____________ 158,702,666
____________
(3) Cash and cash equivalent
Closing balance Opening balance
RMB RMB
Closing balance of cash and bank 1,391,517,607 1,285,362,414
Less:
Restricted bank deposits 2,711,926 2,643,181
Restricted other monetary funds 128,863,377 181,477,572
Deposit with a period of over three months 3,000,000
____________ 9,000,000
____________
Closing balance of cash and cash equivalents 1,256,942,304
____________ 1,092,241,661
____________
- 65 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
47. Supplementary information to consolidated cash flow statement - continued
(3) Cash and cash equivalent - continued
Closing balance Opening balance
RMB RMB
Cash 1,256,942,304 1,092,241,661
Including: Cash on hand 117,507 179,488
Bank deposits on demand 1,256,824,797
___________ 1,092,062,173
__________
Closing balance of cash and cash equivalents 1,256,942,304
___________ 1,092,241,661
__________
48. Assets with restriction of ownership
Closing balance Opening balance
RMB RMB
Cash and bank 131,575,303 184,120,753
Account receivable 30,732,944 23,880,775
Fixed assets 68,658,094 18,405,000
Intangible assets 145,937,719 -
__________ __________
As at 31 December 2016, cash and bank balances with restriction of ownership as follows:
Closing balance Opening balance
RMB RMB
Pledged time deposits for R&D Centre 46,100,000 151,100,000
Refundable deposits of notes payable 38,900,000 30,000,000
Refundable deposits of letter of credit 25,694,735 370,000
Balance in Alipay account 18,118,441 -
The Company’s housing fund 2,711,926 2,643,181
Margin for entity card 50,201
___________ 7,572
__________
Total 131,575,303
___________ 184,120,753
__________
- 66 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
48. Assets with restriction of ownership - continued
Among the aforementioned items, the amount of RMB 18,118,441 which is the blocked balances
of goods payment in Alipay account can be unlocked after 15 days.
As at 31 December 2016, the amount of accounts receivable with restricted ownership is EUR
4,206,074 (translated as RMB 30,732,944) , which refers to accounts receivable Atrio conducted
for factoring from Banco de Sabadell, S.A. etc.
As at 31 December 2016, the net carrying amount of fixed assets that the Company has pledged
for long-term borrowings and long-term accounts payables is RMB 68,658,094.
As at 31 December 2016, the net carrying amount of intangible assets with restricted ownership is
RMB 145,937,719, which mainly refers to the land use rights that Company has pledged for long-
term borrowings.
49. Foreign monetary items
(1) Foreign monetary items
The foreign monetary items located within China are as follows:
Closing foreign Exchange Closing translated
currency balance rate RMB balance
Cash and bank
EUR 77,487 7.3068 566,182
HKD 215 0.8945 192
__________ ______ __________
Long-term borrowings due within one year
EUR 4,000,000 7.3068
______ 29,227,200
__________
__________
(2) Overseas business entities
The Company’s overseas subsidiaries determine bookkeeping currency based on the primary
economic environment. The bookkeeping base currency of Atrio and Francs Champs
Participations SAS ("Francs Champs") are all in Euro, and Atrio and Francs Champs have no
foreign monetary items at the year end.
- 67 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VII. CHANGE IN CONSOLIDATION SCOPE
1. Business combination under different control
(1) Business combination under different control in current period
Name of Equity Equity Equity Revenue from Net profit from
Equity Acquisition Basis of
acquisition acquisition acquisition ratio acquisition acquisition date acquisition date
acquisition cost date acquisition date
company date (%) method to year end to year end
Finish payment
Mirefleurs 1 Jan 2016 EUR 3,816,000 100 Purchase 1 Jan 2016 RMB 8,016,542 RMB 807,079
and acquire equity
Other detail information:
Pursuant to the Equity Transfer Agreement entered into between the Group and Vignobles et
Domaines Castel S.L ("VDC S.L.") on 12 May 2015, the Group acquired 100% shares held by
VDC S.L in Mirefleurs by cash consideration of EUR 3,816,000 (equivalent to RMB 26,163,278).
As at 31 December 2015, the Company satisfied the prerequisite for the entire equity transfer. As
at 1 January 2016, the Company obtained the control over the financial and operating policies of
Mirefleurs through allocation of directors based on the Articles of Association of the Company.
The Company invested EUR 3,330,000 (equivalent to RMB22,622,355) for the advanced
payment on 24 November 2015 and EUR 486,000 (equivalent to RMB3,540,923) for the
remaining payment in December 2016.
(2) Consideration and Goodwill
Consideration
Mirefleurs
RMB
Cash 26,163,278
Total consideration 26,163,278
Less: acquired provisional value of net assets 10,401,838
__________
Goodwill 15,761,440
__________
- 68 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VII. CHANGE IN CONSOLIDATION SCOPE - continued
1. Business combination under different control - continued
(3) Recognised assets and liabilities of mergee at acquisition date
Mirefleurs
Fair value Book value
at acquisition date at acquisition date
RMB RMB
Assets
Cash and bank 1,779 1,779
Accounts receivable 3,555 3,555
Other receivables 62,151 62,151
Inventories 9,934,027 9,934,027
Other current assets 1,191,401 1,191,401
Fixed assets 8,049,900 8,049,900
Biological assets 1,769,888 1,769,888
Intangible assets 2,488
____________ 2,488
____________
Total assets 21,015,189
____________ 21,015,189
____________
Liabilities
Accounts payable 911,071 911,071
Other payables 9,378,334 9,378,334
Employee compensation payable 323,946
____________ 323,946
____________
Total liabilities 10,613,351
____________ 10,613,351
____________
Net assets 10,401,838 10,401,838
Less：Non-controlling interests -
____________ -
____________
Acquired net assets 10,401,838
____________ 10,401,838
____________
2. 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
Guangzhou Changyu Pioneer 22 July 2015 Wang, Hongshan Sales RMB 10,000,000 Wholesale trade 91440105347476120M
Sales Co. Ltd ("Guangzhou Pioneer") * Guangzhou Guangdong, China
* As at 31 December 2015, these subsidiaries had completed registration but paid share
capital in 2016, therefore they are included in the consolidation scope of the Group in
2016.
- 69 -
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
Mirefleurs Bordeaux, France Bordeaux, France Trading 100% Subsidiary acquired in business combination
under non-common control
Atrio (b) Navarra, Spain Navarra, Spain Sales 75% 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") (c)
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") (d)
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 Chateau (e) 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., Benxi, Liaoning, China Benxi, Liaoning, China Sales 100% - Subsidiaries acquired by establishment
Ltd. ("National Wines")
Liaoning Changyu Ice Wine Chateau Co., Ltd. Benxi, Liaoning, China Benxi, Liaoning, China Manufacturing 51% - Subsidiaries acquired by establishment
("Ice Chateau") (f)
Yantai Development Zone Changyu Trading Yantai, Shandong, China Yantai, Shandong, China Sales - 100% Subsidiaries acquired by establishment
Co., 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 Miyun, Beijing, China Miyun, Beijing, China Service - 100% Subsidiaries acquired by establishment
Center")
Beijing AFIP Tourism and Culture ("AFIP Miyun, Beijing, China Miyun, Beijing, China Tourism - 100% Subsidiaries acquired by establishment
Tourism")
Ningxia Wine Co.Ltd. ("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 65% 35% 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")
Shihezi 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")
R&D Centre (g) Yantai, Shandong China Yantai, Shandong China Manufacturing 62% - Subsidiaries acquired by establishment
Changyu (HuanRen) Wine Co., Ltd Benxi LiaoNing China Benxi LiaoNing China Wine 100% - Subsidiaries acquired by establishment
("Huan Ren Wine") production
Projecting
Xinjiang Sales Shihezi Xinjiang China Shihezi Xinjiang China Sales - 100% Subsidiaries acquired by establishment
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 Changyu Wine Sales Co., Ltd Lanzhou Gansu, China Lanzhou Gansu, China Sales - 100% Subsidiaries acquired by establishment
("Lanzhou Sales")
Beijing Retailing Co. Ltd("Beijing Retailing") Beijing, China Beijing, China Sales - 100% Subsidiaries acquired by establishment
Tianjin Changyu Pioneer Sales Co., Ltd Tianjin, China Tianjin, China Sales - 100% Subsidiaries acquired by establishment
("Tianjin Pioneer")
Fuzhou Changyu Pioneer Sales Co., Ltd Fuzhou Fujian, China Fuzhou Fujian, China Sales - 100% Subsidiaries acquired by establishment
("Fuzhou Pioneer")
Nanjing Changyu Pioneer Sales Co., Ltd Nanjing, Jiangsu, China Nanjing, Jiangsu, China Sales - 100% Subsidiaries acquired by establishment
("Nanjing Pioneer")
Xianyang Changyu Pioneer Sales Co., Ltd Xianyang, Shanxi, China Xianyang, Shanxi, China Sales - 100% Subsidiaries acquired by establishment
("Xianyang Pioneer")
Shenyang Changyu Pioneer Sales Co., Ltd Shenyang, Liaoning, China Shenyang, Liaoning, China Sales - 100% Subsidiaries acquired by establishment
("Shenyang Pioneer")
Jinan Changyu Pioneer Sales Co., Ltd ("Jinan Jinan, Shandong, China Jinan, Shandong, China Sales - 100% Subsidiaries acquired by establishment
Pioneer")
Shanghai Changyu Pioneer Sales Co., Ltd Shanghai, China Shanghai, China Sales - 100% Subsidiaries acquired by establishment
("Shanghai Pioneer")
Fuzhou Changyu Pioneer Sales Co., Ltd Fuzhou, Jiangxi, China Fuzhou, Jiangxi, China Sales - 100% Subsidiaries acquired by establishment
("Fuzhou Pioneer")
Shijiazhuang Changyu Pioneer Sales Co., Ltd Shijiazhuang, Hebei, China Shijiazhuang, Hebei, China Sales - 100% Subsidiaries acquired by establishment
("Shijiazhuang Pioneer")
Hangzhou Yuzefeng Sales Co., Ltd ("Hangzhou Hangzhou, Zhejiang, China Hangzhou, Zhejiang, China Sales - 100% Subsidiaries acquired by establishment
Yuzefeng")
Jilin Changyu Pioneer Sales Co., Ltd ("Jilin Changchun, Jilin, China Changchun, Jilin, China Sales - 100% Subsidiaries acquired by establishment
Pioneer")
Beijing Changyu Pioneer Sales Co., Ltd Beijing, China Beijing, China Sales - 100% Subsidiaries acquired by establishment
("Beijing Pioneer")
Haerbin Changyu Pioneer Sales Co., Ltd Haerbin, Heilongjiang, China Haerbin, Heilongjiang, China Sales - 100% Subsidiaries acquired by establishment
("Haerbin Pioneer")
- 70 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VIII. INTERESTS IN OTHER ENTITIES - continued
1. Structure of the Group - continued
Equity interest owned
by the company
Name Address Place of registration Nature Direct Indirect Acquisition method
Hunan Changyu Pioneer Sales Co., Ltd ("Hunan Changsha, Hunan, China Changsha, Hunan, China Sales - 100% Subsidiaries acquired by establishment
Pioneer")
Yinchuan Changyu Pioneer Sales Co., Ltd Yinchuan, Ningxia, China Yinchuan, Ningxia, China Sales - 100% Subsidiaries acquired by establishment
("Yinchuan Pioneer")
Kunming Changyu Pioneer Sales Co., Ltd Kunming, Yunnan, China Kunming, Yunnan, China Sales - 100% Subsidiaries acquired by establishment
("Kunming Pioneer")
Chongqing Changyu Pioneer Sales Co., Ltd Chongqing, China Chongqing, China Sales - 100% Subsidiaries acquired by establishment
("Chongqing Pioneer")
Zhengzhou Changyu Pioneer Sales Co., Ltd Zhengzhou, Henan, China Zhengzhou, Henan, China Sales - 100% Subsidiaries acquired by establishment
("Zhengzhou Pioneer")
Wuhan Changyu Pioneer Sales Co., Ltd Wuhan, Hubei, China Wuhan, Hubei, China Sales - 100% Subsidiaries acquired by establishment
("Wuhan Pioneer")
Taiyuan Changyu Pioneer Sales Co., Ltd Taiyuan, Shanxi, China Taiyuan, Shanxi, China Sales - 100% Subsidiaries acquired by establishment
("Taiyuan Pioneer")
Huhehaote Changyu Pioneer Sales Co., Ltd Huhehaote Inner Mongolia, China Huhehaote Inner Mongolia, Sales - 100% Subsidiaries acquired by establishment
("Huhehaote Pioneer") China
Chengdu Changyu Pioneer Sales Co., Ltd Chengdu, Sichuan, China Chengdu, Sichuan, China Sales - 100% Subsidiaries acquired by establishment
("Chengdu Pioneer")
Nanning Changyu Pioneer Sales Co., Ltd Nanning, Guangxi, China Nanning, Guangxi, China Sales - 100% Subsidiaries acquired by establishment
("Nanning Pioneer")
Lanzhou Pioneer Lanzhou Gansu, China Lanzhou Gansu, China Sales - 100% Subsidiaries acquired by establishment
Yantai Fulangduo Yantai Shandong, China Yantai Shandong, China Sales - 100% Subsidiaries acquired by establishment
Hefei Pioneer Hefei, Anhui, China Hefei, Anhui, China Sales - 100% Subsidiaries acquired by establishment
Urumchi Pioneer Urumchi Xinjiang, China Urumchi Xinjiang, China Sales - 100% Subsidiaries acquired by establishment
Guizhou Pioneer Guiyang Guizhou, China Guiyang Guizhou, China Sales - 100% Subsidiaries acquired by establishment
Guangzhou Pioneer Guangzhou Guangdong China Guangzhou Guangdong China Sales - 100% Subsidiaries acquired by establishment
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) As at 12 September 2016, Dicot has completed an internal reorganization. Hacienda y
Vinedos Marques del Atrio, S.L.U. consolidated Enotec S.L, Hostaler I S.L., Faustino
Rivero Ulecia S.L.by Absorption merger. After the completion of the reorganization, Atrio
became the only surviving company.
(c) 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.
(d) 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.
(e) 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.
(f) 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 2021.
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VIII. INTERESTS IN OTHER ENTITIES - continued
1. Structure of the Group - continued
(g) R&D Centre is a joint venture established by the Company and CADF, accounting for 62%
of R&D Centre's equity interest at 31 December 2016. As mentioned in Note VI-29 ,
in 2016, RMB 305,000,000 from CADF was invested in R&D Centre's, CADF
accounted for 37.9% of the registered capital. According to the investment agreement,
CADF will recovery investment funds over 10 years, the investment income received
equal to 1.2% of the remaining unpaid principal per annum. In addition to the fixed
income, CADF will no longer enjoy other profits or bear the loss of R&D Centre.
Therefore although the investment in R&D Centre, nominally equity investment, is
actually a debt investment. The group take this investment as long-term payables, which
measured in amortized cost. The company is fully responsible for the operation,
investment and financial policies of the R&D Centre in the form of such agreements. The
agreement will expire on 22 May 2026.
2. Non-wholly owned subsidiaries
Name Minority Profit and loss belongs Distributions to Closing balance of
shareholder ratio to minority interest shareholders minority interest
Xinjiang Tianzhu 40% - - 56,093,912
Atrio 25% (1,438,903) (546,423) 30,699,317
Changyu Chateau 30% - - 12,365,016
Langfang Castel 51% - - 22,702,522
Beijing Chateau 30% - - 35,293,868
Ice Chateau 49% -
_________ -
_______ 33,319,062
__________
Total (1,438,903)
_________ (546,423)
_______ 190,473,697
__________
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
Name Non-
Current Non-current Total Current Total Current Non-current Current Non-current Total
current Total assets
assets assets assets liabilities liabilities assets assets liabilities liabilities liabilities
liabilities
Xinjiang
Tianzhu 80,126,247 77,008,886 157,135,133 23,266,974 5,336,114 28,603,088 101,018,712 81,709,715 182,728,427 15,554,068 5,336,114 20,890,182
Changyu
Chateau 173,934,285 116,396,690 290,330,975 210,904,481 - 210,904,481 156,538,810 118,256,609 274,795,419 191,898,436 - 191,898,436
Langfang Castel 26,528,622 19,890,293 46,418,915 10,233,932 - 10,233,932 30,867,940 22,471,694 53,339,634 7,913,957 - 7,913,957
Beijing
Chateau 88,294,417 502,368,404 590,662,821 431,222,472 888,945 432,111,417 216,643,935 523,151,845 739,795,780 588,733,969 1,777,890 590,511,859
Ice Chateau 38,239,653 27,545,615 65,785,268 13,756,944 100,000 13,856,944 43,224,419 29,322,675 72,547,094 12,623,467 100,000 12,723,467
Atrio 333,455,551 131,921,130 465,376,681 272,843,155 69,572,335 342,415,490 277,879,914 157,297,623 435,177,537 259,625,473 44,813,493 304,438,966
2016 2015
Name Total Total
Operating activities Operating activities
Revenue Net profit (loss) comprehensive Revenue Net profit (loss) comprehensive
cash flows cash flows
income income
Xinjiang Tianzhu 118,253,496 11,561,969 11,561,969 5,647,080 107,683,230 (37,548) (37,548) 44,250,338
Changyu Chateau 102,588,593 13,184,637 13,184,637 16,751,337 98,894,499 7,573,641 7,573,641 22,609,230
Langfang Castel 41,948,391 731,204 731,204 8,681,926 51,602,897 862,103 862,103 1,995,967
Beijing Chateau 178,662,315 29,417,483 29,417,483 55,561,102 170,037,611 25,424,015 25,424,015 72,629,545
Ice Chateau 43,742,412 (5,895,304) (5,895,304) 4,922,305 51,657,543 (4,223,249) (4,223,249) 3,294,895
Atrio 281,328,100 (7,484,378) (8,473,348) (28,411,777) 76,202,513* 807,079* 396,939* (3,682,122) *
* This is amount incurred in the period between acquisition date and 31 December 2015.
- 72 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT
The Group's major financial instruments include cash and bank, notes receivable, accounts
receivable, interest receivables, other receivables, available-for-sale financial assets, other non-
current assets, short-term borrowings, notes payable, 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.
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 2016, 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 (EUR) 566,182 151,746,825
Bank and cash (HKD) 192 96,777
Short-term borrowings (HKD) - 103,297,447
Non-current liabilities due within one year (HKD) - 127,345,600
Non-current liabilities due within one year (EUR) 29,227,200 -
Long-term borrowings (EUR) - 56,761,600
___________ ___________
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.
- 73 -
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
HKD 5% increase against RMB 10 10 (11,527,314) (11,527,314)
HKD 5% decrease against RMB (10) (10) 11,527,314 11,527,314
EUR 5% increase against RMB (1,433,051) (1,433,051) 4,749,261 4,749,261
EUR 5% decrease against RMB 1,433,051
________ 1,433,051
________ (4,749,261)
________ (4,749,261)
________
________ ________ ________ ________
Note: As at 31 December 2015, the Group's management anticipated a change of 5% in exchange
rate for USD to RMB.
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 (Refer to Note VI-1, Note VI-19, Note VI-27 and Note VI-28 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
Change in interest rate Effect on profit owners' equity Effect on profit owners' equity
Bank borrowings 50% increase (1,774,725) (1,774,725) (2,528,430) (2,528,430)
Bank borrowings 50% decrease 1,774,725 1,774,725 2,528,430 2,528,430
Note: As at 13 December 2015, the Group's management anticipated a change of 50 basis points
in the bank's variable interest rate.
- 74 -
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 2016, 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 2016, 26.3% of the Group
trade receivables are due from top 5 customers (31 December 2015: 28.4%). There is no collateral
or other credit enhancement on the balance of the trade receivables of the Group.
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 More than five years Total
RMB RMB RMB RMB RMB RMB
Short-term borrowings 3,777,392 145,518,875 533,769,281 - - 683,065,548
Notes payable - 34,900,000 4,000,000 - - 38,900,000
Account payables 128,480,966 256,961,933 159,788,420 - - 545,231,319
Other payables 182,570,536 85,110,213 278,624,561 - - 546,305,310
Interest payables 563,613 - - - - 563,613
Long-term borrowings 980,746 1,783,374 58,881,143 50,793,667 - 112,438,930
Long-term payables _________- 915,000
_______ 14,785,833
_________ 136,864,767
_________ 171,303,367
_______ 323,868,967
_________
316,373,253 525,189,395 1,049,849,238 187,658,434 171,303,367 2,250,373,687
_________ _______ _________ _________ _______ _________
- 75 -
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 2016, 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 % %
Controlling Parent Limited
Company Company Company Yantai SunLiqiang Manufacturing 50,000,000 50.4 50.4 265645824
During the year ended 31 December 2016, there is no change in parent company's registered
capital, shares holding or voting power.
2. Subsidiaries: Please refer to Notes VIII.
3. Other related parties
Name of related parities Nature of related parties Incorporate code
Yantai Changyu Wine Culture Museum Company controlled 913706007582586548
Co., Ltd.("Wine Culture Museum") by the same parent
Yantai Changyu International Window of the Company controlled 91370600672208146X
Wine City Co., Ltd.("Window of the Wine City) by the same parent
Yantai ShenMa Packing Co., Ltd. Company controlled 91370600553393350J
("ShenMa Packing") by the same parent
Yantai Zhongya Pharmaceutical Tonic Company controlled 91370600726203923M
Wine Co., Ltd.("Zhongya Pharmaceutical") by the same parent
- 76 -
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 2016 2015
party transactions RMB RMB
ShenMa Packing product purchase 150,590,287 153,891,013
Zhongya Pharmaceutical product purchase 12,567,066 9,856,685
Wine Culture Museum product purchase 10,210,089 6,047,453
Window of the Wine City product purchase 2,032,847
__________ 730,488
__________
175,400,289
__________ 170,525,639
__________
All related party transactions are based on the negotiated price.
In 2016, purchases from related parties accounted for 13.2% of the Group's total purchase (2015:
10.5%)
Sales to related parties
The content of related 2016 2015
party transactions RMB RMB
Wine Culture Museum goods sales 15,670,982 7,371,180
Window of the Wine City goods sales 10,945,578 7,578,711
Zhongya Pharmaceutical goods sales 3,387,900 2,723,976
ShenMa Packing goods sales 1,496,669
__________ 1,820,232
__________
31,501,129
__________ 19,494,099
__________
In 2016, sales to related parties accounted for less than 1% of the Group's total sales (2015: less
than 1%).
- 77 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
X. RELATED PARTY AND RELATED PARTY TRANSACTIONS - continued
4. Significant related party transactions - continued
(2) Property leased from a related party
The Group as Lessee
2016 Assets leased Beginning date Ending date Rental expense
Changyu Group Company Warehouse and office building 1 January 2012 31 December 2016 5,858,000
Changyu Group Company office building 31 January 2016 31 December 2020 1,692,724
______
7,550,724
______
______
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 RMB 5,858,000, and till 31
December 2016. For the year ended 31 December 2016, the rental payable to Changyu Group
Company amounted to RMB 5,858,000 (2015: RMB 5,858,000).
Pursuant to the lease agreement entered into between the Group and Changyu Group Company on
1 January 2016, starting from 1 January 2016, the Group rented properties from Changyu Group
Company for operation purposes at a basic annual rental of RMB 1,692,724, and till 31 December
2020. For the year ended 31 December 2016, the rental payable to Changyu Group Company
amounted to RMB 1,692,724 (2015: Nil).
(3) Other significant related party transactions
The content of related Note 2016 2015
party transactions RMB RMB
Changyu Group Company Royalty fee (a) 74,125,038 83,734,976
Changyu Group Company Patents fee (b) 50,000 50,000
Zhongya Pharmaceutical Sales of fixed assets (c) 411,407
________ ________-
________ ________
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 2016, royalty fee paid to related company accounted for 100% of the Group (2015:
100%).
- 78 -
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 - continued
(b) Patents fee
Pursuant to a patents implementation license dated 18 May 1997, starting from 18
September 1997, the Company may use the patents of Changyu Group Company. The
annual patents usage fee payable by the Company to Changyu Group Company was RMB
50,000. The contract was expired on 20 December 2005. The Company renewed the
contract on 20 August 2006 for 10 years. The annual patents usage fee payable by the
Company to Changyu Group Company remained RMB 50,000. For the year ended 31
December 2016, the patents usage fee payable to Changyu Group Company is amounted
to RMB 50,000 (2015: RMB 50,000).
During 2016, patent fee paid to related company accounted for 100% of the Group (2015:
100%).
(c) Sales of fixed assets
As at 28 December 2016, fixed assets sold by the Group to Zhongya Pharmaceutical
amounted to RMB 411,407 (31 December 2015: nil), accounting for 34.0% (31 December
2015: nil).
(4) Remuneration of the management
2016 2015
RMB RMB
Remuneration of the management 9,166,918
_________ 9,744,790
________
- 79 -
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 3,913,997 - 2,240,282 -
Shen Ma Packing. 50,700 - 169,300 -
Window of the Wine City 1,833,273 - 7,812 -
Wine Culture Museum 876,724
_______ -
_____ _______- -
_____
6,674,694
_______ -
_____ 2,417,394
_______ -
_____
The above amounts due from related parties are unsecured, interest-free and have no fixed terms
of repayment.
(2) Balance due to related parties
Accounts payable Closing balance Opening balance
RMB RMB
Shen Ma Packing 59,058,023 53,735,915
Zhongya Pharmaceutical 4,328,184 7,272,656
Wine Culture Museum 3,038,520 1,928,504
Window of the Wine City 619,578
_________ 145,861
_________
Total 67,044,305
_________ 63,082,936
_________
Other payable Closing balance Opening balance
RMB RMB
Royalty fee payable to parent company 78,572,540
_________ 86,001,287
_________
The above amounts due to related parties are unsecured, interest-free and have no fixed terms of
repayment.
- 80 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XI. COMMITMENT
1. Important commitments
(1) Capital commitments
Closing balance Opening balance
RMB'000 RMB'000
Capital commitment for
purchasing non-current assets 1,508,310
________ 1,580,280
________
(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 44,631 50,369
1 to 2 years 20,262 35,100
2 to 3 years 12,836 24,265
3 years and above 36,533
__________ 44,466
__________
114,262
__________ 154,200
__________
2. Contingent liability
The Group do not have any significant contingent liabilities as at balance sheet date.
XII. POST BALANCE SHEET DATE EVENT
According to the board of the director resolution raised on 20 April 2017, the Company proposed
a cash dividend of RMB 5.0 (including taxes) for every 10 shares in respect of 2016 based on the
issued shares of 685,464,000. The aggregate amount of cash dividend is RMB 342,732,000. The
resolution is to be approved by the annual general meeting.
- 81 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIII. OTHER SIGNIFICANT EVENTS
Segment report
The Group is principally engaged in the production and sales of wine, brandy, and champagne in
China, France and Spain. In accordance with the Group's internal organization structure,
management requirements and internal reporting system, the Group's operation is divided into
three parts: China, France and Spain. The management periodically evaluates segment results, in
order to allocate resources and evaluate performances. In 2016, more than 94.4% revenue and
more than 99.9% profit derived from China, and more than 93.9% assets are located in China.
Therefore the Group does not need to disclose additional segment report information.
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS
1. Cash and bank
Closing balance Opening balance
RMB RMB
Cash 6,631 10,804
Bank balance 243,708,493 155,430,457
Other currency fund 25,744,936
____________ 125,377,572
__________
Total 269,460,060
____________ 280,818,833
__________
As at 31 December 2016, the balance of restricted cash of the Company is RMB 2,711,926 (31
December 2015: RMB 2,643,181), which is the Group's housing fund.
As at 31 December 2016, other currency fund of the Company include: deposit of RMB
25,694,735 for letter of credit and deposit of RMB 50,201 for entity card (31 December 2015:
RMB 7,572).
As at 31 December 2016, the Company's term deposits with original maturity from three months
to six months when acquired is RMB 3,000,000 (31 December 2015: RMB 9,000,000 ) with
interest rate 1.65%.
2. Notes receivable
(1) Categories of notes receivable
Closing balance Opening balance
RMB RMB
Bank acceptances 1,114,200
_________ 38,429,319
_________
(2) Pledged notes receivable
As of 31 December 2016, there was no pledged notes receivable (31 December 2015: Nil).
- 82 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY 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 29,199,486
__________ 59,952,558
_________
As at 31 December 2016, notes endorsed by the Company to other parties which are not yet due at
the end of the period is RMB 29,199,486 (31 December 2015: RMB 59,952,558). It is for the
payment to suppliers. The Company believes that due to bank good reputation, the risk of
maturity cannot 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 notes
receivable. 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 at 31 December 2016, there was no notes receivable were reclassified as accounts receivable
due to the default of drawer (31 December 2015: Nil).
3. Accounts receivable
(1) Disclosure of accounts receivable 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
Accounts receivable
that are individually
not significant and
for which bad debt
provision has been
assessed individually
______ ___
3,326,683 100.0
____
-
____ ______
- 3,326,683
______
2,392,870
___
100.00
____
-
____ ______
- 2,392,870
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 accounts receivable.
(2) The aging analysis is as follows:
Closing balance Opening balance
RMB RMB
Within 1 year 3,326,683
_________ 2,392,870
________
- 83 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
3. Accounts receivable - continued
(3) Provision, reversals and collections during the current period:
As at 31 December 2016, there was no provision provided for trade receivables (31 December
2015: Nil). The Company did not provide, reverse or write off any provision during 2016 (31
December 2015: Nil).
(4) The balance of accounts receivable at the end of the year
Relationship Proportion of
with the Group Amount Aging total receivables
RMB %
Zhongya Pharmaceutical Other related parties 3,326,683
_______ Within 1 year 100.0
____
4. Prepayments
(1) The aging analysis is as follows:
Closing balance Opening balance
Amount Proportion Amount Proportion
RMB % RMB %
Within 1 year 702,647 100.0
____ 445,619
______ 100.0
____
______ ____ ____
(2) Top four entities with the largest balances of prepayments:
Percentage of
Reason for total advances
Relationship Amount being to suppliers
with the Group RMB Aging outstanding %
Shandong Electricity Company
Yantai branch Third party 502,671 Within 1 year Electric fee 71.6
Shanghai ziri Packing Co. Ltd. Third party 104,832 Within 1 year Goods not received 14.9
Chongqing Hao Sheng glass
Limited by Share Ltd Third party 93,456 Within 1 year Goods not received 13.3
China Petroleum Chemical Co prepayment
Shandong Yantai Petroleum Branch Third party 1,688
_______ Within 1 year Gasoline fee 0.2
____
702,647
_______ 100.0
____
- 84 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
5. Dividend receivables
(1) Dividend receivables
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Within 1 year
Including: Sales Company 724,259,189 1,515,829,419 (1,837,422,530) 402,666,078
Wines Sales 20,465,163 82,388,043 (42,502,188) 60,351,018
Xinjiang Tianzhu - 46,502,728 (46,502,728) -
Langfang Castel - 9,971,897 (9,971,897) -
Changyu Chateau - 16,655,125 (5,284,518) 11,370,607
Ice Chateau - 2,000,000 (2,000,000) -
Beijing Chateau - 20,000,000 (20,000,000) -
Shihezi Chateau - 62,844,089 (57,002,086) 5,842,003
Kylin Packaging - 16,000,000 (16,000,000) -
Jingyang Sales - 2,000,000 (2,000,000) -
National Wines - 10,000,000 (10,000,000) -
Atrio - 1,475,343 - 1,475,343
More than 1 year
Including: Pioneer International 43,367,997
_________ 12,462,774
__________ (5,716,707)
__________ 50,114,064
_________
Total 788,092,349
_________ 1,798,129,418
__________ (2,054,402,654)
__________ 531,819,113
_________
__________
(2) Significant Dividend Receivable more than 1 year
Closing balance Aging Reason for being Whether
RMB outstanding impairment
Pioneer International 50,114,064
________ More than 1 year Not paid No
6. 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 3,572,802,092 99.7 - - 3,572,802,092 5,727,534,401 99.8 (7,199,521) 0.1 5,720,334,880
Other receivables that are
not individually significant
and for which bad debt
provision has been
assessed individually ______ ___0.3
9,730,770 _____- ___- ______
9,730,770 ______
14,121,249 ___0.2 _____- ___- ______
14,121,249
Total
______ ___
3,582,532,862 100.0
_____- ___- ______
3,582,532,862
______
5,741,655,650
___
100.0
_____
(7,199,521)
___0.1 ______
5,734,456,129
- 85 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
6. Other receivables - continued
(1) Disclosure of other receivables by categories: - continued
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 2,138,473,742 59.7 - 2,138,473,742 4,849,743,585 84.5 - 4,849,743,585
1 to 2 years 1,443,856,430 40.3 - 1,443,856,430 884,540,581 15.4 - 884,540,581
2 to 3 years 37,123 0.0 - 37,123 171,963 0.0 - 171,963
Over 3 years 165,567
________ ____0.0 _______- 165,567
________ 7,199,521
________ ____0.1 (7,199,521)
______ ________-
3,582,532,862 100.0 3,582,532,862 5,741,655,650 100.0 (7,199,521) 5,734,456,129
________ ____ _______- ________ ________ ____ ______ ________
(2) Accrual, reversal and written-off during the current period
No bad debt accrued or reversed in 2016 (2015:Nil.).
(3) Other receivables written off current year
Other receivables is written off RMB 7,199,521 (2015: Nil ).
(4) Disclosure of other receivables by nature
Closing balance Opening balance
RMB RMB
Receivable from subsidiary 3,580,805,532 5,732,654,756
Investment fund - 7,199,521
Receivable deposit 8,000 103,834
Others 1,719,330
____________ 1,697,539
____________
3,582,532,862
____________ 5,741,655,650
____________
(5) Top five entities with the largest balances of other receivables
As at 31 December 2016, the particulars of top five other receivables are as follows:
Proportion of total
Nature Amount Aging prepayments
RMB %
Sales Company Internal balance 1,000,076,488 Within 2 year 27.9
Changan Chateau Internal balance 753,079,312 Within 2 year 21.0
Ningxia Chateau Internal balance 435,507,892 Within 2 year 12.2
Beijing Chateau Internal balance 382,245,667 Within 2 year 10.7
Pioneer International Internal balance 223,539,679
__________ Within 2 year 6.2
___
2,794,449,038
__________ 78.0
___
- 86 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
7. Inventories
Closing balance Opening balance
Net carrying Net carrying
Balance Provision amount Balance Provision amount
RMB RMB RMB RMB RMB RMB
Raw material 4,190,928 - 4,190,928 5,200,748 - 5,200,748
Work in progress 747,521,822 - 747,521,822 680,061,444 - 680,061,444
Finished goods 41,019,668
_________ -
_____ 41,019,668
_________ 42,910,915
_________ -
_____ 42,910,915
_________
792,732,418
_________ -
_____ 792,732,418
_________ 728,173,107
_________ -
_____ 728,173,107
_________
8. Long-term equity investments
Movement Cash Dividends
2016 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 46,502,728
Kylin Packaging 23,176,063 23,176,063 - 23,176,063 100 100 16,000,000
Changyu Chateau (a) 28,968,100 28,968,100 - 28,968,100 70 100 16,655,125
Pioneer International (b) 3,500,000 3,500,000 - 3,500,000 70 100 12,462,774
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 10,000,000
Ice Chateau (b) 30,440,500 30,440,500 - 30,440,500 51 100 2,000,000
Beijing Chateau (b) 77,000,000 77,000,000 - 77,000,000 70 100 20,000,000
Sales Company 7,200,000 7,200,000 - 7,200,000 100 100 1,515,829,419
Langfang Sales (b) 100,000 100,000 - 100,000 10 100 -
Langfang Castel (a) 19,835,730 19,835,730 - 19,835,730 39 100 9,971,897
Wine Sales 4,500,000 4,500,000 - 4,500,000 100 100 82,388,043
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 2,000,000
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 (b) 80,000,000 80,000,000 - 80,000,000 65 100 -
Shihezi Chateau 550,000,000 150,000,000 400,000,000 550,000,000 100 100 62,844,089
Changan Chateau 20,000,000 20,000,000 - 20,000,000 100 100 -
R&D Centre (a) 805,000,000 500,000,000 - 500,000,000 62 100 -
Huanren Wine 11,000,000 11,000,000 - 11,000,000 100 100 -
Francs Champs 220,320,604 209,706,634 10,613,970 220,320,604 100 100 -
Atrio _______
190,150,544 _______
190,148,125 ______2,419 _______
190,150,544 75 100 _______
1,475,343
2,139,341,541 1,423,725,152 410,616,389 1,834,341,541 1,798,129,418
_______ _______ ______ _______ _______
(a) The Company has 100% voting power of those subsidiaries by the way of indirect
controlling, referring to Note VIII-1.
(b) The Company has 100% voting power of these subsidiaries by the way of indirect
controlling through wholly owned subsidiaries.
During 2016, there was no significant restriction on the remittance of fund from the investees to
the Company.
- 87 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
9. Fixed assets
(1) Fixed assets
Buildings Machinery Motor vehicles Total
RMB RMB RMB RMB
I. Total original carrying amount
1. Opening balance 305,649,899 592,702,673 13,179,007 911,531,579
2. Increase
Purchase 320,033 7,195,257 3,675,768 11,191,058
CIP transfer - 7,490,777 - 7,490,777
3. Decrease
Disposal - (30,301,520) (4,092,433) (34,393,953)
Classified as Non-current
assets held for sale (VI-8) (3,599,221)
_________ _________- -
_________ (3,599,221)
_________
4. Closing balance 302,370,711
_________ 577,087,187
_________ 12,762,342
_________ 892,220,240
_________
II. Total accumulated depreciation
1. Opening balance 113,220,552 418,201,108 10,603,905 542,025,565
2. Increase
Additions 9,967,875 24,455,088 689,608 35,112,571
3. Decrease
Disposal - (26,912,479) (3,887,810) (30,800,289)
Classified as Non-current
assets held for sale (VI-8) (1,599,024)
_________ _________- -
_________ (1,599,024)
_________
4. Closing balance 121,589,403
_________ 415,743,717
_________ 7,405,703
_________ 544,738,823
_________
III. Total net carrying amount
1. Closing net carrying amount 180,781,308 161,343,470
_________ 5,356,639
_________ 347,481,417
_________
_________
2. Opening net carrying amount 192,429,347
_________ 174,501,565
_________ 2,575,102
_________ 369,506,014
_________
As at 31 December 2016, fixed assets with restricted ownership is RMB 27,145,520, referring to
Note VI-48 for details.
As at 31 December 2016, net amount of fixed assets classified as Non-current assets held for sale
was RMB 2,000,197, and the Company has no temporary idle fixed assets, fixed assets leased in
under finance leases and fixed assets leased out under operating leases.
(2) Fixed assets of which certificates of title have not been obtained
As at 31 December 2016, buildings without property certificate are as follows：
Reasons why
certificates of title have
Amount not been obtained
RMB
Fermentation centre office,
experiment building and workshop 3,994,837
__________ Processing
- 88 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
10. Construction in progress
(1) Construction in progress
Closing balance Opening balance
RMB RMB
Reconstruction of boiler heating systems 500,000
________ 7,990,777
________
(2) Current year movement on important construction
Opening Transfer to Closing Accumulated The progress of Financed
Budget balance Addition PPE balance expenditure/budget construction by
RMB RMB RMB RMB RMB %
Reconstruction of 7,990,777 - (7,490,777) 500,000
13,000,000 61.5 90.0 Self-raised
boiler heating systems
There was no interest capitalized in construction in progress in 2016.
(3) As at 31 December 2016, there was no provision was made for the construction in process.
11. Bearer biological asset
Bearer biological assets are grape trees，which measured in cost method.
Immature Mature
biological assets biological assets Total
RMB RMB RMB
I. Total original carrying amount
1. Opening balance 103,624,879 14,961,025 118,585,904
2. Increase
(1) Purchase 601,300 - 601,300
(2) Cultivated increase 14,731,590 - 14,731,590
(3) Transfer to mature assets
from immature assets (64,091,555)
__________ 64,091,555
_________ -
__________
3. Closing balance 54,866,214
__________ 79,052,580
_________ 133,918,794
__________
II. Total accumulated depreciation
1. Opening balance - 7,624,715 7,624,715
2. Increase
Additions -
__________ 3,257,386
_________ 3,257,386
__________
3. Closing balance -
__________ 10,882,101
_________ 10,882,101
__________
III. Total net carrying amount
1. Closing net carrying amount 54,866,214
__________ 68,170,479
_________ 123,036,693
__________
2. Opening net carrying amount 103,624,879
__________ 7,336,310
_________ 110,961,189
__________
- 89 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV NOTES TO COMPANY FINANCIAL STATEMENTS - continued
11. Bearer biological asset - continued
As at 31 December 2016, there is no biological asset with ownership restricted.
As at 31 December 2016, there is no indication that biological assets may be impaired, and no
provision was made.
12. Intangible assets
Intangible assets
Land use right
RMB
I. Total original carrying amount
Opening and closing balance 96,594,766
__________
II. Total accumulated depreciation
1. Opening balance 22,213,241
2. Increase
Additions 2,379,153
__________
3. Closing balance 24,592,394
__________
III. Total net carrying amount
1. Closing net carrying amount 72,002,372
__________
2. Opening net carrying amount 74,381,525
__________
As at 31 December 2016, Intangible assets with restricted ownership are RMB 11,220,838, Please
refer to Note VI-48 in detail.
13. Deferred tax assets
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 5,333,339 1,333,335 9,159,340 2,289,835
Unpaid bonus 35,607,406 8,901,851 26,378,467 6,594,617
Retirement benefit 10,754,547 2,688,637 12,914,345 3,228,586
Asset impairment provision 10,000,000 2,500,000 17,199,521 4,299,880
Deductable losses 24,544,964 6,136,241 62,511,688 15,627,922
Deferred income 21,700,753 5,425,188 23,591,406 5,897,852
107,941,009 26,985,252 151,754,767 37,938,692
- 90 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV NOTES TO COMPANY FINANCIAL STATEMENTS - continued
14. Other non-current assets
Closing balance Opening balance
RMB RMB
Receivables from subsidiaries 2,617,457,460
____________ -
_________
15. Short-term borrowings
Closing balance Opening balance
RMB RMB
Credit loans 500,000,000
__________ 601,297,447
__________
As at 31 December 2016, short-term borrowings detail is as follows:
Loan bank Loans amount Loan term Interest rate
RMB %
HSBC (China) Co., Ltd.
Qingdao branch 100,000,000 25.Nov.2016 - 24. Feb.2017 3.48
ICBC Yantai branch 100,000,000 7.July 2016 - 4.July 2017 3.92
ICBC Yantai branch 100,000,000 24.June 2016 - 20 June 2017 3.92
ICBC Yantai branch 200,000,000
_________ 30 May 2016 – 24.May 2017 3.92
____
_________ ____
16. Accounts payable
The aging analysis of accounts payable are as follows
Closing balance Opening balance
RMB RMB
Within 1 year 246,743,228 271,603,863
1 to 2 years 825,629
__________ 1,487,319
__________
247,568,857
__________ 273,091,182
__________
17. Advances from customers
The aging analysis of advances from customers are as follows
Closing balance Opening balance
RMB RMB
Within 1 year 6,000,000
__________ -
__________
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV NOTES TO COMPANY FINANCIAL STATEMENTS - continued
18. Employee benefit payable
(1) Employee benefit payable
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Short-term salaries and welfare 58,144,270 109,527,458 (107,613,514) 60,058,214
Post-demission benefits
- predetermined provision plan - 10,227,042 (10,227,042) -
Termination benefit 12,914,345
_________ 1,662,055
_________ (3,821,853)
_________ 10,754,547
_________
71,058,615
_________ 121,416,555
_________ (121,662,409)
_________ 70,812,761
_________
(2) Short-term salaries and welfare
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Salaries and bonus 57,454,172 95,025,808 (92,441,612) 60,038,368
Staff benefit 2,520 7,235,084 (7,044,204) 193,400
Staff welfare - 4,940,763 (4,940,763) -
Includes:
Medical insurance - 3,878,517 (3,878,517) -
Injury insurance - 661,206 (661,206) -
Maternity insurance - 401,040 (401,040) -
Housing fund - 3,189,445 (3,189,445) -
Union fee and education fee 2,632,533
_________ 550,794
_________ (809,677)
_________ 2,373,650
_________
Total 60,089,225
_________ 110,941,894
_________ (108,425,701)
_________ 62,605,418
_________
Less: Non-current liabilities 1,944,955
_________ 2,499,403
_________
Short-term salaries and welfare 58,144,270
_________ 60,058,214
_________
(3) Predetermined provision plan
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Pension - 9,488,517 (9,488,517) -
Unemployment insurance -
_____ 738,525
_________ (738,525)
_________ -
_____
-
_____ 10,227,042
_________ (10,227,042)
_________ -
_____
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 9,488,517 and RMB 738,525 (2015: RMB 10,505,200 and RMB
853,498) respectively into pension insurance and unemployment insurance. As at 31 December
2016, the Company does not have unpaid pension and unemployment insurance (31 December
2015: Nil) which is due to the pension insurance and unemployment insurance plan and not paid
at the end of the reporting period.
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
19. Taxes payable
Closing balance Opening balance
RMB RMB
Value added tax 2,199,892 (2,238,737)
Consumption tax 18,887,846 11,536,745
Corporation income tax 211,105 651,459
Urban land use tax 802,207 837,367
Individual income tax 7,289,253 6,136,634
City construction tax 1,941,063 1,084,656
Property tax 270,492 270,408
Others 1,664,367
__________ 1,052,779
_________
33,266,225
__________ 19,331,311
_________
20. Other payables
(1) Natures of other payables are as follows
Closing balance Opening balance
RMB RMB
Payable to subsidiaries 359,161,772 983,151,732
Payables for equipment and construction 2,772,304 4,600,199
Payables for transportation - 495,093
Deposits from suppliers 589,300 537,800
Others 5,786,986
____________ 6,036,457
____________
368,310,362
____________ 994,821,281
____________
(2) As at 31 December 2016, there were no significant outstanding balance aged over than one year.
21. Non-current liabilities due within one year
Closing balance Opening balance
RMB RMB
Long-term borrowings due within one year 29,227,200
__________ 127,345,600
__________
As at 31 December 2016, long-term borrowings due within one year refer to the borrowings to the
Company from Yantai Branch of ICBC amounting to EUR 4,000,000 (equivalent to RMB
29,227,200), with a validity period from 1 October 2014 to 29 September 2017 at the interest rate
of six-month LIBOR plus 355 basis points. The relevant interest is paid monthly. As at 31
December 2016, the interest rate of such borrowings is 3.7%.
- 93 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
22. Capital reserve
2016 Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Share premium 557,222,454 -
______ -
______ 557,222,454
_________
_________
23. Operating income and costs
Operating income is analysed as follows:
2016 2015
RMB RMB
Principal operating income 1,415,104,946
____________ 1,383,184,483
____________
Operating cost is analysed as follows:
2016 2015
RMB RMB
Principal operating cost 1,152,076,500
____________ 1,154,834,509
____________
24. Taxes and surcharges
2016 2015
RMB RMB
Consumption tax 86,244,674 106,640,172
City construction tax 8,665,672 11,533,643
Education fee and surcharges 6,189,856 8,306,059
Property tax 1,229,545 -
Land use tax 2,534,985 -
stamp tax 315,520 -
Others 1,288,965
__________ 1,647,256
__________
106,469,217
__________ 128,127,130
__________
- 94 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
25. General and administrative expense
2016 2015
RMB RMB
Salary and employee benefit 34,475,802 59,518,458
Maintenance fee 8,755,646 9,276,965
Leasing expenses 6,525,996 6,575,996
Administrative expenses 5,041,108 7,413,606
Depreciation 4,266,502 4,423,980
Property insurance fees 3,594,451 1,025,924
Greening fee 2,779,497 2,290,397
Amortization 2,333,153 3,012,058
Service fee 2,008,619 12,329,601
Property tax, stamp duty and other taxes 1,952,995 6,105,794
Shuttle bus 1,914,130 2,287,960
Security and sanitation fee 1,727,077 2,049,508
Postal charges 1,689,281 2,305,846
Travelling expenses 1,657,767 3,441,134
Others 7,240,113
__________ 9,130,568
__________
85,962,137
__________ 131,187,795
__________
26. Financial Expense
2016 2015
RMB RMB
Interest income (3,704,355) (11,868,515)
Exchange loss(gain) 10,474,409 8,543,586
Less: Interest expenses 26,658,795 21,322,155
Bank charges 797,603
_________ 855,471
_________
34,226,452
_________ 18,852,697
_________
- 95 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
27. Investment income
2016 2015
RMB RMB
Long-term equity investment income accounted
for by using the cost method 1,798,129,418
____________ 1,587,303,643
____________
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 2016 2015
RMB RMB
Sales Company 1,515,829,419 1,404,700,197
Wine Sales 82,388,043
____________ 65,465,162
____________
1,598,217,462
____________ 1,470,165,359
____________
As at 31 December 2016 and at 31 December 2015, there was no significant restriction on the
remittance of investment income to the Company.
28. Supplement to cash flow statement
2016 2015
RMB RMB
(1) Cash flows from operating activities
calculated by adjusting the net profit:
Net profit 1,830,574,470 1,553,520,098
Add: Depreciation of fixed assets 35,112,571 37,173,740
Amortization of intangible assets 2,379,153 2,379,153
Amortization of biological assets 3,257,386 586,905
Gains on disposal of property,
plant and equipment (111,362) (116,340)
Finance expenses 34,300,141 7,609,550
Investment income (1,798,129,418) (1,587,303,643)
Decrease/(increase) in deferred tax assets 10,953,440 (10,885,121)
Increase in inventories (64,559,311) (46,476,333)
Increase/(decrease) in trade receivables 130,012,325 (973,578,831)
Decrease/(increase) in trade payables (637,852,493)
____________ 11,918,004
____________
Net cash flows from operating activities (454,063,098)
____________ (1,005,172,818)
____________
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
28. Supplement to cash flow statement - continued
(2) Significant investing and financing activities not involving cash receipts and payaments
2016 2015
RMB RMB
Change the claim on Shihezi Chateau into Long-term
equity investments 400,000,000 -
Increase the investment in subsidiaries
with bank acceptances 523,977,060 -
Recover the investment in subsidiaries
with bank acceptances (523,977,060)
____________ -
____________
400,000,000
____________ -
____________
29. Cash and cash equivalents
2016 2015
RMB RMB
Closing balance of cash and bank 269,460,060 280,818,833
Less:
Restricted bank deposits 2,711,926 2,643,181
Restricted other monetary assets 25,744,936 125,377,572
Deposit with a period of over three months 3,000,000
__________ 9,000,000
__________
Closing balance of cash and cash equivalents 238,003,198
__________ 143,798,080
__________
2016 2015
RMB RMB
Cash and bank 238,003,198 143,798,080
Including: Cash on hand 6,631 10,804
Bank deposits on demand 237,996,567
__________ 143,787,276
__________
Closing balance of cash and cash equivalents 238,003,198
__________ 143,798,080
__________
- 97 -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
30. Related party transactions
(1) Purchase of materials
2016 2015
RMB RMB
Subsidiaries 397,141,028 319,040,340
Other related parties 109,448,605
__________ 111,273,050
__________
506,589,633
__________ 430,313,390
__________
(2) Sales of goods
2016 2015
RMB RMB
Subsidiaries 1,399,002,536 1,374,745,130
Other related parties 16,102,410
____________ 8,439,353
____________
1,415,104,946
____________ 1,383,184,483
____________
(3) Sales of Fixed assets
2016 2015
RMB RMB
Subsidiaries 2,971,880 -
Other related parties 411,407
____________ -
____________
3,383,287
____________ -
____________
(4) Guarantee for related parties
The company acting as the guarantor：
Guaranteed party Amount of guarantee Inception date Maturity date If the guarantee completed
Sales company 100,000,000
________ 2 November 2017 2 November 2019 No
31. 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 3,326,683 -
_______ 1,341,924
_______ -
_______
_______
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
31. Receivables and payables to related parties - continued
(1) Trade receivables - continued
Other receivables Closing balance Opening balance
Balance Bad debts provision Balance Bad debts provision
RMB RMB RMB RMB
Subsidiaries 3,580,805,532 -
_______ 5,732,654,756
__________ -
_______
__________
Other non-current assets Closing balance Opening balance
Balance Bad debts provision Balance Bad debts provision
RMB RMB RMB RMB
Subsidiaries 2,617,457,460
__________ -
_______ -
__________ -
_______
The above receivables due from related parties are unsecured, have no interest or fixed date of
repayment.
(2) Trade payables
Trade Payables Closing balance Opening balance
RMB RMB
Other related parties 46,834,283
_________ 36,377,928
_________
Other payables Closing balance Opening balance
RMB RMB
Subsidiaries 452,689,614
____________ 983,151,732
____________
The above payables due to related parties are unsecured, have no interest or fixed date of
repayment.
32. Contingent liability
As stated in Note XIV-30(4), the Company has no other contingent liability.
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YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
APPENDIX I SUPPLEMENTARY INFORMATION TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2016
I. DETAILS OF EXTRAORDINARY PROFIT AND LOSS
2016
RMB
Loss on disposal of non-current assets, including
reversal of accrued impairment provision 14,719
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) 49,130,643
Other non-operating income and expense 4,656,972
Corporate income tax effect (13,072,324)
__________
40,730,010
__________
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 2016. Please
refer to Note VI-42 and VI-43.
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
2016 ROE Basic EPS
% RMB
Net profit attributable to shareholders of the Company 12.55 1.43
Net profit attributable to shareholders
of the Company deducting extraordinary profit and loss 12.03
_____ 1.37
____
The Company did not have any potential dilutive shares.
Weighted average
2016 ROE Basic EPS
% RMB
Net profit attributable to shareholders of the Company 14.40 1.50
Net profit attributable to shareholders
of the Company deducting extraordinary profit and loss 13.89
_____ 1.45
____
The Company did not have any potential dilutive shares.
- 100 -
