Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Yantai Changyu Pioneer Wine Co. Ltd.
2016 Annual Report
2016 Final 01
April, 2017
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Contents
I、Important Notice，Contents and Definition..............................................................................3
II、Brief Introduction for the Company and Main Financial Indicators .................................. 5
III、Summary of the Company’s Businesses .............................................................................. 10
IV、Management Discussion and Analysis ................................................................................. 13
V、Major issues ............................................................................................................................. 34
VI、Changes in Shares and the Shareholders’ Situation ...........................................................50
VII、Related Situation of Preferred Shares ................................................................................59
VIII、 Situation for Directors, Supervisors, Senior Management and Staffs...........................60
IX、 Corporate Governance ........................................................................................................ 73
X、 Related Situation of Corporation Bonds ............................................................................. 83
XI、Financial Report.......................................................................................................................84
XII、Reference Document .......................................................................................................... 185
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
I. Important Notice, Contents and Definition
The Board of Directors，the Board of Supervisors，directors, supervisors & senior managers
of the Company collectively and individually accept full responsibility for the truthfulness，
accuracy and completeness of the information contained in this report and confirm that to the
best of their knowledge and belief there are no unfaithful facts, significant omissions or
misleading statements.
Mr. Sun Liqiang (Chairman of the Company), Mr. Leng Bin (Chief Financial Officer) and Mr.
Jiang Jianxun (Financial Director) assure the truthfulness, accuracy and completeness of the
financial report in the annual report.
All directors personally attended the meeting for deliberating the annual report.
About significant risks that may be faced in production and operation process, please refer
to“5. Risks likely to occur” part of “9.Expectation for the Company’s Future Development”
in chapter four “Management Discussion and Analysis” of this report. We advise investors to
read carefully and pay attention to the investment risks.
The business plan and target in the report do not represent the earnings forecast of the listed
company to 2017. Whether the Company could achieve that or not depends on several factors
including the changes of market conditions and the effort extent of managing team etc. with a
great uncertainty, so the investors should be in a special attention.
The Company’s preliminary scheme of profit distribution deliberated and passed by the
Board of Directors is shown as following:“Based on the Companys’ total 685,464,000 shares,
we plan to pay CNY5 (including tax) in cash as dividends for every 10 shares to all
shareholders and to send 0 bonus share (including tax) and capital reserve will not be
transferred to equity. ”
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Definition
Definition Item Refers to Definition Content
Company/The Company Refers to Yantai Changyu Pioneer Wine Co. Ltd.
Changyu Group/Controlling Refers to
Yantai Changyu Group Co. Ltd.
Shareholder
CSRC Refers to China Securities Regulatory Commission
SSE Refers to Shenzhen Stock Exchange
Refers to Deloitte Hua Yong Certified Public Accountants
Deloitte Hua Yong
Co., LTD (special general partnership)
CNY Refers to Chinese Yuan
II. Brief Introduction for the Company and Main Financial Indicators
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
1. Company’s information
Code number of the
Abbreviation of the Shares: Changyu A、Changyu B 000869、200869
Shares
Abbreviation of the Shares
_
after alteration (if have)
Place of listing of the Shares Shenzhen Stock Exchange
Legal Name in Chinese 烟台张裕葡萄酿酒股份有限公司
Abbreviation of Chinese
张裕
name
Legal Name in English (if
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
have)
Abbreviation of English name
CHANGYU
(if have)
Legal Representative Mr. Sun Liqiang
Registered Address 56 Dama Road, Yantai, Shandong, China
Postal Code 264000
Office Address 56 Dama Road, Yantai, Shandong, China
Postal Code 264000
Website http://www.changyu.com.cn
E-mail webmaster@changyu.com.cn
2. Contact person and information
Secretary to the Board of Authorized Representative of the
Directors Securities Affairs
Name Mr. Qu Weimin Mr. Li Tingguo
56 Dama Road, Yantai, Shandong, 56 Dama Road, Yantai,
Address
China Shandong, China
Tel 0086-535-6633656 0086-535-6633656
Fax 0086-535-6633639 0086-535-6633639
E-mail quwm@changyu.com.cn stock@changyu.com.cn
3. Information disclosure and filing location
The newspapers in which the “China Securities Newspaper” , “Securities Times” and
Company’s information is disclosed “Hong Kong Commercial Daily”
Web Site assigned by CSRC to carry
http://www.cninfo.com.cn
the annual report
Board of Directors’ Office of the Company,
Filing location
56 Dama Road, Yantai, Shandong
4. Registration changes
Organization Code 913700002671000358
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
On 18th September 1997 the Company’s operating scope was the
production, processing and sales of wine, distilled liquor, healthy
liquor, fruit liquor, non-alcohol beverages, fruit jam, packing
materials and winemaking machines.
On 17th April 2008, after the deliberation of 2007 shareholders’
meeting, the Company’s operating scope is amended to “the
Company, legally registered, is in business of production, processing
and sales of wine, distilled liquor, medicated liquor, fruit liquor,
non-alcohol beverages, fruit jam, packing materials and winemaking
machines; licensed import and export.”
On 12th May 2010, after the deliberation of 2009 shareholders’
Changes for the main meeting, the Company revised its operating scope to “the Company,
is in and sales
business of the Company legally registered, liquor,business of production, processingnon-alcohol
of wine, distilled medicated liquor, fruit liquor,
since it was listed beverages, fruit jam, packing materials and its products, winemaking
machines; licensed import and export; external investments according
(if have) to governmental policies. ”
On 23rd September 2016, after the deliberation of 2016annual 1st
Interim shareholders’ meeting, the Company revised its operating
scope to “wine and fruit wine (bulk wine, processing and filling)
production; blending liquor and other blending liquors (grape wine)
production; other liquors (other distilling liquors) production;
production, processing and sales of package materials and
winemaking machines; grape plantation and procurement; tourism
resources development (excluding tourism); package design; activity
of building rental; licensed import and export; warehouse business;
external investments according to governmental policies. ”
Changes for all previous
controlling shareholders No.
(if have)
5. Other documents
The accountant appointed by the Company
Deloitte Hua Yong Certified Public Accountants Co., LTD
Name
(special general partnership)
Address No. 1 East Chang'an Avenue, Dongcheng District, Beijing
Name of signatory accountants Li Xu, Li Yangang
The sponsor agency the Company appointed to perform the duty of continuous supervision
during the report period
□Available Not available
The financial adviser the Company appointed to perform the duty of continuous supervision
during the report period
□Available Not available
6. Key accounting data and financial indicators
Whether the Company makes retroactive adjustments or restates the accounting data of
previous fiscal years because of changes of accounting policy and/or accounting errors.
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
□Yes No
More or less
Item 2016 2015 than 2014
Last year (%)
Business revenue 4,717,596,472 4,649,722,368 1.46% 4,156,727,525
Net profit attributed
to the shareholders
982,460,488 1,030,073,860 -4.62% 977,707,711
of the listed
company
Net profit attributed
to the shareholders
of the listed
company after 941,730,478 993,268,823 -5.19% 950,191,379
deducting the
irregular profit and
loss
Net cash flows
from the operating 889,911,970 1,143,046,367 -22.15% 1,070,083,296
activities
Basic earnings per
1.43 1.5 -4.67% 1.43
share
Diluted earnings
1.43 1.5 -4.67% 1.43
per share
Weighted average
for earning rate of 12.55% 14.40% -1.85% 13.96%
the net assets
More or less
Item Dec. 31st 2016 Dec. 31st 2015 than Dec. 31st 2014
Last year (%)
Total assets 11,528,077,971 10,344,211,461 11.44% 8,912,232,640
Net Assets
attributed to the
8,209,010,989 7,564,099,003 8.53% 6,840,452,145
shareholders of the
listed company
7. Differences in accounting data under PRC accounting standards and international
accounting standards
(1) Differences of net profit and net asset in the financial report disclosed according to
both international accounting standards and PRC accounting standards
□Available Not available
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
There are no differences of net profit and net asset in the financial report disclosed according
to both international accounting standards and PRC accounting standards during the report
period.
(2) Differences of net profit and net asset in the financial report disclosed according to
both foreign accounting standards and PRC accounting standards
□Available Not available
There are no differences of net profit and net asset in the financial report disclosed according
to both foreign accounting standards and PRC accounting standards during the report period.
8. Key financial indicators by quarter
Unit：CNY
1 Quarter
st
2 Quarter
nd
3 Quarter rd
4 Quarter th
Business revenue 1,882,230,620 870,802,179 1,010,732,839 953,830,834
Net profit attributed to
the shareholders of the 542,806,719 152,215,128 129,748,790 157,689,851
listed company
Net profit attributed to
the shareholders of the
listed company after 538,762,161 139,716,160 123,011,178 140,240,980
deducting the irregular
profit and loss
Net cash flows from the
605,256,456 77,491,913 308,317,385 -101,153,784
operating activities
Whether there are differences between the above mentioned financial indicators or their sum
and the related financial indicators in the quarterly reports and semi-annual reports disclosed
by the Company.
□Yes No
9. Item and amount of irregular profit and loss
V Available □Not available
Unit：CNY
Item 2016 2015 2014 Explanation
Gain on disposal of non-current
assets, including the reversal of 14,719 136,061 -5,086,545 －
accrued impairment provision
Tax refund or exemption that is either
non-recurring or without proper 13,405,520 －
approval
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Government grants credited in profit
and loss (except for those recurring
government grants that are closely
49,130,643 38,952,919 27,140,194 －
related to the entity's operation, in line
with related regulations and have
proper basis of calculation)
Reversal of impairment loss for
receivables which was separately 192,908 －
undertaken impairment test
Other non-operating income and
non-operating expenses except the 4,656,971 9,071,448 166,987 －
aforementioned items
Less. Income tax effect 13,072,324 11,355,391 8,302,732 －
Total 40,730,009 36,805,037 27,516,332 --
The reasons shall be made clear and definitely as to the irregular profit and loss that the
Company has defined by virtue of the Explanatory Announcement on Public Company’s
Information Disclosure No.1 - Irregular Profit and Loss and as to regarding the irregular
profit and loss as recurrent profit and loss as specified in the Explanatory Announcement on
Public Company’s Information Disclosure No.1 - Irregular Profit and Loss.
□Available V Not available
There is no situation that the irregular profit and loss is defined and specified as recurrent
profit and loss in accordance with the Explanatory Announcement on Public Company’s
Information Disclosure No.1 - Irregular Profit and Loss during the report period.
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
III. Summary of the Company’s Businesses
1. Main businesses during the report period
Whether the Company need to follow the disclosure requirement of special business?
No.
During the report period, the Company’s main business is to produce and operate wine and brandy, thus providing the domestic and foreign
consumers with healthy and fashionable alcoholic drinks. Compared with earlier stage, there are no significant changes happened to the
Company’s main businesses. The wine industry that the Company involved in is still in the growth stage, the whole domestic wine market is on
the rising trend. The Company takes the dominant position in the domestic wine market.
2. Significant changes of main assets
(1) Significant changes of main assets
Main assets Explanation of significant changes
Equity asset No significant changes
The book value of fixed assets increases by 51.60% compared
Fixed asset with the beginning of the year, owing that parts of construction
projects have transferred to fixed asset during the report period.
Intangible asset No significant changes
The book value of construction projects decreases by 32.89%
compared with the beginning of the year, owing to parts of
Construction in process
construction projects have transferred to fixed asset during the
report period.
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
(2) Main overseas assets condition
Available □Not available
Unit：CNY
Details Formation Assets scale Location Operation mode Control measures Earning The proportion of Whether there
of assets reasons for condition overseas assets in the are significant
safeguarding of Company’s net impairment risks
asset security assets
Equity Acquisition Spain Wine production No
asset of equity 465,376,681 and operation -7,484,378 5.54%
Other explanation No.
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
3. Analysis of core competitiveness
Whether the Company need to follow the disclosure requirement of special business?
No.
Compared with the participants in the arena of the Chinese wine sector, we believe that the
Company is provided with the following advantages:
Firstly, the Company has been enjoying a well-known wine brand since 120-odd years,
“Changyu”, “Jiebaina” and “AFIP” are Chinese famous trademarks that have strong influence
and good reputation.
Secondly, the Company has set up a nationwide marketing network, formed a “three-level”
marketing network system mainly composed of the company’s salesmen and distributors,
possessed the strong marketing ability and market exploitation ability.
Thirdly, the Company has already had strong research strength and a product R&D system,
owned a one and only “State-level Wine R&D Center”, made mastery of advanced
winemaking technology and production processes, been powerful enough in product
innovation and established a perfect quality control system.
Fourthly, the Company is in possession of a lot of grape-growing bases to meet its future
development, having developed a great deal of vineyards in the most suitable areas for wine
grape growing such as in Shandong, Ningxia, Xinjiang, Liaoning, Hebei and Shanxi, whose
scales and structures have generally met the Company’s needs for development.
Fifthly, the Company has a great variety of products composed of all grades, its wine，brandy
and sparkling wine of over 100 sorts can meet different consumers’ demands. The Company
has taken the lead in the domestic wine sector through rapid development in the past 10-odd
years and has possessed comparative superiority in the future competition.
Sixthly, the Company has a relatively respect motivation system. Most of Company’s
employees indirectly hold the Company’s equity through controlling shareholders. There are
high consistency between employee benefits and shareholders benefits, in favor of motivating
employees to create value for shareholders.
All in all, the Company has built up a strong core competitive edge and obtained and
maintained a relatively dominant position in the long-term market competition.
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
IV. Management Discussion and Analysis
1. Summarization
In 2016, influenced by the slowdown of domestic economic growth, the overall domestic
wine industry is relatively stable, the effective demands for top-level products is weakness,
the medium-and-low-level products suitable for mass consumption maintains a favorable
growth tendency. Because of the overwhelming flow of foreign wine into Chinese market,
product price range further decreases, making market competition further intensified and
bringing bigger challenges for the Company to achieve sustained and steady growth. Facing
quite a lot of external disadvantages, the Company insists to focus on the market, adjust the
marketing tactics and product structure, strive to develop brandy and imported wine, optimize
the market layout, perfect the marketing channels and effort to promote product sales,
achieving good results and realizing business income of CNY 4717.59 million, an increase of
1.46% compared with last year; but due to the impact of decreasing the proportion of the
sales in the products with high gross profit margin and increasing the proportion of the sales
in the products with the low profit margin, the Company realized net profit of CNY982.46
million belonging to the parent company’s shareholders, an decrease of 4.62% compared with
last year.
2. Analysis of main business
Whether or not the same as the disclosed summarization in operation situation discussion and
analysis?
□Available Not available
(1) Summarization
Description Increase or decrease of Cause of significant changes
the end of the period
over the end of last year
Operating revenue 1.46% Mainly because of increase in sales volume
Operating cost Mainly because of increase in sales volume,
4.18% especially the proportion of sales in medium-low
price products increased
Sales expense Mainly because of year-on-year increase of wage &
3.48%
welfare, transport cost and depreciation in 2016
Management expense Mainly because of year-on-year reduction of property
-1.33% tax, stamp tax, business travel expense and service
cost in 2016
R&D investment Mainly because of increase in expenses for
0.34%
technology research and development in 2016
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Financial expense Mainly because of reduction of interest income due to
94.63% decrease of time deposit balance, and the increase
in loan interest expenditure and exchange loss
Net amount of cash flow Mainly because of decline of received cash from
-22.15%
generated in operating activities production sales and rendering of service
Net amount of cash flow Mainly because of the decrease in received cash paid
generated in investment 26.70% by subsidiary and other business units
activities
Net amount of cash flow Mainly because of increase in received cash from loan
generated in capital-raising 47.24%
activities
Review and summary of the process of the Company’s early-disclosed development strategy
and business plan during the report period
During the report period, influenced by the decelerated growth on the demand for domestic
wine and intensified market competition, the Company has realized the business income of
CNY 4.72 billion, increased by 1.46% compared with last year, exceeding the target fixed at
the beginning of the year of realizing business income no less than CNY 4.6 billion. In order
to deal with the unfavorable business environment, the Company continuously carried out the
development strategy of multi-liquor, pushed hard on harmonious development of
multi-liquor, which played an important part in realizing the increase in the business income.
The main work in the report period is as following:
Firstly, the Company further strengthened the construction of marketing system, optimized
product structure, increased the marketing promotion efforts and enhanced the marketing
capability. the Company promoted the construction of wine distributor system, especially for
chateau wine mainly pushed by the Company; quickened the national sales system
construction and organized brandy-tasting meeting for 450 times. The Company further
perfected the sales system of multi-channel and multi-corporation, integrated middle-and-low
channel and middle-and-small hotel companies, and adjusted sales system for imported
liquor. The Company built independent sales system for imported liquors, making marketing
promotion more professional and more systematic. the Company conducted accurate
dissemination for brands through new media platforms and took many activities, such as
“G20 State Banquet”, “World Cabernet Gernischt Day” and “Grappie Launch” and so on.
According to Baidu search index, the visibility of Changyu brands in the whole year ranked
first in the wine industry.
Secondly, the management of production was enhanced in order to lower the production cost
and improve the production efficiency. Under the circumstance of raw material shortage, the
Company fully took the advantage of centralized purchasing to ensure the full and timely
supply of raw materials as well as the inhibition of increase in raw material price, resulting
that the purchasing prices of main packaging materials were lower over 5% than average
price. The Company further strictly controlled various expenses, reinforced the management
of production process consumption index in order to keep major production expenses within
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
the standard scope of the Company. Owing to the improvement of production efficiency per
capita in production system, the output per capita was increased through mode of production
structure optimization.
Thirdly, the research for new products and new technologies was continued being conducted
and the quality management was strengthened in order to improve technological level and
product quality. The Company confirmed 41 technologies for improving internal quality of
products, such as chateau wine, Jiebaina and brandy and so on, conducted technology
research mainly in the aspects of product anti-oxidation and extension of bulk wine stability,
and promoted steady improvement in internal quality of various products; combined with
North West Agriculture and Forestry University to report a “Innovation and Application of
Key Technology in Chinese Wine Industry Chain” project and won the second prize of 2016
National Scientific and Technological Progress Award; combined with Jiangnan University
to report a “Establishment and Application of Quality Assessment and Management System
for Premium Wine-making Grape Material and Wine” project and won the first prize of
2016 China General Chamber of Commerce Scientific and Technological Progress Award;
its technology center was awarded as 2016 “National Agricultural Products Processing and
Development Center Technological Innovation Top 10 Unit”; applied for 2 national patents
for invention and published 5 academic paper; attended wine and spirit tasting contest owing
international influence, which could be exemplified as Brussels, winning 3 gold awards and 8
silver awards; The Company enhanced product quality testing and mentoring, and
implemented annual quality target, major work and special work, improving the quality
management level.
Fourthly, the procurement of raw materials such as grapes was completed successfully and
the management of grape base was further strengthened. The Company balanced domestic
and international raw material resource, and optimized grape purchase pricing method, so
that grape purchase pricing controlled in reasonable level.
Fifthly, the construction of technological upgrading projects is steadily promoted to
strengthen momentum for future development. During the report period, the 7 projects run
smoothly among 9 projects which planed to be constructed. Another 2 projects (named
Changyu International Wine City Tourism Projects and Pioneer Monopoly Shop) Suspended
implementation owing to the changes of domestic economic situation and consumer
market ,engineering quality of each construction project is excellent.
(2) Revenue and cost
Composition of operating incomes
Unit: CNY
2016 2015
Proportion Proportion Year-on-year
in in increase or
Amount Amount
operating operating decrease (%)
incomes incomes
Total 4,717,596,472 100% 4,649,722,368 100% 1.46%
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
operation
revenue
Industry-classified
Industry of
liquor and
4,717,596,472 100% 4,649,722,368 100% 1.46%
alcoholic
beverage
Product-classified
Wine 3,700,806,317 78.45% 3,659,597,234 78.71% -0.26%
Brandy 905,687,936 19.20% 883,276,247 19% 0.20%
Others 111,102,219 2.36% 106,848,887 2.30% 0.06%
Area-classified
Domestic 4,437,302,746 94.06% 4,481,598,915 96.38% -2.32%
Abroad 280,293,726 5.94% 168,123,453 3.62% 2.32%
The condition of sectors, products or areas accounting for over 10% in the
Company’s operating incomes or operating profits
Available □Not available
Whether the Company follow disclosure requirement of special industry?
No.
Unit: CNY
Year-on
Year-on- Year-on-
-year
year year
increase
increase increase
Gross or
or or
Operating income Operating cost profit decrease
decrease decrease
rate (%) of
(%) of (%) of
gross
operating operating
profit
income cost
rate
Industry-classified
Industry
of liquor
and 4,717,596,472 1,575,770,979 66.60% 1.46% 4.18% -0.87%
alcoholic
beverage
Product-classified
Wine 3,700,806,317 1,204,784,351 67.45% 1.13% 5.15% -1.24%
Brandy 905,687,936 317,845,705 64.91% 2.54% 3.46% -0.31%
Area-classified
Domestic 4,437,302,746 1,372,112,826 69.08% -0.99% -5.77% 1.57%
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Under the situation that the statistical caliber of the Company’s main business data was
adjusted during the report period, the Company’s main business data adjusted on the basis of
caliber at the end of report period in recent one year.
□Available Not available
Whether the Company’s sales revenue for material object is more than labor income
Yes □No
Sector Project Unit 2016 2015 Year-on-year
increase or
decrease (%)
Sales volume Ton 98,958 86,318 14.64%
Wine
Production Ton 99,784 84,446 18.16%
Sales volume Ton 40,171 40,074 0.24%
Brandy
Production Ton 43,262 39,432 9.71%
Explanation on the causes of over 30% year-on-year changes of the related comparison data.
□Available Not available
The fulfillment of major sales contract signed by the Company up to the report
period
□Available Not available
Composition of operating costs
Unit: CNY
Sector Project 2016 2015 Year-on-yea
Amount Proportio Amount Proportio r increase or
n in the n in the decrease
operating operating (%)
cost (%) cost (%)
Blending
692,570,791 57.49% 608,095,160 53.07% 4.41%
liquor
Packing
372,613,924 30.93% 408,405,997 35.64% -4.72%
material
Wine
Wages 44,895,195 3.73% 41,930,611 3.66% 0.07%
manufacturi
94,704,442 7.86% 87,353,461 7.62% 0.24%
ng cost
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Blending
187,495,081 58.99% 189,302,330 61.62% -2.63%
liquor
Packing
105,943,197 33.33% 93,152,552 30.32% 3.01%
material
Brandy
Wages 11,965,588 3.76% 12,551,940 4.09% -0.32%
manufacturi
12,441,839 3.91% 12,206,568 3.97% -0.06%
ng cost
Whether there are changes of consolidation scope during the report period
Yes □No
For the scope of consolidated financial statement in this year, please see Notes VIII "Equity
in other entities" in detail. For detail of changes in the scope of consolidated financial
statement in this year, please see Notes VII "Change in consolidation scope".
Major changes or adjustments of the Company’s products or services during the
report period
□Available Not available
Information of major customers and major suppliers
The Company’s important customers
The total sales amount of the top five customers（CNY） 173,506,000
The proportion that total sales amount of the top five customers 3.68%
accounting for the annual total sales amount（%）
The proportion that sales amount of the related party in the total
sales amount of the top five customers accounting for the annual 0%
total sales amount（%）
Information on the Company’s 5 biggest customers
Sales Amount Proportion in Total Sales for
No. Customer Name
（CNY） the year（%）
Chuxin Trade Company Limited in
1 49,540,846 1.05%
Guangzhou city
2 New Baicheng Food Trade Company in 34,594,182 0.73%
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Hanjiang district of Putian city
Huahaipengcheng Liquor Company Limited
3 31,452,543 0.67%
in Zhuhai city
Wal-Mart (China) Investment Company
4 29,012,715 0.61%
Limited
Dali Qianxingrong Wine Shop in Nanhai
5 28,905,714 0.61%
district of Foshan city
Total — 173,506,000 3.68%
Available □Not available
There is no associated relationship between top 5 customers and the Company. The
Company’s directors, supervisors, senior management, core technicians, shareholders
holding over 5% shares, actual controller and other related party don’t gain benefits directly
and indirectly in major customers.
Information on the Company’s important suppliers
The total purchase amount of the top 5 suppliers 510,981,344
The proportion of the total purchase amount of the top 5 suppliers in the annual
38.32%
purchase amount
Purchase amount of the related party in total purchase amount of the top five five
11.29%
suppliers accounting for annual total purchase amount（%）
Information on the Company’s top 5 biggest suppliers
Purchase Amount Proportion in Total Purchase
No. Supplier Name
(CNY) for the year（%）
1 Yantai Shenma Packaging Co., Ltd. 150,590,287 11.29%
2 Yantai Changyu Glass Co.,Ltd. 128,098,740 9.61%
3 Xinjiang Yuyuan Liquor Co.,Ltd. 85,691,150 6.43%
Liquan Sales Department of
4 85,477,737 6.41%
Shandong Yantai Winery Co.,Ltd.
152 regiment of the eighth
5 61,123,430 4.58%
agriculture production division
Total 510,981,344 38.32%
Other situation explanation of main customers
□Available Not available
(3) Costs
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Unit: CNY
Year-on-year Explanation of
2016 2015 increase or significant
decrease (%) changes
Mainly because
of year-on-year
increase of
wage &
Sales expense 1,253,260,668 1,211,127,163 3.48% welfare,
transport cost
and
depreciation in
2016
Mainly because
of year-on-year
reduction of
property tax,
Management
309,783,548 313,968,409 -1.33% stamp tax,
expense
business travel
expense and
service cost in
2016
Mainly because
of reduction of
interest income
due to decrease
Financial of time deposit
21,968,859 11,287,685 94.63%
expense balance, and the
increase
of loan interest
expenditure and
exchange loss
(4) Research and development expenditure
□Available Not available
(5) Cash flow
Unit: CNY
Year-on-year
Item 2016 2015 increase or
decrease (%)
20
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Subtotal of cash inflow in
4,525,609,466 5,045,321,545 -10.30%
operating activities
Subtotal of cash outflow in
3,635,697,496 3,902,275,178 -6.83%
operating activities
Net amount of cash flow
889,911,970 1,143,046,367 -22.15%
generated in operating activities
Subtotal of cash inflow in
112,952,925 70,956,457 59.19%
investment activities
Subtotal of cash outflow in
800,394,471 1,008,811,136 -20.66%
investment activities
Net amount of cash flow
-687,441,546 -937,854,679 26.70%
generated in investment activities
Subtotal of cash inflow in
1,191,567,445 602,060,185 97.92%
capital-raising activities
Subtotal of cash outflow in
1,232,491,837 679,633,059 81.35%
capital-raising activities
Net amount of cash flow
generated in capital-raising -40,924,392 -77,572,874 47.24%
activities
Net increase of cash and cash
164,700,643 131,769,387 24.99%
equivalents
Explanation of main influence factors contributing to great changes in related data on
year-on-year basis
Available □Not available
During the report period, comparing with the same period of last year, net amount of cash
flow generated in operating activities was reduced by 22.15%, mainly due to the decrease in
received cash from selling commodity and providing labor service; subtotal of cash inflow in
investment activities increased by 59.19%, mainly due to the regain of the fixed deposit
whose duration is more than 3 months; subtotal of cash outflow in investment activities was
reduced by 20.66%, mainly due to the decrease in received net amount of cash paid by
subsidiary and other business units; net amount of cash flow generated in investment
activities increased by 26.7%, mainly due to the decrease in received cash paid by subsidiary
and other business units; subtotal of cash inflow in capital-raising activities increased by
21
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
97.92%, mainly due to the increase in received cash from loan; subtotal of cash outflow in
capital-raising activities increased by 81.35%, mainly due to the increase in the cash paid for
debt repayment; net amount of cash flow generated in capital-raising activities increased by
47.24%, mainly due to the increase in the received cash from loan; net increased amount of
cash and cash equivalents increased by 24.99%, mainly due to the significant growth of net
amount of cash flow generated in both operating activities and financing activities.
Explanation on the causes of the major differences between the net cash flow generated by
the Company’s operating activities and this year’s net profit during the report period.
□Available Not available
3. Analysis to non-main business
□Available Not available
4. Assets and liabilities situation
(1) Major changes of assets
Unit: CNY
At the end of 2016 At the end of 2015
Proportio Proportio Proportion
Explanation
n in the n in the increase or
on major
Amount total Amount total decrease
changes
assets assets (%)
(%) (%)
Monetary
1,391,517,607 12.07% 1,285,362,414 12.43% -0.36% -
funds
Receivables 173,062,628 1.50% 197,795,091 1.91% -0.41% -
Inventory 2,248,609,740 19.51% 2,260,852,964 21.86% -2.35% -
Investment
0% 0% 0% -
real estate
Long-term
equity 0% 0% 0% -
investments
Significant
increase in
Fixed assets 4,683,187,493 40.62% 3,089,245,185 29.86% 10.76% the book
value of
fixed assets
22
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
compared
with the
beginning
of the year,
owing that
parts of
construction
projects
have
transferred
to fixed
asset during
the report
period.
Significant
decrease in
the book
value of
construction
projects
compared
with the
beginning
Constructio
of the year,
n in 1,346,281,737 11.68% 2,005,990,308 19.39% -7.71%
owing to
progress
parts of
construction
projects
have
transferred
to fixed
asset during
the report
period.
Short-term No major
662,388,882 5.75% 665,581,921 6.43% -0.68%
borrowings changes
Long-term No major
49,140,555 0.43% 71,686,629 0.69% -0.26%
borrowings changes
(2) Measuring assets and Liabilities at Fair Value
□Available Not available
23
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
(3) Assets rights restricted situation up to the end of report period
① In order to ensure the Company and Yantai Economic and Technological Development
Zone Management Council to fulfill debtors obligation, Yantai Changyu Wine Research and
Development Company Limited plans to provide bank receipt of self-owned
CNY46.1million and 365,052.7 ㎡ land with an estimated valuation of CNY127.7684million
to China Agricultural Development Key Construction Fund Company Limited as guarantee
for the debt amount of CNY119.84million including original capital of CNY107million
invested by China Agricultural Development Key Construction Fund Company Limited.
② In order to ensure Yantai Changyu Wine Research and Development Company Limited
and Yantai Economic and Technological Development Zone Management Council to fulfill
debtors obligation, the Company plans to provide two real estate used for warehouse and
office to China Agricultural Development Key Construction Fund Company Limited as
guarantee to provide joint liability for the payment of Yantai Changyu Wine Research and
Development Company Limited and Yantai Economic and Technological Development Zone
Management Council for the debt amount of guarantee is CNY221.76million, including
original capital of CNY198million invested by China Agricultural Development Key
Construction Fund Company Limited. The first real estate provided by the Company as
guarantee locates on Shixue Road in Zhifu District, whose land area, total building area and
the estimated value is respectively 34,888 ㎡ , 10,071.04 ㎡ and CNY42.6514million; the
second real estate locates in the western grape hill factory on Dahaiyang Road in Zhifu
District Yantai, whose land area, total building area and the estimated value is respectively
176,074 ㎡, 89,571.29 ㎡ and CNY330.898million.
24
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
5. Investment situation
(1) Overall situation
Available □Not available
Investment amount during the Investment amount of the same
Variation
report period (CNY) period of last year (CNY)
929,180,000.00 842,060,000.00 10.35%
(2) Situation of acquired main equity investments during the report period
□Available Not available
Unit: CNY
(3) Situation of main ongoing non-equity investments during the report period
Available □Not available
Unit: CNY
Project Investment Whether Involved Investment Accumulated actual
Capital Process Estimated profit Accumulated Reasons Disclosure Disclosure
name mode it sectors Amount investment source of realized for date (if index (if
belongs during this amount up project profit up unreached have) have)
to fixed report period to the end to the end planning
assets of the report of the schedule
investment period report and
period estimated profit
25
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Yantai Self- Yes Liquor and Owned 2016.04.29 http://www.cninfo.com.cn/
Changyu constructed alcoholic funds cninfo-new/
International beverage disclosure/szse_main/
Wine City sector 349,500,000 1,023,130,000 95% — — — bulletin_detail/true/
Blending and 1202265203?
Cooling announceTime=2016-04-29
Center
Yantai Self- Yes Liquor and Owned 2016.04.29
Changyu constructed alcoholic funds
International beverage
295,000,000 776,690,000 95% — — —
Wine City sector
Bottling
Center
Yantai Self- Yes Liquor and Owned 2016.04.29
Changyu constructed alcoholic funds
International beverage
199,452,000 398,892,000 100% — — —
Wine City sector
Logistics
Center
Changyu Vine Self- Yes Liquor and Owned 2016.04.29
and Wine constructed alcoholic funds
15,000,000 105,760,000 55% — — —
Research beverage
Institute sector
Treasure Self- Yes Liquor and Owned 2016.04.29
Wine Chateau constructed alcoholic funds
31,000,000 78,990,000 55% — — —
beverage
sector
Koyac Brandy Self- Yes Liquor and 13,928,000 111,928,000 Owned 50% — — — 2016.04.29
26
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Chateau constructed alcoholic funds
beverage
sector
Greening Self- Yes Liquor and Owned 2016.04.29
Investment constructed alcoholic funds
25,300,000 25,300,000 100% — — —
beverage
sector
Yantai Self- Yes Liquor and Owned Suspend 2016.04.29
international constructed alcoholic funds implementation
0 0 0% — —
Wine City beverage
Tourism project sector
Pioneer Self- Yes Liquor and Owned Suspend 2016.04.29
Monopoly constructed alcoholic funds implementation
0 45,140,000 60% — —
Shop beverage
sector
Total — — — 929,180,000 2,565,830,000 — — — — -- --
27
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
(4) Financial assets investment
Security investment situation
□Available Not available
There is no security investment for the Company during the report period.
Derivatives investment
□Available Not available
There is no entrust financing for the Company during the report period.
(5) The usage situation of the raised capital
□Available Not available
There is no usage situation of the raised capital for the Company during the report period.
(6) Sale of major assets and equities
Sale of major assets
□Available Not available
There is no sale of major assets during the report period.
Sale of major equities
□Available Not available
(7) Analysis to the major holding and joint stock companies
Available □Not available
Situation of main subsidiaries and joint stock companies affecting over 10% of the
Company’s net profit
Unit: CNY
Company Company Main Registered Total Net Operation Operation Net
name type business capital asset asset revenue profit Profit
Xinjiang Subsidia To plant
CNY 75 157,135, 128,532, 118,253,4 14,648,47 11,561,9
Tianzhu ry grape,
million 133 045 96 4 69
Winery produce
28
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Co., Ltd. and sell
grape
juice, bulk
wine and
fruit wine
Yantai To
Changyu research,
-Castel produce
Wine and sell
Chateau Subsidia wine and USD 5 290,33 79,426, 102,588, 18,037,9 13,184,
Co. ry sparkling million 0,975 494 593 53 637
LTD. wine as
well as the
tourism
service
Langfang
Joint
Castel- To produce USD
stock 46,418, 36,184, 41,948,3 1,690,04 731,20
Changyu and sell 6,108,81
compan 915 983 91 2 4
Wine Co. wine 8
y
LTD.
Chateau Subsidia To
Changyu ry research,
CNY
AFIP produce 590,66 158,55 178,662, 40,183,8 29,417,
110
Global and sell 2,821 1,404 315 18 483
million
brandy and
wine
Chateau Subsidia
Liaoning ry CNY
To produce 65,785, 51,928, 43,742,4 -5,846,1 -5,895,
Changyu 26.30
ice wine 268 324 12 20 304
Ice Wine million
Co., Ltd.
Dicot Subsidia To produce
Partners, ry and operate EUR2.38
465,37 122,96 281,328, -16,244, -7,484,
S.L. o wine and 5732mill
6,681 1,191 100 067 378
other ion
liquor
Acquisition and disposal of subsidiaries during the report period
□Available Not available
Information of main holding and joint stock companies
No
29
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
(8) Main part situation of the special purpose being controlled by the Company
□Available Not available
(9) Expectation for the Company’s future development
On the basis of our limited experience and special skills, we make the following estimation of the
wine sector and the Company’s future development:
(1)The sector competition setup and development trend
In 2017, under the slowdown effect of national macroscopic economy growth, the operation
situation of the Company will become more severe, plus the change of the alcohol consumption
environment, leading to difficulties in selling high-end products; Consumers tend to be more
rational, which requires Changyu to make more efforts in improving the cost performance of
products; Owing that influx of plenty of imported wines would further compress the domestic
wine market shares and the new channels such as E-commerce cause great impact on the
traditional sales channels, the competition in the domestic wine industry will still be fierce at
present and in the future long time; Raw material cost, freight and depreciation expense and other
expenses are likely to increase, bringing big pressure to the Company’s profitability. But in the
long run, thanks to increase in their income, more and more people would pursue health and
fashion life mode and the people would be in more favor of wines which fit quite well with the
trend of consumption, ceaselessly stimulating the demands for premium wine. This decides that
the Chinese wine industry owns a huge market development potential, especially that brandy and
wine with high price ratio might have a faster growth. In such a case of long-term coexistence of
opportunities and challenges, those enterprises that possess strong brand influence and marketing
ability, catch the opportunities, actively take adjustments, make full use of newly emerging and
traditional sales channels, timely satisfy the consumers’ demands and provide products with high
price ratio will have the opportunity to be the final winner of competition and then form a new
structure of the future Chinese wine market.
(2)The Company’s development strategy
The Company will continue adhering to the strategy of focusing on wine while fully developing
various products, actively expand the scope of consumption field and marketing mode,
industriously develop middle-and--high-end wines and brandy, strengthen the marketing level of
imported wine and strive to provide consumers with a rich variety of products in high price ratio.
(3) Management plan in new year
In 2017, the Company will try its best to realize business income of not less than CNY4.9 billion
and control the main operating costs and three period expenses below CNY3.5 billion.
(4) The measures the Company will take
In order to better catch the opportunities and face the challenges, the Company will take full
advantage of self-owned advantages, adhere to market-orientation, take profit evaluation as a
means, regard innovations and key work as drives, insist in management and implementation and
would pay attention to following aspects in 2017:
Firstly, the Company will stick to market-orientation, further enhance the construction of
marketing system, optimize the product mix and improve marketing capacity. The Company will
optimize distributor structure of wines such as Changyu Castel, Changyu AFIP and Jiebaina etc,
accelerate marketing system construction of three western chateaux, promote steady growth of
30
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
sales volume in middle-and-high-level products; will complete upgrade of Brandy products,
further expand Brandy market coverage and increase marketing investment of
middle-and-high-level brandy product in order to ensure the continuous and rapid grow of brandy;
will strengthen marketing effort of middle-and-low-end products and acquired overseas
enterprises’ product and endeavor to develop Zuishixian, Grappie and imported products to Big
Product; will continue enhancing newly-emerging business including direct-supply and
e-commerce etc, enlarging input of e-commerce business and accelerating the development of
e-commerce business; will intensify product price management so as to improve profit ability;
will standardize business of VIP custom-made product and improve service level; will positively
take various measures to enhance market competitiveness of Pioneer Monopoly Shop.
Secondly, the Company will focus on informationization of production system, comprehensively
improve management level and reduce business risk. The Company will build an intelligentialized
manufacturing system to realize systematic control in overall process of production and logistics
as well as the seamless joint of various links including the generation of sales order,
decomposition of production plan, operation on production line, storage and logistics links, build
an efficient and flexible production mode, support “various varieties, small quantity” production
and “order business flexibility”, improve production efficiency and meet the quickly changed
market need; will continue perfecting and implementing the management control and assessment
method of salary per ton, bulk wine consumption and controlled expense, make centralized
purchasing in bulk raw material to reduce production cost and improve production efficiency; will
further perfect capital management system, improve financing mode and reduce capital cost.
Thirdly, the Company will further enhance the management of grape base and reinforce the
guarantee capability of grape material. The Company will integrate the layout of domestic and
foreign raw material resource to form the advantage complementation of domestic and foreign
raw material in the aspects of quality, quantity and price and so on and to ensure the stable supply
of premium raw material; will actively carry out the classification management, classification
processing and pricing in bases special for brandy; will improve grape pricing mechanism and
guide the grape bases to produce as the need; will further enhance the management level of
self-supporting bases and improve the quality of wine grape through increasing the soil fertility
and adopting advanced cultivation technology; will perfect the management system of tracing
grape bases by winemakers to improve the management level and grape quality of bases; will
perfect profit assessment method of bases and enhance the profitability of self-supporting bases;
will further increase contractual base area per contractor, enahnce popularizing rate of
mechanization plantation, improve plantation efficiency and reduce raw material cost.
Fourthly, in order to speed up the pace of internationalization, the Company will continue seeking
for target enterprise in major wine regions, such as Australia and Chile, in order to realize the
comprehensive layout in global major wine regions; will reinforce the management of acquired
enterprise and achieve continuous and rapid development in overseas market in the mean time of
enlarging Chinese market business.
Fifthly, the company will steadily push construction of investment projects forward, reinforce
project management, scientifically arrange construction process and strive for putting into
production on time. The Company will continue conducting construction of various project in
Yantai Changyu International Wine City(Changyu Industry park),do the equipment
commissioning and finishing touches well, intensify project cost audit and auditing of final
31
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
settlement, strictly control project investment amount and ensure that all projects could be built
and put into operation according to the scheduled process and quality.
(5) Potential risks
A) Risks in price fluctuation of raw materials
Grapes are the Company’s main raw materials. The grape’s yield and quality are affected to a
certain extent by the natural factors such as drought, wind, rain, frost and snow. These force
majeure factors greatly influence the quantity and price of the grapes in this Company orders and
add the uncertainty to the Company’s production and operation. Therefore, the Company will
lower the risks that are likely to affect grape quality and result in price fluctuation by means of
expanding the self-run vineyards, strengthening the vineyard management and optimizing the
layout of vineyards.
B) Risks in uncertainty of market input and output
To cope with the cutthroat market competition and to meet the needs for market development, the
Company has input more and more capital in the market and the sales expense has taken up a
higher percentage point in the business revenue. The input-output ratio will affect the Company’s
operating results to a great extent and the risk that some investments may not reach the
expectations is likely to occur. Therefore, the Company will strengthen market research and
analysis, enhance market forecast accuracy and continue to perfect the input-output evaluation
system to ensure the investments in market to be satisfactory as expected.
C) Risks in product transport
The Company’s products are fragile and sent to different places all over the world, mostly by sea,
railway and expressway. The peak season of sales is usually in cold winter and close to the spring
festival when market has a great demand. At that time, the natural and human factors such as
serious shortage of transport capacity resulting from busy flow of people and goods, wind, snow,
freezing as well as traffic accidents make the transport departments difficult to send products to
markets in time and safely. As a result, it makes this Company have to face the risks of missing
the peak season of sales. Therefore, the Company will adopt all methods possible like making
precise sales prediction and well designed connection of production and sales, reasonably
arranging production and transport means and making use of more available warehouses in
different places to lower these kinds of risks.
D) Risks in investment faults
According to the plan, currently the Company has finished the production layout at home, and the
next step is to pay more attention to the overseas merge and acquisition in the same industry.
Currently, Yantai Changyu International Wine City (namely Yantai Changyu Industrial Park) has
those features such as the big investment amount, long-term construction period and many
uncertain factors; more unforeseeable factors for the overseas merge and acquisition projects in
the progress of M&A, it is difficult to make sure the fair and reasonable transaction price, the
integration and management after M&A is also hard. Under the influence of uncertain factors for
individual projects, It leads to have the risks of facing with the investment amount out of budget
or hardly taking back the expected investment earnings. The Company will take an adequate
argument and scientific decision-making for investment projects, try hard to reduce and avoid
investment risks.
10. The Company’s receptions, studies, communications and visits
32
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Available □Not available
Reception method Reception object type Basic information
Reception Time
index of studies
2016.05.05 Field survey Institution -
2016.05.12 Field survey Individual -
2016.05.26 Field survey Individual -
2016.06.24 Field survey Individual -
Number of 4of
Reception
Number of 46
received institution
Number 0
of received
individual
Number of other 0
object
Whether disclose, No
reveal or betray
no-public
import information
33
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
V. Major issues
1. The Company’s common stock profit distribution and increasing equity with capital
reserve
Promulgation, implementation or adjustment of common stock profit distribution policies
especially cash dividends policies during the report period
Available □Not available
Deliberated and passed by the 2015 Stockholders’ Meeting convened on 26th May, 2016 by
the Company, the Company’s 2015 annual profit distribution scheme is shown as follows:
based on total 685,464,000 shares (including 453,460,800 A shares and 232,003,200 B shares)
up to 31st December, 2015, the Company would pay cash dividend to all shareholders
registered on the share registration day: CNY5 in cash per ten shares. This time the Company
would neither dispatch bonus shares nor increase equity with capital reserve.
On 1st July, 2016, the Company published the Implementation Announcement of 2015
Annual Equity Distribution on China Securities Journal, Securities Times and
www.cninfo.com.cn, determining that the share registration day and the ex-dividend day of A
Share was respectively on 6th July, 2016 and on 7th July, 2016; the last trading day, the share
registration day and the ex-dividend day of B Share was respectively on 6th July, 2016, on
11th July, 2016 and on 7th July.
This time the dispatching objects contain all A Share holders registered at China Securities
Depository and Clearing Corporation Limited Shenzhen Company after closing of Shenzhen
Stock Exchange on the afternoon of 6th July, 2016 and all B Share holders registered at
China Securities Depository and Clearing Corporation Limited Shenzhen Company after
closing of Shenzhen Stock Exchange on the afternoon of 11th July, 2016. This dispatching
has already been completed in July 2016.
Special explanation
Whether it is in accordance with the requirements of the regulation in the Articles Yes
of Association and the resolution of shareholders
Whether the distribution standard and proportion is clear and definite Yes
Whether the relative decision process and mechanism is complete Yes
Whether the independent directors perform their responsibilities and play the roles. Yes
Whether the small and middle shareholders have the chance to express their Yes
advices and appeals, as well as their lawful right and interest is in an enough
protection.
Whether it is legal and transparent for the condition and process while adjusting Yes
and amending the cash dividends distribution policy.
The Company’s plan (preliminary scheme) of common stock profit distribution and
increasing equity with capital reserve in the recent three years (including the report period).
34
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
The Company’s profit distribution in 2014 is as following: Because the left amount of legal
earned surplus reserve reaches 50% of registered capital, while making profit distribution, the
legal earned surplus reserve will be not drawn. Based on the Company’s 685,464,000 shares
at total up to December 31, 2014, we plan to pay CNY 4.4 in cash as dividends for every ten
share (including tax) to the Company’s all shareholders, totaling up to CNY 301.60416
million accounted for 30.85% of net profits CNY977.707711 million attributable to
shareholders of parent company in the consolidated statements. The retained and
undistributed profit of CNY 676.103551 million will be reserved for distribution in the next
year.
The Company’s preliminary scheme of profit distribution plan in 2015 is as following:
Because the left amount of legal earned surplus reserve reaches 50% of the registered capital,
while making profit distribution, the legal earned surplus reserve will not be drawn. Then
based on the Company’s 685,464,000 shares at total up to December 31, 2015, we plan to pay
CNY 5 in cash as dividends for every ten shares (including tax) to the Company’s all
stockholders, totaling up to CNY 342.732 million, accounting for 33.27% of the net profit
CNY 1030.07386 million attributable to the shareholders of the parent company in the
consolidated statement, the retained and undistributed profit of CNY 687.34186 million will
be reserved for the distribution of next year.
The Company’s profit distribution plan in 2016 is as following: Because the left amount of
legal earned surplus reserve reaches 50% of the registered capital, while making profit
distribution, the legal earned surplus reserve will not be drawn. Then based on the
Company’s 685,464,000 shares at total up to December 31, 2016, we plan to pay CNY 5 in
cash as dividends for every ten shares (including tax) to the Company’s all stockholders,
totaling up to CNY 342.732 million, accounting for 34.89% of the net profit CNY
982.460488 million attributable to the shareholders of the parent company in the consolidated
statement, the retained and undistributed profit of CNY 639.728488 million will be reserved
for the distribution of next year.
The Company’s common stock cash dividend record in recent three years (including the
report period)
Unit: CNY
Net profit Proportion in the Amount of cash Proportion of cash
belonging to the net profit belonging dividends in other dividends in other
Amount of
listed company’s to the listed ways ways
Year of cash dividend
stockholders in the company’s
distribution (including
consolidated stockholders in the
tax)
statement of the consolidated
distribution year statement (%)
2016 342,732,000 982,460,488 34.89% 0 0%
2015 342,732,000 1,030,073,860 33.27% 0 0%
2014 301,604,160 977,707,711 30.85% 0 0%
35
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
During the report period the Company earned profit, the profit of the parent company that
could be distributed to common stock shareholders was positive but without proposing
common stock cash dividend distribution.
□Available Not available
2. The Company’s preliminary scheme of profit distribution and preliminary scheme of
increasing equity with capital reserve
Available □Not available
Number of sending bonus shares per ten shares (share) 0
Number of dividend payout per ten shares (CNY) (including tax) 5
Number of transferring per ten shares(share) 0
The cardinal number of the capital stocks for the preliminary distribution
685,464,000
scheme (shares)
Total cash dividend distribution（CNY）(including tax) 342,732,000
Distributable profit (CNY) 982,460,488
The proportion of cash dividend distribution in the total profit distribution 100%
Cash dividend
If the Company’s development is in growth stage and major capital expenditure is arranged,
while making profit distribution, the proportion of cash dividends should takes up no less
than 20% in this profit distribution
Detailed explanation for the preliminary scheme of profit distribution or increasing equity
with capital reserve
According to the audit result from Deloitte Hua Yong, the net profit belonging to the parent
company’s stockholders in the consolidated statement is CNY982.460488million, the net
profit of the parent company in financial statement is CNY1830.574470 million in 2016.
According to PRC accounting standard, the situation for the attributable profit of
consolidation and parent company in 2016 is as following:
Unit: CNY
Consolidation Parent company
Undistributable profit at the end the year 6,620,118,562 7,360,234,545
Including: net profit in 2016 982,460,488 1,830,574,470
Distributable profit carried over to the 5,980,390,074 5,872,392,075
beginning of the year
Distribution for 2015 dividend 342,732,000 342,732,000
Withdrawing for the legal earned surplus 0 0
reserve
According to regulation of 157th item in the Articles of Association, which is that the
Company can distribute dividends either in cash or by stock, the profit to be distributed each
year is not less than 25% of the distributable profit realized in the same year and the
36
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
accumulated sum of profit to be distributed in cash in the next three years is not less than
30% of the yearly average distributable profit to be realized in the next three years,
meanwhile, considering the large amount on the capital expenditure in 2017, under the
condition of not influencing the normal production and operation, the Company put forward
preliminary scheme on profit distribution in 2016 as following:
Because the left amount of legal earned surplus reserve reaches 50% of the registered capital,
while making profit distribution, the legal earned surplus reserve will not be drawn. Then
based on the Company’s 685,464,000 shares at total up to December 31, 2016, we plan to pay
CNY 5 in cash as dividends for every ten shares (including tax) to the Company’s all
stockholders, totaling up to CNY 342.732 million, accounting for 34.89% of the net profit
CNY 982.460488million attributable to the shareholders of the parent company in the
consolidated statement, the retained and undistributed profit of CNY 639.728488 million will
be reserved for the distribution of next year. The cash dividend for the shareholders of B
share listed overseas was paid in Hongkong dollar according to the middle rate between CNY
and Hongkong dollar issued by the People’s Bank of China on the first working day after the
resolution date of 2016 shareholders’ meeting.
3. Implementation of commitments
(1) Commitments that the Company’s actual controllers, shareholders, related parties,
acquirers and the Company and other related commitment parties have implemented during
the report period and have not implemented up to the end of the report period
Available □Not available
Commitment Commitment Commitment Commitment Implementat
Commitments Commitment type
party content time period ion
Commitments at
－ － － －
share reform
Commitments
made in
acquisition － － － －
report or equity
changes report
Commitments at
asset － － － －
restructuring
Yantai Solve horizontal Non-horizontal 18thMay 1997 Has been
Commitments at Changyu competition competition performing
Forever
the initial public Group Co. strictly
offering or Ltd.
refinancing Yantai Clear the purpose According to
Has been
Changyu of brand royalty Trademark
18 May 1997 Forever
th
performing
Group Co. License
strictly
Ltd. Contract, the
37
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Company will
pay trademark
royalty for the
‘‘Changyu’’
products of
Yantai
Changyu
Group Co., Ltd
every year,
Yantai
Changyu
Group Co., Ltd
will use
trademark
royalty to
advertise
‘‘Changyu’’
trademarks and
Contracted
products in this
contract.
Equity incentive
－ － － － －
commitments
Commitments at
middle and
small － － － －
－
shareholders of
the Company
Commitment Yes
under timely
implementation
or not
Whether or not No
to have specific
reasons of the
unimplemented
commitment and
next steps(if
any)
(2) The Company should make a statement on the achieved original profit forecast of
assets or projects and its reason if there is profit forecast of Company’s assets or
projects and the report period is still in the profit forecast period
□Available Not available
38
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
4. Non-business capital occupying of listed company by controlling shareholder and its
related parties
□Available Not available
There are no non-business capitals occupying of listed company by controlling shareholder
and its related parties during the report period.
5. Explanation of Non-standard Audit Report given by accounting firm in the report
period from board of directors, board of supervisors and independent directors (if
have)
□Available Not available
6. Compared with the previous year’s financial report, explanation for the changes of
accounting policy, accounting estimation and accounting method
□Available Not available
There are no changes of accounting policy, accounting estimation and accounting method
during the report period.
7. During the report period, the situation explanation for the correction of major accounting
errors which need to be retrospect and restated.
□Available Not available
There is no situation for the correction of major accounting errors which need to be retrospect and
restated.
8. Compared with the previous year’s financial report, explanation for the changes of
the consolidated statements scope.
Available □Not available
For the scope of consolidated financial statement in this year, please see Notes VIII "Equity
in other entities" in detail. For detail of changes in the scope of consolidated financial
statement in this year, please see Notes VII "Change in consolidation scope".
9. The appointment and dismissal of certified public accountants
Currently appointed accounting firm
Deloitte Hua Yong Certified Public Accountants Co., Ltd.
Domestic accounting firm name
(special general partnership)
39
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Reward for domestic accounting firm
198
(CNY‘0000)
Consecutive period for the audit
4
services of domestic accounting Firm
Name of Certified public accountant
for the audit services of domestic Li Xu, Li Yangang
accounting Firm
Overseas accounting firm name (if
－
have)
Reward for overseas accounting firm
0
(CNY‘0000) (if have)
Consecutive period for the audit
－
services of overseas accounting Firm
Name of Certified public accountant
for the audit services of overseas －
accounting Firm
Whether or not to dismiss the accounting firm during the report period
□Yes No
To employ internal control audit accounting firms, financial adviser or sponsor.
Available □Not available
The Company employs Deloitte Hua Yong Certified Public Accountants Co., Ltd. (special
general partnership) as 2016 internal control audit accounting firms.
10. Face of suspension and termination of listing after the disclosure of annual report
□Available Not available
11. Bankruptcy reorganization
□Available Not available
There is no bankruptcy reorganization during the report period.
40
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
12. Material litigation and arbitration
□Available Not available
There are no material litigation and arbitration during the report period.
13. Penalty and rectification
□Available Not available
There are no penalties or rectifications during the report period.
14. Credit of the Company, holding shareholders and actual controllers
□Available Not available
15. Implementation of the Company’s equity inventive plan, employee stock ownership plan
or other employee incentive measures
□Available Not available
There are no implementation of the Company’s equity inventive plan, employee stock ownership
plan and other employee incentive measures.
16. Significant related transactions
(1) Related transactions in relation to routine operations
Available □Not available
Detailed information about the Company’s 2016 annual routine related transactions, please
refer to Notes X "Related party and Related Transaction" in the Financial Statement of the
report in detail, or could also look up the Company’s related temporary announcement
according to the following index.
Disclosure website of major related transactions’ temporary reports for related query
Name of Disclosure date of Website of disclosure of
Temporary announcement temporary announcement temporary announcement
Announcement of 2017
Cninf
annual routine related April 22, 2017
(http://www.cninfo.com.cn)
transaction
Announcement of 2016
Cninf
annual routine related April 29,2016
(http://www.cninfo.com.cn)
transaction
41
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
(2) Related transactions in relation to acquisition and sales of assets or equity
□Available Not available
There are no related transactions in relation to acquisition or sales of assets or equity during the report period.
(3) Related transactions in relation to common foreign investment
□Available Not available
There are no related transactions in relation to common foreign investment during the report period.
(4) Related current credit and debt
Available □Not available
Whether or not to exist non-operating related credit and debt
□Yes No
(5) Other major related transactions
□Available Not available
17. Major and important contracts and execution results
(1) Trusteeship, contract and leasehold issues
Trusteeship situation
42
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
□Available Not available
There is no trusteeship situation during the report period.
Contract situation
Available □Not available
Contract situation description
During the report period, about the Company’s contract operation situation, please see ‘‘1. The structure of Enterprise group’’ in
Annex 8 ‘‘Rights and interests of other subject’’ in the financial report of this report.
Project in gains and losses for the Company to achieve more than 10% of the total profit
□Available Not available
There are no contract projects in gains and losses for the Company to achieve more than 10% of the total profit during the report period.
Leasehold situation
Available □Not available
Leasehold situation description
On 1st January 2012, the Company renewed the Space Lease Agreement with the controlling shareholder Changyu Group, the Company leased
the space with 57749.77 square meters located at 174 Shihuiyao Road, Zhifu District,Yantai City and the space with 3038 square meters located
at 56 Dama Road, Zhifu District, Yantai City, which are all under the name of controlling shareholder. The rent of the above spaces per year is
CNY 5.858 million with a period of 5 years from 1st January 2012 to 31st December 2016.
Project in gains and losses for the Company to achieve more than 10% of the total profit
43
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
□Available Not available
There are no leasehold projects in gains and losses for the Company to achieve more than 10% of the total profit during the report period.
(2) Major guarantee
Available □Not available
Guarantee situation
Unit: CNY’0000
External guarantee of the Company and its subsidiaries（excluding guarantee to subsidiaries）
Disclosure date of
Whether or
related Actual date of Actual Whether or
Guarantee object Guarantee Guarantee Guarantee not belong to
announcement occurrence (date guarantee not complete
name quota type Period related-party
about guarantee of agreement) amount implement
guarantee
quota
Yantai Economic
and Technological
Mortgage;
Development 2016.12.22 34160 2016.12.21 34160 10years No No
Pledge
Zone Management
Council.
Total of the external guarantee quota Total of the actual external
approved during the report period 34160 guarantee amount during 34160
(A1) the report period (A2)
Total of the external guarantee quota 34160 Balance of the actual 34160
44
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
approved by the end of the report external guarantee by the
period (A3) end of the report period
(A4)
Guarantee between the Company and subsidiaries
Disclosure date of Whether Whether or
related Actual date of Actual or not not belong to
Guarantee object Guarantee Guarantee Guarantee
announcement occurrence (date guarantee complete related-party
name quota type Period
about guarantee of agreement) amount implemen guarantee
quota t
Yantai Changyu
Pioneer Wine Joint liability
2016.10.31 10,000 2016.11.05 10,000 2years No Yes
Sales Limited assurance
Company
Yantai Changyu
Mortgage;
Pioneer Wine 2016.12.22 11,984 2016.12.21 11,984 10years No Yes
Pledge
Company Limited
Yantai Changyu
Joint liability
Wine Research
2016.12.22 72,176 2016.12.21 72,176 assurance; 10years No No
and Development
Mortgage
Company Limited
Total of the actual
Total of the guarantee quota approved
guarantee amount for
to subsidiaries during the report 82,176 32,176
subsidiaries during the
period (B1)
report period (B2)
Total of the guarantee quota approved Balance of the actual
82,176 32,176
to subsidiaries by the end of the report guarantee for subsidiaries
45
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
period (B3) by the end of the report
period (B4)
Guarantee between subsidiaries
Disclosure date of Whether
Whether or
related Actual date of Actual or not
Guarantee object Guarantee Guarantee Guarantee not belong to
announcement occurrence (date guarantee complete
name quota type Period related-party
about guarantee of agreement) amount implemen
guarantee
quota t
Total of the actual
Total of the guarantee quota approved
guarantee amount for
to subsidiaries during the report 0 0
subsidiaries during the
period (C1)
report period (C2)
Balance of the actual
Total of the guarantee quota approved
guarantee for subsidiaries
to subsidiaries by the end of the report 0 0
by the end of the report
period (C3)
period (C4)
Total of the Company’s guarantee amount（Total of above three major items）
Total of the actual
Total of the approved guarantee quota guarantee amount during
116,336 66,336
during the report period（A1+B1+C1） the report period
（A2+B2+C2）
Total of the approved guarantee quota Balance of the actual
by the end of the report period 116,336 guarantee by the end of the 66,336
（A3+B3+C3） report period（A4+B4+C4）
The proportion of Actual total guarantee amount (A4+B4+C4) in the
8.08%
Company’s net asset
46
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Among :
The amount of guarantee for shareholders, actual controllers and their
0
related parties（D）
The amount of debt guarantee for the guaranteed objects whose
0
asset-liability ratio is more than 70% directly or indirectly（E）
Total amount of guarantee that exceeds 50% of net assets（F） 0
Total amount of the above-mentioned three items（D+E+F） 0
Explanation for undue guarantees that have happened warranty
liability or may take joint payback liabilities during the report period No
（if have）
Explanation for violating due process to provide external guarantee
No
（if have）
Specific explanation on adopting complex guarantee type
No.
Illegal external guarantee
□Available Not available
There is no illegal guarantee situation during the report period.
(3) Entrusting others to manage cash assets
Financial management entrustment
□Available Not available
47
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
There is no financial management entrustment during the report period.
Loan entrustment
□Available Not available
There is no loan entrustment during the report period.
(4) Other important contracts
□Available Not available
There are no other important contracts during the report period.
18.Social Responsibility
(1)Precise poverty
①Summary of annual precise poverty
No.
②Working condition of Listed company’s annual precise poverty
No.
③Subsequent precise poverty plan
No.
(2)Other social responsibility
Please see “China Securities Newspaper” , “Securities Times” and 2016 Annual Social Responsibility Report disclosed on www.cninfo.com.cn .
The listed company and its subsidiaries are whether or not to belong to the heavy pollution industry stipulated by the state environmental
protection department.
48
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
□Yes No
Whether or not to public social responsibility
Yes □No
Enterprise social responsibility
Enterprise property Whether including Whether including Whether including Standard of disclosure
environmental social information information in Domestic standard Foreign standard
information governance aspect
Private Yes Yes Yes Listed Company other
social responsibility
guidance
Detail explaination
1. Whether the Company has passed Environment Management System Yes.
Certification(ISO14001)
2. Expenditure of environment protection in the firm-year(CNY‘0000) 630
3.Emission reduction performance of three wastes ‘waste gas, waste water and All discharges with standards
waste residues’ for the Company
4.Investment of employee career development ability for improvement of employee 220
knowledge and technology
5. Social public donation 186
19. Other Major issues
□Available Not available
There are no other major issues need to be explained during the report period.
20. Major issues of Company’s subsidiaries
□Available Not available
49
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
VI. Changes in Shares and the Shareholders’ Situation
1. Changes in shares
(1) Changes in shares
Unit: share
Amount before this change Change (+, -) Amount after this change
Transfer
Percentage Allot Distribute other Percentage
Amount new bonus share capital to others Sub total Amount %
% share share
capital
1、Unrestricted shares 685,464,000 100% 685,464,000 100%
(1)、A shares 453,460,800 66.15% 453,460,800 66.15%
(2)、B shares 232,003,200 33.85% 232,003,200 33.85%
2、Total shares 685,464,000 100% 685,464,000 100%
Cause of share change
□Available Not available
Approval of share change
□Available Not available
Transfer of changed shares
□Available Not available
50
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
The influence of share change on the financial indicators such as basic earnings per share, diluted earnings per share of the latest year and the
latest period, net asset per share belonging to the Company’s common shareholders, etc.
□Available Not available
Other contents the Company thinks necessary or securities regulatory departments ask to make public.
□Available Not available
(2) Changes in restricted shares
□Available Not available
2. Securities issuance and listing situation
(1) Securities issuance (exclude preferred share) during report period
□Available Not available
(2) Explanation of change in Company’s total shares and shareholding structure and change in Company’s assets and liability structure
□Available Not available
(3) Current employee shares
□Available Not available
51
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
3. Situation for shareholders and the actual controllers
(1) The number of shareholders of the Company and the shareholdings
Unit：share
Total number of preferred
Total number of Total number of preferred
shareholder recovering
shareholders by the end of shareholder recovering
Total shareholders in voting power by the end of
41,984 last month before the 42,254 voting power by the end 0 0
the report period last month before the
disclosure day of the ofreport period (if have)
disclosure day of the annual
annual report (see note 8)
report (if have) (see note 8)
Shareholders holding more than 5% or the top 10 shareholders holding situation
Number Pledged or frozen
Changes
Name of Percentag Shares held until the during the of Number of
Character of shareholders e end of the report period report restricte unrestricted
Shareholders (%) Share status Amount
d shares
period
shares
YANTAI
Domestic non-state-owned 345,473,85
CHANGYU GROUP 50.40% 345,473,856 0 0
legal person 6
CO. LTD.
GAOLING Foreign legal person
3.11% 21,300,919 0 21,300,919 0
FUND,L.P.
CHINA State-owned legal person
SECURITIES 2.32% 15,924,155 -73,300 15,924,155 0
FINANCE CORP
BBH BOS S/A
FIDELITY FD - Foreign legal person 2.22% 15,241,826 -334,300 15,241,826 0
CHINA FOCUS FD
TIANAN Domestic non-state-owned 1.16% 7,939,166 7,939,166 7,939,166 0
52
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
PROPERTY legal person
INSURANCE CO.,
LTD—BAOYING
NO.1
NORGES BANK Foreign legal person 0.96% 6,584,748 886,296 6,584,748 0
GUOTAI JUNAN
SECURITIES(HONG Foreign legal person 0.78% 5,321,478 651,906 5,321,478 0
KONG) LIMITED
CENTRAL HUIJIN
ASSET
State-owned legal person 0.69% 4,761,200 0 4,761,200 0
MANAGEMENT
LTD.
BBH A/C
VANGUARD
EMERGING Foreign legal person 0.55% 3,788,487 72,700 3,788,487 0
MARKETS STOCK
INDEX FUND
FIDELITY CHINA
SPECIAL Foreign legal person 0.55% 3,779,202 0 3,779,202 0
SITUATIONS PLC
Strategic investors or legal result of the placement of new
No
shares to become a top 10 shareholders(if have)(see note 3)
Among the top 10 shareholders, Yantai Changyu Group Company Limited has no
The explanation for the associated relationship and
associated relationship or accordant action relationship with the other 9 listed shareholders,
accordant action
and the relationship among the other shareholders is unknown.
The top 10 shareholders with unrestricted shares
Name of Shareholders Number of unrestricted Type of share
53
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
shares held until the end of
Type of share Amount
the year
YANTAI CHANGYU GROUP CO. LTD. 345,473,856 A 345,473,856
GAOLING FUND,L.P. 21,300,919 B 21,300,919
CHINA SECURITIES FINANCE CORP 15,924,155 A 15,924,155
BBH BOS S/A FIDELITY FD - CHINA FOCUS FD 15,241,826 B 15,241,826
TIANAN PROPERTY INSURANCE CO., LTD—BAOYING NO.1 7,939,166 A 7,939,166
NORGES BANK 6,584,748 B 6,584,748
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED 5,321,478 B 5,321,478
CENTRAL HUIJIN ASSET MANAGEMENT LTD. 4,761,200 A 4,761,200
BBH A/C VANGUARD EMERGING MARKETS STOCK INDEX FUND 3,788,487 B 3,788,487
FIDELITY CHINA SPECIAL SITUATIONS PLC 3,779,202 B 3,779,202
The explanation for the associated relationship and accordant action of the top 10 Among the top 10 shareholders, Yantai Changyu Group Company
shareholders with unrestricted shares, the the associated relationship and Limited has no associated relationship or accordant action
accordant action between the top 10 shareholders with unrestricted shares and the relationship with the other 9 listed shareholders, and the relationship
top 10 shareholders among the other shareholders is unknown.
Explanation for the top 10 shareholders who involved in financing activities and The top 10 shareholders do not involve in financing activities and
stock trading business (if have)(see note 4) stock trade business.
Whether or not the Company’s top 10 common shareholders and shareholders with unrestricted shares take agreed repurchase trading during the
report period
□Yes No
There is no agreed repurchase trading taken by the Company’s top 10 common shareholders and shareholders with unrestricted shares during the
report period.
(2) Situation for the controlling shareholders of the Company
Property of holding shareholders
Type of holding shareholders: Legal representative
54
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Legal Establishment Organization
Name of controlling shareholder Main business
representative date code
Production and distribution of wine,
healthy liquor, distilled liquor and
91370600265645 non-alcohol beverages, planting of
Yantai Changyu Group Co. Ltd. Sun Liqiang 1997.04.27
8244 agricultural products and export
business under the scope of
permission.
Equity situation for the other domestic listed
companies controlled or shared by the
No.
controlling shareholders during the report
period
Changes in the controlling shareholder during the report period
□Available Not available
There are no changes in the controlling shareholder during the report period.
(3) Situation for the actual controllers of the Company
Property of actual controllers: domestic other institutions; foreign other institutions
Type of actual controllers: Legal representative
Name of actual Legal Establishment Organization
Main business
controllers representative date code
Under state permission, property investment, tenancy of machine and facility,
Yantai Yuhua Investment
Jiang Hua 2004.10.28 76779294－7 wholesale and retail of construction material, chemical products (chemical
& Development Co. Ltd
hazard products excluded), hardware and electronical products, grape
55
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
plantation.
Directly or indirectly conduct the production and distribution of food
ILLVA Saronno Holding Augusto products (alcoholic products included) as well as industrial, commercial,
1984.07.25 －
Spa Reina financial and service activities of any other kinds through joint-stock
companies and organizations
International Finance Corporation is one of the members of World Bank,
mainly dedicated to investment in private sectors of developing countries
International Finance Philippe LE while providing technical support and consultation service. The corporation
Corporation HOUEROU 1956.07.25 － is a multilateral financial institution that ranks first in the world in terms of
providing capital stock and loans to developing countries. Its purpose is to
promote sustainable investments of private sectors of developing countries in
order to alleviate poverty and improve people’s life.
Operating management of state-owned property right (stock right) authorized
by State-owned Assets Supervision and Administration Commission of
Yantai Municipal Government; Financing, investment and operating
management of government projects, such as strategic investment and
industrial investment and so on; Capital operation (including acquisition,
reintegration and transfer, etc) of state-owned property right and state-owned
stock right within the scope of authorization; Venture capital investment
Yantai Guofeng
business; Agency of venture capital investment business of other venture
Investment Holdings Co., Chen Dianxin 2009.02.12 00426068-6
investment enterprises or individuals; Participation in the establishment of
Ltd
venture capital investment enterprises and venture capital investment
management consultant institutions; Investment and financing service
business; Investment and financing consultant business; Other business
authorized by State-owned Assets Supervision and Administration
Commission of Yantai Municipal Government.(Projects need to be
authorized in accordance with the law could carry out business activities only
after the approval of relevant departments )
56
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Equity situation for the
other domestic listed
companies controlled by No
the actual controller
during the report period
Changes of the actual controllers during the report period
□Available Not available
There are no changes in actual controllers during the report period.
Introduction for property right and control relations between the Company and its actual controllers
57
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Yantai Guofeng Investment
Illva Saronno Holding Spa Holdings Co., Ltd
Actual controller controls the Company through a trust or other asset management ways
□Available Not available
(4) Other institutional shareholders holding more than 10% shares
58
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
□Available Not available
(5) Shares reduction situations of holding shareholders, actual controllers, restructuring side and other commitment subjects
□Available Not available
VII. Related Situation of Preferred Shares
□Available Not available
There are no preferred shares during the report period.
59
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
VIII. Situation for Directors, Supervisors, Senior Management and Staff
1. Changes in shareholdings of directors, supervisors and senior management
Shares Increased
Decreased
Beginning Ending held at the shares Other Shares held at
shares
Name Post Status Gender Age date of the date of the beginning during changes of the end of the
during the
post post of the the shares held period
period
period period
Chairman to the present
Sun Liqiang Board of Directors M 69 1997.09.18 2019.05.27 0 0 0 0 0
incumbent
Vice-chairman to
Zhou the Board of present
Hongjiang Directors and M 52 2002.05.20 2019.05.27 0 0 0 0 0
incumbent
General manager
Director and present
Leng Bin Vice-general M 54 2000.08.22 2019.05.27 0 0 0 0 0
manager incumbent
Director,
Vice-general present
Qu Weimin manager and M 59 1997.09.18 2019.05.27 0 0 0 0 0
Secretary to the incumbent
Board of Directors
present
Zhang Ming Director M 43 2016.05.26 2019.05.27 0 0 0 0 0
incumbent
leaving the
Chen Jizong Director M 41 2013.05.14 2016.05.26 0 0 0 0 0
post
Augusto Director M
Reina present 76 2006.12.07 2019.05.27 0 0 0 0 0
60
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
incumbent
Aldino present
Marzorati Director M 64 2006.12.07 2019.05.27 0 0 0 0 0
incumbent
Antonio present
Appignani Director M 78 2006.12.07 2019.05.27 0 0 0 0 0
incumbent
present
Dai Hui Director F 51 2010.09.01 2019.05.27 0 0 0 0 0
incumbent
Independent leaving the
Xiao Wei director M 56 2010.09.01 2016.05.26 0 0 0 0 0
post
Wang Independent present
Zhuquan director M 51 2014.05.23 2019.05.27 0 0 0 0 0
incumbent
Present
Wang Shigang Independent
director M 51 2011.05.10 2019.05.27 0 0 0 0 0
incumbent
Independent Present
Luo Fei director M 64 2016.09.23 2019.05.27 0 0 0 0 0
incumbent
Independent Present
Liu Yan director F 43 2016.09.23 2019.05.27 0 0 0 0 0
incumbent
Kong Chairman to the present
Qingkun Board of M 44 2013.05.14. 2019.05.27 0 0 0 0 0
Supervisors incumbent
present
Zhang Lanlan Supervisor F 47 2013.05.14. 2019.05.27 0 0 0 0 0
incumbent
present
Liu Zhijun Supervisor M 36 2016.05.26 2019.05.27 0 0 0 0 0
incumbent
leaving the
Guo Ying Supervisor F 42 2013.05.14. 2016.05.26 0 0 0 0 0
post
Vice-general present
Yang Ming manager M 58 1998.08.12 - 0 0 0 0 0
incumbent
Li Jiming Chief engineer present M 50 2001.09.14 - 0 0 0 0 0
61
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
incumbent
Vice-general present
Jiang Hua manager M 53 2001.09.14 - 0 0 0 0 0
incumbent
Vice-general present
Sun Jian manager M 50 2006.03.22 - 0 0 0 0 0
incumbent
present
Jiang Jianxun Finance manager M 50 2002.05.20 - 0 0 0 0 0
incumbent
Total -- -- -- -- -- -- 0 0 0 0 0
62
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
2. Changes in the Company’s directors, supervisors and senior management
Available □Not available
Name Position Type Date Reason
Leaving the post owing to
Chen Jizong Director expiration of the term of 2016.05.26 -
office
Leaving the post owing to
Independe
Xiao Wei expiration of the term of 2016.05.26 -
nt director
office
Leaving the post owing to
Guo Ying Supervisor expiration of the term of 2016.05.26 -
office
3. Situation for work experience
The professional background, main work experiences and present positions of the Company’s
directors, supervisors and senior management
(1) Members of Board of Directors
Mr. Sun Liqiang, male, 69, Chinese, with college degree, senior economist, began serving as
chairman of the Company from 18th September, 1997 and has held the position ever since.
Now, he concurrently is party secretary, chairman and general manager of Changyu Group.
He was representative of the 10th and 11th National People’s Congress.
Mr. Zhou Hongjiang, male, 52, Chinese, with doctor degree, senior engineer, began serving
as director, vice-chairman and general manager of the Company from 20th May, 2002 and has
held the position ever since. Now, he concurrently is vice chairman of Changyu Group and
the representative of the 12th National People’s Congress. He was vice general manager of the
Company and general manager of the Sale Company.
Mr. Leng Bin, male, 54, Chinese, with master degree, senior accountant, began serving as
director of the Company from 15th June, 2000 and has held the position ever since. Now, he
concurrently is director of Changyu Group. He was chief accountant and certified accountant
of Yantai Radio Regulatory Commission and vice section chief and section chief of Yantai
Audit Bureau.
Mr. Qu Weimin, male, 59, Chinese, bachelor of engineering，senior economist, began serving
as director, vice general manager and concurrently as secretary to the board of directors of the
Company from 18th September, 1997 and has held the position ever since. He worked at
Yantai Commission for Restructuring the Economic System and Research Office of Yantai
Government and has 20 years of experience in the aspect of macroeconomic study and
enterprise operation and management.
Mr. Zhang Ming, male, 43, Chinese, with bachelor degree, senior engineer, is now chairman
of Yantai Guofeng Investment Holding Co., Ltd. He was planner of Yantai Synthetic Leather
General Factory, plan specialist of business department, deputy section chief of plan and
statistic section in assets management department and section chief of plan and statistic
section in assets management department in Yantai Wanhua Synthetic Leather Group Co.,
63
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Ltd, risk control section chief of Yantai Guofeng Investment Holding Co., Ltd. and
concurrently director and vice general manager of Yantai Guoyu Finance Lease Co., Ltd, vice
general manager and secretary to the board of directors of Wanhua Efficient Technology
Group Co., Ltd. and general manager of Yantai State-owned Asset Management Co., Ltd.
Mr. Augusto Reina, male, 76, Italian, is now serving as chief executive officer of several
companies including Illva Saronno Holding SpA and Illva Saronno Investment SRL, member
of the board of directors of Barberini Spa, director of Federvini (Italian Alcohols Production
and Export Association), director of Istituto Del Liquore (Wine Research Institute), director
of Assovini (Sicily Viniculture and Wine Production Association) and director of Changyu
Group. He has been director of the Company since 27th April, 2006.
Mr. Aldino Marzorati, male, 64, Italian, with bachelor degree, is now the general manager of
Illva Saronno Holding SpA and director of the board of directors of some branches under the
group company and the director of Changyu Group. He has been director of the Company
since 27th April, 2006.
Mr. Antonio Appignani, male, 78, Italian, with bachelor degree, is vice chairman of Italian
Business Consultation Committee, chief of Professional Ethics Committee, teacher of
vocational training course of Industrial and Commercial Consultation Committee, member of
Economic and Commercial Committee of the public university “G. D Annunzio” and
concurrently serving as member of the board of directors of different companies and member
of the board of directors of several companies under Illva Group and the director of Changyu
Group.
Ms. Dai Hui, female, 51, Chinese, MBA, is now consultant of IFC, director of Changyu
Group Company and director of Listed Company. She was former project manager of
Government Loan Enlending Department in China FOTIC (staying in Beijing), former
manager assistant of High Net Worth Center in First Pacific Bank (staying in Hongkong),
representative of Rabobank Beijing Office (staying in Beijing) and chief representative of
Rabobank Beijing Office (staying in Beijing).
Mr. Wang Shigang, male, 51, Chinese, MBA and Certified Public Accountant, is now the
board chairman of Shandong Tianhengxin Construction Cost Consultation Co. Ltd.. He
previously served as independent director of the Company. He acts as the independent
director again from 14th May, 2013.
Mr. Wang Zhuquan, male, 51, Chinese, doctor of management (accountancy), first batch of
national accounting academic leading personals of Financial Department, the entrant of
accountant master cultivation project of Financial Department, outstanding teacher of
Shandong province, Government Special Allowance expert, acted as independent director
from 13th May, 2010 to 12th May, 2013. Now he is the professor and the doctoral supervisors
of the Ocean University of China as well as independent director of the some listed
companies which could be exemplified as Qingdao DoubleStar Co., Ltd. He acts as the
independent director of the Company again from 23rd May, 2014.
Mr. Luo Fei, male, 64, Chinese, with doctor degree, visiting scholar of University of Toronto,
doctoral supervisors, Government Special Allowance expert, first batch of trans-century
subject (academic) leading personals of Financial Department. He successively served as the
dean of accounting college in Zhongnan University of Economics and the dean of accounting
college in Zhongnan University of Economics and Law. He focuses on the study of financial
accounting, cost accounting, financial management, and so on. He has worked in companies
64
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
for many years and has practical working experience with companies. Now he is serving as
independent director of the Company.
Ms. Liu Yan, female, 43, Chinese, with master degree, was honored as national outstanding
lawyer in 2005. Her main practice areas include issuing and listing of domestic and foreign
stocks, merger and acquisition and foreign investment. She now is the partner of Tian Yuan
Law Firm and serving as independent director of the Company.
(2) Members of board of supervisors
Mr. Kong Qingkun, male, 44, Chinese, MBA and economist, served as the section member of
production department in the healthy liquor branch office, clerk and vice director of general
manager office. He now is director of general manager office.
Ms. Zhang Lanlan, female, with bachelor degree and economist, served as vice-manager of
the Company’s import/export company, manager of import department. She now is director
of board of directors’ office.
Mr. Liu Zhijun, male, 36, Chinese, with bachelor degree, worked in foreign fund section of
Economy and Trade Bureau in Longkou economic development zone, served as news section
member of propaganda department in Longkou Municipal Committee, member of
propaganda and mass work section, member of planning section, vice-director member of
programming development and enterprise distribution section, vice-director member and
deputy chief of programming development section. He now is supervisor of the Company.
(3) Other senior managers
Mr. Yang Ming, male, 58, Chinese, with bachelor degree, application researcher, has been
serving as vice general manager of the Company since 12th August, 1998.
Mr. Li Jiming, male, 50, Chinese, with doctor degree, application researcher, has been
serving as chief engineer of the Company since 14th September, 2001.
Mr. Jiang Hua, male, 53, Chinese, with master degree, senior engineer, has been serving as
vice general manager of the Company since 14th September, 2001.
Mr. Sun Jian, male, 50, Chinese, MBA and economist, has been serving as vice general
manager of the Company since 22nd March, 2006.
Mr. Jiang Jianxun, male, 50, Chinese, MBA and accountant, has been serving as Financial
Manager of the Company since 20th May, 2002.
65
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Post in the shareholder’s company
Available □Not available
Paid by
Beginning date Ending date of
Name Shareholder’s Company Post shareholder’s
of the post the post
company or not
Chairman and
Sun Liqiang Yantai Changyu Group Co. Ltd. general manager 2013.10.08 2017.10.07 No
Zhou Hongjiang Yantai Changyu Group Co. Ltd. Vice chairman 2013.10.08 2017.10.07 No
Li Jiming Yantai Changyu Group Co. Ltd. Director 2013.10.08 2017.10.07 No
Sun Jian Yantai Changyu Group Co. Ltd. Director 2013.10.08 2017.10.07 No
Chen Jizong Yantai Changyu Group Co. Ltd. Director 2013.10.08 2017.10.07 No
Augusto Reina Yantai Changyu Group Co. Ltd. Director 2013.10.08 2017.10.07 No
Aldino Marzorati Yantai Changyu Group Co. Ltd. Director 2013.10.08 2017.10.07 No
Antonio Appignani Yantai Changyu Group Co. Ltd. Director 2013.10.08 2017.10.07 No
Dai Hui Yantai Changyu Group Co. Ltd. Director 2014.03.06 2017.10.07 No
Explanation for the post in the
No.
shareholder’s company
66
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Post at other companies
Available □Not Available
Beginning
Ending date of Paid by other
Name Other’s company Post at other company date of the
the post company or not
post
Yantai Changyu Zhongya
Director and
Leng Bin Medicine & Healthy Liquor Co., 2012.09.10 No
legal representative
Ltd
Explanation for the post in the
No.
shareholder’s company
Disciplinary actions taken by securities regulators in recent 3 years to the Company’s directors, supervisors and senior management both on the
job and left during the report period
□Available Not available
4. Salary of directors, supervisors and senior management
Decision-making process, the basis of determination, the actual payment of directors, supervisors and senior management
The salary for the independent directors is paid according to the resolution of shareholders’ meeting. The salary for the chairman, directors with
administration duty, supervisors, managers and other senior management should be paid on basis of the evaluation result according to the
Proposal on Assessment Methods of the Company’s Senior Officers’ Performance from 2014 to 2017 which was passed during the Board of
Directors’ meeting.
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Salary of directors, supervisors and senior management during the report period
Unit: CNY’0000
Whether get
Total reward from
reward from
Name Post Gender Age Status the Company
related parties of
before tax
the Company
Sun Liqiang Chairman to the Board of M
Directors 69 present incumbent 126.89 No
Zhou Hongjiang Vice-chairman to the Board of M
Directors and general manager 52 present incumbent 126.77 No
Leng Bin Director and vice-general M
manager 54 present incumbent 89.39 No
Director, Vice-general manager
Qu Weimin and Secretary to the Board of M 59 present incumbent 89.11 No
Directors
Zhang Ming Director M 43 present incumbent 0 No
Chen Jizong Director M 41 leaving the post 0 No
Augusto Reina Director M 76 present incumbent 0 No
Aldino Marzorati Director M 64 present incumbent 0 No
Antonio Appignani Director M 78 present incumbent 0 No
Dai Hui Director F 51 present incumbent 0 No
Xiao Wei Independent Director M 56 leaving the post 5 No
Wang Zhuquan Independent Director M 52 present incumbent 5 No
Wang Shigang Independent Director M 51 present incumbent 5 No
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Luo Fei Independent Director M 64 present incumbent 0 No
Liu Yan Independent Director F 43 present incumbent 0 No
Kong Qingkun Chairman to the Board of M
supervisors 44 present incumbent 60.63 No
Zhang Lanlan supervisor F 47 present incumbent 19.26 No
Liu Zhijun supervisor M 36 present incumbent 0 No
Guo Ying supervisor F 42 leaving the post 0 No
Yang Ming Vice-general manager M 58 present incumbent 85.79 No
Li Jiming Chief Engineer M 50 present incumbent 79.98 No
Jiang Hua Vice-general manager M 53 present incumbent 85.62 No
Sun Jian Vice-general manager M 50 present incumbent 77.74 No
Jiang Jianxun Finance manager M 50 present incumbent 60.49 No
Total - - - - 916.67 -
The awarded equity incentives for the directors, supervisors and senior management of the Company during the report period
□Available Not available
5. Staff of the Company
(1) Staff number, specialty constitution and education degree
Incumbent staff number of parent company (people) 1,625
Incumbent staff number of major subsidiary companies (people) 3,002
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Total incumbent staff (people) 4,627
Total staff getting paid in current period (people) 4,627
Retired staff number whose expenses are undertaken by parent 0
company or subsidiary companies (people)
Specialty constitution
Category Number of people (people)
Production staff 1,331
Sales staff 2,780
Technical staff 152
Financial staff 145
Administrative staff 219
Total 4,627
Education degree
Category Number (People)
Bachelor and above 1,387
Junior College 1,953
Technical secondary school 550
Senior high school and below 737
Total 4,627
(2) Remuneration policy
The Company builds and improves the remuneration and welfare system, including salary system, incentive mechanism, social security and
health insurance and so on, to make sure that all staff could be insured. In accordance with the law, the Company buys social old-age insurance,
medical insurance, occupational injury insurance, unemployment insurance and maternity insurance, and pay housing fund for staff. Based on
the principle of “distribution according to work, equal pay for equal work”, the Company pays the staff’s remuneration timely. With the increase
of the Company’s profitability, the Company steadily improves the staff’s remuneration and welfare, and provides the competitive salary income
and development space of equal opportunity for staff.
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
(3) Training plan
In order to further improve the employees’ comprehensive quality and professional skill, the
2017 training plan for the Company’s major employee is shown as follows:
① Senior and Middle-level Managers
Firstly, it is commonality training. Training topics related with industrial development,
business orientation and management philosophy would be chosen to open the senior and
middle-level managers’ minds, to promote operation philosophy and also to improve
scientific decision-making capacity and operation capacity. The Company plans to employ
professional lecturers to give lectures in the company or through remote internet videos.
There will be four topics arranged for senior and middle-level managers within the year, one
topic in each quarter and one to two days for each topic.
Secondly, it is professional training. Based on individual work, senior and middle-level
managers would be organized in batches to attend high-end forum and summit of entrepreneur
and to visit domestic and foreign successful enterprises for studying. Middle-level managers
would be encouraged to take participation in MBA and other master degree. The professional
managers related with finance, equipment, safety, technology quality and other professional
fields would be organized to attend vocational qualification test to get vocational qualification
certificate. Senior and middle-level managers would attend special training organized by the
Company’s professional management department for safety, technology, equipment, finance
and tourism and so on, no less than twice a year.
② Section Chief and Ordinary Staff Members
Firstly, it is commonality training. Courses would be arranged in order to improve capability
of management, innovation and execution. In addition, professional lecturers or college
teachers would be employed to give lectures in the company, twice a year and one day for
each time. They would attend commonality trainings about enterprise culture, rules and
regulation and various alcohol products knowledge which should be known and grasped.
Secondly, it is professional training. Professional and responsible senior managers would
choose one book for their subordinate administrative personnel to study on their own. At the
end of the year these administrative personnel should propose suggestion for the Company’s
development on the basis of their own work. Eligible general administrative personnel would
be encouraged to take participation in MBA and other master degree. The professional
administrative personnel related with finance, equipment, safety, technology quality and other
professional fields would be organized to attend vocational qualification test to get vocational
qualification certificate. Based on their undertaking work, they would attend special training
organized by the Company’s professional management department no less than twice a year,
which involve safety, technology, equipment, finance, tourism and comprehensive
management and other special projects.
③ Marketing Personnel
Firstly, it is commonality training. They would study training materials related with the
Company’s management system, product knowledge and sales responsibility system.
Secondly, it is professional training. For personnel whose level is or above manager assistant
in the city marketing management company, the Company would invite professional lecturers
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
to the company or by means of remote internet video to give lectures about successful cases
and economic situation research in current domestic and foreign wine industry, once a quarter
and one day for each time. For city marketing manager, the Company would strengthen their
training for marketing skills as well as execution ability of the company’s sales policy. The
Company would invite its professional management cadre or employ professional lecturers to
take closed training for these managers, once at the beginning of each month and one day for
each time. For business directors and other personnel, every marketing management company
should be based on the local business and adopt training methods of employing professional
lecturers combined with going outside for visit and learning so as to make all marketing
personnel within its jurisdiction attend training about successful marketing cases and
marketing management philosophy. The frequency of this training is once a quarter and one
day for each time.
(4) Labor outsourcing
□Available Not available
IX. Corporate Governance
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
1. Current Corporate Governance Situation of the Company
(1) About shareholders and shareholders’ meeting
The Company has set up the Deliberation Rules of Shareholders’ Meeting, and convened the
shareholders’ meetings in strict accordance with requirements of standard opinion of
shareholders’ meeting, made the great effort to provide convenient conditions for more
shareholders to participate the shareholders’ meeting, and ensured all shareholders to enjoy
same equity and well exercised their rights. The Company drew great attention to the
communication and exchange with shareholders, actively responded the shareholders’
inquiry and questions, and widely listened to the suggestions and comments from
shareholders.
(2) About the Company and holding shareholder
The Company has independent power on business and self-management, and also be
independent of its holding shareholder on business, staff, assets, organization and finance.
The Board of Directors, Board of Supervisors, management team and also internal
organizations operated independently in the Company. The holding shareholder of the
Company could regulate its activities, no other behavior was found that surpassed the
shareholders’ meeting to directly or indirectly interfere with the decision-making and
business activities of the Company, or occupied any assets of the Company which damaged
the Company’s and medium & small shareholders’ interests.
(3) About the director and board of directors
The Company strictly appoints all directors in light of Company Law and Articles of
Associations. The qualifications of all directors are in line with the requirements of laws and
regulations. In accordance with the requirements of Corporate Governance Guidelines, the
Company has carried out the cumulative voting system. At present, the Company has four
independent directors accounting for about one three of all directors, and the number and
composition of board of directors was basically in accord with requirements of regulations
and also Articles and Associations. All directors of the Company could work in the light of
regulations including Rules of Board of Directors’ Procedure and Working Rules for
Independent Directors, punctually attended board of directors’ and shareholders’ meetings,
actively took part in relevant knowledge training, knew very well about the laws and
regulations concerned, had a deep knowledge and long experience of practitioners, and
performed their duties according to the law and regulations. The Board of Directors
convened the meetings in accordance with related rules and regulations.
(4) About supervisor and board of supervisors
The Company strictly elected all supervisors in light of Company Laws and Articles of
Associations. At present, board of supervisors has three people among which one supervisor
is representative for staff, the number and composition of board of supervisor was in accord
with requirements of regulations and rules. All supervisors of the Company could follow the
requirement of Rules of Board of Supervisors’ Procedure, insist the principle of
responsibility to all shareholders, seriously perform their duties, effectively supervise and
present their independent opinion on important issues, interrelated deals, financial status, the
duty performance of directors and managers of the Company.
(5) About performance evaluation and incentive system
73
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
The engagement of managers was open and transparent, and accorded with laws and
regulations. The Company has established and gradually improved the performance
evaluation standard and formed efficient incentive system, so as to ensure the salary of staff
to be linked with job performance.
(6) About stakeholders
The Company could fully respect and safeguard the legal rights of the party with relevant
benefit, cooperate actively with the stakeholders, jointly drive the Company to develop
continually and stably, pay great attention to the issues such as local environmental
protection and public utilities etc., and assume full responsibilities for the social
responsibility.
(7) About the information disclosure and transparency
The Company has appointed the secretary to Board of Directors to be responsible for
investor relation management including information disclosure, investor relations
management and reception of shareholders’ visit and consultation. The Company has also
assigned China Securities Newspaper, Securities Times, Honkong Commercial Daily and
web site http://www.cninfo.com.cn/ to disclose information, punctually, accurately and truly
disclosed any information in the light of requirement of relevant laws and rules, and also
ensured all shareholders to have same opportunity to acquire any information.
In order to further perfect the Company’s governance system, during the report period, the
Company formulates and improves Equipment Management Specification of Self-supporting
Base, Assessment Method of Equipment Management in Self-supporting Base, Changyu
Company Construction Opinions of A Level Material Base, Popularized Technology for
Each Company to Improve Internal Quality of Product in 2016， Daily Assessment Method
of Product Quality in 2016 ， Monitoring Method of Quality Safety Risk for Changyu
Products，Implementation Instruction about Management and Control of Risks at Different
Levels for Wine Enterprise， Implementation Scheme about Investigation and Treatment of
Hidden Danger for Wine Enterprise，Specification Opinions of Advancing the Accelerated
Resolution of Market Feedback Problems, Management Methods of Preventing
Infringements of Intellectual Property Rights and Management Methods of Litigation
Warning, etc.
Whether or not there is significant variance between the Company’s actual situation of
corporate governance and the normative documents about listed company governance issued
by China Securities Regulatory Commission.
□Yes No
There is no significant variance between the Company’s actual situation of corporate
governance and the normative documents about listed company governance issued by China
Securities Regulatory Commission.
2. Relative to the controlling shareholder, independence of the Company on business,
personnel, assets, organization and finance
(1) Personnel Arrangement
The Company’s general manager, vice general managers and other senior officers, all of
whom were paid by the Company and did not hold any post in the controlling parties. The
74
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Company was entirely independent in personnel arrangement, conclusion and adjustment of
labor contracts thanks to its sound and independent system for labor, personal and salary
management.
(2) Assets:
Tangible assets and Intangible assets including trademark, industrial property right and
non-patent technologies were all clearly divided between the Company and the controlling
shareholder, and all legal formalities were completed. The Company being a legal
independent entity consistently conducted business activities legally and provided no
guarantee in any form with its assets for its shareholders or individuals’ liabilities or any
other legal persons or natural persons. The Company owns trademarks including “黄金冰谷”,
“爱斐堡”, “爱菲堡”, “爱斐” and “AFIP”, etc. However, due to some issues from the past,
the Company permitted to use “Changyu” etc the intangible assets such as part of trademark
ownership and patent still held by the controlling shareholders.
(3) Finance
The Company has independent finance department, chief account and financial staff, and also
complete, independent and standardized accounting system. The Company has also
established its own bank accounts, duly and legally paying taxes, workers insurance fund. All
financial individuals do not hold any concurrent posts in associated companies and are able to
make financial decisions independently. The Company has its own audit department, which is
especially responsible for the internal audit work of the Company.
(4) Offices
The Company has set up a sound organizational framework, in which the Board of Directors
and Board of Supervisors operate independently, no superior and subordinate relationship
exists between the functional departments of the controlling shareholder. The Company has
its own independent production & business offices, all functional departments are
independent to exercise their powers and carry out the production and business activities
independently.
(5) Operations
The operations of the Company are independent of the controlling shareholder. The Company
owns itself completely independent systems covering research and development, accounting,
workforce and labor, quality control, raw materials purchase, production and sales, and is
possessed of self-run capabilities, and has neither relationship with the controlling
shareholder in terms of supply and sales by proxy nor competition with the other.
3. Situation for Horizontal Competition
□Available Not available
4. Information for the shareholders’ meeting and temporary shareholders’ meeting held
during the report period
(1) Information for the shareholders’ meeting during the report period
Participation Convening Disclosure
Session Meeting type Disclosure Index
ratio of date date
75
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
investors
http://www.cninfo.com.
2015 Annual Annual cn
Shareholders’ shareholders’ 62.28% 2016.05.26 2016.05.27 Notice of 2015 Annual
Meeting meeting Shareholders’ Meeting
Resolution
Notice of 2016 http://www.cninfo.com.
First cn
Extraordinary
Extraordinary Notice of 2016 First
Shareholders’ 63.08% 2016.09.23 2016.09.24
Shareholders’ Extraordinary
Meeting
Meeting Shareholders’ Meeting
Resolution Resolution
(2) Request for convening temporary shareholders’ meeting by priority shareholders
owing recovered voting right
□Available Not available
5. Performance of independent directors during the report period
(1) Attendance of independent directors for the board of directors and the shareholders’
meeting
Attendance of independent directors for the board of directors
Whether or not
to attend the
Required
Personal Communication Authorized meetings
Name attendance Absence
attendance attendance attendance personally for
time
successive
twice
Xiao Wei 4 3 1 0 0 No
Wang Shigang 6 3 3 0 0 No
Wang Zhuquan 6 3 3 0 0 No.
Luo Fei 2 0 2 0 0 No.
Liu Yan 2 0 2 0 0 No.
Attendance time of
independent directors for the
2
shareholders’ meeting
without voting rights
Explanation for failed to personally attend the Board of Directors’ meetings for successive
two times
No
(2) Any objections for the Company’s projects from the independent directors
Whether or not the independent directors raised any objection for the Company’s projects
76
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
□Yes No
During the report period, the independent directors did not raise any objections for the
Company’s projects.
(3) Other explanations on independent directors’ performance
Whether or not the independent directors’ propositions are accepted by the Company
Yes □No
Explanation on acceptance or refusal of the independent directors’ propositions to the
Company
During the report period, some independent directors propose suggestions on prudent
investment in tourism project of Changyu International Wine City. They thought that it is a
higher risk in the current background of slower growth of domestic economy. The Company
accepted the independent directors’ opinions and decided to suspend construction of the project.
6. Performance of the special committees under the Board of Directors during the
report period
(1) Summary report of the Board of Directors’ Audit Committee regarding
performance of duties
On March 26th , 2016, after the certified public accountants responsible for annual audits
had introduced their preliminary opinions, the independent directors on behalf of the Audit
Committee communicated with them and made written comments which read that “we
communicated in detail with the certified public accountants responsible for auditing of the
Company’s 2015 Annual Report who expounded the main standards, main emphasis audited
field, the problems and the matters necessary to adjust that were found during the auditing.
We’ve noticed that the Company has adjusted the matters as the accountants suggested. On
the basis of our communication results with the accountants, the production and operation
situations that the Company’s management reported to us as well as the progress of important
events, we believe that we have no objection to the Company’s 2015 Annual Financial
Statement preliminarily examined by Deloitte Hua Yong Certified Public Accounts Co., Ltd.
and the preliminary audit opinions of that services.”
On 27th April 2016, the Board of Directors’ Audit Committee deliberated and passed 2015
Annual Audit Report, Draft Proposal on 2015 Annual Profit Distribution, Proposal on
Renewal of Contract with the Present Certified Public Accountants firm, 2015 Annual
Self-assessment Report on Internal Control and 2016 Internal Audit Plan issued by Deloitte
Hua Yong Certified Public Accounts Co., Ltd.
All of committee members unanimously agree to submit the above proposals to the
Company’s 6th Session Board of Directors 12th Meeting for deliberation. The meeting reached
the following consensus:
(A) The clean-opinion auditing report on the Company’s 2015 Annual Financial Statement
issued by Deloitte Hua Yong Certified Public Accounts Co., Ltd reflects the Company’s
financial condition, operating results and cash flow truly, objectively and correctly.
(B) The profit distribution scheme that the Company formulated is relatively acceptable,
taking the shareholders’ interest into account while paying attention to the Company’s
long-term development.
(C) Considering the strict maintenance of objective and fair standpoint as well as the high
audit quality and reasonable arrangement for audit progress during the process of the
77
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Company’s 2015 annual financial audit and internal control audit taken by Deloitte Hua
Yong Certified Public Accounts Co., Ltd, it is proposed that the Company will reappoint
Deloitte Hua Yong Certified Public Accounts Co., Ltd as the 2016 annual auditor of the
Company. The employment period is one year and the audit will be taken from two aspects
shown as follows.
On one hand, it is to take the audit of 2016 annual financial report and issue a Financial Audit
Report. On the other hand, it is to take the audit of 2016 annual internal control and issue an
Internal Control Audit Report.
The annual auditing fee for the above parts is CNY 1.98million, including travel expense and
all service charges.
(D) The Company’s 2015 Self-assessment Report on Internal Control has truly and
objectively mirrored out the present standing of the Company’s internal control and can
basically ensure the effective implementation of its policies and realization of its strategic
goals.
(E) The Company’s 2016 Internal Audit Plan is comparatively perfect and practicable, based
on which the Company’s Audit Department will conduct the 2016 annual internal audit.
On 25th August 2016, the Board of Directors’ Audit Committee deliberated and passed
2016 Semiannual Report and Proposal on 2016 Semiannual Profit Distribution. The meeting
reached the following consensus:
The Company’s 2016 Semiannual Financial Statements reflected the Company’s financial
condition, operating results and cash flow truly, objectively and correctly.
As the Company just realized 2015 Annual Profit Distribution Scheme in middle July, we
propose neither to distribute profits for the first half of 2016 nor to increase the Company’s
capital stock with accumulated public fund. The net profit made in the first half of this year
will be reserved and distributed at the end of the year. Our Auditing Committee considers the
suggestion to be reasonable.
All of Committee members unanimously agree to submit the above proposals to the
Company’s 7th Session Board of Directors 2nd Meeting for deliberation.
(2) Summary report of the Board of Directors’ Emolument Committee regarding
performance of duties
The Board of Directors’ Emolument Committee is responsible for assessment of the economy
responsibilities of the directors and the senior managers who receive salaries from the
Company and examination of the salary policy and scheme designed for the Company’s
directors and senior managers.
Proposal on 2015 Assessment Results of the Company’s Senior Officers’ Performance was
deliberated and passed by the Board of Directors’ Emolument Committee on 27th April 2016,
who thought that this document was in compliance with Performance Assessment Methods
for Company’s Senior Executive from 2014 to 2017 approved by the Company’s 6th Session
Board of Directors’ 4th Meeting.
All committee members unanimously agree to submit the above proposals to the Company’s
6th Session Board of Directors 12th Meeting for deliberation.
During the report period, the Board of Directors’ Emolument Committee also examined the
2015 annual payroll records of the directors and the senior managers who receive salaries
from the Company and believes that the salaries of the Company’s directors, supervisors and
senior managers received from the Company is strictly assessed and delivered based on the
78
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
Company’s economic responsibility assessment system. The salaries disclosed by the
Company are in conformity with the actually paid amount.
7. The work of the Board of Supervisors
Whether or not the Board of Supervisors found any existence risk to the Company in
oversight activities during the report period
□Yes No
The Board of Supervisors has no objections to supervision matters during the report period.
8. Performance Evaluation and Incentive situations of Senior Management
The Company has already established a sound system for evaluation of achievement of senior
management and the related incentive system which linked the reward with the Company’s
benefit and personal achievement. The Emolument Committee under Board of Directors
assumed the responsibility of stipulating the policy and appraising the scheme for salaries and
rewards. Based on the Company’s annual business planning goals, this committee examined
senior personals and also their responsible subsidiaries or departments according to their
management achievement and index and took these as criterion of awards or penalties.
During the report period, because of not finishing the annual business plan deliberated and
passed in the Board of Directors’ meeting at the beginning of the year, the total salaries and
rewards of the senior management are basically equal to that of last year.
9. Internal Control
(1) Specific situations for significant defects of the internal control found during the
report period
□Yes No
(2) Self-assessment report on internal control
Disclosure date for full text of the
2017.04.22
internal control self-assessment report
Disclosure index for full text of the 2016 Self Assessment Report on Internal Control disclosed on
internal control self-assessment report China Securities Journal, Securities Times and www.cninfo.com.cn
by the Company on 22nd April, 2017.
Percentage of total unit assets included
in scope of the assessment accounting
94.51%
for the Company’s total assets of
consolidated financial statements
Percentage of unit operating income
included in scope of the assessment
88.61%
accounting for the Company’s operating
income of consolidated financial
79
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
statements
Standards of Defect Identification
Category Financial report Non-financial report
Qualitative criteria Significant defects: one defect of internal Significant defects: Any situations listed
control, individually or together with other below appears, it can be regarded as
defects, has the reasonable probability to cause significant defects. Operation: Unable to
the significant misstatements, which can not be achieve all operation target or key business
promptly prevented, or found and corrected index, widely out of budget in various
timely in the financial report. For example: aspects. Safety accident effects: Cause no
Company’s Directors, Supervisors and Senior less than one person death, or more than 3
Management have fraudulent practices; The person serious injuries. Major negative
Company makes corrections for the published effects: Negative information frequently
financial report; The audit of external appears in the medias with involving a wide
intermediary agent finds significant scope in the international and national
misstatement existing in the current financial mainstream media. Environment effects:
report, but the Company does not realize it Create irreparable damages to environment,
during the operation process; Negative and cause massive public complains.
information frequently appears in the medias Major defects: Any situations listed below
with involving a wide scope; The appears, it can be regarded as major defects.
Company’s audit committee and internal audit Operation: Unable to achieve partly
department makes an inefficient supervision for operation target, a big margin out of budget in
internal control; Other situations maybe various aspects. Safety accident effects:
cause significant misdirection which guides the Without reaching the person loss or the
report users to make the right judgment. number of serious injury of significant
Major defects ： The defect of internal control, defects. Major negative effects: Negative
individually or together with other defects, has news appears in the media with influencing a
the reasonable probability to cause the wide scope in the provincial mainstream
significant misstatements, which can not be media. Environment effects: Cause heavy
promptly prevented, or found and corrected environment damages and massive public
timely in the financial report, although the complains, ought to carry out the significant
misstatements neither achieves nor exceeds the remedial measures.
importance level but still arising the attention General defects: Any situations listed below
of Board of Directors and management team. appears, it can be regarded as general defects.
Failure to select and apply accounting Operation: Other effects unable to
regulations in accordance with generally constitute the significant defects or major
accepted accounting principles; Failure to defects. Safety accident effects: Personal
establish the anti-fraud procedures and control injury less than the quantitative standards of
measures; Failure to set up corresponding major defects. Major negative effects:
control mechanism or to carry out and take Other defects unable to constitute the
corresponding compensating control for the significant defects or major defects.
accounting treatments with irregular and Environment effects: Other environment
special deal; Negative news appears in the effects unable to constitute the significant
media with influencing a wide scope; One or defects or major defects.
more defects exist in the control during the
process of the ending financial report, and the
80
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
target of achieving truthfulness and integrality
cannot be reasonably guaranteed in the
financial report; General defects refer to the
other control defects, which do not constitute
the significant and major defects.
Quantitative criterion For total assets/Owner’s equity: For direct property loss:
Significant defects: misstatements ≧1% Significant defects: More than CNY10
Major defects: 0.5%≦misstatements<1% million
General defects: misstatements<0.5% Major defects: CNY1 million-CNY10
For operation revenue: million (including 1 million)
significant defects: misstatements ≧1% General defects: Less than CNY1 million
Major defects: 0.5%≦misstatements<1%
General defects: misstatements<0.5%
For pretax profit:
Significant defects: misstatements ≧5%
Major defects: 2%≦misstatements<5%
General defects: misstatements<2%
Number of significant 0
defect in financial
report
Number of significant 0
defect in non-financial
report
Number of major 0
defect in financial
report
Number of major 0
defect in non-financial
report
10. Internal control audit report
Available □Not available
Audit opinions of the internal control audit report
We believe that Yantai Changyu Pioneer Wine Co., Ltd. kept effective internal control to financial
report in all significant aspects in accordance with General Criteria of Company’s Internal Control
and other related rules on 31st December, 2016.
Disclosure of the internal control audit
Disclosure
report
Disclosure date for the full text of the 22ndApril, 2017
81
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
internal control audit report
Internal Control Audit Report disclosed on China
Disclosure index for the full text of the
Securities Journal, Securities Times and
internal control audit report
www.cninfo.com.cn by the Company on 22nd April, 2017.
Opinion type of the internal control audit
Standard without reserved opinion
report
Whether or not exists significant defects in
No
non-financial reports
Whether or not the accounting firm issued non-standard opinions for the audit report of
internal control
□Yes No
Whether the audit report of internal control issued by the accounting firm is in consistency
with the self-assessment report of the board of directors
Yes □No
X. Related Situation of Corporation Bonds
Whether or not the Company has the corporation bonds issued in public, listed in the stock
exchange, not due on the annual report’s authorized issue date or failed to pay in full on the
due date.
82
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
83
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
XI. Financial Report
1. Audit Report
Type of audit opinion Standard unqualified audit opinion
Date signed on audit report 20th April, 2017
Deloitte Hua Yong certified public accountants co.,
Audit agency name
Ltd. (special general partnership)
Document No. of audit report De Shi Bao (Shen) Zi (17) No. P01956
Certified public accountant's name Li Xu, Li Yangang
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 which comprise the consolidated and company's balance sheets as at 31st 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
84
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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.
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 31st 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 Hua Yong Certified Public Accountants Co., Ltd Chinese Certified Public Accountant
(Special General Partnership) Li Xu
Shanghai, China Li Yangang
20th April, 2017
2. Financial report
Unit: CNY
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
85
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
____________
86
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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: ____________________________________
87
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
____________
88
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
____________
89
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
____________
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
____________
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
__________
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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 inflows from financing 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
__________
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
_________
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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%
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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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V. TAXES - continued
(2) 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".
(3) 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.
(4) 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.
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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: RMB: 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%.
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2.
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
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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: 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
___
120
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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).
121
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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 -
___- ______ ______ ___ (7,199,521)
18,880,800 53,346,008 100.0
_____ ___ ______
14.0 46,146,487
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
_________
122
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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 Over 1 years ___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
_________ (21,426,756)
_______ 923,379,760
_________ 942,720,720 (18,147,490)
_________ _______ 924,573,230
_________
2,270,036,496 (21,426,756)
_________ 2,248,609,740 2,279,000,454 _______
_______ _________ _________ (18,147,490)
_______ 2,260,852,964
_________
(2) Inventory provision
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Finished goods 18,147,490
________ 3,279,266
_______ -
________ 21,426,756
________
123
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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.
124
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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: 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.
125
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
____________
126
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
R&D Centre (“Changyu Wine financial
integrational Construction”) Project institutions
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 2,289,723 in 2016(2015: Nil).
(3) As at 31 December 2016, there was no indication of impairment, therefore no provision was made.
127
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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.
128
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
_________
129
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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
_________
________
130
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
_________
131
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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 (“ 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.
132
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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
_________
_________
133
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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.
134
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
_________
135
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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.
136
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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 11,074,240 Payables for contracting fee
development limited company
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.
137
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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) 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
138
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
_________
139
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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.
140
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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.
141
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
__________
142
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
_________
143
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
__________
144
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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.
145
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
__________
146
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
__________
147
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
____________
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
__________
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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.
45. 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.
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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
__________
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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 (“Lanzhou 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.
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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., Ltd. Benxi, Liaoning, China Benxi, Liaoning, China Sales 100% - Subsidiaries acquired by establishment
("National Wines")
Liaoning Changyu Ice Wine Chateau Co., Ltd. Benxi, Liaoning, China Benxi, Liaoning, China Manufacturing 51% - Subsidiaries acquired by establishment
("Ice Chateau") (f)
Yantai Development Zone Changyu Trading Co., Yantai, Shandong, China Yantai, Shandong, China Sales - 100% Subsidiaries acquired by establishment
Ltd ("Development Zone Trading")
Shenzhen Changyu Wine Marketing Ltd. Shenzhen, Guangdong, China Shenzhen, Guangdong, China Sales - 100% Subsidiaries acquired by establishment
("Shenzhen Marketing")
Yantai Changyu Fushan Trading Yantai, Shandong, China Yantai, Shandong, China Sales - 100% Subsidiaries acquired by establishment
Company("Fushan Trading")
Beijing AFIP Meeting Center ("Meeting Center") Miyun, Beijing, China Miyun, Beijing, China Service - 100% Subsidiaries acquired by establishment
Beijing AFIP Tourism and Culture (“AFIP Miyun, Beijing, China Miyun, Beijing, China Tourism - 100% Subsidiaries acquired by establishment
Tourism")
Ni ngxi a Wi ne Co.L t d. ("Ni ngx ia Wi ne "). 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 production 100% - Subsidiaries acquired by establishment
("Huan Ren Wine") 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 Lanzhou Gansu, China Lanzhou Gansu, China Sales - 100% Subsidiaries acquired by establishment
Sales")
Beijing Retailing Co. Ltd("Beijing Retailing") Beijing, China Beijing, China Sales - 100% Subsidiaries acquired by establishment
Tianjin Changyu Pioneer Sales Co., Ltd (“Tianjin Tianjin, China Tianjin, China Sales - 100% Subsidiaries acquired by establishment
Pioneer”)
Fuzhou Changyu Pioneer Sales Co., Ltd (“Fuzhou Fuzhou Fujian, China Fuzhou Fujian, China Sales - 100% Subsidiaries acquired by establishment
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 Fuzhou, Jiangxi, China Fuzhou, Jiangxi, China Sales - 100% Subsidiaries acquired by establishment
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”)
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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 Wuhan, Hubei, China Wuhan, Hubei, China Sales - 100% Subsidiaries acquired by establishment
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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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 Current Non-current Total Current Non-current Total Current Non-current Current Non-current Total
Total assets
assets assets assets liabilities liabilities liabilities assets assets 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.
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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.
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT - continued
1. Risk management objectives and policies - continued
1.1 Market risk - continued
1.1.1 Currency risk - continued
Sensitivity analysis on currency risk
Where all other variables are held constant, the reasonably possible changes in the foreign
exchange rate may have the following pre-tax effect on the profit or loss for the period and
shareholders' equity:
Current year Prior year
Effect on Effect on
shareholders' shareholders'
Change in exchange rate Effect on profit equity Effect on profit equity
RMB RMB RMB RMB RMB
HKD 5% increase against RMB 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.
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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
_________ _______ _________ _________ _______ _________
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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
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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%).
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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%).
161
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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
________
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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.
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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.
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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).
165
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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
________
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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
____
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
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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
______ 5,734,456,129
________ ____ _______ ________ ________ ____ (7,199,521) ________
(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
___
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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.
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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
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
__________
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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 Co. Ltd. 2016 Annual Report
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 Co. Ltd. 2016 Annual Report
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%.
176
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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 cos1,152,076,500 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
__________
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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
_________
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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 Co. Ltd. 2016 Annual Report
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
__________
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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 Co. Ltd. 2016 Annual Report
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 Co. Ltd. 2016 Annual Report
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.
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Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
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.
184
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report
XII. Reference Documents
(1)The original of Annual Report autographed by the chairman.
(2)The Financial Statements autographed and signed by the chairman, chief accountant and
accountants in charge.
(3)The Prospectus and Public Offering Announcement for Stock B in 1997; The Prospectus
and The Shares’ Change & Public Offering Announcement for Stock A in 2000.
(4) The originals of all documents and announcements that the Company made public during
the report period in the newspapers designated by China Securities Regulatory Commission.
Yantai Changyu Pioneer Wine Co. Ltd.
Board of Directors
22nd April, 2017
185
